[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
AN EXAMINATION OF COMPETITION IN THE WIRELESS INDUSTRY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
MAY 7, 2009
__________
Serial No. 111-37
Printed for the use of the Committee on Energy and Commerce
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California JOE BARTON, Texas
Chairman Ranking Member
JOHN D. DINGELL, Michigan RALPH M. HALL, Texas
Chairman Emeritus FRED UPTON, Michigan
EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida
RICK BOUCHER, Virginia NATHAN DEAL, Georgia
FRANK PALLONE, Jr., New Jersey ED WHITFIELD, Kentucky
BART GORDON, Tennessee JOHN SHIMKUS, Illinois
BOBBY L. RUSH, Illinois JOHN B. SHADEGG, Arizona
ANNA G. ESHOO, California ROY BLUNT, Missouri
BART STUPAK, Michigan STEVE BUYER, Indiana
ELIOT L. ENGEL, New York GEORGE RADANOVICH, California
GENE GREEN, Texas JOSEPH R. PITTS, Pennsylvania
DIANA DeGETTE, Colorado MARY BONO MACK, California
Vice Chairman GREG WALDEN, Oregon
LOIS CAPPS, California LEE TERRY, Nebraska
MICHAEL F. DOYLE, Pennsylvania MIKE ROGERS, Michigan
JANE HARMAN, California SUE WILKINS MYRICK, North Carolina
TOM ALLEN, Maine JOHN SULLIVAN, Oklahoma
JANICE D. SCHAKOWSKY, Illinois TIM MURPHY, Pennsylvania
HILDA L. SOLIS, California MICHAEL C. BURGESS, Texas
CHARLES A. GONZALEZ, Texas MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington PHIL GINGREY, Georgia
TAMMY BALDWIN, Wisconsin STEVE SCALISE, Louisiana
MIKE ROSS, Arkansas
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE BRALEY, Iowa
PETER WELCH, Vermont
Subcommittee on Communications, Technology, and the Internet
RICK BOUCHER, Virginia
Chairman
EDWARD J. MARKEY, Massachusetts FRED UPTON, Michigan
BART GORDON, Tennessee Ranking Member
BOBBY L. RUSH, Illinois J. DENNIS HASTERT, Illinois
ANNA G. ESHOO, California CLIFF STEARNS, Florida
BART STUPAK, Michigan NATHAN DEAL, Georgia
DIANA DeGETTE, Colorado BARBARA CUBIN, Wyoming
MICHAEL F. DOYLE, Pennsylvania JOHN SHIMKUS, Illinois
JAY INSLEE, Washington HEATHER WILSON, New Mexico
ANTHONY D. WEINER, New York CHARLES W. ``CHIP'' PICKERING,
G.K. BUTTERFIELD, North Carolina Mississippi
CHARLIE MELANCON, Louisiana VITO FOSELLA, New York
BARON P. HILL, Indiana GEORGE RADANOVICH, California
DORIS O. MATSUI, California MARY BONO MACK, California
DONNA M. CHRISTENSEN, Virgin GREG WALDEN, Oregon
Islands LEE TERRY, Nebraska
KATHY CASTOR, Florida MIKE FERGUSON, New Jersey
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
PETER WELCH, Vermont
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
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Page
Hon. Rick Boucher, a Representative in Congress from the
Commonwealth of Virginia, opening statement.................... 1
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 3
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, opening statement................................. 4
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 5
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 6
Hon. George Radanovich, a Representative in Congress from the
State of California, opening statement......................... 7
Hon. Michael F. Doyle, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 8
Hon. Donna M. Christensen, a Representative in Congress from the
Virgin Islands, opening statement.............................. 9
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 11
Hon. Peter Welch, a Representative in Congress from the State of
Vermont, opening statement..................................... 13
Hon. Roy Blunt, a Representative in Congress from the State of
Missouri, prepared statement................................... 148
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, prepared statement......................... 150
Witnesses
Paul Schieber, Vice President, Access and Roaming, Sprint........ 14
Prepared statement........................................... 17
Answers to submitted questions............................... 215
Robert J. Irving, Jr., Senior Vice President and General Counsel,
Leap Wireless International, Inc., Cricket Communications, Inc. 35
Prepared statement........................................... 37
Answers to submitted questions............................... 236
Victor H. ``Hu'' Meena, President, Cellular South................ 50
Prepared statement........................................... 52
Answers to submitted questions............................... 240
Ravi Potharlanka, Chief Operating Officer, Fiber Tower Corp...... 66
Prepared statement........................................... 68
Chris Murray, Senior Counsel, Consumers Union.................... 85
Prepared statement........................................... 88
George S. Ford, Chief Economist, Phoenix Center for Advanced
Legal and Economic Public Policy Studies....................... 99
Prepared statement........................................... 102
Submitted material
Article entitled ``Best cell-phone service,'' Consumer Reports,
January, 2009, submitted by Mr. Walden......................... 152
Prepared statement of AT&T....................................... 158
Answers to submitted questions............................... 243
Prepared statement of Verizon.................................... 168
Answers to submitted questions............................... 246
AN EXAMINATION OF COMPETITION IN THE WIRELESS INDUSTRY
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THURSDAY, MAY 7, 2009
House of Representatives,
Subcommittee on Communications, Technology,
and the Internet,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:08 a.m., in
Room 2123, Rayburn House Office Building, Hon. Rick Boucher
[chairman of the subcommittee] presiding.
Present: Representatives Boucher, Markey, Rush, Eshoo,
Doyle, Inslee, Christensen, Castor, Space, McNerney, Welch,
Waxman (ex officio), Dingell, Stearns, Upton, Shimkus, Shadegg,
Blunt, Buyer, Radanovich, Walden, Terry, and Barton (ex
officio).
Staff Present: Roger Sherman, Chief Counsel; Pat Delgado,
Chief of Staff for Representative Waxman; Tim Powderly,
Counsel; Shawn Chang, Counsel; Greg Guice, Counsel; Sarah
Fisher, Special Assistant; Amy Levine, Counsel; Neil Fried,
Minority Counsel; Amy Bender, Minority Counsel; and Sam
Costello, Minority Assistant.
OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF VIRGINIA
Mr. Boucher. The committee will come to order.
The movement of personal communications to mobile services
is dramatic and accelerating. Just this week, it was announced
that, for the first time, the number of homes having only a
cell phone and no landline service now exceeds the number of
homes having only a landline and no cellular service. Daily,
new, attractive, and useful applications are coming to wireless
services, and data rates continue to increase, ensuring that
consumers can obtain faster access to mobile applications.
Today the subcommittee is beginning its examination of
possible ways in which Federal telecommunications policy may be
adjusted in light of these developments, with the goal of
enhancing the consumer experience and facilitating the future
growth of mobile services. Our goal is to develop on a
bipartisan basis legislation that will make timely needed
policy changes respecting mobile services, and as we construct
the measure, we intend to consult with both consumer
representatives and cellular telephone companies.
This morning, we begin this process by surveying possible
areas in which policy changes may be needed. Today most
Americans can choose among wireless service providers that
offer a truly nationwide service. It is not uncommon for people
to live in one State, work in another State, and travel to many
other States, all while using their cellular telephones. These
consumers expect and deserve the same useful features and
quality of service to be provided no matter where in our Nation
they may be using mobile services.
Today, State governments have authority over consumer
protection for wireless services, including such matters as
customer billing information and practices. With a highly
mobile Nation using an inherently mobile service with a truly
national footprint, I think it is hard to argue that for
millions of mobile users, one State's consumer protection
standards are particularly relevant to that user to the
exclusion of others.
The mobile industry presents a compelling example where a
uniform national set of consumer protection standards would be
more relevant to today's patterns of living, work and travel.
In exchange for meaningful national standards, the States would
be preempted from standard setting but, as a practical matter,
should have enrolled in dispute resolution and standard
enforcement.
Another clear need is for the identification of additional
spectrum that can be made available in the future for
commercial wireless services. As more people use wireless
devices and as advanced applications require ever higher data
rates over time, additional spectrum will be needed in order to
accommodate projected growth. Our legislation should direct
that NTIA undertake a survey of possible new spectrum that
could be auctioned in the future for that future growth.
Other possible subjects of interest may include
modifications to the rules relating to cellular tower siting,
particularly where the application is to place transmitters on
existing structures that already have transmitters attached.
We should also examine whether the rules relating to
roaming agreements should include data as well as voice
services, which are covered by roaming agreement requirements
presently.
We should examine whether policy adjustments are needed to
assure the adequate availability of backhaul in order to
accommodate the growing volume of cellular traffic, and whether
any policy adjustment is appropriate to assure that the newest
handsets are available to a wider group of cellular providers.
One relevant question would be whether a wider use of the
requirements that the Commission imposed last year on the
auction of the C-block could be a creative and perhaps helpful
way of addressing that need.
The testimony of today's witnesses on these and other
legislative avenues we may consider pursuing will be very
welcomed.
And I want to say thank you to our witnesses for taking
part in our discussion this morning.
Members will note the presence at the table of a variety of
consumer representatives and also cellular telephone companies.
Perhaps members have noted the absence of the two largest
cellular telephone providers, AT&T and Verizon, from our
conversation today. I want to note that invitations were
extended to both of those carriers. Both wanted to attend, but
the witnesses who they wanted to testify were not available
because of other previously scheduled company events that
required those witnesses' attendance. Both companies have been
invited to submit their comments for this record, and I do
anticipate their being a part of the record of today's hearing
accordingly and of also being a part of any future
conversations that we have on the subject of structuring
provisions for legislation addressing local services.
At this time, I am pleased to recognize the ranking
Republican member of the subcommittee, the gentleman from
Florida, Mr. Stearns, for his opening statement.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Good morning, and thank you, Mr. Chairman, for
holding this hearing.
As you pointed out, the wireless industry has become one of
the fastest growing and most competitive sectors of the United
States economy because Congress has allowed consumers to rule
the market.
Now, the way in which consumers use wireless services
varies widely from person to person, and thus, obviously, we
should resist imposing a one-size-fits-all regulation that
would likely reduce choice and innovation.
The industry has transformed from an all-analog duopoly to
almost an all-digital, multi-carrier industry where consumers
can choose from four national providers and over 100 regional
or local providers with a variety of plans and devices at a
range of prices to meet the consumers' needs.
Indeed, more than 99 percent of the consumers have one or
more wireless carriers to choose from, while 90 percent have
four or more choices. So, obviously, consumers are the big
winners here.
Between 1993 and 2008, the cost per minute has dropped to 4
cents from 44 cents, and the number of wireless subscribers
increased from 11 million to 270 million, an increase of over
2,000 percent.
Wireless technology will, obviously, transform our lives
from health and education to banking and transportation.
Imagine if an EMT at an accident site can send images of the
scene to the ER so that trauma teams can be preparing
themselves instantaneously, or if teachers could stream live
video from a zoo instead of reading about animals in an
elementary school textbook?
Applications in mobile banking could eventually mean that
our wireless devices will replace our wallets, and airlines are
already experimenting with electronic boarding passes that are
shipped directly to one's handheld wireless device, saving time
and saving money. We are limited by our imagination and, of
course, by our temptation to regulate.
The purpose of this hearing is to focus on a variety of
issues, such as handset exclusivity, wireless net neutrality,
special access, and maintaining a national regulatory
framework.
On the issue of handset exclusivity, some say it is
anticompetitive and limits consumer choice. However, when the
iPhone was introduced, consumers flocked to AT&T, challenging
Verizon, T-Mobile and Sprint to offer their own improved
devices, services, and rate plans to remain competitive.
On the other hand, I sometimes hear from constituents that
they would like to use their iPhone on any network that they
wish. I hope our witnesses can address both sides of this very
complicated issue.
Wireless net neutrality is another important issue. I have
already expressed concern that wireless net neutrality can
jeopardize investments in innovation. This is especially true
in the wireless context since capacity constraints make the
need for flexibility and traffic management all that more
critical.
Also, I hope our witnesses will address special access. In
1999, the FCC allowed limited deregulation of the special
access market where providers could demonstrate evidence of
competition. Some now argue that the market is no longer
competitive, and we should consider re-regulating. Both sides
assert that the evidence proves their position. If that is the
case, then perhaps we need to get all the data and resolve the
issue once and for all.
Innovation is occurring because carriers are looking for
ways to drive usage on their networks in this competitive
environment, not because of any government mandates. For
example, without any government intervention, the application
market is exploding. iPhone users have the choice of more than
35,000 apps with more than 1 billion downloads in the 9 months
that they have been live. It is important to point out that
this occurred without a government mandate on AT&T. Therefore,
instead of imposing new mandates, we should remove existing
regulatory barriers, such as the disparate, costly State
regulation of service plans and fees.
In 1993, we preempted State regulation of wireless rates
and entry. That decision has fueled the tremendous growth.
Since then, States have created a patchwork of regulations on
service and billing practices that threaten their growth. So
now is the time to create a national consumer protection
framework.
Finally, I would also like to request that the committee
start the process of identifying where the next allocation of
spectrum for commercial use will come from. These inventory
efforts generally have a long life between the start of the
process and when the spectrum actually comes to market. Thus,
the time to start is before America's carriers are spectrum
constrained. Identifying spectrum will help ensure that the
U.S. wireless market continues to be the world leader.
So, Mr. Chairman, I thank you for holding the hearing, and
I welcome our witnesses, and I look forward to their testimony.
Mr. Boucher. Thank you very much, Mr. Stearns.
The gentleman from Michigan, Mr. Dingell, chairman emeritus
of the full Energy and Commerce Committee, is recognized for 5
minutes.
OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Dingell. Thank you, Mr. Chairman, and I commend you for
holding today's hearing on competition in the wireless
industry, a very important subject.
Although the Organization for Economic Cooperation and
Development, OECD, recognizes the United States as having one
of the most competitive wireless industries in the
industrialized world, the continued consolidation of that
industry in this country behooves us to remain vigilant in
ensuring robust wireless competition.
Indeed, the fact the two largest domestic carriers, AT&T
and Verizon, control 60 percent of the market alone naturally
leads one to question the veracity of several conclusions
reached in the Wireless Telecommunications Bureau's January 16,
2009, report; most notably that consumers continue to reap
significant benefits from competition in the Commercial Mobile
Radio Services, CMRS, marketplace.
As you are all aware, I have long maintained that greater
competition is beneficial to consumers. Today's debate on
issues related to handset availability, voice and data roaming,
and special access must not lose sight of their potential to
increase competition in the marketplace. I welcome the opinions
of witnesses assembled here today concerning these matters, but
I would like to offer a few observations of my own before
engaging in that discussion.
With regard to handset availability, I continue to question
why a consumer is constrained to using a single particular
handset, for example, an iPhone on only one wireless provider's
network. Although I understand this is due to contractual
obligations, I wonder if a consumer would not benefit from
greater choice in the networks available to his handset. I also
wonder what it is that the Congress ought to do about this
matter. Clearly, this is a matter into which the committee
should go today and at other times.
Further, given the profusion of so-called smartphones in
the marketplace, I feel it is imperative that we expand roaming
requirements to include not only voice services but also data
services.
Lastly, with regard to special access, I would reiterate my
insistence from the 110th Congress that competitive carriers,
CLECs, should make the same disclosure about their facilities
as must incumbent local exchange carriers, the ILECs. I think
this is a very important matter into which the committee should
go.
I look forward to a lively discussion of these matters and
others this morning, Mr. Chairman. I want to thank you not only
for your courtesy but for your vigor in addressing these
questions.
I yield back the balance of my time.
Mr. Boucher. Thank you very much, Chairman Dingell.
The gentleman from Illinois, Mr. Shimkus, is recognized for
2 minutes.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. Sorry, Mr. Chairman. I am talking about energy
up here. I got distracted.
Let me just highlight the issue on the competitive nature
of the cell phone industry. It is highly competitive, and the
simple example I would use is that my 2-year contract expired
in December. So, in my local community, there is a development
called Collinsville Crossing, new, and part of that development
is part of a strip of buildings which are like 10 businesses.
And as I researched, in 10 of those office sections, three are
full-time national carriers who are selling their products, and
a fourth one is in the Radio Shack.
So what I was able to do was to visit four competitive cell
phone companies within less than a tenth of a mile, and not
only visit them and figure out the deal and their products and
the services, but I was able to walk back and forth, comparing
prices, comparing models, comparing options, until I found the
provider and the equipment that not only I wanted to do at my
price but also that my 16-year-old son wanted. And nowhere
else, in no other industry, in that short amount of space, not
even in a big mall where you may have two wireless carriers or
maybe three in the little subsections, but this is in
Collinsville, Illinois.
So I reject the premise that there is not a highly
competitive nature to the cell phone industry. It is what makes
this committee great, and it is what makes this industry so
exciting for conservative capitalist Republicans, because you
move too fast for us to regulate, and I am going to stand and
make sure that we don't.
Mr. Boucher. Thank you very much, Mr. Shimkus.
The gentleman from Massachusetts, Mr. Markey, is recognized
for 2 minutes.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. Thank you, Mr. Chairman, and thank you for
having this extremely important hearing today.
Last year, when I chaired the subcommittee, we held a
legislative hearing on a draft consumer protection and
broadband bill, with your support and with the support of many
of our colleagues. That draft bill proposed a strong nationwide
consumer protection policy for wireless subscribers. It had
effective Federal and State enforcement, the promotion of
community broadband deployment and a plan for Federal agencies
to assess their spectrum inventory and to utilize frequencies
using spectrum-efficient and cost-effective technologies. This
last issue holds great promise for our future innovation and
job creation.
I congratulate you, Mr. Chairman, for your leadership in
this area.
The wireless industry has suggested that Congress should
preempt States from regulating the terms and conditions of
wireless service, as it did over a decade ago, with respect to
the price for wireless services. Many States have initiated
attempts to take action to provide consumer protection policies
for their residents, particularly with respect to regulation
aimed at wireless contract terms, early termination fees,
privacy issues, and others.
To the extent that wireless service is, by its nature, an
interstate service, this hearing will provide an opportunity
for us to explore whether further preemption is advisable, how
consumer protection can be enhanced if regulatory treatment is
nationalized, and how best to ensure rigorous enforcement of
consumer protection.
Since the subcommittee's hearings last year, problems posed
by the current marketplace and regulatory structure have
persisted with roaming arrangements among carriers; with a lack
of devices available to smaller regional carriers; with respect
to the portability of devices to other carriers, remaining
limited or nonexistent; with a lack of clarity and uniformity
with respect to billing terms and conditions; and with an
inability for consumers to effectively compare plans; and for
many consumers to sometimes feel trapped after buying an
expensive device or for getting locked into long-term contracts
with significant penalties for switching.
This is a very important hearing. I thank you for your
continuing leadership, Mr. Chairman.
I yield back the balance of my time.
Mr. Boucher. Well, thank you very much, Mr. Markey.
You did excellent work on this general subject during the
last Congress. We are using the legislative draft that you
assembled as the foundation for our consideration this year,
and I want to thank you and commend you for that outstanding
work.
The gentleman from Indiana, Mr. Buyer, is recognized for 2
minutes.
Mr. Buyer. I reserve my time for questions.
Mr. Boucher. The gentleman reserves his time and will have
his time added to his question time for this panel.
The gentleman from Illinois, Mr. Rush, is recognized for 2
minutes.
Mr. Rush. Thank you, Mr. Chairman, for holding this very
important hearing.
In all of my years on this subcommittee, I have always been
concerned with the lack of diversity and competition in the
telecommunications market. I have found the lack of diversity
in the wireless marketplace to be particularly disturbing
because the spectrum used by wireless companies is a public
asset, owned by all of the American people and not by just
these companies. I continue to be dismayed over the fact that
women and minority businesses have little, if any, presence in
the wireless industry.
Given that the market for advanced wireless services is
rapidly growing and will likely soon displace traditional
wireline telecommunication services, it is vital that we ensure
diversity in the market now and not kick the can down the road
for another day.
As such, Mr. Chairman, I hope that these fine witnesses who
are gathered here can comment on this longstanding interest of
mine, and I further hope that, with the new administration, we
will finally find some public commitment to ensure that all
Americans can partake in the multimillion dollar wireless
industry.
Mr. Chairman, with that, I yield back the balance of my
time.
Mr. Boucher. Thank you very much, Mr. Rush.
The gentleman from California, Mr. Radanovich, is
recognized for 2 minutes.
OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Radanovich. Thank you, Mr. Chairman, for holding this
hearing and for examining the competition in the wireless
industry. I appreciate the effort on this.
As cochair of the Wireless Caucus with Mr. Inslee, I
appreciate the opportunity to explore the ways we can work
together to ensure that the wireless customers will have the
most innovative, best quality services at competitive prices.
One area I believe that is hindering effective competition
is tower siting. The ability to deploy wireless systems and
expand services, thereby increasing competition for customers,
relies on the ability to construct and place towers and
transmitters. Yet 3,300 wireless siting applications are
pending before local jurisdictions awaiting a decision.
Approximately 760 have been pending final action for more than
a year, while 180 of those have been waiting for more than 3
years.
The problem is that the Communications Act is very
ambiguous about the time in which a decision on these
applications has to be made, requiring only that it be done
within a reasonable time frame. This potential for delaying
action discourages investment and prevents consumers from
receiving the full benefits that come from increased service
and competition.
I am sympathetic to the demands that zoning authorities
must be given enough time to properly review these
applications. However, this process must have an end to it so
that carriers are not continuing to be left wondering whether
they will get an answer at all.
I look forward to working with the interested parties and
with the committee toward a resolution to this matter.
I am also aware that there is an effort to have the FCC
reset price caps for special access, and I do not believe that
this is possible or should be possible until the FCC has all
the relevant data on the full scope of high-capacity services.
Nevertheless, I am thrilled that this hearing is taking
place, and I look forward to the testimony from the witnesses.
Thank you, Mr. Chairman.
Mr. Boucher. Thank you, Mr. Radanovich.
The gentleman from Pennsylvania, Mr. Doyle, has just
returned, and is recognized for 2 minutes.
OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. Thank you, Mr. Chairman. I apologize.
Thanks for holding this hearing.
Mr. Chairman, you know, some people who have my cell phone
number are very interested in my car. I just want to say for
the record that my car warranty is not about to expire. I am
not really happy that they call my cell phone, and I am not
happy that they keep calling me, even though I am on a ``do not
call'' list and even though calling my cell phone is blatantly
illegal. And even though I have tried to get on these
companies' ``do not call'' lists, they still keep calling me,
so I just want to say: Stop doing that.
I hope the FTC and the FCC hunt each and every one of you
down and make a lesson out of you by interrupting every one of
your meals that you eat for the rest of your lives with a
telemarketing call. OK. I feel better now.
Now on to more happy topics.
Since we last looked at the wireless industry, we have seen
dramatically improved customer service. Consumers generally
better understand the contracts they sign and the services that
are available to them.
That is not to say it is all perfect. In fact, many of us
up here have had problems with our bills, and I do agree with
those who say that text messages are still priced way above
cost. For example, if you were to send enough text messages to
fill this 1.5-megabyte floppy diskette at 20 cents a message,
you would have to pay over $2,000. If you were to send enough
text messages to equal the size of an MP3 song, that would cost
almost $6,000.
But I think most of the companies have improved. One
example: Verizon Wireless has successfully sued several
companies for illegal telemarketing and for text message spam.
I am glad to see that the company, the FTC, and the FCC are
working on this problem, and I am glad to see that most of the
carriers have clearer bills and prorated contracts.
Mr. Chairman, if you decide to move a national framework
bill, I look forward to seeing that. It will give consumers
across America peace of mine with a baseline of reliable
consumer protections. Thanks for your patience, and I yield
back my time.
Mr. Boucher. Thank you very much, Mr. Doyle.
The gentleman from Oregon, Mr. Walden, is recognized for 2
minutes.
Mr. Walden. Thank you very much, Mr. Chairman. I appreciate
this hearing as well.
A lot has already been said about the positive competitive
nature of the wireless marketplace.
I would like to ask unanimous consent to put in the record
a Consumer Reports story I found very interesting on this
issue, dated January of 2009, which our colleagues may find of
interest.
Mr. Boucher. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Walden. I am one of those people who, you know, has
three cell phones, Mr. Chairman, one official, one personal,
one campaign, so I get experience on a lot of them.
Fortunately, I have not been called about a car warranty
yet. I suppose I should not admit that, but I am not going to
give out the number either.
I know that this marketplace has changed dynamically and
rapidly in a way that is very positive. As rates have come
down, service has been expanded, and options have increased,
and so I look forward to seeing where we can help this very
mature industry move forward and keep the competition going
that drives down prices and that makes these devices available.
With that, Mr. Chairman, I yield back.
Mr. Boucher. Thank you, Mr. Walden.
The gentlelady from the Virgin Islands, Mrs. Christensen,
is recognized for 2 minutes.
OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A
REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS
Mrs. Christensen. Thank you, Mr. Chairman and Ranking
Member Stearns, for holding this hearing to examine issues
related to wireless competition in our country.
The wireless industry has a tremendous impact on the U.S.
economy. It includes about 600 companies with a combined annual
revenue of over $110 billion. It is projected that, by 2016,
this revenue will increase to $427 billion annually.
However, some argue that the industry is highly
concentrated with four national wireless carriers earning about
85 percent of the industry revenue and two controlling 90
percent of special access. It is important to preserve
competition within the wireless industry in order to ensure the
consumers, especially in rural areas and in places like the
U.S. Virgin Islands, that I represent, have access to
reasonable rates and to the best of services.
Competitive local exchange carriers, such as the ones
testifying today, rely heavily on the incumbents for services
like special access. Yet they are limited in options for
service providers. This inevitably raises prices for the CLECs
and makes it difficult for them to remain competitive.
Mergers also can pose a significant threat to competition,
especially if the conditions are not imposed and then
implemented. The wireless industry is thriving and steadily
growing at an enormous rate, but for some carriers, it is still
difficult or virtually impossible to compete in this industry.
So I look forward to hearing from our witnesses on this
issue and on the recommendations for keeping the industry
competitive, and I thank them for being here.
Mr. Boucher. Thank you very much, Mrs. Christensen.
The gentleman from Nebraska, Mr. Terry, has waived his
opening statement and will have additional question time added.
The gentleman from Michigan, Mr. Upton, is recognized for 2
minutes.
Mr. Upton. Well, thank you, Mr. Chairman.
I just want to say that I noticed today the same stats that
you apparently cited in your opening statement that, for the
first time, there are more American families with wireless
phones than with hardline phones, and we know that all families
are really struggling, that all American families are really
struggling in these very tough economic times. They are looking
for any savings that they can in their household budgets.
And thanks to more competition, providing more spectrum,
something that this committee did in lifting many of the
burdensome regulations, the cost to families has gone down, and
we can congratulate many in this room for seeing that happen.
I would just say to Mr. Doyle, who has stepped away, maybe
he is listening until the anteroom, there is a provision in
most contracts, at least with mine. I have two teenagers. There
is such a provision as an ``unlimited text message'' section,
and I think it is about 4 bucks a month. I would suggest it, as
it has saved me a lot of money after the first abuse of my son,
Stephen.
Thank you. I yield back my time.
Mr. Boucher. Thank you very much, Mr. Upton.
The gentleman from California, Mr. McNerney, is recognized
for 2 minutes.
Mr. McNerney. Thank you, Mr. Chairman, for holding this
important hearing.
I am interested in today's hearing because of how dynamic
the industry is. We have seen a tremendous transformation in
the last decade or so. I would like to see that competition
continue, and I want to make sure that Federal regulation is
not part of the problem and that it is part of the solution.
So, right now, there does seem to be a consolidation going on
in the industry, and I am looking forward to seeing what you
have to say about what that is doing to the competition.
In particular, the handset exclusivity or tower siting, are
those issues that are part of the problem or do we need to look
at how those are being regulated right now?
So, with that, I yield back.
Mr. Boucher. Thank you, Mr. McNerney.
The ranking member of the full committee, the gentleman
from Texas, Mr. Barton, is recognized for 5 minutes.
Mr. Barton. Well, Mr. Chairman, I will not take that time.
I am going to submit my full statement for the record.
I am a three-cell-phone person if you count BlackBerrys. In
my immediate family, there are seven. We contributed to that
$75 billion of revenue fairly substantially last year, and we
enjoy it. I am told that there are about 280 million cell phone
customers, which is almost one per person. This is obviously an
industry that is thriving. There is consolidation going on.
That is not necessarily a bad thing. We have two market
participants that each have, I think between them, the top two
have about 60 percent of the market.
The thing that I would bring to the committee's attention
is this issue of States regulating terms and conditions. If you
want to call it a loophole, we left that open several years
ago. I think this subcommittee would be wise to take a look at
that and to see if we do now need to set up a national
regulatory framework for terms and conditions. That might help
continue the growth of the industry that is thriving.
With that, I am glad we are having a hearing where we are
not arguing over free allowances for C02. So this is a good
hearing, and I look forward to listening to our witnesses.
Mr. Boucher. Thank you very much, Mr. Barton. We will have
a discussion later on that very subject.
Mr. Barton. Yes, I know. That is what I am afraid of, Mr.
Chairman.
Mr. Boucher. The gentlelady from Florida, Ms. Castor, is
recognized for 2 minutes.
Ms. Castor. Thank you, Mr. Chairman. I will waive my
opening.
Mr. Boucher. Thank you, Ms. Castor.
The gentlelady from California, Ms. Eshoo, is recognized
for 2 minutes.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman.
And, welcome, to the panel of witnesses.
Compared to much of the telecommunications industry, the
wireless sector might look like it is wildly competitive. Most
consumers actually have some degree of choice for service,
unlike the broadband sector, where 90 percent of Americans have
two or fewer choices for service, or the wireline industry,
where the choices are largely nonexistent.
Wireless technologies are bridging some of these gaps and
are improving the competitive landscape, but there remain major
choke points and anticompetitive practices that inhibit true
competition and tilt the playing field steeply in favor of a
pair of dominant carriers.
I think my colleagues are aware of whom I speak, and I am
disappointed that Verizon and AT&T are not here today. I hope
that they will decide to come in the future. After all, the top
three wireless firms control nearly 80 percent of the wireless
phone business in America. That is a real stronghold.
A particular concern I have in the wireless industry is the
market for special access services. Special access is the high-
speed middle-mile between the Internet backbone for wireless
phone and data towers, hospitals, banks, retailers, and other
medium and large businesses. For wireless carriers, the cost of
special access carriage is up to a third of the expense of
running a wireless tower. Special access is a significant choke
point in the telecommunications system since Verizon and AT&T
control 80 to 90 percent of the special access market
nationwide.
In 1999, the FCC moved to deregulate special access, and
not surprisingly, with such limited competition, prices have
skyrocketed. Recent data indicate that, for the three large,
regional Bell companies, the rates of return on special access
range from 15 to 38 percent.
In 2005, the FCC initiated a proceeding to review special
access rates. Four years later, the Commission's review is
still pending.
In November 2006, the GAO issued a report entitled, right
here, ``FCC Needs to Improve Its Ability to Monitor and
Determine the Extent of Competition and Dedicated Access
Services.'' I think Chairman Martin must have missed that one.
So I am pleased that the Senate has finally scheduled
hearings to confirm a new chairman of the FCC. I hope the
Commission, and I would urge them, pursues this proceeding
aggressively and determines where there is actual competition
and fair pricing in this important market.
I also want to mention one other important competitive
issue in the wireless industry, access to spectrum. In the most
recent major auction of wireless spectrum, the 700 megahertz
auction last year, 84 percent of the winning bids went to
Verizon and AT&T. Again, it is difficult to see how the
wireless sector can be competitive when two players dominate in
so many respects. There are new entrants trying to break up
this dominance, and some of them happily are on the panel
today, and we look forward to hearing from you.
I think another avenue for a disruptive new entrant would
be the auction of the AWS-3 spectrum now lying fallow. So,
again, I hope the FCC proceeds on this matter. It has been
pending for over 2 years, and I hope it will finally be taken
up.
So, welcome, to all of you. I look forward to hearing your
testimony.
Thank you, Mr. Chairman.
Mr. Boucher. Thank you very much, Ms. Eshoo.
The gentleman from Arizona, Mr. Shadegg, is recognized for
2 minutes.
Mr. Shadegg. Mr. Chairman, other than to thank you for
holding this hearing and to thank our witnesses, I will waive
my opening statement.
Mr. Boucher. Thank you very much, Mr. Shadegg.
The gentleman from Vermont, Mr. Welch, is recognized for 2
minutes.
OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VERMONT
Mr. Welch. Thank you, Mr. Chairman and Ranking Member
Stearns.
Thank you to the witnesses.
Vermont is a very rural State, and it has had some
experience in trying to deal with some of the issues that we
are going to be dealing with as a committee, tower siting,
roaming, a lack of competition. Most Vermonters are actually
pretty pleased with the wireless service that they get, but it
is incredibly critical to our economy to have wireless service
everywhere.
The Vermont legislature has passed legislation calling on
doing whatever it is we can do to extend wireless throughout
the State, and our goal is to achieve 90 percent of coverage.
Some of us think it ought to be 100 percent. We are in the
process of installing tower sites and of using some of our
barns and silos to actually help us along the way. We are
working on streamlining the permitting process for new
telecommunication towers and antennas that will facilitate our
reaching our goals, but there are many issues remaining:
The cost of wireless backhaul is obviously a big one.
Roaming rates are an enormous problem for many of our users.
Vermont has not been able to attract the interest of some of
these larger national carriers to serve some of our most rural
areas. So they are kind of skimming the good economic
opportunities and are ignoring where we need a lot of help.
The progress in my State has been largely as a result of
local efforts, so we would have some significant concern about
this balance between a national plan and a freezing out of the
ability of States to actually play a very aggressive role in
trying to extend the benefits of wireless to their citizens.
Thank you, Mr. Chairman and Ranking Member, for convening
this subcommittee hearing. I yield back the balance of my time.
Mr. Boucher. Thank you very much, Mr. Welch.
Mr. Inslee was here earlier. I do not see him now. Unless
he is planning to appear momentarily, we are going to turn to
our first panel of witnesses. We will turn to our first panel
of witnesses.
STATEMENTS OF PAUL SCHIEBER, VICE PRESIDENT, ACCESS AND
ROAMING, SPRINT; ROBERT J. IRVING, JR., SENIOR VICE PRESIDENT
AND GENERAL COUNSEL, LEAP WIRELESS INTERNATIONAL, INC., CRICKET
COMMUNICATIONS, INC.; VICTOR H. ``HU'' MEENA, PRESIDENT,
CELLULAR SOUTH; RAVI POTHARLANKA, CHIEF OPERATING OFFICER,
FIBER TOWER CORP.; CHRIS MURRAY, SENIOR COUNSEL, CONSUMERS
UNION; GEORGE S. FORD, CHIEF ECONOMIST, PHOENIX CENTER FOR
ADVANCED LEGAL AND ECONOMIC PUBLIC POLICY STUDIES
Mr. Boucher. I want to welcome the attendance of each here
this morning. I will say a brief word of introduction.
Mr. Paul Schieber is vice president for Access and Roaming
for Sprint. Mr. Robert Irving is senior vice president and
general counsel for Leap Wireless. Mr. Victor Meena is
president of Cellular South. Mr. Ravi Potharlanka is chief
operating officer for FiberTower. Mr. Chris Murray is senior
counsel for Consumers Union. Dr. George Ford is chief economist
of the Phoenix Center.
We welcome each of our witnesses this morning, and we thank
you for sharing your views with us.
Without objection, your prepared written statements will be
made a part of our record, and we would now welcome your oral
summaries and would ask that you keep those summaries to
approximately 5 minutes so that we have ample time for
questions.
Mr. Schieber, we will be happy to begin with you.
If you will turn your microphone on, we will hear you
better.
STATEMENT OF PAUL SCHIEBER
Mr. Schieber. Thank you.
Good morning, Chairman Boucher, Congressman Stearns, and
members of the subcommittee.
I am Paul Schieber, vice president of Access and Roaming at
Sprint Nextel Corporation. Thank you for the opportunity to
testify today about competition in the wireless industry in the
United States.
For years, Sprint has been a leader in the development and
deployment of data services, including a 3G mobile broadband
platform throughout most of its network as well as the
development of 4G technology. In recent years, Sprint has spent
billions of dollars to deploy its 3G EVDO network, improve its
performance capabilities, and increase the array of advanced
services that are available to consumers through its mobile
broadband platform.
Through our investment in Clearwire, we are also committed
to maintaining our leadership role in making 4G broadband
services widely available to U.S. consumers and businesses.
These mobile broadband services will undoubtedly fuel
significant economic development and job growth.
Unfortunately, there continue to be several impediments to
Sprint and to other wireless and wireline provider efforts to
make broadband services ubiquitously accessible and reasonably
priced for all Americans.
In Sprint's view, the biggest of these impediments is the
failed special access market, but I want the members of the
subcommittee to know that Sprint is also supportive of efforts
to reform the Nation's cell-siting laws. We need laws which
make it easier for wireless carriers to collocate facilities
and to share the timely approval of cell site construction.
I focus my testimony on special access reform, however,
because Sprint believes that should be a top priority of the
FCC and this subcommittee.
Special access is the lifeblood of the telecommunications
industry. It touches virtually every communications product and
is a critical part of the services consumers use every day.
When consumers make wireless calls, access the Internet, send
e-mails, swipe their credit cards at stores, or use automated
teller machines, they are using services that rely on special
access.
The importance of middle-mile facilities to the wider
deployment of broadband was underscored by Susan Crawford, a
member of President Obama's National Economic Council, who
recently stated, and I quote, ``Investments in backhaul or
middle-mile networks, particularly in rural communities, will
likely be particularly useful.''
When Sprint and other carriers provide mobile broadband
services, we need other providers to link together into a
seamless network our facilities. In the simplest configuration,
a broadband provider must interconnect three segments of an
end-to-end service: A local network, middle-mile facilities and
a backbone network.
In Sprint's case, its local wireless broadband facilities
connect a caller or a laptop user to a nearby cell site. Sprint
then needs middle-mile transmission circuits to transport the
customer's traffic from a Sprint cell site, between a mobile
telephone switching office and, from there, to Sprint's
Internet backbone network.
As has been repeatedly demonstrated by Sprint and other
wireless and wireline broadband service providers as well as by
reports issued by the GAO and the National Regulatory Research
Institute, we are overwhelmingly dependent on special access
facilities provided by incumbent LECs.
Despite the central role of special access in mobile and
fixed broadband deployment and the benefits that would come
from robust competition, incumbents control 91.7 percent of the
special access market, and two dominant carriers, AT&T and
Verizon alone, receive 81 percent of all special access
revenues nationwide, generating a rate of return of up to 138
percent on these revenues in the case of AT&T. This is
obviously not a competitive market.
The monthly payments for middle-mile special access Sprint
incurs in its wireless business represents about one-third of
the cost of operating a cell site. In most cases, Sprint simply
has no competitive alternatives to the incumbent LEC for these
facilities.
Today, Sprint buys access from vendors other than the LEC
at only 4 percent of its cell sites. The excessive prices that
incumbent LECs charge for these middle-mile connections harm
consumers, cost us jobs and divert needed jobs from Sprint's
broadband network and services.
Fortunately, the FCC has the legal authority and the
evidentiary record to fix the problem and spur broadband
deployment. Reform of special access will promote mobile and
fixed broadband growth by freeing resources that can be used to
invest in new facilities, create new jobs and contribute to the
Nation's economic recovery.
I respectfully ask this subcommittee to urge the FCC to act
now. The special access rulemaking, now pending for more than 6
years, must be completed now to rein in anticompetitive special
access prices and practices by incumbent LECs, allowing Sprint
and other competitive providers to accelerate the deployment of
mobile and fixed broadband. Stimulating broadband deployment in
this way will generate economic growth and will expand consumer
access to broadband communications, and it will do so without
spending a dime of taxpayers' money.
Thank you.
[The prepared statement of Mr. Schieber follows:]
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Mr. Boucher. Thank you very much, Mr. Schieber.
Mr. Irving.
STATEMENT OF ROBERT J. IRVING, JR.
Mr. Irving. Chairman Boucher, Ranking Member Stearns, and
members of the subcommittee, thank you for allowing me to
testify today on behalf of Leap Wireless and its subsidiary,
Cricket Communications. I would also like to thank you and the
Congress for your leadership in appropriating stimulus funds to
expand broadband services and to improve access to broadband by
public safety agencies.
While you are addressing many important issues today, I
would like to offer Cricket's perspective on one of them, the
importance of automatic voice and data roaming to ensure
effective competition in the wireless industry.
First, I would like to note for you where Cricket fits in
the industry and briefly explain why small- and mid-sized
carriers like Cricket promote innovation and competition.
Cricket and its joint venture partners have built digital
networks covering almost 84 million individuals in 32 States,
and we are continuing to grow steadily. In fact, we will launch
service in Washington, D.C., and in Baltimore in the next
several months.
Cricket's services are specifically tailored to bring
wireless communication to consumers who have been left behind
by other providers. We offer consumers unlimited voice and data
wireless services for a flat monthly rate with no fixed-term
contracts, no credit check and no early termination fees. We
also recently introduced an affordable wireless broadband
product at $35 to $40 per month for unlimited service. Our
customer base reflects our commitment to the underserved. A
majority of our customers are Hispanics, African Americans and
other minorities, and our customers tend to be younger and less
affluent than our competitors' customers.
We recently partnered with the nonprofit group, One
Economy, to provide very low-income families in Portland,
Oregon, with computers, modems and free Cricket wireless
broadband for 2 years. This pilot program has been tremendously
successful in promoting broadband access and in increasing the
Internet savvy of program participants. One participant
reported to us that he is now enrolled in an online English
class. Another said that she now uses e-mails to apply for
jobs. Cricket hopes to expand this program to reach other very
low-income families who can benefit from affordable broadband
service.
Our growth and our commitment to a diverse customer base
illustrate the type of competition that Congress and the FCC
has tried to promote, and our success demonstrates those
innovative, pro-consumer benefits that small- and mid-sized
carriers bring to the wireless marketplace. We show that being
pro-consumer can be good for business. We discipline prices in
every market that we enter, and our presence prompts other
carriers to offer a wide range of choices, including flat rate
and unlimited usage plans like the plans we pioneered.
In recent years, we have been concerned with the increasing
consolidation of spectrum and market share into the hands of
the Nation's largest carriers and of the consequence of this
trend for small- and mid-sized carriers and, more importantly,
for consumers.
Cricket and other small, rural and regional carriers
increasingly face anticompetitive business practices, such as
the largest carriers' refusal to provide wholesale roaming on
reasonable, nondiscriminatory rates and terms. Automatic
roaming agreements play a critical role in the wireless
industry. They plug coverage holes that exist in every
carrier's network.
Reliable service is not simply a marketing tool. Whether we
are trying to get emergency text message alerts, seek help if
we have car trouble, or contact family members in the wake of a
hurricane or of a terrorist attack, consumers should not suffer
dropped calls when they travel away from home.
Unfortunately, the Nation's largest carriers have
institutionalized policies of charging very high wholesale
rates or of denying roaming services all together to other
carriers' customers in the areas where the requesting customer
can theoretically provide service. These behaviors weaken
emerging competitors' service offerings, in spite of the fact
that the largest carriers, themselves, have relied on roaming
agreements for over 30 years to expand their own networks and
to improve service.
These anticompetitive practices harm all consumers by
reducing competition, but they disproportionately burden
disadvantaged and rural populations, many of whom cannot afford
or qualify for wireless service provided by the Nation's
largest carriers.
In my written testimony, I have described several
proceedings in which the FCC has an opportunity to improve its
current policies with regard to automatic roaming. I urge
Congress to monitor these proceedings closely, to encourage the
FCC to adopt a pro-consumer, pro-competitive approach to
roaming and, if necessary, to consider legislative solutions
that ensure all consumers have access to affordable, nationwide
wireless coverage.
Thank you very much.
[The prepared statement of Mr. Irving follows:]
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Mr. Boucher. Thank you, Mr. Irving.
Mr. Meena.
STATEMENT OF VICTOR H. ``HU'' MEENA
Mr. Meena. Good morning, Mr. Chairman and members of the
subcommittee. Thank you for allowing me this opportunity to
testify before you today.
I have been in the wireless industry for over 20 years with
Cellular South, the Nation's largest, privately held wireless
carrier, serving all of Mississippi and four other southeastern
States.
In my years in the wireless industry, I have seen the
duopolistic role of the early cellular licenses when there were
two, and only two, carriers in each market. The rise in
wireless competition is a result of the later spectrum options
and of the growth and innovation throughout the industry as a
result of the Telecommunications Act of 1996.
However, today I am convinced that, unless things change
quickly, the industry is coming full circle and is progressing
or is, rather, regressing into a duopoly once again.
Today, AT&T Wireless and Verizon Wireless have almost 65
percent of the national market. Over 90 percent of the wireless
market is in the hands of those two, plus Sprint and T-Mobile.
This should come as no surprise after the parade of
acquisitions over the past several years.
One of the effects of the market concentration, of this
market concentration, is that the largest carriers now use
their market power to demand and receive long-term, exclusive
agreements with device manufacturers for the latest and
greatest technological handsets. Exclusivity agreements prevent
other carriers from acquiring these devices, and they are
particularly harmful to wireless consumers. The practice has
worked so well for the large carriers that they are now using
the same formula for the emerging netbook market as well.
What would happen if merchants sold computers that only
worked with one Internet service provider? For example, imagine
a world in which Macintosh computers only worked on AT&T DSL.
That, of course, is exactly the world we live in with iPhone
and Apple's exclusivity agreement with AT&T Wireless. If a
consumer wants that handheld computer, he or she must subscribe
to that service through AT&T.
This battle among the industry titans has left consumers as
collateral damage because device manufacturers are prohibited
from offering cutting-edge devices to the smaller carriers who
many times serve rural areas.
Even in the areas that are served by the largest carriers,
consumers are not free to choose the latest devices without
being forced into accepting services from a specific carrier.
If you live in New York City and want an iPhone, then you are
obligated to be an AT&T Wireless customer. If you live in
Washington, D.C., and want a BlackBerry Storm, then you will be
a Verizon Wireless customer, whether you want to be or not.
The situation with exclusivity agreements is bad and is
only getting worse. Cellular South and customers like us have
tried to find solutions to this problem without resorting to
help from policymakers. We have attempted several solutions
within the industry, including direct talks with device
manufacturers, industry association working groups, and
consolidating purchasing power through buying grids, but all of
these efforts have been fruitless. Without legislation from
Congress or action from the FCC, there will be no solution to
this issue.
On the topic of roaming, far and away the most important
issue is that of automatic roaming for data services,
specifically roaming for broadband. When I began in this
industry, roaming agreements could be negotiated in a matter of
an afternoon and usually finalized within a week. Today, the
largest carriers use their market power to dictate unreasonable
roaming terms or they refuse data roaming agreements all
together; 700 megahertz licensees not named AT&T or Verizon
cannot build out their next generation networks without high-
speed data roaming agreements. This is increasingly important
as carriers deploy new data technologies that provide services
anywhere, any time, such as telemedicine applications and Voice
services over Internet Protocol, somewhat better known as VoIP.
I ask you, is VoIP voice roaming or is it data roaming?
Better yet, why should it matter?
We are at a critical period in the wireless industry.
Although the wireless industry may no longer be in its infancy,
it is no more mature than an awkward adolescent. There is much
innovating left to be done. There are many people of all
socioeconomic backgrounds and of geographic locales who have
yet to benefit fully from the wireless experience.
Before it is too late, Congress must step in and put an end
to the largest carriers' anticompetitive stranglehold on
devices as well as ensure full roaming access. The future of
free markets in our industry and the delivery of wireless
broadband services to rural America depends on it. A light
regulatory touch today will prevent the reemerging duopoly in
which two companies will control all of the customers, all of
the best devices, all of the prime spectrum, and will become
too big to fail.
Thank you.
[The prepared statement of Mr. Meena follows:]
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Mr. Boucher. Thank you very much, Mr. Meena.
Mr. Potharlanka.
STATEMENT OF RAVI POTHARLANKA
Mr. Potharlanka. Good morning, Chairman Boucher, Ranking
Member Stearns and members of the subcommittee.
Thank you for the opportunity today to testify about the
importance of middle and last mile backhaul services in the
context of competition in the wireless industry.
My name is Ravi Potharlanka. I am the Chief Operating
Officer of FiberTower Corporation.
Formed in 2000, FiberTower is the Nation's leading
alternative carrier for middle and last mile backhaul.
FiberTower operates hybrid fiber microwave networks in 13 U.S.
markets. The top eight mobile carriers and the government are
amongst our largest customers. We have a national scope of 24-
gigahertz and 38-gigahertz spectrum licenses and access to over
100,000 towers. We also offer fixed wireless services across
the Nation. We have been offering backhaul services for the
last 6 years and are in a position to offer a unique
perspective. Let me explain.
Backhaul connects last mile end users, including those who
serve first responders, Homeland Security, municipal buildings,
medical facilities, schools, and libraries to the Internet and
to other network-switching centers.
Absent backhaul infrastructure, broadband networks cannot
operate. Also, backhaul and transport infrastructure must be
built before end users can fully realize the benefits of
broadband. In fact, backhaul is often considered the Achilles'
heel to achieving broadband connectivity.
This lack of development in unserved and in underserved
areas has inhibited the growth of broadband services. Our
modular network is relatively inexpensive to deploy when
compared to fiber and can often be up and running in a matter
of days.
I want to applaud the subcommittee on its leadership in
producing the broadband stimulus programs. This subcommittee
and the committee have identified middle mile and last mile
backhaul appropriately as a critical piece in achieving
broadband expansion. We see the access to this capital as a
unique opportunity to capitalize on the expansion.
For example, we could build in the western half of Virginia
backhaul networks similar to those that have been built
elsewhere. In just months, we could get people working
throughout the unserved and underserved communities and make
broadband accessible. This will create long-term jobs while
permanently enhancing the economy. This model can most
definitely be deployed in other areas of the Nation. I would
now like to draw your attention to four important matters.
First, mapping of unserved and underserved areas must
include middle and last mile backhaul. The FCC, NTIA and RUS
should consider an area with an adequate backhaul or transport
coverage as underserved. Even if such an area has an end user
broadband service provider, an area without backhaul is unable
to support multiple broadband networks that drive the economy.
Second, ensure that multiple-use backhaul platforms, which
are called MuniFrames, are accessible to all end users. Doing
this truly brings broadband to the area while greatly reducing
costs. It is important to ensure that all parties have the
ability to access these platforms in a nondiscriminatory
manner.
Third, reinforce the existing Federal preemptions or
burdensome zoning and permitting restrictions for fixed
wireless antenna placements. Restrictions that impair the
installation of small antennas for fixed wireless are not
permitted under a very specific FCC rule. Zoning and permitting
requirements often add substantial delays in costs of
deployments.
Fourth, make a limited number of the numerous, vacant TV
white space channels available for point-to-point licensing.
The recently completed FCC TV white space order is a first step
in unleashing broadband deployments to unserved and underserved
areas. The lack of backhaul and transport services is
particularly problematic in rural areas when great costs and
great distances slow or prevent connections to switch locations
of the Internet.
However, white space channels make long range promulgation
possible, thereby reducing the number of required towers to
reach the same distance. There is no Member of this Congress
more committed than you, Mr. Chairman, to bringing high speed
broadband to America. I submit to you today that should FCC
grant point to point licensed use for limited number of TV
white space channels, it could stimulate rural broadband. This
proposal involves a small number of numerous vacant rural
channels and only in a fashion that protects incumbents and
promotes plentiful and healthy sustained growth for unlicensed
devices.
100-mile connection using white spaces would typically cost
less than $200,000 to deploy, while the same connection using
some proposed bands like in six or 3.65 gigahertz spectrum
would likely cost more than $3 million, almost 15 times as
much. Similarly, a new transfiber build in the same distance
would normally cost at least 20 or 30 times more expensive and
be slow to deploy.
In conclusion, making a limited number of TV white space
channels available before the initial stimulus grant filing
deadline is very critical. Finally, we strongly recommend the
following: Continued reinforcement of FCC rules that preempt
burdensome zoning and permitting restrictions for small fixed
wireless antennas, comprehensive mapping of middle mile and
last mile backhaul, and an express eligibility for backhaul and
transport projects under the BTOP and RUS programs. This now
concludes my oral testimony, and I thank you for the
opportunity.
Mr. Boucher. Thank you very much, Mr. Potharlanka.
[The prepared statement of Mr. Potharlanka follows:]
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Mr. Boucher. Mr. Murray.
STATEMENT OF CHRIS MURRAY
Mr. Murray. Good morning, Mr. Chairman, Mr. Ranking Member
and members of the committee. I appreciate the opportunity to
appear before you once again on behalf of consumers and on
behalf of Consumers Union, the publisher of Consumer Reports
Magazine.
I am pleased to report that this year the satisfaction of
consumers in the cell phone industry does seem to be headed
upwards. You may remember last year it was bottom of the
barrel. It was 18th out of 20 services that we rate. But this
year it seems to be moving closer to average, and we are happy
about that. Fewer consumers are complaining about automatic
contract extension, and fewer consumers are complaining about
early termination penalties as vociferously, although we still
believe that, because these fees are starting from a very high
level, we agree with State courts that are finding they may be
illegal, so we think that scrutiny is warranted.
But we have a new top concern of consumers this year, and
that is the high price of cell phone service. And you may
recall the last time I was here I said that U.S. consumers pay
more than consumers around the world for cell phone service.
Now, on a per-minute basis, as the industry is quick to note,
because U.S. consumers talk an awful lot, we pay a little bit
less. But if you look at just the dollars, the amount of money
that people spend every year, U.S. consumers spend more on cell
phone service than in any other industrialized nation.
We also see that SMS text revenues are up for the carriers
over 150 percent per texting subscriber. That is not overall
over the whole network, that is just for the people who text.
It is up 150 percent over the last 4 years.
We see this year the rage is consumer overcharges for data
plans. And we see one subscriber--I had an account of somebody
who bought a netbook and got a data plan from AT&T. Five
gigabytes is what she got for $60. She exceeded that plan by
five gigabytes. And guess what the bill came back? $5,000. It
is astonishing to me that the first five gigabytes somehow cost
$60 and then the second five gigabytes cost about as much as a
pretty decent used car.
So what is going on here?
I saw a McKenzie report that was fascinating, which
basically said this industry is moving very quickly towards
duopoly or towards a quasi-duopoly, and that concerns us.
Basically, in sum, what I would like to say is that if we want
competition to work better in this market, and I believe it
can, is this market more competitive than some of the other
rather monopolistic sectors of telecom? Well, yes. But that is
sort of like saying a horse and buggy is a much better way to
get around than a unicycle. We can do better than that.
So if you want competition we need to reduce switching
costs for consumers. That includes things like number
portability, allowing consumers to take their phone numbers
with them. We initially, when we first started talking about
this 4 years ago, the cell phone industry said this is going to
cost billions of dollars, and nobody wants it, and nobody will
use it. Well, that wasn't the truth. The truth was people use
this every day. They have been very happy with it, and it not
only didn't cost so much, but it has actually allowed some
carriers to really win in the marketplace.
So the FCC is considering a proposal to reduce the interval
from 4 days to one. We obviously support that, and we hope that
the agency will recognize the arguments of the carriers as
relatively transparent protectionism.
The other thing, if we want competition, switching costs
need to come down. And early termination fees are still a major
concern for us. I will note that we are talking about a
national model, but we do a have a national model in the
uniform commercial code, which is the law in 50 States. And
what that says is that if you want subscribers for actual
damages, that is ok. But if you are charging them a penalty
that is designed to prevent them from switching, that is
illegal, right? The law of contracts says you can't do that
because we want competition to work as vigorously as possible.
So now the cell phone companies are up here saying we want
a national model. Exempt us from the law of contracts in 50
States. I hope that the Congress will not go for that
opportunity.
As we look at a national model, we have to look at what is
the price of preemption. If we think that we can put in very
strong national consumer standards, it is not totally anathema
to consumers, but I do worry when I hear Members of Congress
discussing how little this industry needs oversight and then,
in the next breath, talking about a national consumer
protection model. That seems to me to be code for we are going
to eliminate some strong consumer protections in States.
The last thing I want to briefly touch on--I apologize I
don't have time to talk about roaming and data roaming and
special access. But I am very concerned about anti-competitive
behavior I see in the industry, and I really would beg this
committee for more oversight.
Recently we saw AT&T saying they would not allow Skype to
be used by users on the 3G radio. They will allow to use it on
WiFi but you can't use it on the 3G radio. And the top public
policy executive for AT&T says, we absolutely expect our
vendors not to facilitate the services of our competitors.
This is the Internet. It is supposed to be different. This
is what is supposed to bring us competition. And if what we are
saying is we are just going to treat all these Internet
companies as competitors and we are not going to let them use
our Internet connections, well, we have fundamentally broken
the Internet.
So I am not stepping up today saying regulate the Internet.
What I am saying is, let's get some oversight. When we have
clear examples of anti-competitive behavior we need action.
The last thing I will say is on access to consumer devices
handset exclusivities, I will note that Ranking Member Barton
has a bill which aims to eliminate exclusives for automotive
diagnostic software in an industry which is, arguably, more
competitive than this one. And I think that is good, because
you are breaking the stranglehold of automotive dealers, and
allowing smaller repair shops to get in on a game that would
otherwise be a complete monopoly for the dealerships.
Well, similarly, here we have some carriers who are
absolutely too small to have the market power to get the
devices that consumers are demanding. And if we want 3G to be
built out in rural areas, I am telling you we have to look at
this problem.
So I thank you again for the opportunity to appear before
you today. And I hope that we can engage in further oversight.
Thank you.
[The prepared statement of Mr. Murray follows:]
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Mr. Boucher. Thank you very much, Mr. Murray.
Dr. Ford.
STATEMENT OF GEORGE S. FORD
Mr. Ford. Mr. Chairman and Ranking Member Stearns and
members of the subcommittee, good morning, and thank you for
the invitation. My name is Dr. George Ford. I am the chief
economist of the Phoenix Center, a nonprofit 501(c)(3)
organization that focuses on the publishing of academic quality
research on the law and economics of telecommunications and
high tech industries.
Our research is consistently targeted at providing
policymakers information about the important role that pro-
entry policies must play in the communications industry. Our
substantial research production has been published in academic
journals, and several of our papers cover many of the topics
discussed in this hearing today.
The Phoenix Center makes it a policy not to endorse or
support any particular piece of Federal or State legislation or
proposed regulation. Our mission is not to tell policymakers
what to think, but more how to think about it.
By most accounts, the wireless industry today is workably
competitive. The statistics have been cited here today by many
members of the subcommittee and many of the panelists. But it
is not perfectly competitive. No industry is. Workably
competitive means that competitiveness is effective enough at
sustaining good performance, even if not matching the textbook
concept of perfect competition.
Regulation is unlikely to improve market performance in a
workably competitive market. Nor is the industry static, but it
is constantly changing. The dynamic nature of the industry
requires constant reformulation and testing of pricing plans,
product offerings and network capabilities. Some changes are
successful. Some not. That is the nature of the business.
You mentioned earlier, Mr. Chairman, that most Americans
have access to four or so wireless carriers, and some feel that
this makes it a concentrated market, and by some definitions it
would. But the relatively concentrated nature of wireless
communications is natural and to be expected, given the large
amounts of capital expenditures required to participate in the
industry. The industry incurs about $20 billion in capital
expenditures annually. Economics teaches us that in industry
with such large capital costs relative to retail expenditures,
only a relatively few number of firms will be able to survive
and continue to offer service. The industry structure is, for
the most part, pre-ordained by its cost and demand structure.
While it is often assumed that observing that there are
only a few firms implies that there is little competition,
there is no unambiguous theoretical support for this position.
Duopoly is not a dirty word.
In the 1992 Cable Act, rate regulation was abandoned with
the presence of 1\1/2\ firms, and that was in the statute. OK.
That is an HHI of 8,600, according to the rules.
I do not mean to imply that industry concentration is
irrelevant, but it must be placed in the correct context.
Recognizing that the industry is driven by its underlying cost
and demand conditions is vital for good policymaking.
Let me give you a few examples. Take spectrum caps.
Contrary to widely held beliefs, it is not possible to increase
a sustainable number of firms in the wireless industry by
increasing the amount of spectrum. Whether there are two or 10
firms the cost to deploy and upgrade a wireless network is
roughly the same. Dividing the market into smaller pieces by
divvying up spectrum into smaller pieces will not increase the
number of carriers that can survive. What it will do is cause a
nonsustainable industry structure and, inevitably, result in
mergers, bankruptcies or both.
On the other hand, in a world of limited spectrum, having a
few firms may actually be a very good thing for society. The
more spectrum a firm has, the higher bandwidth services it can
offer. If we cut the spectrum into little pieces to make more
firms, we might get a little more price competition for low
bandwidth services, but we lose the enormous value offered by
higher bandwidth innovative services like mobile broadband.
There is a tradeoff between lots of guys with a little, and a
few guys with a lot.
My research has also shown that, given the relatively
concentrated nature of telecommunications markets, regulators
must be very careful not to exacerbate the factors that
generate that outcome. However well-intentioned, regulatory
driven open access or wireless card phone proposals do exactly
that. They both are likely to spark further industry
concentration and increase prices for mobile handsets, without
necessarily benefiting consumers.
There could be some benefits to such proposals, but all
regulation comes at a cost. And my research leads me to believe
that the costs are likely to outweigh the benefits.
In a recent paper using auction results show that
Carterfone style open access obligations could reduce industry
profitability by 32 percent and reduce industry investment by
$50 billion over the next 10 years. This large reduction in
profitability could literally mean the difference between the
survival or demise of weaker wireless providers. Open access
regulations would, in fact, reduce the number of carriers in
the industry and possibly result in significantly less
competition and choice for consumers.
Moreover, regulations that control handset equipment, a
common feature of wireless Carterfone policies invariably leads
to higher handset prices but not necessarily lower service
prices. And many of the people who propose those rules
recognize this outcome, but ignore its implications. This would
not be good for the average American, not the high user
American, but the average American, and would be particularly
harmful to those with low incomes who are prolific users of
mobile technology and are more likely to be cord cutters.
Another feature of the wireless industry that is typically
forgotten, policy debates that is multi product industry. The
typical wireless carrier offers local calling, national
calling, international calling, e-mail, text messaging, picture
messaging; they will even fix your flat tire. The economic
implications of this are important.
The wireless firm doesn't offer a price and a service. It
offers a set of prices and a set of services. All these
services are interrelated. The price of one goes up. The price
of the other goes down. The quantity of one goes up, the price
of the other ones may change. You cannot take one thing, text
messaging or phones, and focus on that one thing and say, oh,
there is market power in this market because a high price in
one service may sustain a low price in the other service. We
are not in here talking about restaurants who mark up wine
three or four times and give you water and bread. But it is the
same kind of argument that people are making.
Finally, we have a paper here that we recently published on
the national framework for wireless regulation. What is a
little different about our approach is that we are not, we
allow the state regulator to make efficient decisions for its
people. It is acting in the interest of its people. It is not
acting incompetently or anything like that. But even still, it
makes sense, if those decisions in one State spill over into
another, whether it be cost or prices, that the regulation move
up to the national level. So it is not a debate about the
competence of regulation. It is a debate about how the industry
and how a particular regulation in one location could impact
another. And that is what I am driving at. Thank you for your
time.
[The prepared statement of Mr. Ford follows:]
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Mr. Boucher. And we now have a recorded vote pending on the
House floor. I am going to ask my questions, and then we will
declare a brief recess, and we will ask our witnesses to stay
with us pending the return of members. It shouldn't take very
long. We just have one recorded vote to respond to.
Let me ask any of the witnesses who want to respond,
because several of you mentioned this during the course of your
testimony. Several of you have talked about your reliance on
the major carriers, Verizon and AT&T, for the special access
lines that connect facilities, and you depend upon those lines
to connect your facilities. And you have talked about various
ways that that problem might be addressed. One possible way to
address it is to apply for stimulus funds under the Economic
Recovery Act. And there is language in that Act that
specifically makes middle mile services eligible as a target
for grantmaking under the law.
So my question to those who have that concern is, are you
planning to apply for stimulus funding for these middle mile
links? Mr. Schieber, let's begin with you.
Mr. Schieber. Yes, thank you, Mr. Chairman. Sprint's
position is, you know, we are closely monitoring that
legislation as the terms in that legislation are defined and
if, depending on how those terms are defined, unserved,
underserved rural backhaul, etc., we may very well apply for
those funds. It is unclear at this point until there is more
clarification.
Mr. Boucher. Well, let's assume that the criteria make it
possible for you to apply and, should you be awarded the
grants, would enable those grants to be useful in addressing
your middle mile needs. Would you then apply?
Mr. Schieber. We may very well. And I will tell you that
our friends from FiberTower on the panel here are the experts
in providing wireless backhaul services. In all honesty, we may
look to someone like FiberTower.
Mr. Boucher. All right. Well, let's ask Mr. Potharlanka
that same question.
Mr. Potharlanka. Thanks for the question, Mr. Chairman.
Special access, or middle mile as we have called it, in terms
of creating alternatives there, we have to build other types of
facilities-based networks. We cannot resell the stuff. You have
to actually invest capital to actually build networks so that
various end users networks actually have options, much like,
you know, we talked about options.
Mr. Boucher. Well, but Mr. Potharlanka, would you rely to
some extent if it is available on stimulus funds in order to
help you make that investment?
Mr. Potharlanka. Absolutely. Our technology and what we do
is very well suited to actually building these types of
networks, and we fully expect that, you know, depending on the
rules, we would actually apply.
Mr. Boucher. OK. That is good. One of the subjects that
interests me is possible barriers that might exist to the
siting of additional transmitters by carriers on structures
that are already in existence, to which transmitters are
already attached. And within the general category of tower
siting, where I understand there are a number of tensions
between the local governments that have decisionmaking
authority with regard to this and the carriers that want to
site towers, it strikes me that that is one discrete area in
which, if it truly is a problem, we might be able to offer some
ready solutions.
And so let me just ask the question. Where you have got a
circumstance where there is an effort and an application to
attach an additional transmitter to a tower, to which other
transmitters are already attached, is there resistance on the
part of local governments today to rapidly processing those
applications? Are you experiencing that problem? Mr.
Potharlanka or others.
Mr. Potharlanka. Sure. I mean, we certainly experience, you
know, zoning or permitting delays and cost associated with----
Mr. Boucher. That specific example, if you could answer
that, please.
Mr. Potharlanka. With a specific example?
Mr. Boucher. Yes. That specific example.
Mr. Potharlanka. Sure. I mean, we have several instances in
the northeastern States where our applications do take a long
time.
Mr. Boucher. This is an example, and let me state it again,
where a tower already exists, transmitters are already attached
to that tower. The application is to attach an additional
transmitter to that tower already containing other
transmitters. In that instance, do you know of instances where
delays are being experienced and those applications are not
being rapidly processed?
Mr. Potharlanka. Absolutely. We attach transmitters to
existing sites, existing towers. We don't install new towers,
and so that is exactly what we face.
Mr. Boucher. All right. Do others have examples? Mr.
Schieber?
Mr. Schieber. Mr. Chairman, we experience the same thing at
Sprint that, whether it is a new site or an existing site,
there are often delays in getting zoning approvals from the
local authorities.
Mr. Boucher. What is the appropriate remedy for that, in
your mind?
Mr. Schieber. From our perspective, I think something like
a shot clock that encourages local zoning authorities to make a
decision quickly and not stretch the time frame out over many,
many years, which is what we experience sometimes would be
very, very helpful.
Mr. Boucher. All right. I have some additional questions,
but I am going to interrupt those so that we can respond to our
recorded vote on the floor. And this subcommittee will stand in
recess.
I would encourage Members to come back as quickly as they
have voted so we can continue our questioning. And we will ask
for the patience of our witnesses until we return.
[Recess.]
Mr. Boucher. The subcommittee will reconvene. I thank the
witnesses for their patience. And we are missing Mr. Murray,
but I suppose he will join us in due course.
I was interested in the testimony that was asked by--that
was provided by a number of the witnesses regarding the current
roaming rules, and I would like to just ask each of you, if you
want, to comment on this.
Given the importance of the growing use of mobile data, and
the fact that so many people are now relying on their mobile
devices as a major Internet access and e-mail application, in
fact, I have got an iPhone. I guess I probably shouldn't
advertise particular products, but I like it a lot. And I am
probably using that for e-mail more now than anything that sits
on a desk. And I am sure that there are millions of other
people having similar experiences with that device or other
similar kinds of portable devices.
And so, given the growing importance of mobile data uses,
has the time come, in your opinion, for us to provide automatic
roaming rights for data, similar to the automatic roaming
rights that exist for voice services today?
Mr. Murray, you have joined us, and we will ask you first
if you would like to comment.
Mr. Murray. I think absolutely the answer to that is yes.
We value competition and we value rural consumers being served
as robustly as urban. That is part of the promise of universal
service. And unquestionably, these smaller carriers will tell
you they can't get data roaming. It is not that it has been
taken away, it has just never been there. So I think we have
absolutely come to the point where this is essential. If we
want to not hit a brick wall and see consolidation really
accelerate, I think data roaming is essential.
Mr. Boucher. Others care to comment very briefly? My time
really has expired. Mr. Meena.
Mr. Meena. Yes, sir. I wanted to comment on that because it
is such an important issue. Yes, we, all carriers need access
to automatic data roaming. The VOIP example I gave in my
testimony is a perfect example. In the future with 4G, is VOIP
voice or is it data? Why would it matter? And there are
countless telemedicine and other applications that customers
need to use in their home footprint, as well as their travel
anywhere throughout the country, and that is a goal of ours, to
provide the type of services that customers want, no matter
where they go.
Mr. Boucher. All right. Anyone else want to offer a view?
Mr. Irving.
Mr. Irving. I would agree that now is the time for data
roaming to also be included in carriers, common carrier
obligations. We have begun entering into data roaming
agreements generally with smaller and mid size carriers who
tend to be more receptive to those roaming agreements.
I would add one clarification. You asked whether we should
enter into data roaming agreements or data roaming obligations
similar to the voice roaming obligations. We would like to see
the voice roaming obligations and the data roaming obligations
improved.
Mr. Boucher. I understand that. Mr. Schieber.
Mr. Schieber. Yes. Sprint spent billions of dollars on a
DVDO network and as we have seen competition unfold, we are
increasingly open to considering people who want to roam on our
ABDO network. Whether we need automatic roaming, as we have
with voice or not, is an open issue, I think. I will say though
that, you know, if we have to have something like that, the in
market exception really needs to be addressed so that we were
all on the same level playing field. The in market exception
precludes us from getting roaming from folks if we have
spectrum in a particular market, so addressing that issue in
that context would be very helpful.
Mr. Boucher. This would be spectrum you have in that market
that you haven't built out in yet presumably.
Mr. Irving. That is correct.
Mr. Boucher. All right. Mr. Upton, you are recognized for 5
minutes.
Mr. Upton. Well, thank you, Mr. Chairman.
Dr. Ford, I have the results of the Consumer Reports most
recent wireless survey which was published in January of this
year. They concluded that, 1, overall cell phone service has
become significantly better service. Two, contract terms for
cell phone services are less onerous, and there were fewer
problems with call quality in this year's survey, which
obviously 2008. There was substantial improvement over the 2007
survey results, and that there has been a surge in
satisfaction. Those are their words.
In your testimony you stated that the wireless industry is,
in fact, workably competitive. And I know that as an economist
and consumer satisfaction surveys may not be the tools of your
trade. But would you agree that these positive consumer
satisfaction surveys results are consistent with what we might
expect from consumers enjoying the benefits of a competitive
marketplace?
Mr. Ford. Oh, sure. I mean, I think, to some extent, that
the progression of the industry is part of the dynamic
competitive nature of it, and you would expect things to change
and improve over time. And with the advent of new services and
broadband and new telephones, people are going to get
increasingly happy. And we are looking at nearly 20 percent of
the people falling off the wire line network. Mobile service
would have to get better for that to happen. So sure, it is
very consistent with that outcome.
Mr. Upton. Thank you. Mr. Schieber, AT&T and Verizon claim
that see CLEX and other proponents of special access reform
have not provided comprehensive data on the networks as the
Bell companies have. Are you willing to provide the FCC with
the same data that the Bell companies have given the FCC?
Mr. Schieber. Congressman, we respectfully disagree with
AT&T and Verizon. We feel like the FCC has a strong record of
evidence. The FCC has what they need to act on this. However,
if there is additional information that we can provide that
will help the FCC get better clarity in the State of
competition and special access we will be more than happy to
provide that. But we would like the FCC to act on that and act
on it quickly though.
Mr. Upton. So the FCC, do they have any outstanding
requests in for more information at this point or not?
Mr. Schieber. I am not aware of any outstanding requests at
this point. I think that they are working on something at this
point, a request for information.
Mr. Upton. Thank you. Mr. Potharlanka, in my view, we
squandered an opportunity to make sure that backhaul capacity
was available when we gave the white spaces away, rather than
auction them off. Do we still have an opportunity to correct
that mistake in the FCC's reconsideration of the white spaces
order?
Mr. Potharlanka. Our general opinion about white spaces,
the channels available in the white spaces, in rural areas is
that we could actually have multiple uses for it. I think
several applications can coexist. And we are not sure that
limiting options is the right way to do it, either through an
auction process or----
Mr. Upton. But if they are valuable, wouldn't we all
benefit if they had been auctioned off rather than parts of it
given away?
Mr. Potharlanka. We are not disagreeing whether there would
be enhanced value out of it. All we are saying is there are
some parts of the spectrum, I think, which are best served by
set asides for certain types of applications which, where you
would be able to enable broadband over extended distances. And
I think what we have proposed is we want to have multiple
applications coexist at the same time. And I think different
types of approaches could be used to putting that spectrum to
work.
Mr. Upton. Well, do you think that they ought to be used
for unlicensed parts? Should those white spaces be allowed to
be unlicensed?
Mr. Potharlanka. Sure. Yes. We believe that our proposal--
and let me touch on that specifically. Our proposal
specifically states that we would like a few channels in the
rural areas to be allocated for point-to-point licensing in a
manner that they can coexist with income bands as well as allow
for unlicensed devices to operate. And there is a way to do it.
There are lots of rural areas where you have 15 sometimes, all
the way up to 40, 45 channels. And I think the trick is to
figure out a mechanism where you can actually have a lot of
these things coexist, and it is possible, given the amount of
spectrum that is available.
Mr. Upton. Thank you. Yield back.
Mr. Boucher. Thank you very much, Mr. Upton.
The gentlelady from California, Ms. Eshoo, is recognized
for 5 minutes.
Ms. Eshoo. Thank you, Mr. Chairman. And thank you to all of
the witnesses. I think it has been a terrific panel, and I
think that you have built a very strong case around the whole
issue of whether we have real competition and what the outcomes
are if we don't and the state of affairs that we are in.
Dr. Ford, I don't have a question for you. But there are
two things that really take my breath away about what you said;
and that is that a duopoly is natural. I just, I have to tell
you, that just flies in the face of what I think America is
about and what our whole system and belief in competition. I
just don't buy into that. And so I needed to comment because I
still can't get it out of my head.
But at any rate, I want to talk, I focused on special
access in my opening comments. And while I think that, you
know, much of the focus on special access has been the
competitive issues that result from wireless companies who, due
to a lack of competition and choice, have to pay largely
whatever the incumbent Bell company decides. What I want to
touch on is the broader impact of this bottleneck in the middle
mile.
Now, for years I worked very hard on HIT legislation, on
getting the legislation passed here. We were successful in
getting substantial funding, so we got the policy, then we got
significant funding in the stimulus package. And that is going
to create jobs. It is going to build an infrastructure to
reduce health care costs. It is going to help reach people who
don't have immediate access to hospitals.
But my question is, in listening to the panel and examining
this issue, how are these hospitals and other providers who
don't have immediate access to the network to transmit large
amounts of health care data, health records, MRIs, x-rays and
the rest, how are they going to get this to providers and to
patients?
I mean, we use, you know, we kind of dive down into a whole
alphabet soup of the telecom industry here, and yet members
need to really understand that because of these bottlenecks,
the work that we have already done and we are congratulating
ourselves for, how is this going to work? So I pose that
question to you. I mean, it is special access services. And now
we are preparing ourselves for an energy bill. The smart grid
has to be a part of it. The data transmission requirements to
monitor, to send information, control the flow of energy
access, energy across the grid, has to be in a very intelligent
and efficient manner. And it will be substantial. And again, we
bump up against special access fees.
So, and I just want to put my own personal example on the
table and that is, last year, I explored the possibility of
installing Cisco's telepresence technology in both my D.C. and
Palo Alto office. And while it was fairly expensive, it was
going to really do a lot for us and my constituents. But what
we couldn't afford, what we couldn't afford out of our budget
was the monthly cost of the special access lines that were
needed. They were in the range of 2,000 bucks a month. So, you
know, I mean, I just start with my own operation on that.
So I open it up to the entire panel on the special access
fees and the exploration of these very key areas that we need,
you not only need, but we need to operate to transmit
information.
And we have the information technology. But in the 21st
century, with these fees, I think that we are in real trouble.
We are saying, on the one hand, congratulations Congress, we
did all of this. But look what these special access fees are
doing.
So whoever would like to comment. Dr. Ford's not going to
agree with me, so the rest of you can chime in. But
congratulations, Dr. Ford. There aren't too many people that
leave a few words with me that will remain just about forever.
Mr. Meena. Yes, ma'am. I would like to try to answer that.
Any time you have two carriers that have a disproportionate
power, then the prices that you experience are going to be
prevalent. And the way to solve that is introduce, allow more
competition, or maybe a light touch of regulation. That will
stimulate those duopolistic providers to do what they need to
do. We had that same issue in the handset arena. The larger
carriers are coalescing and bringing together market power to
acquire the largest, a significant number of the most
attractive handsets, and we are not able to provide those to
our customers because of this market power that they exert. So
that is why it is so important that Congress step in and
require that companies like us can sell the handsets we want,
that other companies can get into the special access business
and do what they need to do to provide services at the rates
that are competitive.
Ms. Eshoo. Now, the chairman said something earlier, which
was a very good question, asking about the stimulus funds and
making use of them in order to, if I heard it right, to
accomplish the goal of what some of us would like to see in
policy. I think, straightaway, we need a new policy. I want the
companies to make good use of the stimulus funds. And I am
proud that we did what we did for underserved and unserved
areas, and it is a good place to start. But I don't think that
takes the place of a policy.
But anyway, I think others of you wanted to weigh in on
what I raised.
Mr. Potharlanka. If I may add something to this. In terms
of a specific example of a hospital needing access to bandwidth
is a great one. The key is to create alternatives so that these
costs go down. That is the key. Having, trying to regulate so
much from the medium to long term actually serves the purpose,
so we need to create alternatives by, you know, enabling
investment. And so our thought is, and this is what I think we,
as a company, having been doing for some time is make sure that
we invest capital where we create broadband hot spots, places
across the nation where various entities can have equal access
to bandwidth. It could be hospitals, it could be a government
facility, frankly, it could be any of the wireless carriers
which is who we focus on today. But frankly it could be anybody
else.
And I think under the stimulus problem and the BTOP
program, I think we have a unique opportunity to direct some of
those funds to creating broadband hot spots so that we get the
multiplier effect of opening broadband up to a larger community
of users and not focused on just one segment of the
marketplace.
And we also believe that, you know, approaches like this
could be expanded on an ongoing basis, much beyond the stimulus
program.
Mr. Murray. I will just add briefly that I think Mr.
Potharlanka is right. We need alternatives. But at the same
time, when we say data that show that in some places we have
got profit margins exceeding 125 percent on these services, we
have to acknowledge that there will be some places where there
will not be alternatives, whether that is rural areas, whether
that is just areas of the country that get left behind for
whatever reason. And for those areas, the question is are we
just going to orphan them?
Ms. Eshoo. Not a natural duopoly. It is hope for a lack of
that somewhere.
Mr. Schieber. And I will tell you, 96 percent of our cell
sites are served by the ILEC. 96 percent of the special access
we buy on our wire----
Ms. Eshoo. 96 percent are?
Mr. Schieber. 96 percent of the wire line special access we
pay for is paid to the ILEC.
In all honesty, in the interim and the short-term, I would
be happy with a duopoly. It is not a duopoly, it is a monopoly
today. We need to have more competition. And the broadband
stimulus funding may be an option down the road. It may be an
opportunity.
But, in all honesty, we have a short-term issue. And I
don't think that we can predict that that will necessarily
solve the special access problem. It is an operating expense
problem we have. The broadband dollars are spent on capital.
That is great. I support that. But we have an operating expense
problem in this nation with respect to special access. And it
is a monopoly right now. We have extremely difficult terms and
conditions we have to put up with with the LECS, and I support
that.
Ms. Eshoo. Thank you very much. I think you have been a
terrific panel. Thank you, Mr. Chairman, for allowing them to
answer the questions.
Mr. Boucher. Thank you very much, Ms. Eshoo.
The gentleman from Florida, Mr. Stearns, is recognized for
5 minutes.
Mr. Stearns. Thank you, Mr. Chairman. And I will probably
take a little bit different approach than the gentlelady from
California. She goes on to talk about the state of affairs that
we are in and these bottlenecks. But if you look across the
world and you see the concentration, the United States is more
competitive than almost all the other countries. Isn't that
true, Dr. Ford that, I think out of all the OEC countries, the
United States has more, I mean, we have AT&T, Verizon, Sprint
is in the mix and so is T Mobile.
So isn't it true that, contrary to what the gentlelady
said, there is, the United States has more competition than
almost any other country in the world? Is that true.
Mr. Ford. That is true.
Mr. Stearns. And Dr. Murray, I know you are talking about
these 125 percent, and that is probably access, and Sprint is
probably very aware of that. And I think Sprint makes a very
good point. You know, the other side of the evidence shows that
the market is competitive. You know, the real larger question
is, can you have a large wireless market with 12 carriers, or
is it going to come down to three or four? And I think there
seems to be some quantitative law here that, when you get this
kind of market, to have the capital to invest, and to have the
innovations required, you probably can't have 12.
So Dr. Ford, you might want to just touch on that, because
it appears to me that if we are the most competitive in the
world, there is a quantitative rule that says you have got to
have at least maybe just two or three that can carry the load.
Mr. Ford. Absolutely. I mean, we regulated the electricity
business. We regulated the telephone, local telephone business
for years because it was a natural monopoly. Only one firm
could survive. And as technology has developed, we have created
opportunities to get costs down and to have more firms. Markets
grow, costs go down, we can have more firms. So, yes, I mean,
our policy paper 21 sort of lays out the economics of what
these industries are going to look like, using formulas. I
mean, basically, there is formula to tell you what this
industry is going to look like.
Mr. Stearns. Recently, the FCC came without a report and
this is what they said. They are talking about the commercial
and mobile radio services. They said, ``the metrics indicate
that there is an effective competition in the wireless market
and demonstrate the increasingly significant role that the
wireless services play in the lives of American consumers.'' So
the FCC sort of agrees with you, Dr. Ford, and this is a recent
report this year which indicates the competition.
Notwithstanding that fact, Mr. Schieber, Mr. Upton asked
you the question about advocating increased special access
regulation. You know that U.S. Telecom indicated, sent a letter
to the FCC outlining a lot of questions; and you have seen this
report, have you?
Mr. Schieber. Yes, I have.
Mr. Stearns. OK. So they are indicating that the evidence
shows the market is competitive. You are indicating the market
isn't. So they, the incumbent phone companies submitted this
filing with the FCC listing the type of information that needs
to be collected to answer this question, which is a fundamental
question for this hearing today. Do you agree that these
questions are relevant? You obviously have read them. Do you
think they are pertinent and would provide us an answer whether
the market is competitive or not?
Mr. Schieber. I think it is very relevant to determine
whether the market is competitive. I can speak from personal
experience in managing access on a day-to-day basis,
Congressman, that it is, it is very difficult with, to find
alternatives to the incumbent LECs. You have to look at the
complete circuit that is being provided, the whole middle mile
facility. There are certain portions of the middle mile
facilities where there is more competition than the others. But
for that very last mile in the middle market facilities there
is very little competition.
Mr. Stearns. OK. So we have these questions from the
incumbents and others, and they submitted them. And you say
these questions are pertinent. By and large you agree with
these questions. And I guess a real question is, if the FCC
answered this question, could they make an objective decision
whether there is enough competition in the market?
Mr. Schieber. We believe that the FCC----
Mr. Stearns. Just a yes or no on this. On these questions
that are in here that you have read, would you say yes, these
are sufficient to answer your concern about whether there's
market competition or not?
Mr. Schieber. No, sir.
Mr. Stearns. OK. And would you also, your group and others,
provide another list of questions that you think are more
pertinent so we can solve this question from the FCC's
standpoint, because I think, as Members of Congress, this is so
difficult for us to regulate. I think the gentlelady from
California mentioned possibly we should step in. But I think
many of us are sort of, you know, trying to sort this out. And
maybe the FCC can do this instead of the government, the United
States Congress coming in and mandating this thing. So we are
trying to say, look, the U.S. Telecom has these list of
questions. You don't think they are pertinent. Do you have your
own set of questions that you and your group could submit so
that the FCC could make an objective analysis?
Mr. Schieber. We would be happy to. Congressman, as I said
earlier, we honestly believe that the FCC has all the
information necessary to make this determination. But if there
is additional information that we can provide, we would be
happy to. If there are additional questions that we think they
need to be asking, we will happy to provide those questions.
With all due respect, what we would really like is for the FCC
to act. This issue has been with them for six years.
Mr. Stearns. So the FCC, in your opinion, does not need
these questions from the U.S. Telecom association to bring
bearing and answer to this because they already have the
information.
Mr. Schieber. I think there are questions that are relevant
besides the ones that the ILECs have.
Mr. Stearns. Do you think these are self-serving then? Is
that what you are saying?
Mr. Schieber. Without question, sir.
Mr. Stearns. OK. Dr. Ford, what is your feeling? Can the
FCC determine this, based upon the information they have
without these questions?
Or you probably haven't seen these questions. But I think
many of us would just like the FCC to act. And all respect to
Sprint, they have got a good point. If the information is
there, why isn't the FCC acting?
Or are you going back on your original statement is that
there is sufficient competition that the FCC does not have to
act.
Mr. Ford. I don't know how much competition there is in
special access, and nobody knows how much competition there is
in special access. They keep doing these huge studies. The NRI
just did a study. The GAO has done studies. And every time they
come back with these studies, they say, well, the data is
really bad and we need to do something else. The FCC needs to
collect more data. The evidence, you know, I don't know, but
the evidence for regulating special access is really pathetic.
I mean, if there was a 138 percent rate of returning on special
access I wouldn't be sitting here talking to you. I would be
building a special access plant.
Mr. Stearns. Mr. Murray says it is 125 percent. Isn't that
what you said, Mr. Murray?
Mr. Ford. I mean, it is just insane. These are regulatory
books that the FCC has rejected as being relevant to this
proceeding. The FCC, they collect the data and present it to
people, and they said this is not relevant. I mean, a 138
percent rate of return? I mean, we would all be building
plants. We would be nuts not to. It just doesn't make any
sense. But that doesn't say that they don't have a point, OK?
The point is that somebody needs to get in there and do a
really serious job and get data from everybody because if there
is going to be two or three people providing service, OK, you
can't miss one. If you don't have data from one guy, you have
missed everything.
Mr. Stearns. Madam Chairman, I have asked my question. Is
there anybody else on the panel that would like to tackle this,
in addition to Dr. Ford and Mr. Schieber? Anybody else?
Mr. Murray. I guess I just want to challenge the economics
for a brief second. I will humbly do so since I am not a tenth
of the economist that Dr. Ford is. But the classic monopoly
behavior is not, hey, let's figure out how much output we can
get out there. Let's produce the maximum amount. It is quite
the opposite. Classic monopoly behavior is let's reduce output
so we can raise price on the services that we have. And, you
know, we are seeing, like, I mean, I guess would anybody deny
that in more than 90 percent of U.S. markets there is only one
choice for special access? Is anybody going to deny that fact?
Because I don't think anybody will challenge that. And that
looks like a really concentrated market to me.
Mr. Ford. Look, we have--95 percent of the people in this
country have a telephone, and it was served by a monopoly. So
restricting output is kind of silly in this business. Carriers
are required to provide service to people. OK? It is not a
choice of restricting output. And if there is an output level
that has been chosen, then the pricing is a little bit tricky,
OK? Because you are not just going to put it out there and then
not do anything with it. I mean, it is sunk. If he could make a
marginal profit, a monopolist would make a marginal profit on
it. So the argument is not correct.
Mr. Stearns. Thank you.
Ms. Eshoo. [presiding.] Too bad Judge Black isn't still
alive to come and testify.
Let's see. Just exercising the prerogative of the Chair,
which I very, very seldom have ever had, I think that just to
set something down for the record, in terms of competition and
the foreign markets have been referred to, they do regulate.
They do regulate the top. They also insist that that there is
regulation of the wholesale market. And there is a difference,
Mr. Stearns. And I think that that needs to be taken into
consideration.
I would like to recognize the gentleman from Pennsylvania,
Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you very much. As I have said before, the
debate over special access should really be called critical
access because these special access lines are critical to
broadband deployment and competition. These lines allow
America's businesses to bring innovation and development to
far-flung areas, and they allow us to stay connected to our
data and the world around us. These are not small issues with
funny names. They are our link to the broadband future, and we
can't get this one wrong.
The FCC deregulated special access in 1999, anticipating
new competition driving down prices. I probably would have
supported deregulation then. But since then, competition has
grown, then decimated with MCI and the old AT&T getting
purchased by incumbents, then grown again a little bit, but it
does not appear to have flourished.
The GAO in the Bush administration said that, where the FCC
has completely deregulated special access prices, special
access prices have gone up. NARUP commissioned a study that
concluded, ``overall, the market concentration data portray
special access as one firm such as the ILEC dominates, and
other providers, both individually and collectively, have a
small market share and little influence on price.''
The report also said that the time is ``certainly ripe for
reform.''
Now, the incumbents say that the markets are highly
competitive, and that these reports aren't relying on the right
data. I suppose I shouldn't be surprised, but these independent
analysis are interesting.
I would like to ask Mr. Schieber, Mr. Meena and Mr. Irving,
can you provide me any examples where a Bell company doesn't
hold at least 90 percent of the market?
Mr. Schieber. Sir, I can't provide any such example. As I
have already stated in my testimony, and then question and
answers here, 96 percent of our special access circuits are
with--I can't think of a single market where they don't have
more than 90 percent.
Your comments about this being critical access, as I said
in my oral testimony, it is the lifeblood of the industry. And
we, in fact, see access rates going up, as you discussed.
A specific example, we have a situation where we have had a
9-year contract with an ILEC. We had to renew that just last
week, and I had two choices. I could renew under a new plan
that was made available to me at a 28 percent increase for
those circuits, or alternatively, I could elect not to renew
under a term, volume and term plan, and I would have to pay 108
percent more than I had been paying for the last 9 years.
Mr. Doyle. Mr. Irving.
Mr. Irving. We at Cricket have been following the debate
carefully. Special access is, in fact, as has been discussed,
going to become increasingly important as we move to greater
capacity and greater data. We are, at Cricket, very interested
in seeing increasing competition in this field. But I am not
specifically aware of our own experience with middle access
providers.
Mr. Doyle. Mr. Meena, are you aware of any Bell company
that doesn't hold at least 90 percent of the market?
Mr. Meena. No, sir. I am not familiar with exactly what the
percentages are, but I do know that a free market is defined by
willing buyers----
Mr. Boucher. Pull the microphone up so everyone can hear
you because I think everything you are saying is important, and
especially so because I agree with you. So we want you right in
the microphone.
Mr. Meena. Appreciate that. Yes. I don't know specifically
what the percentages are. But I do know that a free market is
defined by willing buyers and willing sellers, not seller. And
that is what is seen to be a bottleneck for my cohorts here.
Our big issue is related to devices and roaming, and special
access doesn't matter if our customers can't get the devices
they need, can't get access to data roaming nationwide.
Mr. Doyle. Mr. Irving, in your testimony your mentioned
several proceedings pending at the FCC that deal with roaming.
Can you explain to the committee your understanding of the
roaming conditions of the Verizon Wireless Alltel merger? And
in your opinion, do you think those merger conditions have been
violated?
Mr. Irving. I do. In connection with the merger, the
wireless merger proceedings and, in fact, with all major
wireless merger proceedings in the last several years, the
issue of roaming has been raised to the FCC. And the reason it
has been raised is because mergers of major companies eliminate
one of few roaming partners that are available in the industry.
The issues with respect to Alltel and Verizon merging, roaming
came up. Verizon has a policy of carving out large geographic
areas from competitors where they prohibit roaming, and there
was concern that the elimination of an Alltel partner would
further exacerbate that problem.
So, in connection with the roaming, with the merger
proceeding, Congress, excuse me, the FCC imposed a condition
that said that small and midsize carriers who dealt with
Verizon and Alltel could choose either the Alltel agreement or
the Verizon agreement to cover their roaming traffic. Verizon
is known for having large geographic carve-outs in which they
prohibit roaming. The Alltel agreements didn't have that. And
so this merger condition insured that roaming would be
available.
Although the condition has been in place, and although the
merger has occurred, Verizon is taking the position that not
only can they use geographic carve-outs for their own markets,
but they are free to do that with Alltel markets also. So I
believe that they are violating the condition that the FCC put
in place. They are not violating it. They are making--they are
reserving the right to violate it. They are putting competitors
like Lieb in a difficult position. We have asked the FCC to
clarify and we hope the FCC will clarify rapidly.
Mr. Doyle. I see my time has expired. I thank the Chair.
Ms. Eshoo. Thank you. The gentleman from Illinois, Mr.
Shimkus, is recognized for 5 minutes.
Mr. Shimkus. Thank you Madam Chairman.
Steve, do you want to go?
OK. Thank you, Madam Chairman. Thank you for sitting in the
Chair, and you all for waiting through the votes, and I am
sorry about missing some of the testimony.
Let me just ask a simple question. Do you believe the
auction of more spectrum with fewer conditions will benefit the
consumer? Yes or no. And maybe why, if you have got a short
answer. Mr. Schieber.
Mr. Schieber. Sir, I am not a spectrum expert. I am not
sure that I am qualified to answer.
Mr. Shimkus. OK. That is fine. Mr. Irving.
Mr. Irving. Absolutely. I think the answer is yes. I was
prepared to tell the committee that spectrum was the lifeblood
of the wireless industry. Special access apparently is the
lifeblood. And spectrum also. But we would like to see
additional spectrum auctioned off with few conditions so that
small and mid size carrier can continue to compete.
Mr. Shimkus. Great.
Mr. Meena. Yes. I don't think the name of the game in our
industry is necessarily access to any kind of spectrum. Access
to low band is particularly important. When I say low band
spectrum, I mean 800 megahertz, 700 megahertz. Last year we
were able to acquire 700 megahertz spectrum that we are not
able to actually build out because of the issue related to
handsets and not having access to automatic roaming, auto data
roaming.
Mr. Shimkus. Let me ask because the question really is
about if we place additional conditions on the spectrum that we
are auctioning off, would that make it more difficult to you
and to your decision to purchase or to bid on it.
Mr. Meena. It just depends on what those special conditions
are.
Mr. Shimkus. So, if we added conditions without a
definition, that does change your parameters a little bit?
Mr. Meena. Well, let me give you an example for
specifically what you are asking.
We were hoping there would be special conditions tied into
the 700 auction that would require automatic data roaming for
those who bought, I believe it was, the C-Block spectrum last
year. That did not occur. If that special condition had been in
place--and we would have been supportive of it--we would have
been very pleased if that would have come about.
Mr. Shimkus. OK. Sir.
Mr. Potharlanka. We really were not qualified to talk about
spectrum as it relates to middle mile. Our opinion is making
more spectrum available for middle mile, I think, will create
more options, and actually targeting----
Mr. Shimkus. OK. I have limited time, so let me just go to
Mr. Murray and then to Dr. Ford.
Mr. Murray. So more spectrum would clearly benefit
consumers, but the central tragedy of the last 10 years of
policymaking, I would say, is the fact that we had the best
opportunity of a swath of spectrum coming up. Who got it? The
same two dominant carriers that were trying to create
competition----
Mr. Shimkus. But the question is: If we put restrictions on
spectrum, do you like that?
Mr. Murray. Well, you are referencing, I guess, the C-Block
openness conditions, and I see--you know, if those conditions
help the marketplace to move towards more openness and to get
more devices and more applications out there for consumers, I
think that is a net win for consumers, and I actually think----
Mr. Shimkus. But, obviously, the return on investment from
the government on some of the auctions, because of
restrictions, was less?
Mr. Murray. Well, let us remember that this is the public's
spectrum; it is actually not the government's spectrum. What is
the value of a public park, you know? Could we presumably earn
a little bit more revenue if we sold that land for the public
park? Well, sure.
Mr. Shimkus. But you also have to remember that people have
to put in a lot of capital to make that spectrum worth
anything. Otherwise, it is worth nothing.
Mr. Murray. Right. But some would actually argue the
opposite--that in some cases, by putting on certain kinds of
conditions, you may actually increase the number of bidders who
get into it.
Mr. Shimkus. Does anyone agree with that? Those of you who
cannot debate this issue, I understand that.
Mr. Irving, do you agree that adding additional conditions
will bring in more bidders or less bidders?
Mr. Irving. You know, there are conditions that could bring
in more bidders. Right now, we have--so it is hard to----
Mr. Shimkus. Does it restrict the ability of us to get a
better return on the investment of spectrum, if we view it as a
public asset, that we do so?
Mr. Irving. I am sorry. I apologize. I did not hear your
question.
Mr. Shimkus. Well, I mean, if we put in conditions, does it
inhibit our ability to raise the revenue from the bidders as we
specify what goes on there? Let me just move on to another
question because I am----
Mr. Meena. Could I take a shot at that, please?
Mr. Shimkus. No. Actually, I just need to go. I have got
about four questions, and I have only dealt with one.
So let me just go to Mr. Schieber. How would Carterphone
rules, requiring all wireless networks to support all devices,
impact your ability to manage your network?
Mr. Schieber. It would have a significant impact. I am not
a network engineer; but, you know, we are very cognizant of
managing traffic to ensure that all of our customers have equal
access to our network, and putting other devices----
Mr. Shimkus. And let me just, if I may, Madam Chair, finish
with this: Would service quality be affected?
Mr. Schieber. It very well could be. Yes, sir.
Mr. Shimkus. Thank you, Madam Chair.
Ms. Eshoo. [presiding.] Thank you, Mr. Shimkus.
The gentleman from California, Mr. McNerney, is recognized
for 5 minutes.
Mr. McNerney. Thank you, Madam Chair.
I want to thank the panel for your testimony this morning.
I have learned a lot, and I find it especially helpful,
especially regarding special access and backhaul. I know it is
not easy to testify, so I appreciate your coming up here.
I would like to see a competitive marketplace in which the
little guy has a chance to become a big guy, and that is kind
of what we are talking about here. I particularly liked your
comments, Mr. Murray, that it is not necessarily about
overregulating but that we need to use our oversight authority
to haul noncompetitive players in here and to make them explain
themselves in front of us. That is something that I hope the
committee can follow up with.
My first question goes to you, Mr. Murray, and to you, Dr.
Ford. I definitely appreciate your economic perspective on
this, but there are a few large telecom players that dominate
the field, especially regarding the spectrum, while several
smaller companies are clawing it out for the scraps, for the
crumbs.
How do you propose to run the next auction so that it is
more competitive for the little guys to get a part of it?
Mr. Murray, could you take that first?
Mr. Murray. I think, frankly, we just need to look at rules
that perhaps have a filter which looks at dominant carriers. If
you have already got a ton of spectrum, if you are already
massively dominant in the industry, you know, it is possible
that we should consider a spectrum block, which is a
competitive spectrum block.
Mr. McNerney. So, by its very nature, that would get more
people to bid if you were blocking?
Mr. Murray. Exactly.
Mr. McNerney. Dr. Ford.
Mr. Ford. You can hope for some things that you can never
have, and this industry is very costly to be in, and you can
try to force somebody in it, but that does not mean they are
going to survive, OK? They are going to have to spend billions
of dollars every year to keep that network running. If they
cannot generate the business, then all you are doing is waiting
for some bigger guy to gobble him up, and you have created a
massive inefficiency, OK?
What we have to have in this industry is a dramatic rise in
either the market size--the expenditures, and maybe broadband
will help with that--or a significant reduction in the cost of
the network. I have not seen either of those really happen.
I mean we are really at the point now where we are about to
lose possibly another wireless carrier, and it is not because
of some malfeasance or government incompetence in regulating
the industry. It is just that it is too competitive for four or
five people. It is just too competitive. It is just the nature
of the business, man.
Mr. McNerney. Like Ms. Eshoo, I have trouble stomaching
that geez, we need to let the bigger players get bigger so that
they can spend the money they need to spend.
Mr. Ford. Well, you are going to have to subsidize them----
Mr. McNerney. From the market.
Mr. Ford. That is the only choice because they are going to
lose money. If you have five of them beating their brains out,
they are going to lose money. They have a debt to pay when they
build that network. They have to have revenue to cover that
cost. That is the only point, right? That is the only point.
The costs are exceedingly high in this business.
Mr. McNerney. I have a technical question. I want to move
on to a technical question.
Mr. Murray. California alone is the ninth largest economy
in the world. Are we seriously suggesting that that cannot
support an independent, strong carrier? I think Leap is a
testament to that is just not true. If it were so damned
competitive, why is that its profit margins keep creeping up in
the midst of a recession? We have got these guys making
gangbuster profits in the midst of a time when the rest of the
country is really struggling it out.
That, to me, says market power. We have got evidence of
market power left to right in this industry. We have got
anticompetitive behavior, blocking applications. You cannot
get, you know, exclusive contracts on handsets.You know, you
cannot get special access. What more evidence do we need that
this market needs some oversight?
Mr. McNerney. Thank you. I would like to move on to a
technical question, actually.
Mr. Schieber, you said you are not a technical person
regarding the spectrum, but you are about to make massive
investments in G4, I understand; is that correct?
Mr. Schieber. I am sorry. G4?
Mr. McNerney. Yes.
Mr. Schieber. Oh, 4G.
Mr. McNerney. Oh, 4G. Excuse me.
Mr. Schieber. I am sorry. Yes. Yes.
Mr. McNerney. I am a little dyslexic.
Mr. Schieber. Through a company, Clearwire, that we own a
portion of, yes.
Mr. McNerney. So is there a problem with 4G in regard to
the interference between neighboring portions of the spectrum?
Mr. Schieber. In all honesty, I believe anytime that you
have spectrum that butts up against itself, that you always run
the risk that there is some sort of interference. I know that
it is something that our engineers deal with on a regular
basis.
Mr. McNerney. Is that a particular problem? I mean 4G has a
tremendous amount of bandwidth and content. There must be some
spillover that exceeds that of prior generations of technology.
Mr. Schieber. I have not heard anything that indicates that
the engineers cannot manage the spectrum appropriately to
ensure that there is not interference.
Mr. McNerney. Does anyone else on the panel have a comment
on that question?
Mr. Meena. I think Mr. Schieber is right.
You have that in any spectrum band. You could have bleed-
over and interference if it is not managed properly. I do not
know of any special situations with 4G other than incumbent
broadcast TV stations at the 700-megahertz level that there
might be some interference with when companies like ourselves
offer 4G services at the 700-megahertz band.
Mr. McNerney. OK. Thank you. My time has expired.
Ms. Eshoo. All right. Thank you, Mr. McNerney.
The Chair recognizes the gentleman from Oregon, Mr. Walden,
for 5 minutes.
Mr. Walden. Thank you, Madam Chair. I appreciate that.
Mr. Schieber, my understanding is that more than half of
all the backhaul in Europe and in Asia is wireless. If wireless
backhaul is successful elsewhere, why doesn't Sprint use it
more comprehensively in the U.S. given your partial ownership
of Clearwire? What is the issue behind that?
Mr. Schieber. The majority of the cell sites where we do
have an alternative vendor is, in fact, a wireless backhaul. It
is technology that we are seeing an increasing amount of. I
mentioned earlier that we work with FiberTower to bring
wireless backhaul to our own cell sites.
One of the single biggest issues that we are faced with in
migrating to wireless backhaul or to any other alternative
access vendor is the fact that we are subject to very onerous
terms and conditions associated with the special access and the
middle mile facilities we buy from the ILEC today. We have
situations where if we buy too much we are penalized; where if
we buy too little, we are penalized. If we want to migrate a
circuit from the ILEC to an alternative vendor, we have to pay
in excess of $900 in some cases. It is very, very difficult and
very onerous to move, and so we have to be very cautious to
avoid incurring termination liabilities.
Unfortunately, we were forced to sign up for those
contracts because, without signing up for those contracts, we
would have had to have paid even higher rates above and beyond
what we are paying today, which, as we heard today, we are
already seeing exorbitant rates of return on special access and
ILECs.
Mr. Walden. So it is not because T1 lines are so cheap?
Mr. Schieber. No, sir, T1 lines are not cheap. One-third of
our operating costs associated with operating a cell site are
for T1s and for the middle mile facilities.
Mr. Walden. OK. Because your CTO, Barry West--I guess in
2008--made some comment about that, that T lines are cheap and
that that is part of the reason, so I was just wondering.
Mr. Schieber. In certain parts of the country--in very
dense, urban areas--if there is a relatively short distance
between a cell site and a LEC central office, you may very well
see some less expensive T1s, but it is not a cheap technology
for us to buy.
Mr. Walden. OK. Dr. Ford, you were making some comments
about just the extraordinary cost of whoever is building this
out over time and about the need to get return on that. Mr.
Murray, I think, had a little different perspective on that in
terms of--I think your line was ``the gangbuster profits right
now.''
I am curious, Dr. Ford, if you want to respond to that.
Mr. Ford. Well, I mean I do not see any evidence of
gangbuster profits. I mean, you know, you could say, well,
there are gangbuster profits in special access. Well, I thought
we were talking about the wireless industry. There are four or
five wireless carriers in California. I mean there is enough
market in places for that to exist, and there are areas--we
heard earlier from members of the subcommittee--where they do
not have enough wireless, right? They are rural areas where the
markets are very small but where the cost of deploying the
network is not that much different or is even higher in rural
areas. So the economics drives this thing. I mean you cannot
just say, ``I want more competition.'' The economics are going
to tell you whether or not you can have what you want.
So, you know, firm profits are the only reasonable measure
of how competitive the business is, because any given product
may be above cost or any given product may be below cost. So it
is across the whole scheme of the business venture from which
you have to measure the competitiveness or the profitability of
the business.
Mr. Walden. I will tell you that it seems like this
Congress and administration certainly have an attitude of
nationalizing everything, once it is broke. So I hope we do not
create something else to go after.
I think I read in some testimony that 99 percent of America
has access to cellular coverage right now. I must be the
winner, then, of that 1 percent, because up until a year ago,
at least two county seats--well, at least one that I know of
for sure--in my district did not have cellphone coverage. U.S.
Cellular came in there, and I know they are considering another
town in my district. There are still lots of these rural areas
where we do not even have one carrier.
It would not be fair, Mr. Murray, if I did not let you
respond now to what Dr. Ford said.
Mr. Murray. There is a lot to respond to there, sir.
One thing I would say is I do not see this at all as moving
away from a market economy. In fact, this is quite the
opposite. This is, how can we maintain free markets? How can we
maintain competition? That is what I am saying.
My perspective has always been that I prefer competition to
regulation, and in this market, while we do have some
competition, there are really clear indicators that they are a
market power. You know, the Department of Justice uses things
like four firm concentration ratios, like HHI indices. The fact
of the matter is those numbers have been creeping steadily up
in this industry, and to complement that consolidation trend we
see evidence of abuse.
So all I am saying is in order so that we can have a free
market and have these companies stay strong and thrive, what we
need to do is make sure that the dominant carriers are not
abusing their market power. This has been the story of
competition for more than a century.
Mr. Walden. Mr. Irving, do you want to respond?
Mr. Irving. Yes. Very quickly, I would just like to point
out that, I think, small and medium carriers help make the
industry vibrant, innovative and competitive.
What I would like to see is--I would like to make sure, to
the extent that there are forces essentially tending toward
elimination or toward the marginalization of small and medium
carriers, that we act to address those forces so that we can
continue to be innovative driving forces in the industry.
Mr. Walden. All right. Thank you.
Thank you, Madam Chair, for your indulgence on the time.
Ms. Eshoo. I thank the gentleman who is always so
thoughtful and well-prepared.
Dr. Ford, you talked about California. You mentioned this.
I want to set something down for the record here.
Now, according to the GAO report on special access, in
Silicon Valley--most specifically in San Jose, California,
perhaps the most data-hungry area of the world--competitors
have access to only 6.2 percent of all buildings. To put it
another way, the incumbent provider, AT&T, is the only provider
of access in 93.8 percent of all buildings. So, if you think
that is competitive, I will eat my hat. This is so worthwhile
to drill down into this, but I just wanted to get that on the
record.
Mr. Ford. Is that a question?
Ms. Eshoo. No.
I am going to recognize now the gentleman from Indiana, Mr.
Buyer, for 7 minutes.
Mr. Buyer. Actually, I have to go back, Mr. Meena, and look
at your testimony again.
Your word ``duopoly'' has sort of stuck in my mind, and so
I was trying to think of other industries in our country that
have that type of system. I was thinking about the tire
industry, perhaps. There are industries out there that have
really dominant players. You might want to call them
``duopolies,'' but they really are not. So you have got Coke
and Pepsi, right? Then there are a whole bunch of others.
Mr. Meena. Right.
Mr. Buyer. That is exactly what you have here, too. I don't
know, I don't want to be a lawyer and be nitpicking at your
testimony here.
Mr. Meena. Well, I do not agree with that.
Mr. Buyer. You can't say ``duopoly'' and then can't count,
OK? So whoever wrote that for you can't count. So don't call it
a ``duopoly.'' That is the only point I would like to make. It
is an easy thing to----
Mr. Meena. I would like an opportunity to respond.
Mr. Buyer. Fine. It is an easy thing to throw out there. I
am just being very cautious to you.
Sure, go ahead.
Mr. Meena. Yes. Well, what I am saying is that when I was
in college, I walked out to play football at Ole Miss. There
were two scholarship quarterbacks and five walk-ons. Were there
really seven quarterbacks or two?
Mr. Buyer. Seven.
Mr. Meena. No. I tell you, there were two because there
were only two who got to go to the scrimmages and two who got
to put the game jerseys on and those types of things. Yes, you
could count one, two, three, four, five, six, and seven.
Mr. Buyer. Oh, I see. So the other five did not make the
other two better players?
Mr. Meena. No, sir. Here is why. Here is the example.
Mr. Buyer. Where did you go to school?
Mr. Meena. I went to the University of Mississippi, but let
me finish, please, sir.
The two who are duopolistic in our industry have built
their companies on low-band spectrum--850 megahertz--and they
have put together licenses throughout the Nation on the most
attractive beachfront property spectrum. When the auctions
occurred last year and when more of that low-band spectrum was
let, or was auctioned, they were able to acquire more and more
of that. That allowed them to continue to build their
businesses on the best spectrum possible in the wireless
industry. That is the best advantage they have.
Mr. Buyer. Let me reclaim my time, then, because I am
getting a sense that you would believe that all wireless
carriers should have equal access to precisely the same type of
wireless headset regardless of who made it.
Is that what you believe?
Mr. Meena. What is that?
Mr. Buyer. Is that what you believe?
Mr. Meena. I do believe that every wireless user should
have----
Mr. Buyer. I am trying to figure out what you believe.
Mr. Meena. OK.
Mr. Buyer. Then, if that is the belief and if you are
asking us to adopt that belief, where is the incentive to
collaborate and to innovate and to create differentiating
products?
Mr. Meena. I will tell you where the incentive is. It is in
competition. These manufacturers want to sell every device they
possibly can. For example, the iPhone. The iPhone today is
limited to just selling to AT&T customers. Manufacturers desire
to sell their products just like we desire to sell our
products.
Mr. Buyer. Well, if in fact we had a paradigm--actually,
strike the word ``paradigm.''
If we had a predicate of your belief, where is the
incentive for someone to adjoin and to put at-risk capital into
the marketplace to create anew? That is the iPhone. So, when
you have someone who actually wants to innovate and to do
something new and different and to create something new and
different, it excites the consumer, and then everybody goes
chasing after the mark.
Mr. Meena. Sure. All smartphones----
Mr. Buyer. Would you agree with that?
Mr. Meena. I do agree with that, and I can even add onto
that.
Mr. Buyer. Well then, if you agree to that, explain to me
how that is congruent to your predicate?
Mr. Meena. Here is how it is congruent. All users want
access to the latest and greatest devices, especially
smartphones, this day. We are seeing a great migration from the
plain old cellular phones to smartphones, including iPhones.
BlackBerries are another example of that.
Our average revenue per user in smartphones is $10 less
than other companies' average revenue per user. If you have one
company that has one device, they do not have that opportunity
to take advantage of the price differential that we might offer
and that others might offer.
Mr. Buyer. You know, I could use your same analogy in the
pharmaceutical market. We deal with these exclusivity
arrangements. When someone goes to the marketplace and they
take the risk--meaning they are willing to also accept the loss
of the marketplace--and when they have a blockbuster drug or
when they have a blockbuster product, then everyone dives for
the product. They want access to it, and they demand their
access, and then they demand their subjective belief under an
objective standard called ``fairness,'' and they want us or the
FCC to determine it.
Mr. Meena. OK.
Mr. Buyer. The reality is that--I suppose King Solomon, so
long ago, said: When it comes to human vice--in particular,
greed--that there is nothing new under the sun.
Now, let us be pretty doggone honest with each other. That
is what this is about. It is about money. It is about how we
gain access to that dollar. We want to chase it. We want to
benefit from somebody else's investment. So would we be just as
equally willing to pay for their loss for products that do not
make it on the market? The answer is no. That is the reality.
The answer is no.
Mr. Meena. Let me tell you----
Mr. Buyer. So let me--no. Time out. I understand your
predicate. Respectfully, I disagree with your philosophy. I
want to protect the marketplace is what I want to protect.
So as you look out there and you say, OK, not only does
AT&T have an exclusivity with the iPhone, Sprint with the Palm
Pre, Verizon with the BlackBerry Storm, T-Mobile now hooking up
in an agreement with Google, but if these companies want to do
this and if they are creating products which consumers like and
they are new and innovative, I think it is pretty healthy, that
is what I look at. I think of it as something that is very
healthy.
I want to ask this question to--let me turn to Dr. Ford.
Help me here.
If Congress were to say that we would ban exclusivity--do a
prohibition of exclusivity agreements--what would be the impact
upon innovation and true competitiveness in the marketplace?
Mr. Ford. The wireless industry--a lot of the competition
in the wireless industry occurs in the device. I mean most of
the commercials you see on television are talking about the
device. So the device is a very important component of
competition in that industry. Plus, they are giving it to you a
lot of times, and they are giving it to you for a very low
price, so that is a very important piece. They want to be able
to differentiate in that piece to attract business.
Necessity is the mother of invention. When AT&T came out
with the iPhone, every single manufacturer was working
exceedingly hard to try to match the quality of that product.
And Apple drove this. It wasn't the wireless industry, OK? This
was Apple's decision. Whether or not that was a wise decision
for Apple, I don't know. You could go either way. AT&T had to
upgrade its network significantly to handle that in terms that
maybe they didn't put in as much investment as they needed to,
given the enormous demands that that device puts on the
network. I think, unquestionably in this industry, if you
prohibit that kind of arrangement, you are going to reduce
competition.
I think their points may be a little different in the sense
that I am out here in this rural area, and I am not really
competing in that space.
You know, I do not think that--I mean, there is the issue
also of whether or not a carrier would say, I am going to make
a device for you, if you can't sell 5 million of them. It may
not be efficient for the manufacturer to sell to very small
firms, so it might not necessarily be an issue with the big
carriers in trying to keep other people from their goodies.
Mr. Murray. Congressman, if I may----
Mr. Buyer. I only have one comment. My time has expired. So
if the Chair would indulge me, I would note that, out of the
Organization of Economic Cooperation and Development, of all of
the countries, the United States has the most minutes of use,
the lowest revenue per minute and the least concentrated market
of, and, what I would say, the most efficient use of spectrum
of any of the countries.
Mr. Murray. And consumers pay more in this country than in
any other country, right?
Mr. Buyer. Geez. If we use more, we pay more. Hello. Hello.
Mr. Ford. Thank you.
Mr. Murray. Sir, here is my question for you.
Mr. Buyer. If you want the best and if you get the most
efficient use out of the spectrum and if you use it a lot, you
are going to pay more. It is a free market enterprise system.
Mr. Murray. And that is why we are all moving towards
unlimited----
Mr. Buyer. Wow.
Ms. Eshoo. Wow. This really did something for the volume. I
have a bill on advertising volume----
Mr. Ford. I am all for that.
Ms. Eshoo. --that blows people out of the room.
Thank you, Mr. Buyer.
I just want to make a comment about what is tied to what.
We have many successful companies in the country that really
are not tied to other services. TiVo? How many people in the
room use TiVo? How about IMAX? Slingbox? Xbox?
So the notion that there has to be a nexus between the two
is something I do not necessarily buy into, and we have got
some very good examples of that.
Mr. Murray, you started to say something, and I would like
to give you time to answer and anyone else who is on the panel.
There is not any other member to call on, so we have got a few
minutes here, and then we will adjourn.
Mr. Murray. Briefly, I wanted to address Mr. Buyer's point,
which was that the network is not the innovator here. It is the
handset company who is doing the innovation. I challenge the
premise--that is, a free market--that we are going to maximize
returns to that handset manufacturer by telling them to limit
the universe of people with whom you can contract. That is just
fundamentally wrong.
If we want to maximize the incentive for people to build
sexy new devices, let them sell it to everybody. The only
reason that manufacturers have not come out against these
exclusive deals is because they are scared of the retribution
that they will get back from the carriers. The carriers are not
innovating here; it is the handset manufacturers. It is just
wrong if we say we are going to maximize their incentives by
limiting the universe of people that they can sell to.
Mr. Buyer. Were they working together?
Ms. Eshoo. Well, the gentleman has not been recognized.
Mr. Meena. Most of the innovation is coming from the
manufacturers. Most of it is coming from the manufacturers.
Ms. Eshoo. Does anyone else want to chime in on this?
Mr. Meena. Can I speak to the pharmaceutical issue?
Ms. Eshoo. Quickly.
Mr. Meena. In a rural area, what if there were just one--
let us just say there was a Walgreens and not a CVS, and that
CVS had access to a lifesaving drug. Is it not fair for those
who live in the rural area to have access to that lifesaving
drug? That is what we are dealing with here. Is it not fair
that those who live in rural areas do not have access to the
latest and greatest devices?
Ms. Eshoo. Well, I think that today's hearing has been
highly instructive and that there obviously are divergent views
on the committee, but I think that we have not just skirted
along the surface but that we have really dipped our wings into
the important issues here. I think the area of special access
is something that deserves a great deal of attention, not only
by the Congress but by the FCC.
I hope again that the new composition of the FCC will come
together soon. There is an enormous amount of work to be done
there and some very clear thinking about what the state of
competition is in the United States of America. We are all for
competition. I mean it is in the DNA of every American, but--
well, I will not editorialize that.
So I want to thank the audience. You have been a patient
one. I do not know if we have so mesmerized you by the great
content of the hearing or if you are employed by some of the
interests here; but whatever, it is nice to see that the room
remained full.
I want to ask for unanimous consent to keep the record open
for 10 days for members to submit their opening statements and
follow-up questions.
Ms. Eshoo. Also, not the Acting Chairwoman, but the
Chairman has also included AT&T and Verizon to submit
statements for the record, which I find very interesting, but
that is what he would like to do. They did not testify today,
but they are going to be allowed to submit statements for the
record.
[The information appears at the conclusion of the hearing.]
Ms. Eshoo. So that is the unanimous consent request. Not
hearing any objections, so be the order. And the subcommittee
will now adjourn. Thank you, everyone.
[Whereupon, at 12:55 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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