[House Hearing, 114 Congress] [From the U.S. Government Publishing Office] FCC REAUTHORIZATION: OVERSIGHT OF THE COMMISSION ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTEENTH CONGRESS FIRST SESSION __________ MARCH 19, 2015 __________ Serial No. 114-24 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Printed for the use of the Committee on Energy and Commerce energycommerce.house.gov ______ U.S. GOVERNMENT PUBLISHING OFFICE 95-817 WASHINGTON : 2016 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON ENERGY AND COMMERCE FRED UPTON, Michigan Chairman JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey Chairman Emeritus Ranking Member ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois JOHN SHIMKUS, Illinois ANNA G. ESHOO, California JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York GREG WALDEN, Oregon GENE GREEN, Texas TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado MICHAEL C. BURGESS, Texas LOIS CAPPS, California MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania Vice Chairman JANICE D. SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio DORIS O. MATSUI, California CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland LEONARD LANCE, New Jersey JERRY McNERNEY, California BRETT GUTHRIE, Kentucky PETER WELCH, Vermont PETE OLSON, Texas BEN RAY LUJAN, New Mexico DAVID B. McKINLEY, West Virginia PAUL TONKO, New York MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon BILL JOHNSON, Missouri JOSEPH P. KENNEDY, III, BILLY LONG, Missouri Massachusetts RENEE L. ELLMERS, North Carolina TONY CARDENAS, California LARRY BUCSHON, Indiana BILL FLORES, Texas SUSAN W. BROOKS, Indiana MARKWAYNE MULLIN, Oklahoma RICHARD HUDSON, North Carolina CHRIS COLLINS, New York KEVIN CRAMER, North Dakota Subcommittee on Communications and Technology GREG WALDEN, Oregon Chairman ROBERT E. LATTA, Ohio ANNA G. ESHOO, California Vice Chairman Ranking Member JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania MARSHA BLACKBURN, Tennessee PETER WELCH, Vermont STEVE SCALISE, Louisiana JOHN A. YARMUTH, Kentucky LEONARD LANCE, New Jersey YVETTE D. CLARKE, New York BRETT GUTHRIE, Kentucky DAVID LOEBSACK, Iowa PETE OLSON, Texas BOBBY L. RUSH, Illinois MIKE POMPEO, Kansas DIANA DeGETTE, Colorado ADAM KINZINGER, Illinois G.K. BUTTERFIELD, North Carolina GUS M. BILIRAKIS, Florida DORIS O. MATSUI, California BILL JOHNSON, Missouri JERRY McNERNEY, California BILLY LONG, Missouri BEN RAY LUJAN, New Mexico RENEE L. ELLMERS, North Carolina FRANK PALLONE, Jr., New Jersey (ex CHRIS COLLINS, New York officio) KEVIN CRAMER, North Dakota JOE BARTON, Texas FRED UPTON, Michigan (ex officio) C O N T E N T S ---------- Page Hon. Greg Walden, a Representative in Congress from the State of Oregon, opening statement...................................... 2 Prepared statement........................................... 4 Hon. Fred Upton, a Representative in Congress from the State of Michigan, prepared statement................................... 115 Witnesses Tom Wheeler, Chairman, Federal Communications Commission......... 27 Prepared statement........................................... 30 Answers to submitted questions............................... 122 Mignon Clyburn, Commissioner, Federal Communications Commission.. 44 Prepared statement........................................... 46 Answers to submitted questions............................... 146 Jessica Rosenworcel, Commissioner, Federal Communications Commission..................................................... 54 Prepared statement........................................... 56 Answers to submitted questions............................... 153 Ajit Pai, Commissioner, Federal Communications Commission........ 60 Prepared statement........................................... 62 Answers to submitted questions............................... 159 Michael O'Rielly, Commissioner, Federal Communications Commission 75 Prepared statement........................................... 77 Answers to submitted questions............................... 164 Submitted Material H.R. --------.................................................... 5 Statement of various racial justice and civil rights organizations, submitted by Ms. Eshoo.......................... 116 Statement of the Public Interest Spectrum Coalition and other nonprofit groups, submitted by Mr. Doyle....................... 118 FCC REAUTHORIZATION: OVERSIGHT OF THE COMMISSION ---------- THURSDAY, MARCH 19, 2015 House of Representatives, Subcommittee on Communications and Technology, Committee on Energy and Commerce, Washington, DC. The subcommittee met, pursuant to call, at 11:02 a.m., in room 2123 of the Rayburn House Office Building, Hon. Greg Walden (chairman of the subcommittee) presiding. Members present: Representatives Walden, Latta, Shimkus, Blackburn, Scalise, Lance, Guthrie, Olson, Pompeo, Kinzinger, Bilirakis, Johnson, Long, Collins, Cramer, Barton, Eshoo, Doyle, Clarke, Loebsack, Rush, Butterfield, Matsui, McNerney, Lujan, Cardenas, and Pallone (ex officio). Staff present: Gary Andres, Staff Director; Ray Baum, Senior Policy Advisor for Communications and Technology; Sean Bonyun, Communications Director; Leighton Brown, Press Assistant; Karen Christian, General Counsel; Andy Duberstein, Deputy Press Secretary; Gene Fullano, Detailee, Telecom; Kelsey Guyselman, Counsel, Telecom; Peter Kielty, Deputy General Counsel; Grace Koh, Counsel, Telecom; David Redl, Counsel, Telecom; Charlotte Savercool, Legislative Clerk; Jeff Carroll, Democratic Staff Director; David Goldman, Democratic Chief Counsel, Communications and Technology; Margaret McCarthy, Democratic Professional Staff Member; Tim Robinson, Democratic Chief Counsel; and Ryan Skukowski, Democratic Policy Analyst. Mr. Walden. If everyone could take their seats. And while they are, before we start the clock, as many of you know, I am going to exert a little Chairman's prerogative here, because Mr. Wheeler and I have not always gotten along. And I have my opening statement here, but I am just sick and tired of your third string approach to winning, and the way you are willing to tackle and run over the top of people, and score points just for scoring points. Now, now that the U of O/OU game is over in the national football championship, I want everybody to know I have kept my promise and worn the Ohio State tie. So---- Mr. Wheeler. Mr. Chairman, I---- Mr. Walden. No, you are out of order. Mr. Wheeler. I hope we---- Mr. Walden. I am just going to say that right now. Mute the mics--nothing. Mr. Wheeler. I hope we are on the record, because I just want to say two things. Number one, you are an honorable man, and---- Mr. Walden. Thank you. Mr. Wheeler [continuing]. You had the wrong side, and we were pleased to beat you with our backup to the backup quarterback. Mr. Walden. You think this is going to go better for you? Mr. Wheeler. But I do think that the color is very becoming on you. Mr. Walden. Now, just so you know, I have now fulfilled my bet that I would wear the Ohio State tie if they beat my Ducks, and vice versa. I also want you to know there is a pending matter to be settled. I did offer up dates for lunch, which I will buy, and I suggested February 26 might have been a wonderful day for the Chairman to have lunch with me. He suggested he had other matters to attend to. All right. Enough of fun and frivolity. Thank you all for being here, and I thank our FCC Commissioners for being here, and my colleagues. I know this is a ``go away day'', and we will probably interrupt it by votes, so we will try and move through this. But this is really important business we are going to take up, as we always do in this committee, and so on to the serious matters. OPENING STATEMENT OF HON. GREG WALDEN Mr. Walden. It was just over 2 weeks ago that we had the Commission's managing director present us with his rationale for the largest budget request in history for the Federal Communications Commission. We were able to discuss with him whether the funding levels requested would actually yield an effective and credible agency. Today we have the opportunity to ask the Commissioners themselves whether this agency is functioning as it should, whether it is producing the high caliber policymaking that American society requires and deserves, and I, for one, have to confess, I am skeptical. I think I have a good reason for my skepticism. The Federal Communications Commission was once a transparent, predictable agency, presiding with a light touch over an explosion of mobile and Internet investment and innovation that has greatly benefitted consumers. Today that agency, in my opinion, has evolved into a place where statutory obligations are left to languish in favor of scoring points. The agency's capitulation to the President's demands comes at the end of a proceeding mired in what I say is procedural failures, and the White House's behind the scenes influence on the FCC's process has been well documented by credible news sources, including the Wall Street Journal, through e-mails from Senator Reid's office last May as well. It is the responsibility of an expert independent agency to issue detailed notice to the public when it intends to act, and to apply its expertise to resolve the hard questions of law and policy. This process should be transparent, and every effort should be made to resist calls to politicize the outcome. Perhaps in this respect, the FCC should learn a thing or two from the Federal Trade Commission, an agency the FCC rendered moot in protecting ISP consumers. A properly functioning commission doesn't work behind closed doors with the President to bypass the administrative process, and a properly functioning commission doesn't make decisions based on the number of click and bait e-mails that interest groups can generate. A properly functioning commission focuses on law and facts to generate thoughtful and legally sound analysis, rather than being carried away by politically generated populous furor. The Open Internet proceeding is not the only place where the FCC seems to have abandoned good process. I am also concerned about the use of delegated authority. Commissioners have the responsibility for dealing with matters that are controversial or make new policy, and should not simply delegate a decision to bury the result. I am concerned that transparency has suffered between the Commissioners. Lack of agreement should not mean that decisional documents are kept from other Commissioners until the 11th hour. And I am concerned that an excessive number practical proceedings remain unresolved, and thousands of businesses wait in the wings while the Commission focuses on extending its regulatory reach. But mostly I am concerned that the FCC has overstepped its jurisdiction too regularly, net neutrality, the obvious example here, but there are others. An agency only has the authority given to it by statute, and I can't see how any reading of the Communications Act would give the impression that Congress granted the FCC authority to be the ultimate arbiter of the use of personal information. I cannot see how the Telecommunications Act could be read to gut the 10th Amendment, place the FCC in the position of deciding how states can spend their tax dollars. I cannot see how the FCC could possibly interpret its governing statutes to wrest control of content from the creators and mandate its presentation on the Internet. But for the fact that I only have 5 minutes for my statement, we could keep going. A bidding credit waiver for grain management, government researchers in newsrooms adopting trouble damages without notice, excessive and unfunded merger conditions, last minute data dumps into the record. The FCC appears to believe it is authorized to take the Potter Stewart approach to its authority. I know it when I see it. To be fair, some of the responsibility lies right here in Congress. We have not updated the Communications Act for decades, and technology has out-evolved its regulatory framework. The FCC does not have the tools to do its job, but this doesn't mean the agency should distort or ignore the current law, or worse, threaten to manufacture authority out of whole cloth, should regulated industries have the temerity to resist the Commission's demands. Instead it should work with Congress. We have offered a way forward on net neutrality that is more certain, and less costly for society, and it is not clear to me that the objections to our legislation are based on policy. But if we could work together on fixing the net neutrality situation, I think we would be able to chalk up a victory for all of us, and for all our consumers, and for the American economy. So it starts today with trying to fix the agency itself. It is our job to do our due diligence and reauthorize this agency for the first time since 1995. I thank our Commissioners, and Chairman Wheeler, for their attendance today, and I look forward to our productive session ahead. [The prepared statement of Mr. Walden follows:] Prepared statement of Hon. Greg Walden It was just over 2 weeks ago that we had the commission's Managing Director present us with his rationale for the largest budget request in history for the FCC. We were able to discuss with him whether the funding levels requested would actually yield an effective and credible agency. Today we have the opportunity to ask the Commissioners themselves whether this agency is functioning as it should--whether it is producing the high-caliber policymaking that the American society requires and deserves. I, for one, am skeptical that this is the case. I think I have good reason for my skepticism. The Federal Communications Commission was once a transparent and predictable agency presiding with a light-touch over an explosion of mobile and Internet investment and innovation that has greatly benefited consumers. Today that agency has devolved into a place where statutory obligations are left to languish in favor of scoring political points. The agency's capitulation to the president's demands comes at the end of a proceeding mired in procedural failures and the White House's behind-the-scenes influence on the FCC's process has been well documented by the Wall Street Journal and through emails from Senator Harry Reid's office last May. It is the responsibility of an expert independent agency to issue detailed notice to the public when it intends to act and to apply its expertise to resolve the hard questions of law and policy. This process should be transparent and every effort should be made to resist calls to politicize the outcome. Perhaps in this respect the FCC could learn something from the Federal Trade Commission--an agency the FCC recently rendered moot in protecting ISP customers. A properly functioning commission doesn't work behind closed doors with the president to bypass the administrative process and a properly functioning commission doesn't make decisions based on the number of click-bait emails that interest groups can generate. A properly functioning commission focuses on law and facts to generate thoughtful and legally sound analysis rather than being carried away by politically generated populist furor. The Open Internet proceeding is not the only place where the FCC seems to have abandoned good process. I'm also concerned about the use of delegated authority. Commissioners have the responsibility for dealing with matters that are controversial or make new policy and should not simply delegate a decision to bury the result. I am concerned that transparency has suffered between the Commissioners; a lack of agreement should not mean that decisional documents are kept from other Commissioners until the eleventh hour. And I'm concerned that an excessive number of practical proceedings remain unresolved--and thousands of businesses wait in the wings-- while the commission focuses on extending its regulatory reach. But mostly, I'm concerned that the FCC oversteps its jurisdiction too regularly. Net neutrality is the obvious example here, but there are others. An agency only has the authority given to it by statute, and I cannot see how any reading of the Communications Act would give the impression that Congress granted the FCC authority to be the ultimate arbiter of the use of personal information; I cannot see how the Telecommunications Act could be read to gut the 10th Amendment and place the FCC in the position of deciding how states can spend tax dollars; and I cannot see how the FCC could possibly interpret its governing statutes to wrest control of content from the creators and mandate its presentation on the Internet. But for the fact that I only have 5 minutes for my statement, we could keep doing this all day. A bidding credit waiver for Grain Management; government researchers in newsrooms; adopting treble damages without notice; excessive and unfounded merger conditions; and last minute data dumps into the record. The FCC appears to believe that it is authorized to take the Potter Stewart approach to its authority: ``I know it when I see it.'' To be fair, some of the responsibility here lies with Congress. We haven't updated the Communications Act for decades, and technology has out-evolved its regulatory framework. The FCC doesn't have the tools to do its job. But this doesn't mean that the agency should distort or ignore the current law or worse threaten to manufacture authority in whole cloth should regulated industries have the temerity to resist the commission's demands. Instead, it should work with Congress. We have offered a way forward on net neutrality that is more certain and less costly for society, and it's not clear to me that the objections to our legislation are based on policy. But if we could work together on fixing the net neutrality situation, I think we would be able chalk up a victory for all of us, for all consumers, and for the American economy. It starts today with trying to fix the agency itself. [H.R. -------- follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Walden. I would yield the remaining 30 seconds to the vice chair, Mr. Latta. Mr. Latta. Well, thank you, Mr. Chairman, and I appreciate you for yielding, and holding today's hearing. I thank the Commissioners for being here. The success and productivity of the communications and technology industry never ceases to amaze me, as it has been, and is a constant bright spot in our economy as it rapidly advances and evolves to meet consumer demands. Given the FCC's integral role in the marketplace, it is critical that the agency is transparent, efficient, and accountable. That is why I am concerned with the FCC's decision to reclassify broadband Internet service as a telecommunications service under Title II. Despite the fact that the order goes against a light touch regulatory approach that was fundamental for providing the industry with flexibility it needed to invest, innovate, and create jobs, the order process was not transparent, and represents a regulatory overreach that will have lasting negative consequences. Today's hearing is a step in the right direction in an effort to make the agency more efficient and effective by reviewing the Commission's policy decision and processes. I look forward to hearing from the Commissioners. Mr. Chairman, I yield back with a point of personal privilege. From an Ohioan, I think your tie looks great. Mr. Walden. Sure glad I yielded time to you. With that, I will turn to my friend from California, part of the Pac-12, Ms. Eshoo. Ms. Eshoo. Thank you, Mr. Chairman. I don't have any sports analogies, so--and obviously I hold a much different view, and so I want to express that view with an intensity that I think needs to be brought to really what this issue is all about. And I appreciate having the hearing, but I think that the main point is that on February 26 the American people finally won one, and it was big. The regular guys and gals across our country, part of the beleaguered middle class, were heard. It was a historic day when the FCC voted for bright line Open Internet rules to protect the ability of consumers, students, and entrepreneurs to learn and explore, create and market, all on equal footing. This is about net equality. The FCC decision ensures that the Internet remains open and accessible to everyone, a source of intellectual enrichment, and an engine for economic growth and prosperity in our country. The Internet is the public library of our time, a laboratory in the most robust marketplace imaginable, and the FCC declared it open to all, and for all. I think this is nothing short of extraordinary. It was a day when the average person witnessed something very rare. The big shots in Washington, D.C. sided with them. Decision makers actually took in and considered the advice of over four million Americans. I remember watching TV when Dr. King addressed a million people on the Mall. It was a sea of humanity. Well, put a multiplier on that. It is over four million people that weighed in, and I think that kind of public engagement with our government should be celebrated, and not rolled over and disrespected. Today the majority has offered a legislative discussion draft intended to reauthorize the FCC. I have reviewed the draft legislation, and concluded that, in effect, it is meant to squeeze an agency that is already operating at the lowest number of full time staff in 30 years. The FCC has to have the means to fulfill its mission, to protect consumers, promote competition, and advance innovation. That is their mission. This includes huge issues, and they are huge, like freeing up additional spectrum, promoting municipal broadband deployment, and enhancing 911 services. Any attempt to overhaul the FCC's funding structure should be fully analyzed, and the implications of these changes should be fully understood. We shouldn't be horsing around with it, in plain English, and a 48 hour review is simply insufficient. So I find myself wondering, why are we having this hearing today? I hope it isn't a fishing expedition. By compelling the FCC Chairman and Commissioners to testify five times over the course of 8 days, it seems to me that the majority seems to have chosen to ignore a glaring fact. Four million--over four million Americans did something. They, and countless more, contacted their members of Congress to say, we don't want to pay more for less. We don't think any kind of discrimination, blocking, or throttling is good or fair. We are tired of poor service from providers, confusing bills, and having to wait for a half hour or more on hold to try and talk to a human being, and we don't want any gatekeepers. So I think that is really what this is all about. I welcome the debate. I welcome the discussion with the Commissioners. And I yield the remainder of my time to Congresswoman Matsui. Ms. Matsui. Thank you very much, Ranking Member. I would also like to welcome the Chairman and the Commissioners here today. We know over the last year the debate over the future of the Internet has not been an easy one. There have been many twists and turns. But in the end, I was specifically pleased that the FCC's net neutrality rules ensure that paid prioritization schemes, or so-called Internet fast lanes never see the light of day in our economy. Americans will not experience Internet slow lanes or gatekeepers hindering traffic. We know, however, the fight to preserve net neutrality is not over. That said, it is time for us to really get back to working on issues that advance our Internet economy. I think spectrum should be at the top of that list. The AWS3 option demonstrated the massive appetite for spectrum. I look forward to re- introducing bipartisan legislation with Congressman Guthrie that would create the first ever incentive auction for Federal agencies. With that, I yield back the balance of my time. Mr. Walden. The gentlelady yields back. Chair recognizes the Vice Chairman of the full committee, Ms. Blackburn. Mrs. Blackburn. Thank you, Mr. Chairman. And to the Commission, I want to say thank you for being here and offering your testimony. As you all know, we have got questions, and we want to move right on to them. I think that the recent actions taken by the FCC have really raised more questions about your scope, and your reach, and your authority, and I will also say about transparency. Chairman Wheeler, I will tell you, I do not think it is acceptable for the Commission to pass a net neutrality rule before the American people have the opportunity to find out what is in it, and that was disappointing to us. Releasing a draft final order should have been a part of the rulemaking process, and it is disappointing that it was not. Every dollar you spend is a taxpayer dollar. Every action that you take affects the American taxpayer, so that lack of transparency is incredibly disappointing. I am sure that also you are hearing from Netflix, and some of the other stakeholders who have been very disappointed on what they found out once they started to read the 322 word- filled pages. I will tell you also, as a former State Senator from Tennessee, and someone that worked on the telecommunications and interactive technology issues there, I was terribly disappointed to see the action of the Commission, to choose to take a vote, and choose to preempt state laws in Tennessee and North Carolina that restrict municipal broadband entry. These are decisions that should be made by their state legislators. Your actions there are disappointing, and we have questions about them. And, Mr. Chairman, I yield back my time. Mr. Walden. Anyone else on the Republican side seeking time? If not, gentlelady yields back. Chair now recognizes the Ranking Member of the full Committee, the gentleman from New Jersey, Mr. Pallone, for 5 minutes. Mr. Pallone. Thank you, Mr. Chairman. Over the past few days we have heard quite a bit about process, fairness, and transparency at the FCC. We just heard it again from my previous colleague. But given what has transpired in this subcommittee over the last 48 hours, I wonder whether we first have to make sure our own house is in order. As witness testimony was already being submitted, the Republicans released, with no notice, a partisan discussion draft that would completely overhaul the FCC's funding, and this maneuvering is unfair to the witnesses, and unfair to the members of the subcommittee, Mr. Chairman. Unfortunately---- Mr. Walden. Gentleman yield? Mr. Pallone. Yes? Mr. Walden. Yes. So the discussion draft was put out at least an hour and a half before any testimony came in. I realize that is still not enough time, but this isn't a markup. This is a hearing. We followed all the committee rules. We have circulated drafts, and always tried to be open and transparent. We will continue to be. We are not marking up a bill. Mr. Pallone. Well, Mr. Chairman, unfortunately, in this Congress, we seem to have halted a tradition. I am not sure it is in the rules, but we have had a long tradition of sharing text with all members of the subcommittee at least a week prior to a legislative hearing, and we have seen these same partisan tactics---- Mr. Walden. Will the gentleman yield on that point? Mr. Pallone. Sure. Mr. Walden. Because actually, when you all were in charge, I have got a list here of examples where that wasn't the case. I agree we should be more transparent---- Mr. Pallone. Well, let us just say, if I can take back my time, I would like to see us go back to a tradition, process, whatever it was, that we have at least a week prior to a legislative hearing. I mean, the same thing happened in the Commerce, Manufacturing, and Trade subcommittee in the last couple days, and it just, you know, I understand--maybe give examples of things that were done in the past by us, but I just think that, Mr. Upton, yourself, the subcommittee chairs have all said that they want to act in a bipartisan way, they want bipartisan bills, and I appreciate that. But if you are going to do that, then we need to have more time than just the 48 hours that occurred here today. And we had the same thing yesterday in the other subcommittee. If we are going to really move forward, we are trying to do bills on a bipartisan basis, we need to have more than the 48 hours. In addition to that, I have yet to hear a convincing explanation for why this legislation is a good idea. Given what we just went through with the Department of Homeland Security, I doubt our constituents are clamoring for us to create another funding cliff, especially for an agency that just netted $41 billion for public safety and deficit reduction without raising a dime in taxes. I just think this agency is too important to play these types of games with its funding. And nonetheless, I am grateful that we are having the hearing today. It gives us the opportunity to show our appreciation in person and in public to the FCC for its work. So thank you, Chairman Wheeler, and to his fellow Commissioners for all that you have accomplished. This has been an eventful year for the FCC. The Commission has certainly received more than its fair share of attention, and also an unprecedented level of civic engagement. Four million Americans weighed in, overwhelmingly calling for strong Network Neutrality rules. 140 members of Congress engaged in the process. And, of course, the President expressed his opinion as well, which is not something that we should be embarrassed about, by the way. Yet despite the withering glare of the spotlight, the Commission stood tall. The Commissioners, and the entire staff of the FCC, have shown a steadfast dedication to serving the public interest. You showed everyone who called in, who wrote in, who came in to support net neutrality that the FCC and the rest of Washington know how to listen, so thank you. Now, I have repeatedly said that I welcome the majority's change of heart, and their offer to legislate on this issue of net neutrality, and I remain open to looking for truly bipartisan ways to enshrine the FCC's Network Neutrality protections into law. But after what has taken place over the past few days, I wonder if bipartisanship may only be in the eye of the beholder. If we are able to find a real partner in this process, we must make sure that our efforts do not come at the expense of all the other work the Commission does. The FCC must remain an effective cop on the beat to protect consumers. The FCC must continue to promote universal service to all Americans. The FCC must ensure that the telecommunications and media markets are competitive. And the FCC must maintain the vitality of our public safety communications. And that is why I look forward to hearing today how the FCC can continue to serve an important role in the broadband age. And so, to the Commissioners, thank you for coming here today, and thank you for your public service. May I just ask--I know, because I yielded time to you, Mr. Chairman, I wanted to yield a minute of my time to Mr. Lujan, but I don't have it now. But if I could ask unanimous consent-- -- Mr. Walden. Without objection. Mr. Pallone. Thank you. Mr. Lujan. Thank you, Ranking Member Pallone, and let me second your comments about the need for us to work together. Telecommunications policy has a long history of being made on a bipartisan basis, and I would hate to see the polarization that defined so many of our policy debates dominate our efforts on this Subcommittee. Before us are real challenges. We still have 77 percent of New Mexicans living in rural areas that lack access to fixed high speed broadband. And as I have shared with Chairman Wheeler before, if we can have Internet access at 30,000 feet on an airplane, we should be able to have Internet access all across rural America, including New Mexico. Today I am especially interested in hearing from Commissioner Rosenworcel on the innovative potential of unlicensed spectrum, and I am also excited to hear from a former public utility commissioner, a colleague of mine as well, Commissioner Clyburn's ideas to modernize the Lifeline program in the broadband era. And I want to hear from all Commissioners on how we can work with the FCC, including strengthening the information and technology systems that collapsed under the weight of millions of comments generated last year when a friend of ours, John Oliver, and four million others filed comment to the FCC, which crashed its servers. Four million comments is a lot, but surely the agency that is charged with overseeing the Internet should be able to handle the traffic. And with that, Mr. Chairman, I want to thank everyone for being here today, and I look forward to this important conversation today. Mr. Walden. Thank the gentleman for his comments. We will go now to the Chairman of the FCC for an opening statement. Mr. Wheeler, thank you for being here. We know you have a tough job, and we look forward to your comments, sir. STATEMENTS OF THE HONORABLE TOM WHEELER, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION; THE HONORABLE MIGNON CLYBURN, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION; THE HONORABLE JESSICA ROSENWORCEL, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION; THE HONORABLE AJIT PAI, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION; AND THE HONORABLE MICHAEL O'RIELLY, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION STATEMENT OF TOM WHEELER Mr. Wheeler. Thank you very much, Mr. Chairman, Ranking Member Eshoo. It is a privilege to be here with all of my colleagues. There has been some reference up here about the Open Internet. I am sure we will discuss it more today. Clearly the decision that we made was a watershed. You, in your legislation, Mr. Chairman, and we in our regulation, identify a challenge, a problem that needs to be solved. We take different approaches, to be sure, and no doubt we are going to be discussing those, now and in the future. There is common agreement that the Internet is too important to ignore, and too important to not have a set of yardsticks and rules. We have completed our work, now Open Internet rules will be in place. Now let me move on to another couple of issues that I think are important to the committee, and one is that there is a national emergency in emergency services, and Congress holds the key to the solution. Ms. Eshoo referenced the public safety challenges. The vast majority of calls to 911 come from mobile devices. In a unanimous decision of this entire Commission, we have established rules for wireless carriers to provide location information as to where that call is coming from. The carriers are stepping up. But delivering that information is only the front end of the challenge. Mr. Shimkus, about 15 years ago, led legislation making 911 a national number. Amazing it had never been that. The calls now go through, but many times it is like a tree falling in the forest. There was a recent tragic example in Georgia, when a lady by the name of Shanelle Anderson called as she was drowning in her car. The signal was received by an antenna that happened to be an adjacent PSAP, public safety answering point, that had decided not to have maps of the area next door. I have listened to the call, and it is heartbreaking. She keeps saying, ``well, here is where I am,'' and the dispatcher keeps saying, ``I can't find it on the map. I can't find it, I don't know where you are,'' and didn't know where to send somebody. There are 6,500 different PSAPs in this country. They are all staffed by incredibly dedicated individuals, but there needs to be some kind of set of standards, and only Congress can deal with it. We have dealt with the front end, but now it is necessary to do something about the back end. This is not a power grab. I don't care how it gets done, or what agency is responsible, but we owe this to the American people. The second quick issue that I would like to raise is, Mr. Chairman, both you and I want a Commission that works openly, fairly, and efficiently. While three-to-two votes always get the attention, about 90 percent of our decisions during my tenure have been unanimous. About two percent have been four to one, and there have been 21 out of 253 votes that have been three to two. We also have, during my tenure, the best record of any full commission this century for getting decisions out quickly. Seventy three percent of our decisions are released in one business day or less. The measure of that is the last Republican-led commission, it took a week before they could hit that number. We also have the lowest number, and percentage, of actions made on delegated authority of any commission, Republican or Democrat, in the last 15 years. But regardless of this, we should be constantly striving for improvement. Commissioner O'Rielly has raised some really good questions about longstanding processes. He and I were in the same position. We walked in the door at the same time, and we found processes in place that had been typical for both Republican and Democratic administrations. As I say, he raised some really good questions, and to address these questions, I am going to be asking each Commissioner to appoint one staff person to work on a task force to be headed by Diane Cornell, who ran our Process Reform Task Force. I have already asked her to begin a review of all similarly situated independent agencies so that we know what the procedures are for those agencies, and that can be a baseline against which we can measure our procedures and move forward to address what I think are some of the legitimate issues that Commissioner O'Rielly has raised. Thank you, Mr. Chairman. [The prepared statement of Mr. Wheeler follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Walden. Thank you, Mr. Chairman. We will now move to the Honorable Mignon Clyburn, Commissioner of Federal Communications Commission. It is a delight to have you back here, former Chairwoman. We are delighted to have you here. Please go ahead. STATEMENT OF MIGNON CLYBURN Ms. Clyburn. Thank you, Chairman Walden, Ranking Member Eshoo, distinguished members of the Committee. Thank you for the opportunity to share my perspectives with you this morning. In my written testimony for the record, I discussed the Commission's work in several policy areas. This morning I will focus on spectrum auctions and inmate calling services reform. In March of 2014 we unanimously adopted licensing and service rules to auction 65 megahertz of spectrum in the AWS-3 bands. This was not only important for wireless seeking to meet skyrocketing consumer demand on their networks, but it was critical for the promotion of more competitive options. My colleagues and I agreed on a plan with smaller license blocks, and geographic licensed areas. We also agreed on the need for interoperability between the AWS-1 and AWS-3 bands. Such rules encourage participation by smaller carriers, promote competition in local markets, and ensure the auction allocates spectrum to the highest and best use. Most experts predicted intense bidding in this auction, but no one forecasted that the total gross amount of winning bids would be a record setting $44.89 billion. The success of this auction was due in large part to a painstaking effort to pair the AWS-3 spectrum bands that involve the broadcast and wireless industries, Federal agencies, and members of this Committee, and for that I thank you. We should follow a similar collaborative approach in the voluntary incentive auction. Robust participation by small and large wireless carriers in the forward auction will encourage broadcast television stations to take part in the reverse auction. A unanimously adopted notice of proposed rulemaking seeks to strike a proper balance between licensed and unlicensed services. We also initiated a proceeding to reform our competitive bidding rules in advance of the incentive auction. We proposed comprehensive reforms so small businesses can compete more effectively in auctions, and sought comment on how to deter unjust enrichment. An example of how the markets do not always work, and a regulatory backstop is sometimes necessary, is inmate calling services. While a petition requested relief from egregious inmate calling rates remained pending at the FCC for nearly a decade, rates and fees continue to increase. Calls made by deaf and hard of hearing inmates have topped $2.26 per minute. Add to that an endless array of fees. $3.95 to initiate a call, a fee to set up an account, another fee to close an account. There is even a fee charged to users to get a refund from their own money. These fees are imposing devastating societal impacts that should concern us all. There are 2.7 million children with at least one parent incarcerated, and they are the ones most likely to do poorly in school, and suffer severe economic and personal hardships, all exacerbated by an unreasonable rate regime. Studies consistently show that meaningful contact beyond prison walls can make a real difference in maintaining community ties, promoting rehabilitation, successful reintegration back into society, and reducing recidivism. Ultimately, the downstream costs of these inequalities are borne by us all. We have had caps on interstate inmate calling rates since February of last year, and despite dire predictions of losing phone service and lapses in security, we have witnessed nothing of the sort. What we have seen is increased call volumes, ranging from 70 percent to as high as 300 percent, and letters expressing how this relief has impacted lives. I look forward to working with the chairman and my colleagues to finally bring this issue over the finish line, my sports reference, the best I am going to do this morning, by reforming all rates, while taking into account robust security protections. Mr. Chairman, and Ranking Member, and others of the committee, I appreciate the opportunity to appear before you today, and I look forward to any questions you may have. [The prepared statement of Mr. Clyburn follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Walden. I think you have a winner there. OK, we are going to go now to Commissioner Jessica Rosenworcel. We are delighted to have you back before the subcommittee. Look forward to your comments as well, Commissioner. Thank you for being here. STATEMENT OF JESSICA ROSENWORCEL Ms. Rosenworcel. Good morning, Chairman Walden. Mr. Walden. I don't think that microphone stayed on. Ms. Rosenworcel. Have I got it now? Mr. Walden. There you go. Ms. Rosenworcel. OK. Good morning Chairman Walden, Ranking Member Eshoo, and distinguished members of the Committee. Today communications technologies account for \1/6\ of the economy, and they are changing at a breathtaking pace. How fast? Well, consider this. It took the telephone 75 years before it reached 50 million users. To reach the same number of users, it took television 13 years, and the Internet 4 years. More recently, to reach the same number of users it took Angry Birds 35 days. So we know the future is coming at us faster than ever before. We also know the future involves the Internet, and our Internet economy is the envy of the world. It was built on a foundation of openness. That is why Open Internet policies matter, and that is why I support network neutrality. As you have undoubtedly heard, four million Americans wrote the FCC to make known their ideas, thoughts, and deeply held opinions about Internet openness. They lit up our phone lines, clogged our e-mail inboxes, and jammed our online comment system. That might be messy, but whatever our disagreements on network neutrality, I hope we can agree that is democracy in action and something we can all support. Now, with an eye to the future, I want to talk about two other things today, the need for more wi-fi and the need to bridge the Homework Gap. First, wi-fi. Few of us go anywhere today without mobile devices in our palms, pockets, or purses. That is because every day, in countless ways, our lives are dependent on wireless connectivity. While the demand for our airwaves grows, the bulk of our policy conversations are about increasing the supply of licensed airwaves available for auction. This is good, but we also need to give unlicensed services and wi-fi its proper due. After all, wi-fi is how we get online in public and at home. Wi-fi is also how our wireless carriers manage their networks. In fact, today nearly one-half of all wireless data connections are at some point offloaded onto unlicensed spectrum. Wi-fi is also how we foster innovation. That is because the low barriers to entry for unlicensed airwaves make them perfect sandboxes for experimentation. And wi-fi is a boon to the economy. The economic impact of unlicensed activity has been estimated at more than $140 billion annually. By any measure, that is big. So we need to make unlicensed services like wi-fi a priority in our spectrum policy, and at the FCC, we are doing just that with our upcoming work in the 3.5 gigahertz band, and in guard bands in the 600 megahertz band. But it is going to take more than this to keep up with demand. That is why I think the time is right to explore greater unlicensed use in the upper portion of the five gigahertz band. And I think, going forward, we are going to have to be on guard to find more places for wi-fi to flourish. Now, second, I want to talk about another issue that matters for the future, and that is the Homework Gap. Today, roughly 7 in 10 teachers assign homework that requires broadband access, but FCC data suggests that as many as one in three households today lack access to broadband at any speed. Think about those numbers. Where they overlap is what I call the Homework Gap. And if you are a student in a household without broadband, just getting homework done is hard. Applying for a scholarship is challenging. And while some students may have access to a smartphone, let me submit to you that a phone is just not how you want to research and type a paper, apply for jobs, or further your education. This is a loss to our collective human capital, and to all of us, because it involves a shared economic future that we need to address. That is why the homework gap is the cruelest part of our new digital divide. But it is within our power to bridge it. More wi-fi can help, as will our recent efforts to upgrade wi- fi connectivity--through the e-rate program, but more work remains. I think the FCC needs to take a hard look at modernizing its program to support connectivity in low-income households, especially those with school-age children. And I think the sooner we act, the sooner we bridge this gap, and give more students a fair shot at 21st century success. Thank you. [The prepared statement of Ms. Rosenworcel follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Walden. Thank you, Commissioner. We appreciate your testimony. Those bells that went off, or buzzer, as we so lovingly say--we have got two votes, but we should have time to get through both the other Commissioners' testimony, and then we will probably break to go vote, and then we will come back immediately after votes to resume questioning. So welcome, Commissioner Pai. Thank you for being here. Please go ahead with your testimony. STATEMENT OF AJIT PAI Mr. Pai. Chairman Walden, Ranking Member Eshoo, members of the subcommittee, thank you for giving me the opportunity to testify here today. It has been an honor to work with the members of the Subcommittee on a wide variety of issues, from making available more spectrum for mobile broadband to improving the Nation's 911 system. I last testified in front of the subcommittee more than a year ago, and since that hearing on December 12, 2013, things have changed dramatically at the FCC. I wish I could say that these changes, on balance, have been for the better, but unfortunately, that has not been the case. The foremost example, of course, is the FCC's decision last month to apply Title II to the Internet. The Internet is not broken. The FCC didn't need to fix it. But our party line vote overturned a 20-year bipartisan consensus in favor of a free and Open Internet. With the Title II decision, the FCC voted to give itself the power to micromanage virtually every aspect of how the Internet works. The FCC's decision will hurt consumers by increasing their broadband bills and reducing competition. A Title II order was not the result of a transparent rulemaking process. The FCC has already lost in court twice, and its latest order has glaring legal flaws that are guaranteed to mire the agency in litigation for a long time. Turning to the designated entity program, the FCC must take immediate action to end its abuse. What was once a well- intentioned program designed to help small businesses has become a playpen for corporate giants. The recent AWS-3 auction is a shocking case in point. DISH, which has annual revenues of $14 billion, and a market cap of over $34 billion, holds an 85 percent equity stake in two companies that are now claiming $3.3 billion in taxpayer subsidies. That makes a mockery of the small business program. The $3.3 billion at stake is real money. It could be used to underwrite over 580,000 Pell grants, fund school lunches for over six million schoolchildren, or incentivize the hiring of over 138,000 veterans for a decade. The abuse had an enormous impact on small and disadvantaged businesses, from Nebraska to Vermont. It denied them spectrum licenses they would have used to provide consumers with competitive wireless alternative. The FCC should quickly adopt a further notice of proposed rulemaking so that we can close these loopholes in our rules before our next auction. Turning next to process, the FCC is at its best when it acts in a bipartisan collaborative manner. During my service under Chairman Genachowski and Chairwoman Clyburn, 89 percent of votes on FCC meeting items, where the agency votes on the most high profile, significant matters affecting the country, were unanimous. Since November 2013, however, only 50 percent of votes at FCC meetings have been unanimous. This level of discord is unprecedented. Indeed, there have been 40 percent more party-line votes at the FCC in the last 17 months than there were under the entire chairmanships of Chairmen Martin, Copps, Genachowski, and Clyburn combined. I am also concerned that the Commission's longstanding procedures and norms are being abused in order to freeze out Commissioners. For example, it has been customary at the FCC for Bureaus planning to issue significant orders on delegated authority to provide those items to Commissioners 48 hours prior to their scheduled release. Back then, if a Commissioner asked for the order to be brought up for a Commission-level vote, that request from a single Commissioner would be honored. Recently, however, the leadership has refused to let the Commission vote on items where two Commissioners have made such a request. Given this trend, as well as others, I commend the subcommittee for focusing on the issue of FCC process reform, and I welcome the Chairman's announcement this morning. Finally, I would like to conclude by discussing an issue where it should be easy to reach consensus. When you dial 911, you should be able to reach emergency personnel wherever you are. But, unfortunately, many properties that use multi-line telephone systems require callers to press nine, or some other access code, before dialing 911, and this problem has led to tragedy. Unfortunately, the phone systems at many Federal buildings are not configured to allow direct 911 dialing. Recognizing this problem, Congress directed the General Service Administration to issue a report on the 911 capabilities of telephone systems in all Federal buildings by November 18 of 2012. I recently wrote to GSA to inquire about the status of that report, and I was disturbed to learn through a press report just a couple of days ago that the GSA never completed it. The FCC's headquarters is one such Federal building where direct 911 dialing does not work. But as Ranking Member Eshoo recently observed, when it comes to emergency calling, the FCC should be the example not only for the rest of the Federal government, but for the entire country. I commend her and Congressman Shimkus for their leadership on this issue. Chairman Walden, Ranking Member Eshoo, and members of the subcommittee, thank you once again for inviting me to testify. I look forward to your questions, and to working with you and your staffs in the days to come. [The prepared statement of Mr. Pai follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Walden. Thank you, Mr. Pai. We now turn to the fifth Commissioner, or fourth Commissioner and the Chairman, Commissioner O'Rielly. We are delighted to have you here. Please go ahead with your full testimony. STATEMENT OF MICHAEL O'RIELLY Mr. O'Rielly. Thank you Mr. Chairman, Ranking Member Eshoo, Ranking Member Pallone, and members of the subcommittee for the opportunity to deliver testimony today. I have always held the Energy and Commerce Committee in the highest regard, given my past involvement as a congressional staffer, with oversight hearings and responsibilities that you have to face every day. I applaud the subcommittee for focusing on this issue of reauthorizing the FCC and improving its process, and I recommit myself to being available of any resource I can in the future. In my time at the Commission, I have enjoyed the many intellectual and policy challenges presented by the innovative and ever challenging communications sector. It is my goal to maintain friendships, even when we disagree, and seek out opportunities where we can work together. To provide a brief snapshot, I voted with the Chairman on approximately 90 percent of all items. Unfortunately, this percentage drops significantly, to approximately 62 percent, for the higher profile open meeting items. One of the policies I have not been able to support is the insertion of the Commission into every aspect of the Internet. As you may have heard, the Commission pursued an ends justifies the means approach to subject broadband providers to a new Title II regime without a shred of evidence that it is even necessary, solely to check the boxes on a partisan agenda. Even worse, the order punts authority to FCC staff to review current and future Internet practices under vague standards such as just and reasonable, unreasonable interference or disadvantage, and reasonable network management. This is a recipe for uncertainty for our nation's broadband providers, and ultimately edge--providers. Nonetheless, I continue to suggest creative ideas to modernize the regulatory environment to reflect the current marketplace, often through my public blog. I have written extensively on the need to reform numerous outdated and inappropriate Commission procedures. For instance, I have advocated that any document to be considered at an open meeting should be made publicly available on the Commission's Web site at the same time it is circulated to the Commissioners, typically 3 weeks in advance. This fix is not tied to a net neutrality item, although it provides a great example why change is needed. Under the current process, I meet with numerous outside parties prior to an open meeting, but I am precluded from telling them, for example, having read the document, that their concerns are misguided, or already addressed. This could be a huge waste of time and effort for everyone involved, and allows some favored parties an unfair advantage in the hunt for scarce and highly prized information nuggets. The stated objections to this approach, presented under the cloak of procedural law, are really grounded in resistance to change, and concerns about resource management. In addition, the Commission has a questionable post-adoption process that deserves significant attention. While I generally refrain from commenting on legislation, I appreciate the ideas approved by this subcommittee, and ultimately the full House last Congress, which would address a number of Commission practices that keep the public out of the critical end stages of the deliberative process. I believe that these proposed changes, as well as others, would improve the functionality of the Commission, and improve consumer access to information. In addition, I would turn the subcommittee's attention to a host of other Commission practices that I believe deserve attention. The 48-hour notification that my friend mentioned, testimony provided by outside witnesses at the Commission open meetings, delegating vast authority to staff to make critical decisions or set policy, the Regulatory Flexibility Act and Paperwork Reduction Act compliance, and accounting for the Enforcement Bureau's assessed penalties. Separately, I have also been outspoken on many substantive issues, such as the need to free up spectrum resources for wireless broadband, both licensed and unlicensed. I look forward to working with my colleagues on this issue, and so many more in the months ahead. I stand ready to answer any questions you may have. [The prepared statement of Mr. O'Rielly follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Walden. Thank you, Commissioner. We appreciate your input as well. Mr. O'Rielly. Thank you. Mr. Walden. We will recess now so that Members can go to the House floor and vote. Please return as promptly as possible, as we will begin our questioning thereafter. We stand in recess. We have two quick votes. [Recess.] Mr. Walden. Public and Commissioners to please resume their places. We will get restarted here in the hearing in just a second, when everybody gets settled. All right. Thank you very much, and we will resume the Subcommittee on Communications and Technology. We are now into the questioning phase from the members of the committee. And, again, we want to thank all of you for your testimony today, and the work that you do with all of us every day, so we do appreciate that. You know, throughout the debate on the Internet proceeding, I was amused--there were some comparisons to what former Chairman Kevin Martin did or didn't do with respect to his media ownership proceeding. Yes, he wrote a late in the day op- ed, put out a public notice, testified before Congress, but he didn't do a further notice of proposed rulemaking, and that seems to be precisely why the Third Circuit threw his newspaper/broadcast cross-ownership rule out. I guess Federal Appellate Judges don't think much of op-eds, news releases, or even congressional testimony when it comes to satisfying APA notice and comment requirements. They actually think the agency should go through the procedural steps to make sure that all interested parties, even those outside D.C. policy circles, get a real opportunity to understand a significant shift in direction, and have a reasonable amount of time to comment. So I have got just a couple of questions, and perhaps I will just direct them to Mr. Pai. How many of the Commission's tentative conclusions found in the NPRM were reversed in the final order? Mr. Pai. Mr. Chairman, virtually all of them. Mr. Walden. What number paragraph in the NPRM says that the Commission planned to assert its authority over IP addressing? Was that in the NPRM? Mr. Pai. It was not, sir. Mr. Walden. And what number paragraph of the NPRM put the public on notice that the Commission intended to redefine the term public switched network? Mr. Pai. There is no such paragraph. Mr. Walden. That is what I was concerned about. I didn't see that either. There are a number of issues that are pending at the Commission, and I know Chairman has had a lot on his plate. You all have, I get that. It is a rapidly changing environment, and you have limited resources and all. Some of you have heard me talk about our little applications for FM translators when I was in the radio business, 10 years waiting, 30 days to satisfy the requirements and all. And we get a lot of input here from constituencies out across the country. Just because of limited time, has the Commission acted on the AM modernization order yet? Mr. Pai. Mr. Chairman, it has not yet, and the NPRM, as you know, was adopted about a year and a half ago. The record is complete, unanimous support from the public. Mr. Walden. There is another issue that came up, I was speaking at a group, and it involves this issue to allow small cable operators to operate as a buying group for the purchase of content. Has that been acted on yet? That has been pending for some time, I am told. Mr. Pai. It has not. I voted on the NPRM about--I want to say 3 years ago, but---- Mr. Walden. Three years ago? Mr. Pai. If I recall, it was the summer of 2012, and I am not sure what the status of it is. But I stand ready to vote whenever it is teed up for a vote. Mr. Walden. And my understanding is the Commission has not yet issued its quadrennial review of media ownership rules for 2010. I believe that is about 5 years ago, is that correct? Mr. Pai. Five years ago, but December of 2007 was the last time the actual rules were adopted. Mr. Walden. So it has been 8 years since---- Mr. Pai. Correct. Mr. Walden. And isn't that a statutory obligation? Mr. Pai. It is, and that is why I said we need to put the quad back in quadrennial. Mr. Walden. And what about the work on the Connect America Fund? Has the Commission finished its work on how Connect America will work in supporting mobile? Mr. Pai. My understanding is not yet, but that work is underway. Mr. Walden. These are some of the things that trouble us, to say the least. We also had an issue come to our attention involving the Western Amateur Radio Friendship Association interference case, and maybe, Chairman, I could direct this to you. I understand it has been going on for quite a while, and it is quite disturbing. I have been told about some of the audio recordings, allegedly that there is this jamming that is included. Really awful, repulsive racial epithets, and threats against a female member. And it has come to our attention this has been sitting there for a while, where these operators are jamming and using really awful, awful language. Do you know the status of that? Can you give us some update on that? Anybody on the----Commission. Mr. Wheeler. I can give you an update on that, Mr. Chairman. I will---- Mr. Walden. If you could get back to us? Yes, I think it is called the Western Amateur Radio Friendship Association interference case. I guess there are a couple of these involving pirate radio operators. Which leads into a discussion, and I am going to run out of time here, about the closing of the regional office. When we had the CFO, I guess would be close, managing director here, we weren't really brought up to speed, or advance noticed at least, of this notion that you are going to close these regional offices. Isn't that where this enforcement activity generally takes place? Mr. Pai. Mr. Chairman---- Mr. Walden. That is fine, whoever. Commissioner Pai? Mr. Pai. Yes. Indeed, I think the field offices of the Enforcement Bureau perform one of the core functions, which is to protect the public interest by, among other things, resolving interference concerns, and protecting public safety. And while, obviously, I am still studying the issue, I have had a chance to meet with our union representatives. And I know members of this Committee, such as Congresswoman Clarke, have recently expressed concern about the field offices' function. Mr. Walden. Yes. Mr. Pai. We want to make sure that, however it is reorganized, we protect the public interest. Mr. Walden. And I will quit here in a second, but we clearly don't have--it would leave only two offices, one in L.A. and San Francisco, nothing for the west coast, which I am hearing from various entities. And I was pleased---- Mr. Wheeler. Can I at least---- Mr. Walden. Sure. Mr. Wheeler [continuing]. So there are multiple things going on there. First of all, we need to make sure that, in flat budgets or reduced budgets, that we are spending our money efficiently. When you have more trucks than you have agents, which is the reality that exists today---- Mr. Walden. I would sell some trucks. Mr. Wheeler [continuing]. You have got to ask yourself the question, are you distributing resources as they ought to be distributed? When you have got one manager for every four people, you say to yourself, is this the right kind of structure? Mr. Walden. I fully agree, and I understand---- Mr. Wheeler. Then how do you fix that? Mr. Walden. So what we would like to have is the backup for this, because I understand that wasn't what---- Mr. Wheeler. Happy to. Mr. Walden [continuing]. And I think we have a request pending for that, and we are told---- Mr. Wheeler. Yes. Mr. Walden [continuing]. Well, I don't know whether we were told we can't get it or whatever, but we would like to see---- Mr. Wheeler. No, if my understanding is correct, you asked for the consultant's report. The final consultant's report is-- and---- Mr. Walden. Yes. Mr. Wheeler [continuing]. You will have it when I have it. I have seen a draft of the---- Mr. Walden. OK. Mr. Wheeler [continuing]. Structures, but have also---- Mr. Walden. All right. Mr. Wheeler [continuing]. Sent it back for some more detailed information. Mr. Walden. All right. Mr. Wheeler. You will have that. Mr. Walden. Thank you. Mr. Wheeler. You will---- Mr. Walden. I have far exceeded my time. I appreciate the indulgence, Committee. I recognize the gentlelady from California. Ms. Eshoo. It is OK, because I will ask you for the same. Thank you, Mr. Chairman. Welcome again to the entire Commission. It is obvious that we have different takes on the issues, but I sincerely thank you for your public service. And, to Commissioner O'Rielly, this is a graduate of this committee. You were here under Chairman Bliley, whom I had the pleasure of working with, and getting a lot of things done together, so welcome back. Commissioner Pai, thank you for your advocacy on the 911 issues. You know that the mother and father, the mommy and daddy of this are right here at the committee. Congressman Shimkus and myself founded that caucus, and then helped---- Mr. Pai. This---- Ms. Eshoo. Well, we did. What is so funny about that? I think it is terrific. And it was when no one was paying attention to those issues, but it was before our country was attacked. Commissioner Rosenworcel, thank you for your clarity, and your passion when you speak. And Commissioner Clyburn, go get them. Just go get them. And to the distinguished Chairman, I don't know how many people realize this about the Chairman, but he is a man of history, and so I want to pick on the vein of history. Because I think it is very important for us--around here, life is incremental. It is incremental anyway. God gives us life a day at a time, so those are increments. But I think what I would like to do is to have you, and I want to say a few things about it first, to widen the lens of what is before us today, in terms of history. Now, the majority has defined, or tries to define, net neutrality with some very scary things. They call it railroad regulation, billions of dollars in taxes, new taxes are going to be levied, no investment is going to be made, the market is going to be chilled. In terms of history, we have been through the Stone Age, the Bronze Age, the Iron Age, the Age of Invention, the Industrial Revolution, the Technology Age, and now the Information Age. And I think why this is difficult for some to actually see--and when you see something, you either get it or you miss it. We are at a moment in our nation's history where we are moving to a new age. And I would say that those that are on the other side of this issue are back in an older age, where you have huge corporations, gatekeepers, duopolies. That is not what the Internet is all about. So what I would like you to--as a historian, to address what this moment is, and place it on the stage of history. Mr. Wheeler. Thank you, Ms. Eshoo. You get me started on history, and this--we---- Ms. Eshoo. Well, we don't have very much time. Mr. Wheeler. We could---- Ms. Eshoo. I have got a minute and 40 seconds left. Yes. Mr. Wheeler. I think that we are living through the fourth great network revolution in history. Ms. Eshoo. Yes. Mr. Wheeler. And if you look at those, what you will find is that every single time it was the end of Western civilization---- Ms. Eshoo. Yes. Mr. Wheeler [continuing]. As we know it that---- Ms. Eshoo. Yes. Mr. Wheeler [continuing]. Was being--people who didn't want to embrace the change was like, this is awful. I have hanging in my office a poster from 1839 that was put out by people who were against the interconnection of railroads. It was all patterned around, women and children are going to be hurt by this. It was paid for by all the people whose businesses would be affected because the railroads would interconnect. Yet that interconnection drove the 19th and 20th century. We always hear these imaginary horribles about the awful things that are going to result, and we also always end up saying, as a society, we need rules. We need to have a known set of rules. We need to have a referee on the field who can throw the flag. That is the process that we have gone through since time immemorial, every time there is a new network revolution. We have the privilege of living through that, and trying to deal with those realities today. Ms. Eshoo. Well, I think that that is magnificent in a short period of time. I wish I could question--I have questions for all of you. I am going to submit them to you. And, with that, Mr. Chairman, I would like to ask unanimous consent that Congressman Cardenas's questions be submitted for the record. He is a guest of our subcommittee today---- Mr. Latta [presiding]. Without objection. Ms. Eshoo [continuing]. And demonstrates his great interest in the issues at hand. And another from many, many--I don't know, maybe 50 racial justice and civil rights organizations who have addressed a letter to the Chairman and myself in support of net neutrality. Mr. Latta. Without objection. [The information appears at the conclusion of the hearing.] Ms. Eshoo. Thank you, Mr. Chairman. Mr. Latta. The lady yields back. The next questioner will be the gentlelady from Tennessee, Ms. Blackburn, for 5 minutes. Mrs. Blackburn. Thank you, Mr. Chairman, I appreciate that. Chairman Wheeler, I will just add my viewpoint of, when you look at our economic revolutions in society, whether it was the Agricultural or the Industrial, the Technology, the Information, successful revolutions are about freeing up, not restricting. And what we are looking at right now is the vantage point from--that you all are coming from is taking away and restricting, not freeing up. Chairman--Mr. O'Rielly--Commissioner O'Rielly, let me come to you for a moment and talk taxes. You and I penned an op-ed back in July, calling for the need for a cost benefit analysis, and really looking at what had been said by PPI, Free Pressed, Professor Farber, and what they thought would happen with taxes. New York Times agreed with that. I want to hear from you a little bit, 30 seconds' worth, about why we should have had a cost benefit analysis, and what you think the outlook is. Mr. O'Rielly. So I believe that we should do better at the FCC on cost benefit analysis, and this is a perfect case. I think the---- Mrs. Blackburn. None was done. Mr. O'Rielly. This is a woeful job that was done in this instance. We are talking about hypothetical harms and real world impacts on business. Mrs. Blackburn. Yes. Mr. O'Rielly. But in terms of your question on taxes, I would say--I would switch it more to taxes and fees, because the question has been on universal fees, and what happens in universal service going forward? The Chairman has been very clear that the item in and of itself before us does not impose universal service. That is something we are going to punt for about a month or two, and we are waiting for the joint board-- -- Mrs. Blackburn. OK. Mr. O'Rielly [continuing]. This is something that has to go forward. We are going to see those fees in the months ahead. Mrs. Blackburn. OK. Commissioner Pai, you gave an interview this week and stated that there was going to be a tax on broadband, and the Commission is waiting for a joint board to decide April 7 how large that tax is going to be. You want to expand on that? Mr. Pai. Thank you for the question, Congresswoman. The order suggests that the joint board is going to make a recommendation on April 7. The order also says that a ``short extension'' might be appropriate. So at some point very soon the joint board is going to recommend whether and how to increase these fees that are---- Mrs. Blackburn. OK. Mr. Pai [continuing]. Going to be assessed on broadband for the first time. In addition, it is not just the USF fees, as Commissioner O'Rielly has pointed out. It is also state and local fees. For example, state property taxes. Localities also impose taxes. The District of Columbia imposes an 11 percent tax on gross receipts. These are all fees that are going to have to be paid by someone. It is going to be paid by the consumer at the---- Mrs. Blackburn. OK. Chairman Wheeler, rate regulation. I read something from Professor Lyons at Boston College, and he said Title II is fundamentally a regime for rate regulation. And then we are looking at another thing which he said about a person, which might include a large company, can file a complaint with the FCC under Section 208 if they don't think their charges are just and reasonable. So you have denied that the FCC is going to get into rate regulation through this net neutrality order, but--I understand that the order does not explicitly state that the FCC will be regulating rates on the date the rules are effective, but what about the first time that a complaint is filed with the FCC under Section 208 because a party feels that their rates are not just and reasonable? What is the remedy going to be, and isn't it true that the FCC will be engaged thereby in de fact rate regulation? Mr. Wheeler. Thank you, Congresswoman. I hope somebody files that kind of a complaint. As you know, there hasn't been a complaint filed for 22 years in the wireless voice space, despite the fact that this same kind of authority exists. If somebody files that kind of a complaint, and I don't want to prejudice a decision, but I will assure you that there will be a process that will look at that, and will develop, I would hope, a record that would make it very clear that the FCC is not in the consumer rate regulation business. Mrs. Blackburn. Mr. Chairman, don't you think what you just said about there hasn't been a complaint filed in that space for 22 years proves the point that the Internet is not broken, this space is not broken, and it does not need your oversight and guidance? Mr. Wheeler. No, I was referring to wireless voice, not to broadband. I think the key thing is, you said in your---- Mrs. Blackburn. OK, let me cut you off there. I have got one question for Commissioner Clyburn. And I want to go to the Lifeline and USAC Program---- Ms. Clyburn. Yes. Mrs. Blackburn [continuing]. With you. You have advocated restructuring and rebooting that program, and you have had several supply-side reforms, and did eliminate incentives for waste, fraud, and abuse. And the FCC's Inspector General, as you know, has performed a review of the verification process on this, and recommended that the FCC may improve the effectiveness of the warnings that it gives subscribers, and reduce the level of fraud in that program. We have had hearings on this, and I want to work with you on it. Ms. Clyburn. Thank you. Mrs. Blackburn. And is it true that, under the current system, the penalty for a subscriber defrauding the program by having multiple phones is to lose the subsidy for those phones, all but one? They get to keep one, and then the carrier is prosecuted. And I will tell you why your answer is important. You all are talking about getting into broadband, and in addition to the phones, and you have got to reform all of this before you talk about expanding. Ms. Clyburn. I totally agree. And one of the reasons why I set out five points for reform is because I recognize two things. One, we need to eliminate all incentives, and all existing waste, fraud, and those abuses. We need to do that, and the key way to do that is to get those providers out of the certification business. They will no longer greenlight customers---- Mrs. Blackburn. We need to prosecute the user---- Ms. Clyburn. And---- Mrs. Blackburn [continuing]. Not the---- Ms. Clyburn. And we have---- Mrs. Blackburn [continuing]. You know, not the---- Ms. Clyburn. With guidance from my colleagues, and while I was acting Chair---- Mrs. Blackburn. I yield back. My time is expired. Ms. Clyburn. I am sorry. Mrs. Blackburn. Thank you, Mr. Chair. Mr. Latta. Thank you. The gentlelady yields back. The Chair now recognizes the gentleman from New Jersey, the Ranking Member, for 5 minutes. Mr. Pallone. Thank you, Mr. Chairman. I just want the Commissioners to know, my district was ravaged by Hurricane Sandy in 2012, and one of the most concerning impacts of the storm was the loss of communications services. A lot of people couldn't call their friends, their family, and 40 percent of our cell towers were knocked out in the state. A lot of people there basically learned the hard way that when the power lines go down, communications services go down along with electricity. So I wanted to ask Commissioner Rosenworcel, I know that you toured New Jersey after Sandy, and I ask what lessons did you learn about how to prevent these kinds of communication failures during future emergencies? Ms. Rosenworcel. Thank you for the question. I did tour the New Jersey shore with public safety officials following Hurricane Sandy, and I won't long forget what I saw. A lot of broken homes and businesses, and cars and boulders strewn this way and that, and piles of sand many blocks from where the ocean is because wind and water had delivered it there. But I also saw a lot of people who were very committed to rebuilding, and I learned a lot about how communications succeeded and failed during that storm. What stuck with me was that many of the wireless towers in the affected areas went out. Now, throughout the 10 states that were impacted by the storm, about a quarter of the wireless cell towers went out of service. In New Jersey, as you mentioned, it was about 40 percent. But I would bet the number was significantly higher on the New Jersey shore. And in the aftermath of learning those things, we were able, at the agency, to start a rulemaking to ask, how can we fix this going forward? Because we know that 40 percent of all households in this country are wireless only, and in the middle of a storm, at the very least, they should be able to connect and get the help they need. So we issued a rulemaking in 2013, and among the issues discussed in that was the question of how much backup power is necessary at cell sites, and how much of a reporting duty our wireless carriers should have when these sites go out of service. I hope that we can turn around and deliver a decision on that in short order because we don't know when the next storm is going to hit. But I am pretty sure people are going to try to use communications when it does. Mr. Pallone. Well, thank you. Let me ask Chairman Wheeler, I understand the FCC, as was mentioned, is considering updates to its rules to ensure that consumers have access to essential communications during disasters. Can you commit to updating those rules this year? Mr. Wheeler. Absolutely. The issue that Commissioner Rosenworcel raised is a paramount issue. There are broader issues too, and that is the whole issue of copper retirement, which got forced by Sandy, and how do we make sure that, when the power goes down, and you are relying on fiber, which doesn't carry its own power, that you have got the ability to make a 911 call? We have a rulemaking going on that literally just closed last week. All of these issues interrelate, but first and foremost in our responsibility, which was why I focused on the 911 location issue in my statement, is public safety. Mr. Pallone. I wanted to ask you about the designated entity rules, Mr. Chairman. Obviously small businesses are so important in my state and elsewhere, and I just don't think small businesses can survive in capital intensive industries, like telecommunications, without some smart public policy. I am concerned that the current rules for small businesses still contain Bush era loopholes that allow large corporations to game the system, and so I actually introduced today the Small Business Access to Spectrum Act to update the FCC's rules, and give small businesses a fair shot at accessing the nation's airwaves. Well, there is not much time left, but I will start with Chairman Wheeler, if the others want to chime in. Would you commit to working to maintain a robust designated entity program focused on genuine small businesses? Mr. Wheeler. You wrote us and asked us that. I replied yes, we will, and yes, we are. We have had a rulemaking going on, and we will issue shortly a public notice, making sure that the discussion is broadened out, and the record is built on the question of the recent AWS-3 auction, and some of the very legitimate concerns that have been raised about that. The thing that is frustrating to me, Congressman--you say yes, these were Bush era rules, they haven't been reviewed since then, and it is time to review them. What is really upsetting is the way in which slick lawyers come in and take advantage of rules that this committee created. I was in the room when this committee created designated entities. And, as you say, the world changes dramatically in how a designated entity can be structured and can play in now what is a big market, whereas before it was a much smaller market. Our rules have not kept up, but the slick lawyers sure have figured out how to do it. And we want to make sure, whether it is in this, or whether it is in slick lawyers playing around with broadcast licenses, that there is no way that we keep our rules current. And we are going to do that on this issue. The commitment that I will ironclad give you, sir, is that we want to make sure that we have a new set of DE rules in place before the spectrum auction takes place early next year. Mr. Pallone. Thank you. Mr. Latta. Gentleman's time is expired, and yields back. The Chair now recognizes himself for 5 minutes. Again, thanks very much to the Commissioners for being here today. Commissioner Pai, in January the FCC voted to update the broadband benchmark speeds to 25 megabits per second for downloads and 3 megabits per second for uploads. The speeds had previously been set at 4 megabits per second and 1 megabits per second. While I understand the need to update the broadband speeds, I am kind of curious as to the process the Commission chose the speeds of 25 megabits and the three megabits. It seems, to an outside observer, that an arbitrary number was picked, especially considering that recently the Commission voted to spend $10.8 billion over the next 6 years through the Connect America Fund to employ 10 megabits per second broadband. According to the Commission's new benchmark, 10 megabits per second is going to no longer even be considered broadband. Can you walk us through how the agency came to these new benchmarks? And then also if you could follow up--and how does it still plan to spend over $10 billion on those 10 megabits per second deployment in light of that new definition? Mr. Pai. Thank you for the question, Mr. Chairman. I think the problem is that the agency has viewed each of these issues in a vacuum, and so, in December, when we were talking about rural broadband deployment, we agreed to spend, over the course of a decade, billions of dollars to establish what we considered to be broadband at the time, which was 10 Megabits per second. Flash forward 1 month, all of a sudden we learn that actually isn't broadband. Broadband is 25 megabits per second, under which standard there is no such thing as mobile broadband, because even the fastest LG--4G LTE connection can't get you to 25 megabits per second. Flash forward 1 month more, all of a sudden we learn that there is such a thing as mobile broadband, and it is going to be classified as a Title II service. And I think the schizophrenia that we have seen over the last several months from the Commission as to what is broadband illustrates the basic point. We need intellectual consistency that is grounded in the facts. And the facts in this case basically stem from the question, what do people use broadband for? And by and large, if you look at my statement with respect to the January order, I was trying to look at patterns of usage. And obviously there are going to be some folks who use the Internet for very high bandwidth applications, others who use it for less. The goal of the FCC shouldn't be to artificially pick a number so that it can declare that the broadband marketplace is uncompetitive, and thus justify regulation. It should be to try to tailor, with some forward thinking, what broadband means in the current era. And that is why I think the problem with the 25 megabits per second standard, which I forecast would be jettisoned soon, I didn't know it would be 1 month from then, is that it was more grasping for press headlines, as opposed to what actually was in the record. Mr. Wheeler. Can I---- Mr. Latta. Let me follow up. I am also concerned that this new threshold would reduce the broadband investment in rural areas. You know, if you look at my district, and you have seen it, is that it could ultimately deter the competitive entry into the broadband market. Do you foresee any of these benchmark speeds unfairly impacting consumers and businesses in the rural areas? Mr. Pai. That is a great question, Congressman, and coming from a rural area myself, that is something that I take very personally. The FCC heard from a great number of small providers, and that is service providers in rural areas, who told us that Title II, ironically, would take us in the opposite direction of getting more competition. A lot of folks in rural areas, if they have an option, it is going to be from one of these smaller providers. And so we heard, for instance, from 43 municipal broadband providers, who said that Title II regulation ``will undermine our business model that supports our network, raise our costs, and hinder our ability to further deploy broadband.'' We even heard from 24 small broadband providers on February 17, who said that Title II ``will badly strain our limited resources, because we have no in-house attorneys and no budget line items for counsel. And those ISPs, by the way, include very small ISPs, including one called Main Street Broadband that serves four customers in Cannon Falls. The notion that Main Street Broadband in Cannon Falls exerts some kind of anti-competitive monopoly vis-a AE2-vis edge providers like Netflix, Google, and Facebook is absurd, but I think that is part of the reason why the Obama Administration's Small Business Administration was exactly on point when it urged the FCC last year to take a careful look at how these rules would affect small businesses, because, ultimately, that is where the digital divide is going to open up. It is for the rural Americans, who have a tough enough time getting a broadband option as it is. Mr. Latta. Well, thank you. I would like to ask the question now--the Chairman mentioned, in his opening statement, about the task force starting the agency process, and I am just curious, Commissioner Clyburn, when did you find out about the task force? Ms. Clyburn. When did I find out about the actual task force? To the best of my knowledge, last quarter of last year. It issued a report in February. There was a very interactive process. They asked each office to weigh in, and that is when-- subject to check. My memory is sometimes challenged, but last quarter of last year, with a February---- Mr. Latta. All right. Thank you. Ms. Clyburn. Thank you. Mr. Latta. Commissioner Rosenworcel? Excuse me. Ms. Rosenworcel. I believe they issued a report sometime last year. I would have to go back and check. Mr. Latta. Commissioner Pai? Mr. Pai. If you are referring to the task force that the Chairman announced this morning, is that the one? Mr. Latta. Right, he asked about--that he spoke about in his opening testimony. Mr. Pai. Then I learned about it this morning, when he announced it. Mr. Latta. Commissioner O'Rielly? Mr. O'Rielly. Well, I appreciate the kind words from the Chairman on the ideas that I put forward. I just learned about it this morning. Mr. Latta. Thank you. My time has expired, and the Chair now recognizes Mr. Doyle. Mr. Doyle. Thank you, Mr. Chairman. I want to take a moment and recognize, along with my colleague, Ms. Eshoo, the historic step forward the Commission has made in its Open Internet Order, and the order on municipal broadband. Taken together, these actions by the Commission represent incredible wins for consumers, entrepreneurs, and millions of Americans who called on the Commission to take action. Innovators shouldn't need to ask permission, or pay gatekeepers to deploy new products and services, and the FCC's actions will ensure that this remains true. And I want to point out one more thing too. My colleagues on the other side of the aisle have been talking about Title II like it is the end of the world. Well, up until 2002, the Internet was treated as a Title II service. It was a Republican FCC Chairman, and a Republican Commission, that acted to re- classify the Internet as an information service. I see this rule as the FCC finally setting things straight. Chairman Wheeler, last September you testified before the House Small Business Committee. You were asked about net neutrality proceedings, and you stated Title II is on the table. Now, my Republican colleagues are making the allegation that you only started looking at Title II as a result of White House interference in November of 2014. Was the FCC considering using its Title II authority before President Obama joined millions of Americans in calling on the FCC to take that course of action? Mr. Wheeler. Yes, sir, and the Small Business Committee that you cite there was one member who was saying to me, ``don't you dare do Title II,'' and I was saying, ``we are seriously considering Title II.'' And there was one member who was saying, ``we want you to do Title II,'' and I said, ``yes, we are considering doing Title II.'' Mr. Doyle. Thank you, Mr. Chairman. Let me ask you another question. The Open Internet Order makes great strides to protect consumers and innovators, but in particular by including interconnection and protections for consumer privacy through Section 222 in this order. I want to get your commitment that the Commission will move quickly to complete the rulemaking on Section 222, and ensure that the Commission has rules in place to protect consumer privacy online. And I would also like your commitment that the Commission will take seriously this new responsibility on interconnection. With all of the recent announcements by over the top providers releasing new streaming video services, I think it is more important than ever that gatekeepers do not restrict these new services access to consumers. And also, Mr. Chairman, while I have got you here, I would be remiss if I didn't take the opportunity to mention special access. I understand that the data collection component is complete. I would encourage you to move forward as quickly as possible to complete analysis of that data, and to take action to address any harms taking place. Fixing this situation is a great opportunity to improve competition and economic growth across this country. Mr. Wheeler. So let me see if I can go through it one, two, three. One, on privacy, absolutely, sir, and it starts next month, when we are holding the workshop that gets the parties together and says, ``OK, let us talk specifically about how Section 222 exists in this new reality.'' Secondly, with regard to interconnection, I could not agree more with your point about how over the top services are revolutionizing, and are going to be the consumers' savior. I sat before this committee before this and other committees before, and it is a bipartisan belief that something has to be done about cable prices. That starts with alternatives. Those alternatives are delivered over the top via the Internet. That is why the Internet has to be open, so there are competitive alternatives for people. Mr. Wheeler. Special access. My hair was not gray when I first started asking the Commission about special access. Actually, we have just gotten permission and have begun the data collection on special access. Special access is an incredibly important issue that is particularly essential to those who are bringing competition to communications. My goal is that we are going to have this whole special access issue on the table and dealt with before the end of the year. Mr. Doyle. Thank you, and one last thing. And I--this question, it is on the AWS-3 auction. It raised $45 billion in revenue, meeting all the funding targets, including fully funding First Net and next gen 911. Considering this new reality, and the massive appetite for spectrum by wireless carriers, hasn't the FCC been liberated from these fully funded objections, and its reconsideration of its previous decision on the size of the spectrum reserve, and the incentive auction? Mr. Wheeler. Well, that is one of the issues that we are going to be addressing again as we put together the final rules for the auction. I understand your point, that we have now lived up to our committed obligations, and this is an issue that we will be dealing with in the next couple of months. Mr. Doyle. Commissioner Clyburn, Rosenworcel, do you have comments on that too, very briefly? Ms. Clyburn. One of the things that I joke about, and this is a positive joke, is that all predictions were wrong, that-- -- Ms. Rosenworcel. Right. Ms. Clyburn [continuing]. Two and a half, three times the amount of money that was predicted was raised. You were right to say that we have met our obligations, and we will continue through other auctions, including incentive auction, to deliver spectrum to the American people. Mr. Doyle. Yes. Ms. Rosenworcel. I agree with the chairman. We will be looking at this in the next few months. It is important we follow the statute, and it is also important that we make sure that everyone has opportunities to bid in this upcoming auction, and that no single player walks away with all the spectrum. Mr. Doyle. All right. Mr. Chairman, I appreciate your indulgence, then. I would just like to include in the record this letter from the Public Interest Spectrum Coalition in regards to the incentive auction. Mr. Latta. Without objection. Mr. Doyle. Thank you. I yield back. Mr. Latta. The yields back. The gentleman's time has expired. The Chair now recognizes the gentleman from Illinois, Mr. Shimkus, for 5 minutes. Mr. Shimkus. Thank you, Mr. Chairman. Welcome to the Commissioners. It is great to have you here. I want to be careful because history does tell us a lot of things. I was fortunate to be on the committee during September 11. Chairman Upton of the subcommittee, at that time, took us to Ground Zero because we had the Verizon switching station right across the street. And what I learned in walking through that process, it was really only a big company that could get Wall Street back online after that catastrophic attack. And it is true. I mean, I have still got pictures of it. The basement was flooded. You had wires going up to the third floor. You had individuals hand tying the copper lines. So as we talk about our great country, and competition, and large entities, sometimes large entities are very important in the security of this country. The--and I want to also--thanks for kind words on 911. It is really a team effort. Anna and I have been fortunate to work on this, but it is a process that you have got to stay vigilant on, as, Chairman Wheeler, you mentioned. First we dealt with 911 over cell, then really went to location, then we went to voice over Internet. Now we are back into location, because I am being told by some PSAPs that there is really too many right now, and that they maybe should centralize those. Any comments, briefly, if you can? Mr. Wheeler. One of the interesting things that was in your bill that you and Ms. Eshoo had was--you asked states to voluntarily have state level coordination of their PSAPs, and by and large, that has been observed in the breach. It hasn't existed. There is no state level coordination in Georgia. Introducing mobile means that the people on the right and on the left side of the map need to be able to talk to each other. They need to have similar standards. You ticked off some of the issues in terms of the technologies. The other is text to 911, which we have required carriers to do. Out of the 6,500 PSAPs in the country, 200 have implemented it. That means that America's deaf and hard of hearing community, which, thanks to the unanimous action of this Commission, has text to 911 capabilities provided by carriers. They can text away, and there is nobody who hears it. Mr. Shimkus. And I guess the other thing that we also didn't talk about was the testing that you did on the elevation--I would say the elevation---- Mr. Wheeler. Yes, sir. The ability to get the Y coordinate. Mr. Shimkus [continuing]. Stuff like that, and--very excited about that opportunity. Of course, I don't have much high rises---- Mr. Wheeler. The Z coordinate. Mr. Shimkus [continuing]. In---- Mr. Wheeler. Yes. Mr. Shimkus [continuing]. In my congressional district, but I know it is probably important in large metropolitan areas. Give me some comfort--my concern with the rule being presented is, one, litigation. Two, I have this concern about how do you incentivize build-out of the pipes when it looks like you are moving back to re-regulation? Mr. Wheeler. Yes. Mr. Shimkus. And that, if you are re-regulating, then you have to have a fee. That is where this fee debate comes from. So how do you get a fee to help build out? And maybe I am a simplistic view, but--and then the other question I have is really about the megabit debate, 10, 25. How do you encourage in this new venue, and then I will end, and if you all can-- how--the individual consumer decide what speed they want versus being forced to buy a speed which they will never use, like my mother-in-law? Mr. Wheeler. Right. It is interesting, Congressman, everybody cites their mother or their mother-in-law in that example. There is nothing in here that regulates or established tariffs for the rates for consumer services. There is nothing in here that says that a company can't have multiple levels of services. So your mother-in-law gets e-mail only, and the person next---- Mr. Shimkus. And will pay for that---- Mr. Wheeler. And will pay---- Mr. Shimkus [continuing]. Simple service---- Mr. Wheeler [continuing]. For that kind of---- Mr. Shimkus [continuing]. Versus what---- Mr. Wheeler. And the person next door wants---- Mr. Shimkus. Just so I can have a contrary debate, can I have Commissioner Pai or Commissioner O'Rielly address those before I run out of time, which I am about ready to do? Mr. Pai. Well, a couple different issues, Congressman. One, I think the order explicitly opens the door to ex-post rate regulation. Anyone can file a complaint under Section 208, either with the Commission, or with any Federal court across the country, and that Commission or court will have to adjudicate whether or not the rate is just or reasonable. And the fact that, while on the surface you might allow for differential prices based on different services, nonetheless it is ultimately up to the caprice of any given Commission or court to decide after the fact whether the rate is just and reasonable, and that is the essence of rate regulation. Additionally, you pointed out the incentive--or the effect that this would have on deployment. We have heard from companies that were responsible for the largest capital expenditures in our country when it comes to broadband, and companies that represent very small market areas, and they have told us that the impact of this kind of rate regulation, and other Title II regulations, is going to impede them from delivering some of those advanced services to anybody, whether it is a high bandwidth user or your mother-in-law. Mr. Shimkus. With respect to my colleagues and everybody else, I will just yield back now. Thank you very much. Mr. Latta. Well, thank you very much. The gentleman yields back. The Chair now recognizes, for 5 minutes, the gentleman from Iowa, Mr. Loebsack, for 5 minutes. Mr. Loebsack. Thank you, Mr. Chair. Thanks to all of you for being here today. Great discussion about various issues. I guess I will start out by saying--I don't want to be too presumptuous about this, but I think a lot of us up here have a lot of concerns about rural broadband in particular. I know that that is a big concern for all of you. I have 24 counties, and although the Committee Chairman reminded me that his district is a lot larger than mine--I don't mean the current chair, I mean Chairman Walden, and we have got some from North Dakota, that is a lot bigger than my district too. But I have 24 counties, and I have a lot of rural broadband carriers, a lot of small ISPs, as you mentioned, Commissioner Pai. But a lot of folks who need rural broadband for education, educational opportunities, for health opportunities--we are going to see a lot more tele-health, I think, in rural areas going forward. We are going to need that. For farmers, who have to access GPS so they can plant, and do it efficiently, and make a living, and for economic development, there is no question, and a lot of other reasons as well. I have one quick statistical question for you, Commissioner Pai. You gave us some numbers as far as--I think it was municipal providers and small providers. Can you repeat those numbers? You had two numbers, I believe. Mr. Pai. Sure. We received a letter from 43 municipal broadband providers on February 10, and we also received a letter from 24 small broadband providers, each of which serves less than 1,000 customers, on February 17. Mr. Loebsack. Thank you for those numbers. How many small providers are there in the country? You received 20--from 24. Do you know what the number is total? Mr. Pai. I am not sure of the total number---- Mr. Loebsack. We have a lot in Iowa alone. Mr. Pai. Yes, I am not sure what the overall number is, but this is very representative---- Mr. Wheeler. About 800, sir. Mr. Loebsack. About 800? Thank you. Mr. Pai. We also---- Mr. Loebsack. Thank you, Mr. Pai. Thank you, Commissioner. Chairman Wheeler, as I am sure you are aware, the FCC reauthorization bill draft that we had before us on this committee that has been offered by the majority would make the Universal Service Fund subject to the appropriations process. I have been here 9 years, my 9th year, and things are pretty dysfunctional here, as we all know, when it comes to the appropriations process. In this current environment, where Congress seems utterly incapable, if you will, of passing a bill through regular order, we saw this with the last minute--with the DHS, tying USF funding, which is so important for rural areas, as you know, to the appropriations process, I think, does risk a lot of instability down the road. I know you may not be willing to weigh in on this, but my question to you is do you support attaching USF funding to the appropriations process? Mr. Wheeler. Well, let me see if I can answer that, Congressman, by talking about what we hear from the kind of carriers you were talking about the small rural carriers. They say, ``we need certainty. You are asking us to deploy capital, and we need to know that the capital from you is going to come behind that. We need to know with 5, 7 years of certainty that this money is going to be there.'' That is the way the Universal Service Program has been run to provide that kind of certainty. Clearly a serious concern is that if, all of a sudden, that certainty is impacted because the appropriations move like this, or don't move---- Mr. Loebsack. Yes. Mr. Wheeler [continuing]. And we are dealing with CRs, or whatever the ability of these rural carriers to make the investments that are necessary to provide service in high cost areas will be significantly impaired. Mr. Loebsack. Not to mention putting a cap on such a fund as well, which I think is something that is called for as well. This is just a really huge concern for so many of us, the rural broadband issue, as I mentioned. And I have had concerns in the past about how the USF is administered as well. I want to make sure--and I would be happy to hear from any of you here, I want to make sure that the USF fund actually goes to where it is supposed to go as well, and that those folks who can access that, and provide that kind of broadband that is necessary in those rural areas can have access to those funds. Because we also know that a lot of those folks are the ones who are paying into it in the first place, and I have just heard complaints that sometimes the funding doesn't come back to them, they feel as though they are being disproportionately put upon, if you will, in terms of contributing to that fund, and then not getting back, you know, in a proportionate way what they have been putting into it. Would any of you care to respond to that? Mr. Wheeler. So if I can pick up on that, Congressman? Particularly for the smaller rate of return carriers, we are going to be putting into effect this year a revision of the Universal Service Program for them. We are going to deal with the QRS, the hated regression analysis. We are going to come up with a model that says, ``here is what you can base your business decisions on.'' If I can pause for a self-interested commercial for a second, we do need those carriers to help us come together. The reason I knew there were 800 is because we hear multiple voices talking about what they need, and everybody sits in a slightly different position, and if the industry could come together and say, ``here is a common approach,'' that would be very helpful. Mr. Loebsack. Thank you. Mr. Wheeler. I also need to correct the record on something that Mr. Pai said. He was talking about making a broad brush statement about small carriers. The NTCA represents these small carriers, has said--so the track records of RLEX rural carriers makes clear, Title II can provide a useful framework, and does not need to be an impediment to investment in ongoing operation of broadband networks. In a statement, the small rural wireless carriers also said that they will not object to this. So we have got to be careful that we don't haul out a handful of people and make great generalizations from it. Mr. Latta. The gentleman's time is expired. Mr. Loebsack. Thank the Chair for indulging me---- Mr. Latta. The Chair now recognizes for 5 minutes the gentleman from New Jersey, Mr. Lance, for 5 minutes. Mr. Lance. Thank you very much. Commissioner Pai, would you like to respond to that? Mr. Pai. Thank you, Congressman, for the opportunity. I think, first, it is significant to remember that, number one, one of those folks who submitted the comments about Title II were conceiving of Title II in terms of just the last mile connectivity between the ISP and the customer. They had no idea, because the FCC never published the proposal, that this would go all the way to the far reaches of the Internet, including interconnection. Mr. Wheeler. That is not correct. Mr. Pai. Well, Mr. Chairman, please, if I could respond to the Congressman? Second, among the municipal broadband providers who--these are folks who, by definition, represent the public interest in their communities. Indeed, one of the municipal broadband providers was visited by the President himself in the weeks leading up to our vote. They themselves said, please don't fall prey to what they called the ``facile argument'' that Title II won't have an effect. Third, I think it is important to remember that, with respect to the effect that Title II will have on investment and opportunity, none of these services have been subjected to Title II previously. At the very most you can make the argument that last mile connectivity was, but I think it is critical for us to remember that regulation does have an effect. We have heard from members of the American Cable Association, from small ISPs, from municipal broadband providers, and we can all debate about the numbers. What is indisputable is that these providers have thrived with light- touch regulation, and I think that is part of the reason why just yesterday we heard from a major broadband provider, ``we have benefitted from, essentially, government staying out of the Internet, and I am worried that we are now on a path to starting to regulate an awful lot of things on the Internet.'' Who was that? That was Google's Executive Chairman Eric Schmidt---- Mr. Lance. Thank---- Mr. Pai [continuing]. In Washington. Mr. Lance. Thank you. Commissioner Pai, in your dissenting statement you state, I see no legal path for the FCC to prohibit paid prioritization or the development of a two-sided market, which appears to be the--objection by many to the Chairman's proposal. The NPRM frankly acknowledges Section 706 of the Telecommunications Act could not be used for such a ban, and while the NPRM resists saying it outright, neither could Title II. After all, Title II only authorizes the FCC to prohibit unjust or unreasonable discrimination, and both the Commission and the Courts have consistently interpreted provision to allow carriers to charge different prices for different services. Could you elaborate on that---- Mr. Pai. Thank you for the question, Congressman. It has been textbook law since Title II and its antecedents were adopted, and this goes back to the 1880s, when---- Mr. Lance. Yes. Mr. Pai [continuing]. You are regulating railroads, that differential services could be assessed at different prices by common carriers. Extending that toward the Telecommunications Age, it has long been the case, as I pointed out in my dissent, that you cannot ban paid prioritization. And in that regard, I completely agree with the Chairman's statement on May 20 of last year that there is, ``nothing in Title II that bans paid prioritization.'' Mr. Lance. Given that, how long do you think that this is likely to be litigated in the courts? And I ask that because businesses need certainty as to what the rules of the road will be long term. Mr. Pai. I think whether you support or oppose the FCC's order, the unfortunate aspect, everyone can agree on, is this will be litigated for a long time. Mr. Lance. And this goes first, I guess, to the District Court here in the District of Columbia? Is---- Mr. Pai. Well, it will depend on where a petition for review is filed. It could be filed in any of the regional courts of---- Mr. Lance. Yes. Mr. Pai [continuing]. Appeals. And then, if there are multiple appeals, it will have to be chosen by a lottery. Mr. Lance. And is it your opinion that this will eventually reach the Supreme Court of the United States? Mr. Pai. I think it will. It presents a very substantial question, on which I could easily imagine the Supreme Court granting writ of certiorari. Mr. Lance. Commissioner O'Rielly, your views as to the length of a litigation? Mr. O'Rielly. I agree wholeheartedly with my colleague on this. This is a 3 plus year debate that we are going to have in the court system. Mr. Lance. Commissioner Rosenworcel, your views on that, please? Ms. Rosenworcel. I believe we will see litigation, yes. Mr. Lance. And Commissioner Clyburn? And it is certainly an honor to serve with your father in Congress. Ms. Clyburn. Thank you, I appreciate that. I am 99.99 percent sure that bill will be a legal---- Mr. Lance. So this is even purer than Ivory soap? Mr. Wheeler. Wait a minute, I will go better than my colleague, OK? Because the big dogs have promised they are going to---- Mr. Lance. I see. Mr. Wheeler [continuing]. Their word. Mr. Lance. I do think that we need certainty going forward, and I am deeply concerned regarding that. Commissioner Clyburn, in a speech you gave several years ago, you said, without forbearance, there can be no reclassification, and I believe you went on to compare it as peanut butter and jelly, salt and pepper, Batman and Robin. Would you have supported reclassification under Title II without forbearance? Ms. Clyburn. Without forbearance? Mr. Lance. Yes. Ms. Clyburn. One of the things that I think we did right was recognize the current dynamics of the day. Mr. Lance. Yes. Ms. Clyburn. This is not your father's or your mother's Title II. We forbore from 27 provisions, over 700 rules and regulations, so I am very comfortable in saying this is looking at a current construct, and that is you looking at me. My seconds are up. Thank you. Mr. Lance. Thank you. I think you should have compared it to Bogart and Bacall myself. Ms. Clyburn. That will be the next---- Mr. Lance. Thank you very much, Mr. Chairman. I yield back my time. Mr. Latta. Well, thank you very much. The gentleman yields back. The Chair now recognizes the gentleman from California, Mr. McNerney, for 5 minutes. Mr. McNerney. Well, I thank the Commissioners for your hard work on this. Regarding the litigation issue, is there any decision you could make whatsoever on net neutrality that wouldn't involve significant litigation? Mr. Wheeler. I think you have just hit the nail on the head, sir. Mr. McNerney. OK. Just wanted to make sure about that. I believe most or all stakeholders believe that it is important to meet the big three of net neutrality, no throttling, no paid prioritization, and no blocking, but there is other stuff that might be controversial in your recent decisions. Anything that you want to bring up that might be of interest? Mr. Wheeler. Thank you, sir. Actually, there are only four regulations in here: no throttling, no blocking, no paid prioritization, and transparency. You have got to tell the consumers what you are doing, so they have a fair choice. The other thing that we do is to establish general conduct rule that says you will not harm consumers; you will not harm innovators and you will not harm the functioning of the Internet and the public interest. Now, it is really interesting because people come in and say, ``I don't know what that means.'' Well, that is exactly the way the FTC operates, and the way that the carriers have been saying, ``well, let us take things away from the FCC, and give it to the FTC, because we like this case by case analysis better than somebody coming in and having a rulemaking.'' So we are not having a rulemaking that says we know best, this is the way you are supposed to operate. What we are saying is that there needs to be a judgment capability that says, ``is there harm?'' There needs to be the ability, if harm is found, to do something about it, but never to pre-judge, and always to be in a situation where you are weighing all of the interests. Mr. McNerney. OK. Commissioner Rosenworcel, does the FCC have the power to regulate broadband providers, consumer privacy practices that are unrelated to their phone services? Ms. Rosenworcel. No. Not if they are unrelated to their telecommunications. Mr. McNerney. Right. Ms. Rosenworcel. No. Mr. McNerney. No. Is that something that would be of value? Ms. Rosenworcel. Well, obviously privacy is an important issue to all Americans, and privacy in the digital age is an evolving thing. Our statute, which dates back to 1996, involves customer proprietary network information under Section 222, and that is where the bulk of our privacy authority comes from, with respect to telecommunications services. Mr. McNerney. Are there enough engineers at the FCC to help you do your job? Ms. Rosenworcel. I think we have terrific engineers at the FCC, but in revamping the agency, I think we should make it a priority to have more. It is clear that wireless technologies are exploding. The demand for our equipment authorization process is also multiplying exponentially. And if we had more engineers, I believe we would be in a position to help facilitate more innovation getting to the market faster. Mr. McNerney. Do engineers tend to stay out of the politics of the Commission, or are they like other human beings and want to get into it once in a while? Ms. Rosenworcel. Well, that is a kind of metaphysical question. I am not sure I want to answer that one. Mr. McNerney. All right. Let us see. You mentioned that there should be greater use for the upper portion of the 5- gigahertz band. Could you expand that a little bit, please? Ms. Rosenworcel. Absolutely. We benefit immensely from wi- fi in this country. About 50 percent of us use it to go online regularly in public places, and 60 percent of us use wi-fi at home. The bulk of our wi-fi activity takes place on the 2.4 Gigahertz band, but that place is getting mighty crowded. We also have spectrum in the five Gigahertz band that we use for wi-fi. Many of us, for instance, our home wi-fi systems are based on it. But only a portion of the five Gigahertz band is dedicated to unlicensed and wi-fi services. We have got some other uses in there, and I think we should start studying those other uses, and find out if we can free up more spectrum in the 5-gigahertz band so more people have more access to unlicensed and wi-fi service. Mr. McNerney. Well, what are the physical limitations of the 5-gigahertz band? Line of sight, or what are the physical limitations? Ms. Rosenworcel. So the easy way to describe it is the higher you go, you get more capacity, but it doesn't travel as far. So five Gigahertz is really good inside buildings, inside households. And as more of us use devices that are not tethered to a cord, having that functionality is really important. Mr. McNerney. Thank you. I yield back, Mr. Chairman. Mr. Latta. Thank you very much. The gentleman yields back. The Chair now recognizes the gentleman from Texas for 5 minutes. Mr. Olson. I thank the Chair, and welcome to all the Commissioners. Folks back home noticed that Commissioner Pai and Commissioner O'Rielly weren't at the rollout of the new rules on February 26 this past year. They have got some questions they want answered, and want to know what you guys would answer if you had been at that rollout. I know there are claims about these Open Internet rules, that they do not violate the Fifth Amendment by ``taking'' broadband providers' property. The Commission states that the rules do not break the Fifth Amendment because they ``actually enhance the value of broadband networks'' by protecting innovation. If these rules enhance the value of these networks, as the FCC's majority claims, why do broadband providers large and small, wired and wireless, oppose the rules? Any thoughts, Commissioner Pai? Mr. Pai. Congressman, thank you for the question. I think part of the reason why established broadband providers oppose these rules is that they have invested literally hundreds of billions, if not trillions of dollars since the inception of the Internet in reliance on the bipartisan consensus, started in the Clinton Administration, that the Internet would ``remain unfettered from Federal and state regulation''. That same combination of President Clinton and Congress agreed that access to the Internet would be an information service in Section 230 of the Act. In reliance on that determination, a lot of these providers went to the capital markets, spent a lot of money, took a lot of risk, to build out what I consider to be the best Internet environment in the world. As Commissioner Rosenworcel has said, our Internet is the envy of the world. And part of the reason why they have a concern about regulatory takings is, under the leading case of Pension Benefit Corporation vs. Connolly, there is a question about whether reliance expectations have been disturbed by the exertion of these Title II regulations, and that is something that a court is going to have to work out and take very seriously. Mr. Olson. So they think it is taking it, it sounds like. Mr. O'Rielly, your thoughts, Commissioner O'Rielly? Mr. O'Rielly. So I would suspect that there will be an argument made and challenged on the Fifth Amendment, and the assumptions made by the Commission are likely to be put to test in court. Mr. Wheeler. Congressman? Mr. Olson. Yes, sir. One question for Commissioner Pai, hold on a second, if I have some time, but I have got some questions my people back home want me to answer. Commissioner Pai, let us talk about transparency, how the Committee works behind the scenes. You wrote in your testimony that your edits in the e-rate proceedings were rejected, and yet miraculously they came back when another Commissioner introduced those same edits. Is that true, false? Can you elaborate on what happened there? Mr. Pai. Thank you for the question, Congressman. I put my own proposal for E-Rate on the table 2 years ago. When the FCC teed up its own proposal last year, I suggested, OK, I don't need to go with my proposal. Working within your framework, here are a number of suggestions that would get my vote. I was told no, a lot of these are all red lines, we don't want your vote. One of the suggestions I had obviously didn't go to the core of the item. It said, I want to allow schools and libraries to be able to use e-rate funds for caching servers. Doesn't seem too ideologically troublesome to me, but that was rejected explicitly as what was ``a red line''. Miraculously, when the order was ultimately adopted, and when my colleagues on the other side suggested it, it was agreed to. Same thing on the incentive option. I made 12 different asks. I was told no to 11, and maybe on the 12th. One of the ones that was deemed a red line was extending the comment deadlines, because we had put some very complex proposals on the table, we might want to understand what the public thought about it. I was told no, that was a red line, that would risk delaying the incentive auction. Lo and behold, now the Bureau on delegated authority has extended those very comment deadlines twice. These are just some of the pretty non- ideological proposals I have made that have been rejected. Mr. Olson. Is that standard practice? Mr. Pai. It has not been historically. I can tell you that, based on my first year-and-a-half with the Commission, while I might have disagreed with some parts of an order that were ultimately adopted, nonetheless there was a spirit of collaboration and consensus that ultimately gained buy-in from all the Commissioners. And that, I think, ultimately really makes our product stand the test of time. It gains us legitimacy among the American public and gives us more insulation from litigation risk. Mr. Olson. One final question. There are some parties out there that have said this action has been essential because the Internet is so essential to our life, the American life, and that the current situation is outdated, and it must be changed. This is a change. Should that agent of change be you all, or Congress, the elected officials for the American people, our voices, as opposed to, not an offense, but five unelected Commissioners? I am going to go home today and take some heat, good and bad, about what has happened here. You guys will go home to your families and be OK. How about us being in control, as opposed to you all? Any thoughts? Mr. Pai. Congressman, that is precisely why, when the D.C. Circuit rendered its decision last year, I said, without knowing how this would turn out, we should go to Congress for guidance. You wrote the Communications Act. You have updated it over the years. You are the elected officials who should decide how the Internet economy should proceed. On a matter this important, with laws that essentially constrain our authority, we should turn to the experts, which is Congress. Mr. Olson. Constitution. Yield back. Mr. Latta. Thank you very much. The gentleman yields back. The Chair recognizes for 5 minutes the gentlelady from California. Ms. Matsui [continuing]. Mr. Chairman, I would like to yield my time, and we are going to switch our time. Mr. Latta. Well, in that case, the gentlelady yields her time to the gentlelady from New York. Ms. Matsui. Thank you. Mr. Latta. Five minutes. Ms. Clarke. Thank you very much, Mr. Chairman, and I would like to yield a few seconds to my Ranking Member, Ms. Eshoo. Ms. Eshoo. Thank you for your time, appreciate it. To Commissioner Pai, as you went through the litany of your ideas, and you didn't get your way, welcome to the minority. Ms. Clarke. Thank you. Let me just ask a few questions of our distinguished Commissioners. And the first question is to Chairman Wheeler. Chairman Wheeler, I am concerned about multilingual broadcasting alerts, and the FCC's urgency around this issue. In addition to 911 upgrades, what is being done to ensure that the EAS reflects the growing ethnic and language diversity of our nation? Mr. Wheeler. Thank you, Congresswoman, I am glad you asked that question. Literally yesterday I was meeting with our public safety and security body that is an advisory group, and talking with them about the importance of updating EAS, and the recommendations that they have put out, insofar as making sure that those updates are communicated to all the parties. Yes, we have an EAS system that hasn't been updated since the Cold War. We have to fix it to represent not only new technology, but also increased diversity. Ms. Clarke. And I hope that we will make that a priority because, you know, with the challenges that we are facing, 21st century challenges of climate change, of flooding, of, unfortunately, terrorist attacks, it is becoming more and more of a pressing need, a current day need. The next question I have to you has to do with the Section 257 report. Congress requires the FCC to report on market entry barriers every 3 years, but your latest report to Congress, the 257 report, was due December 31, 2012, and it is still forthcoming. Would you give us an idea, or share with us how the FCC will prioritize this as a process reform to ensure more diversity and inclusion in the media and telecom industries? Mr. Wheeler. Thank you. This has been an item of contention. My colleague, Commissioner Clyburn, was moving this process forward when she was acting Chair. I think it is fair to say that it ran into some difficulties inside of the Commission amongst the Commissioners. She did an admirable and excellent job that I am attempting to pick up on, and to move forward on, because these kinds of issues are important to not only the future of how we build out telecommunications, but the future economic opportunities and structure in our country. Ms. Clarke. Very well, I appreciate that. And 2 years ago I sent a letter to then FCC Chairman Julius Genachowski, asking that the issue of activated FM chips in cell phones be examined. I also understand that you, Chairman Wheeler, are interested in this issue. What progress has been made to ensure that my constituents have every tool at their disposal to receive life-saving information in the event of another terrorist attack, power grid outage, or weather emergency? Mr. Wheeler. So FM chips are a great idea, and they are in an increasing number of phones. They bring with them a couple of technological challenges. One is antenna size. They need a bigger antenna to get the FM signal that that becomes an issue in a tiny device. They also can drain battery power. But they are increasingly showing up, consumers have the ability to purchase them, and some carriers specifically focus on them. I think the broader question is whether or not the Commission should be forcing wireless carriers to activate these chips, or whether they ought to be leaving that to consumer choice. I know that broadcasters around the country are running commercials---- Ms. Clarke. Yes. Mr. Wheeler [continuing]. Saying write the FCC, write your Congressperson, and make them do it. I think this is something that is being resolved in the marketplace, and that we ought to monitor that, and watch what happens. Ms. Clarke. I appreciate it. I have a few more questions. I will submit them to the record, Mr. Chairman, but I thank you, and I thank all of you Commissioners for your hard work and diligence. Mr. Latta. Well, thank you very much. The gentlelady's time has expired. The gentleman from Illinois is now recognized for 5 minutes. Mr. Kinzinger. Thank you, Mr. Chairman. Thank you all for being here. Thanks for serving your country, and spending all afternoon with us. We appreciate it. Hopefully not overly much longer. Commissioner Pai, I have to tell you, when you were asked by Mr. Olson about your suggestions to the Commissioner were ignored, and then other folks made the same suggestion, and they were taken in, that was actually pretty mind blowing to me, to be honest with you. And, you know, the joke was made earlier, and I chuckled too, about welcome to the minority, but I hope the Commission doesn't become like Congress, because I think the intention of the Commission was not to be overtly partisan. That is Congress's job. We battle issues, we debate them. I mean, that is what happens. We look for compromise. I hope the Commission doesn't follow our lead on that. Commissioner Pai, in your statement of dissent on the Open Internet Order, you spent some time talking about the procedure surrounding the Notice of Proposed Rulemaking. Specifically, you talked about how much the order changed from its initial creation, and stated that the standard is whether all interested parties should have anticipated the final rule, not that they could have anticipated the final rule. Could you explain a bit further the problems you see with what was originally proposed by the Commission, as compared to what was eventually adopted? Mr. Pai. Thank you for the question, Congressman, and for the kind words about some of the bipartisan efforts I have made at the Commission to reach consensus. I think the problem with respect to notice is substantial. I think the FCC teed up, in May of 2014, a very different proposal from the one it ultimately adopted. The May proposal, for example, was based on Section 706, and never mentioned such things as redefining the public switched network. It never mentioned the extent of forbearance, or even what specific sections would be forborne from. It never mentioned a whole host of other things, and I think the problem is that, once the FCC teed up this plan in--on February 5, and voted on February 26--a lot of the things in there, unfortunately, have not--there is no record sufficient to support them. Forbearance is the best example of that. There is no evidence in the record, certainly not on a geographic market basis, to support a finding sufficient to grant forbearance on a lot of these things. And that is part of the reason why the FCC completely recast its forbearance analysis, created this new analysis that junked a lot of the previous FCC precedents in order to find forbearance. And I think there are going to be substantial legal problems with this. Mr. Kinzinger. Thank you. Chairman Wheeler, earlier you said that if asked to regulate rates, that the Commission would make it clear that the Commission will not regulate retail rates on broadband. Would you agree that a prohibition on the Commission regulating broadband rates is consistent with your views? Mr. Wheeler. So I have said repeatedly that we are not trying to regulate rates, and that, again, if Congress wants to do something in that---- Mr. Kinzinger. Sure. Mr. Wheeler [continuing]. Regard, that is Congress's authority. I would---- Mr. Kinzinger. So, wait, you are not interested in, but what about the next FCC Commissioner? Do you believe that under Title II that they have the authority to regulate rates? Now, you--I mean, and I respect that you don't want to, but you have created something that will now be passed down through generations of FCC Commissioners. Mr. Wheeler. Well, as I said in my earlier response, if this comes before us while I am there, I hope that, without pre-judging the issue, that we can build a record that will make it difficult for that to happen. Mr. Kinzinger. But you could understand, then---- Mr. Wheeler. Congress clearly has the authority to do---- Mr. Kinzinger. You could understand---- Mr. Wheeler [continuing]. Like to---- Mr. Kinzinger. You could understand our concern, you know, again, we respect when you say, I have no intention of doing it. That is great. But you can understand the concern of Congress, where you implement a rule, and then, in essence, say, I don't have any intention of regulating rates, but I am not going to prevent--I mean, I, you know, the next---- Mr. Wheeler. So---- Mr. Kinzinger [continuing]. Commissioner could do it. Mr. Wheeler. Yes. One of the things that we did was we patterned this after Section 332 and the regulation of mobile voice. For 22 years this exact same authority has rested at the Commission for mobile voice service and never been used. Mr. Kinzinger. So if legislation that said, notwithstanding any provision of law, the Federal Communication Commission may not regulate the rates charged for broadband Internet access service, that would be consistent with that view? Mr. Wheeler. That is what we are trying to accomplish. Mr. Kinzinger. OK. Commissioner Pai, we have heard Chairman Wheeler assert that his decision to apply Title II to mobile broadband services will have no impact on investment because mobile voice service has been subject to Title II, and we have seen substantial investment in mobile voice under that regime. Do you agree? Mr. Pai. I do not, Congressman, for a couple of different reasons. First, it is critical to remember that the reason rate regulation for mobile voice didn't occur was because the FCC, from the inception, determined that competition was sufficient in the voice marketplace so that there wasn't any need for rate regulation. Here, by contrast, the FCC explicitly finds that the broadband market is not competitive, so it explicitly opens the door to the kind of rate regulation that was not contemplated for mobile voice. Secondly, with respect to mobile investment, one of the reasons why we have seen such huge investment since 2007 was because of the inception of the smartphone, and the huge increase in mobile data traffic that was generated as a result. Wireless carriers now, big and small, have to spend to keep up in terms of infrastructure and spectrum to deliver some of that mobile data traffic. Mobile data traffic has never been classified as a Title II service. That is what has driven mobile investment, not Title I's application to mobile voice. Mr. Kinzinger. Thank you, and thank you all again for your service, and I yield back. Mr. Walden. Thank the gentleman. We now turn to the gentlelady from California, Ms. Matsui, for---- Ms. Matsui. Thank you, Mr. Chairman. I want to thank you, Commissioners, for being here. Question for Commissioner Rosenworcel. One of the keys to innovation is spectrum, and more spectrum, and I believe we need a national spectrum plan, actually, a plan that considers both licensed and unlicensed spectrum. Now, you have done a lot in this space, I know, so can you share with us briefly some of your ideas to generate revenue from spectrum sharing, and the ways to incentivize Federal agencies to relocate? Ms. Rosenworcel. Thank you for this question, I know, along with Congressman Guthrie, you have done a lot of work in this area. The fuel for our wireless revolution is spectrum, and if we want to have a modern spectrum economy, we are going to need a more consistent spectrum pipeline. Today, as you probably know, when we need more airwaves for commercial mobile use, we knock on the door of Federal authorities---- Ms. Matsui. Yes. Ms. Rosenworcel [continuing]. And we beg, coax, and cajole, and over time they will give us some scraps. And then Congress will direct those Federal authorities to clear out of that spectrum, relocate, and then you will ask the FCC to auction off those airwaves. This process is slow, it is clunky, it is not reliable, and it is not the pipeline that a modern wireless economy needs. That is why I think it is really important that we develop a system of structured incentives for Federal spectrum authorities so that, when we try to secure more airwaves for commercial use, they see benefits in reallocation and not just loss. That could, obviously, include anything from changes in their budgets to benefits through the appropriations process, to the ability to actually secure what sequestration might have taken away. But in any event, I think that this type of pipeline would actually make our spectrum markets more effective, fast, and efficient. Ms. Matsui. Well, thank you very much for those comments. Chairman Wheeler, I have a question for you. Mr. Wheeler. Yes, ma'am. Ms. Matsui. I remain very concerned about the Stingray surveillance devices that are used by a number of local law enforcement agencies, without which appear--there doesn't seem to be any Federal oversight, and the public should actually have more access to the information about the Stingray device, including what it is being used for, its surveillance capabilities, and who has access to the sensitive information that it collects. And despite some assurances to the contrary, it is unclear to me, and many others, how the Stingray device does not collect data on innocent Americans. And so, Mr. Chairman, in August you announced the creation of a task force on the Stingray device and similar technology. I would like to know the status of this task force, and why haven't we seen anything come out of it, and what--a series of questions--and what you are doing to address the real concern about the lack of oversight over this device. Mr. Wheeler. Thank you, Congresswoman. The task force did look into the situation, and what we found was as follows: our jurisdiction, and our authority, is to certify the electronics and the RF components for such devices for interference questions, and that if the application was being made in conjunction with law enforcement, then we would approve it. This is for the technology. This is not for who buys it. Ms. Matsui. Right. Mr. Wheeler [continuing]. In general, we would approve it. And from that point on, its usage was a matter of law enforcement, not a matter of the technological question of whether or not a piece of hardware interfered with other RF devices. Ms. Matsui. So you are saying that it is out of your jurisdiction, and we have to go to other Federal agencies, including law enforcement? Because I am concerned about the device being sold on the market, or over the Internet, to non- law enforcement organizations, or the general public. So this is something we have to follow up with law enforcement, Federal law enforcement? Mr. Wheeler. We would--on the broad issue, it is follow up with--I think that we would have enforcement jurisdiction in an unauthorized use of an RF device if, in fact, it were being sold illegally. Ms. Matsui. OK. Thank you. I just want to bring up another issue here. More consumers, particularly the millennials, are opting for online subscriptions to buy the TV channels and programming content they want, and we are really clearly seeing the market react. HBO and Apple streaming agreement, CBS is offering monthly online subscriptions, and on and on. I really think this is the future, and no doubt it is a complex issue, however, cable video is going IP, and soon the consumer will be basically paying for bandwidth, and we should look for ways to empower the consumer to be able to pay for programming they want to watch. So I think this is something our subcommittee should explore moving forward in a bipartisan manner, and I just put that out there, and I will yield back the balance of my time. Mr. Walden. Gentlelady yields back the balance of time. Chair recognize the gentleman from Florida, Mr. Bilirakis, for questions. Mr. Bilirakis. Thank you. Thank you, Mr. Chairman, I appreciate it. And I want to thank the Commission for their patience today, and also for their testimony. Mr. Chairman, Chairman Wheeler, there was an unfortunate accident in the Tampa Bay area, the area that I represent in Congress, last April involving Mr. Humphries. It seems that he had a powerful jammer in his SUV, powerful enough to jam local law enforcement radios and calls to 911. He had been doing this for over 2 years. When a local cell phone company reported interference, the field agents in the Tampa office quickly tracked him down, and ended the significant threat to the safety of the folks in the Tampa Bay area. It is my understanding you are planning to close this enforcement office in my area. As a former chairman of the Homeland Security, Emergency Preparedness, Response, and Communications Subcommittee, I have a few questions. How many offices, if you are closing any, do you plan to close, sir? Mr. Wheeler. Sixteen. Mr. Bilirakis. Sixteen? Will the job slots say from the Tampa Bay area be moved to the Washington, D.C. area, yes or no? Mr. Wheeler. No. Mr. Bilirakis. OK. Are you closing the field offices and laying off staff to support the Enforcement Bureau's new work under the net neutrality order? Mr. Wheeler. No. We are doing it to increase productivity. What we are finding is it costs two to three times what a centralized operation would cost, that we have got too many people doing too few things in a specific area, not meaning there aren't issues there, but that we can get greater productivity if we follow the kind of model the FAA has been doing, where you have strike forces. So we would leave in place, in Tampa, for instance, necessary equipment, and would bring people in out of the Miami office to deal with the kind of situations that you are talking about, and that is a more cost efficient way of accomplishing the kind of goals you are talking about. Mr. Bilirakis. Florida is a big state, sir. According to the budget request, page 50, the agency will preserve the integrity of public safety communications infrastructure by taking action on 99 percent of complaints of interference to public safety communications within 1 day. Will you commit to ensuring that this metric has been met historically according to the performance report the Commission has issued over the years? Will you commit that this metric will be met---- Mr. Wheeler. We believe that we can do this without a diminution in quality, sir. Mr. Bilirakis. OK. Will you provide the committee a quarterly report detailing the Enforcement Bureau's success in meeting that metric, including a list of actions taken through the remainder of your Chairmanship, sir? Mr. Wheeler. Good idea. Mr. Bilirakis. OK. Very good. What do you want me to tell the deputies--I know you talked about it. If you can elaborate a little bit more, what would you like me to tell the deputies and other first responders in the Tampa Bay area who may be in danger? This is a very important issue, as you know, public safety, by the delayed response inevitable, and losing an Enforcement Bureau field office, which, again, Florida is a big state, and I know other members probably have questions with regard to the offices that are being closed, 16 nationwide. Mr. Wheeler. So I think the reality that we face is that we have a flat or diminishing budget, we have unfunded mandates imposed by the Congress, and we have to say, ``how can we increase efficiency?'' Do I want to close these offices? I don't want to hear what you are saying, I don't want other folks who are representing areas that are going to lose offices, and hear their complaints. But I have got a fixed amount of dollars to work with. Mr. Bilirakis. I will go on---- Mr. Wheeler [continuing]. So the question becomes how do you become efficient? And that's what we're trying to do. Mr. Bilirakis. Thank you. Commissioner O'Rielly, how do we, the United States, have any credibility telling other countries, like China or Iran, not to control network management practices within their borders if we are taking large steps in that direction, with the recent overreaching broadband reclassification? Mr. O'Rielly. So I think there is an extreme trouble that we are setting our stage by passage of this item on net neutrality. I think it sends the wrong message internationally. That matches up with my conversations internationally, when I went to both Spain recently, and I was in South Korea for the ITU. They are interested in engaging on issues of the broadband. They would like to get as much involvement as they can. Those regimes you speak of obviously have greater government control on the practices of Internet in their nations. So it is a bifurcated message that we were able to send before the passage of this item, that we shouldn't do it here, and you shouldn't do it there. Now we are saying, well, we are willing to do some things on regulating broadband, but you shouldn't do them over there, or that it is OK, acceptable practice across the world, which I think is just a terrible message for them to send---- Mr. Bilirakis. Mr. Pai, what are your thoughts on this issue? Mr. Pai. Congressman, thanks for the question. I agree with my colleague, Commissioner O'Rielly, and I would associate myself with the State Department's views 5 years ago, when they represented, ``We are concerned that in some countries net neutrality may be used as a justification for blocking access for purposes of preventing unwelcome political, social, or cultural information from being disseminated to their citizens.'' And I think this is a bipartisan issue on which the U.S. has historically stood together, and I hope, notwithstanding the February 26 order, that would continue into the future. Mr. Walden. Gentleman's time---- Mr. Wheeler. Congressman---- Mr. Bilirakis. Thank you. Mr. Wheeler. Mr. Chairman, could I just say, for the sake of the record, could we submit for the record---- Mr. Walden. Sure. Mr. Wheeler [continuing]. The full quote that was just excerpted by Commissioner Pai? Mr. Walden. Absolutely. Mr. Wheeler. Great. Thank you. Because it is really taken out of context. Mr. Pai. It is not. Mr. Walden. Yes. We now recognize the gentleman from Ohio, Mr. Johnson, for 5 minutes. Mr. Johnson. From the great state of Ohio---- Mr. Walden. Stop it. Mr. Johnson. Chairman Wheeler, I want to tell you how honored I am that you have chosen to join with our Chairman in paying tribute to---- Mr. Wheeler. You---- Mr. Johnson [continuing]. Ohio State today. Mr. Wheeler. You picked up on this, sir, the---- Mr. Walden. Is this button the one I use to mute? Mr. Johnson. OK. Commissioner Rosenworcel, in your opening testimony, I want to associate myself with something you said. You said we rarely go anywhere these days without our mobile devices on us. I couldn't agree with you more. I was in information technology for over 30 years, long before there was any such thing as the Internet as we know it today, and I submit that the reason we have these things is because we have had unregulated, by the Federal Government, Internet and information services, which has allowed for the innovators to blossom. So I agree with you. Chairman Wheeler, this committee has requested a number of documents that have been denied under the claim of deliberative process privilege. For the deliberative process privilege to apply, an agency must show that a communication was a ``direct part of the deliberative process, and that it makes recommendations or expresses opinion on legal or policy matters''. And in proceedings like the Open Internet proceeding, ex parte filings are required to disclose communications between the FCC and the executive branch, or its staff, if those discussions are, I quote, ``of substantial significance and clearly intended to affect the ultimate decision''. Now, I am trying to figure out how these two different concepts apply here. In withholding certain communications between the White House and the FCC, you have asserted the deliberative process privilege. If those communications were relevant to the Commission's deliberation, several questions emerge. Weren't they subject to the Commission's ex parte rules? Are the contents of those meetings memorialized in any docket at the Commission? How could these conversations with the White House have been both a direct part of the deliberative process, but not have been of substantial significance in that proceeding? Those are questions that are rolling around in my mind. Now I will get to a question for you. I know that you have indicated in your written testimony that you received no secret instructions from the White House. But, of course, secret instructions are not the standard for determining when ex partes are available. Here is my question. In the 10 meetings that you had with the White House in advance of the FCC's action on the Open Internet, is it your opinion that the only meeting that addressed the merits of the Commission's Open Internet proceeding occurred last November? Mr. Wheeler. Yes, sir, and---- Mr. Johnson. Did you say yes? Mr. Wheeler. Yes, and the 10 meetings, just to be clear, were not meetings that were necessarily on Open Internet. We had trade issues, we had national security issues, we had cyber issues, we had auction issues---- Mr. Johnson. But in the 10 meetings that came in advance of the FCC's action on the Open Internet, you are saying that there was no information or discussions of substantial significance and clearly intended to affect the ultimate decision, which would require the disclosure of that information? Mr. Wheeler. There are---- Mr. Johnson. Is it your opinion that---- Mr. Wheeler. There are two parts here. One, you have---- Mr. Johnson. No, that is a yes or a no answer---- Mr. Wheeler. No, you correctly identified what the test---- Mr. Johnson. So is it yes or no? Mr. Wheeler [continuing]. And I did not get instructions in those meetings. Mr. Johnson. No, I am not talking about that. I said do they qualify under ex parte, or how do they qualify for both--I am asking you a question---- Mr. Wheeler. And there is an exemption---- Mr. Johnson. Mr. Wheeler, I am--my time. Mr. Wheeler. And---- Mr. Johnson. How do they qualify under both? If they are in discussion with the White House, my goodness, that is the highest office in our land. I find that the American taxpayer does see that as significant and substantial. How can they not be significant and substantial, clearly intended to affect the ultimate decision, and yet you deny them under a deliberative process claim? Mr. Wheeler. Well, there are multiple parts to that. You asked how. One is there were not instructions given to me. I have been on the record on that, and been clear. Second is that---- Mr. Johnson. That is not the determination. Mr. Wheeler. I am about to--the determination also is that, specifically, interactions with Congress and the White House are excluded from ex parte, and have been since 1991. But I am going beyond that, and saying that is a non ex parte conversation, if there was a conversation that was taking place in that kind of a construct, and two, that--I will even go---- Mr. Johnson. Under what basis? Mr. Wheeler [continuing]. I got no instructions---- Mr. Johnson. Under what basis? I mean, you can't just make that up. The law says what is required to be revealed and what is not to be revealed, and a deliberative process privilege applies when you can show a direct part of the deliberative process, and that it makes recommendations, or expresses opinion in legal or policy matters, rather than substantial significance and clearly intended to affect the ultimate decision. Mr. Wheeler. I am quoting the---- Mr. Johnson. Well, I am disagreeing with you, Mr. Chairman, and I think it is irresponsible that you are withholding information that rightfully should be openly disclosed to this Committee, and to the American people. And, Mr. Chairman, I have---- Mr. Walden. Gentleman's time---- Mr. Johnson [continuing]. Exhausted my time. Mr. Walden. Chair now recognize the gentleman from New York, Mr. Collins, for 5 minutes Mr. Collins. Thank you, Mr. Chairman. Before I get to my questions for Commissioners O'Rielly and Pai, one follow up to Mr. Johnson's question, Chairman Wheeler. There were 10 meetings, and we do understand there was, on the ex parte side, disclosure on one of those 10 meetings. It is my understanding that on the other nine meetings there was nothing of significance discussed relative to the FCC, where, under the rules of ex parte, that you should have, or would be required to otherwise disclose those. Is it true there was nothing disclosed on nine of the 10 meetings? Mr. Wheeler. No, the test is---- Mr. Collins. No, I am not asking you for the test. Mr. Wheeler. No, there is a---- Mr. Collins. Was there anything disclosed? Mr. Wheeler. There is---- Mr. Collins. Sir, I am asking the questions. Mr. Wheeler. OK. Mr. Collins. Was there anything disclosed on the other nine meetings? That is a yes or a no. Mr. Wheeler. I had no---- Mr. Collins. That is a yes or no. Mr. Wheeler [continuing]. Instructions. No. I had no instructions. Mr. Collins. Well, I guess I am befuddled that in nine of the 10 meetings in the White House there was nothing of any consequence discussed relative to the FCC that would require disclosure. I will take you at your word, and just say I am befuddled by that. Now, one thing that we were clear about today is the importance of certainty. And Chairman Wheeler, more than anyone, stressed the importance to the providers in the Internet space of certainty, certainty, certainty, and I can't agree more, with my life in the private sector. Certainty drives investment and returns, and with certainty you invest in innovation. And I would say it is pretty obvious today, the way things have worked has been pretty good, the light touch. We have the number one service in the world. The investments have been billions, and, as Commissioner Pai said, maybe trillions of dollars. We lead the world today. Now, here is my concern. We have also heard unanimous agreement by the Commissioners litigation is coming, and likely to take 3 years. It is guaranteed. Chairman Wheeler said guaranteed there is litigation coming for 3 years. Well, if that is not the definition of uncertainty, I don't know what is. For the next 3 years the folks looking to invest and innovate in this world have to live under the ultimate uncertainty of which court is going to rule how, and when does it move, and what do you do? So, to me, there is a real issue here, a very genuine issue of inconsistency with the Chairman stressing importance of certainty, and then saying, and one thing is certain, we are going to court, which guarantees uncertainty. So I guess, Commissioner Pai, I would like to say again, to me, lack of certainty is a wet blanket on investment. Lack of certainty is a wet blanket on innovation. And my worry is, with less innovation, and less investment, we will someday wake up and not be the leaders in the world relative to what we think and know is probably one of the most important aspects of where we are headed. Could you briefly comment on that, and perhaps take a minute, and then I would like Mr. O'Rielly to fill in the remaining time. Mr. Pai. Thank you for the question, Congressman. I couldn't agree with you more that uncertainty is the bane not only of the private sector, but ultimately consumers, who won't get the benefit of some of that private sector risk. I will give you just two instances of uncertainty that this order generates. First, with respect to the so-called Internet conduct standard, which lays out seven vaguely worded non-exhaustive factors under which the FCC is going to determine what is allowed and what isn't allowed. And the FCC, after the vote, conceded ``we don't know where things go next''. The FCC ``will sit there as a referee and be able to throw the flag.'' The Electronic Frontier Foundation targeted this particular rule and said the problem with a rule this vague is that neither ISPs, nor Internet users, can know in advance what kind of practices will run afoul of the rule. Second example, the Enforcement Bureau advisory opinion process. Nobody knows exactly how it is going to work. Commissioners aren't going to have the ability to have input into that. And when you pair the Enforcement Bureau advisory opinion process with this Internet conduct standard, essentially the entrepreneurial spirit of American is going to be funneled through this regulatory bottleneck, and nobody is going to know in advance until they get permission from Washington what is allowed and what isn't. Mr. Collins. I couldn't agree more that the only thing certain is uncertainty for the next 3 years. Commissioner O'Rielly? Mr. O'Rielly. I couldn't agree with my colleague any more. I think he has hit it right on the head. I would say I was in St. Louis not but a couple months ago and talked to wireless ISPs, and talked about what could happen under this item, and what it would mean for their business. And these are the guys that are the small guys. We talk about 800 other providers, well, these are 800 wireless ISPs trying to serve in the most rural parts of America, and they are stringing together networks under unlicensed bands, and they are asking for more spectrum, and they are like, what does this mean for me? And I am like, it means more paperwork, it means more compliance, it means you don't know what you can do for your business for a number of years. And they were just frustrated beyond belief. Mr. Collins. Well, I share your concerns, and I think America will too, and we will have to see where that heads. Mr. Chairman, my time is up, and I yield back. Mr. Walden. Thank the gentleman from New York, and our witnesses. And I have heard some of the same things from small Internet providers in my district. They are feeling like they are going to be overwhelmed by this, and so I am meeting with some of them as well. I know Mr. Scalise is on his way here, the Whip of the House, so we will try to accommodate his questioning. Ms. Eshoo. Mr. Chairman, I am going to have to leave. I have to catch a flight, and I don't know if that has an effect on--if I leave, can you keep the hearing open? Mr. Walden. We can seek counsel on that. But, obviously, we should try to accommodate the third ranking member of the---- Ms. Eshoo. No, I know, but I---- Mr. Walden [continuing]. Of our committee, who is on his way. Ms. Eshoo. We started at 11 o'clock, so, I mean, he could-- -- Mr. Walden. I---- Ms. Eshoo. He has had some time to get here. Mr. Walden. I understand. Ms. Eshoo. I am a patient person, but I don't want to miss my flight, so---- Mr. Walden. What time is your flight? Ms. Eshoo. I have to go out to Dulles. Mr. Walden. So while we---- Ms. Eshoo. It doesn't leave from the Rayburn horseshoe, unfortunately. Mr. Walden. So while he comes in the door here--we are now going to let him get settled, but, as he is--first of all, if I could ask all of the witnesses there will be some follow-up questions. Some of them you have all taken down. Because of the nature of our work, we would like to have prompt responses to the questions. I know you have probably had questions from other Committees as well, I get that, but the extent to which you can respond promptly, that would be helpful. Thank you, Anna. And we would like your feedback on the draft legislation that we put out there. All of your feedback would be most helpful. It is not a rush job. We are trying to get this right, and we think it is very important. So, with that, I would now recognize the gentleman from Louisiana, the Whip of the United States House of Representatives, allowing him to catch his breath fully, Mr. Scalise. Mr. Scalise. Thank you, Mr. Chairman, and I tested my 40 speed getting here, but I appreciate the Commissioners being here, coming to testify about their Commission, also about this net neutrality proposal that I know I have strong concerns about, and a lot of my other colleagues have expressed real strong concerns about as well. I guess when you get back to the basic question of what has worked so well with the Internet, and the technology community as a whole, somebody who graduated in computer science, who has worked in the technology industry, I have always felt that the reason that the industry has been so successful is because the Federal government hadn't figured out a way to regulate it, to slow it down. And then yet here you come with an answer to a problem that doesn't exist, a heavy handed role of government, and the FCC's traditional role has not been to have a heavy hand. And this, when you look at the proposal that has come out, my goodness, I mean, over 300 pages of regulations. And this is just the first round, before the proposal is even been put into effect. I guess anybody is looking for a free and Open Internet, I am sure they looked to the over 300 pages of regulations from the Federal Government to start that process. It is not broken. Why is the Federal Government here to fix something that has been working incredibly well? Especially when you look at the role of Federal regulations over the years, and just what they have done to harm our economy. I do want to ask you, Commissioner Pai, because you made some comments earlier about the potential taxes and fees that can come with this Title II classification, and when you look at Section 202 of the law, it clearly gives that ability for the FCC to get involved in regulating costs for the Internet. And so if you could share with me just what kind of impact this can have on both fees being implemented, higher prices that consumers will ultimately pay from this new classification? Mr. Pai. Thank you for the question, Congressman. I think a multitude of fees and taxes are going to be levied on broadband in a way that is ultimately going down to the consumer's detriment. Just to give you one example, now that broadband has been reclassified as a telecommunications service, that order explicitly opens the door to billions of taxes and fees being assessed through the Universal Service Fund. So now, in addition to that line item you see on your phone bill which only applies to your voice, the Universal Service Fee, you are going to be paying a fee on broadband, and that will happen, I would imagine, in the next several weeks or months. Secondly, and critically, there are all sorts of other fees that are going to be assessed. For example, currently a lot of broadband providers that had not been classified as telecom providers paid a lower rate for the equipment that they attached to the utility poles, known as pole attachments. They paid a rate under Section 224(d). Now, because they are all telecom providers, they will have to pay a much higher rate at Section 224(e), and smaller providers in particular will have to pay $150 to $200 million a year just for those higher pole attachment rates. Then you add on top of that the higher state and local property taxes that a lot of these companies will have to pay, because they are now telecom providers. All of these costs have to come out of somewhere, and it is going to be the consumer's wallet, and that is one of the reasons why I am concerned. Mr. Scalise. Yes, and we have seen this time and time again, that these kind of regulations, and ultimately these new fees and taxes that would be paid are ultimately going to be paid by consumers, by people that have been enjoying the benefits of the investments that have been made by private companies. This isn't the Federal Government investing. This is private investment, to the tune of billions of dollars. I will read you this quote, and maybe I will let you answer it. ``There is nothing worse for investment, innovation, job creation, all things that flow from investment, than businesses not knowing what the rules are.'' You want to comment on that? Mr. Pai. I think that is, as I have pointed out many times, the bane of not just the private sector, but the consumer, to not know what is going to be allowed and what isn't. And it is exactly in that environment where the private sector is the least likely to take the risk, to raise the capital, to build the infrastructure that is going to connect Americans with digital opportunities. And I believe, as you pointed out eloquently in your statement, that part of the reason why we enjoy the best Internet experience in the world is because we have had this historic bipartisan commitment, dating back to the Clinton Administration, that the Internet would be free from state and Federal regulation. Mr. Scalise. That quote, by the way, was Chairman Wheeler at his confirmation hearing. I do want to ask you, Commissioner O'Rielly, because you commented on this order that it will negatively impact edge providers. Of course, many of the edge providers have been proponents of these net neutrality regulations, but you have raised some concerns about how even they would be negatively impacted, people that even asked for this. So if you could comment on that? Mr. O'Rielly. Yes. A number of people have highlighted on this fact, is that the lines between an edge provider and a telecommunications provider under our new definition are blurring over time. And so today you may be an edge provider, tomorrow you may be something else. You may have multiple parts to your business, and that is problematic as you try to figure out how best to comply with our rules. More importantly, I believe that the Commission is going to continue to push its regulations up the chain. And so today is about telecommunications providers, and we talked about that under our new definition. And then we are going to, we now are having a debate in terms of--we are going to have some kind of structure to deal with interconnection, or the middle mile, what used to be known as peering. In my conversation, we are bleeding right into the backbone of the Internet, and I think that only leads us to edge providers over time. Mr. Scalise. I see I am out of time, but I appreciate your answers, and hopefully this does go forward. But, with that, I yield back the balance of my time. Mr. Walden. Gentleman yields back, and now that I know the rules only require two members of either party to be here, we could go five or six more rounds. Mr. Scalise. Let us go. I am sure they would love to stay around longer, and---- Mr. O'Rielly. Could we order in? Mr. Walden. I want to thank our witnesses. I know you have a tough job, and we may disagree, but we are all trying to do the right thing for the country, so thanks for testifying. Again, if you can promptly respond to our questions, that would be appreciated, and we look forward to your return visit in the not too distant future, we hope. So, with that, the committee stands adjourned. [Whereupon, at 2:15 p.m., the subcommittee was adjourned.] [Material submitted for inclusion in the record follows:] Prepared statement of Hon. Fred Upton Reauthorization of the Federal Communications Commission is long overdue as the agency was last reauthorized nearly a quarter of a century ago. A lot has changed over the last 25 years, and reauthorization provides an important opportunity to refocus the commission for the innovation era on its core purpose and responsibility to administer the policies set by Congress for the American people. I intend to see that we deliver. The commission has an obligation to conduct its business in the open and in accordance with the law in the public's interest. The FCC's recent Open Internet proceeding, however, has been plagued by process failures. Very few people understood the extent of the FCC's new rules regulating the Internet until they were actually showcased by the FCC. And if press reports are accurate, nearly all of those who were looped in work at the White House. Impacted parties must be given the opportunity to review and understand the regulations the FCC proposes before they are adopted. That didn't happen here. Worse still, this is not the only proceeding that has raised questions of the FCC's process integrity. In addition to the lack of transparency, I fear that the FCC has neglected other duties in favor of moving a politically motivated net neutrality decision. At last year's oversight hearing, I expressed my concern at the delay in completing the 2010 Quadrennial Review of Media Ownership rules. To date, the commission still has not done the statutorily mandated work and unfortunately, there are many more proceedings languishing at the FCC. This reauthorization process also provides the opportunity to clarify the commission's jurisdiction. Of late, the FCC seems to be intent on expanding its authority to be the regulator of all things privacy. This is not the commission's role. Rather, it shares responsibility for privacy with the Federal Trade Commission. But the FCC's recent decision to reclassify broadband has taken broadband providers out of the FTC's jurisdiction. As we heard from the FTC at yesterday's hearing on data breach, this action has made consumers less safe. The American people and our nation's economy deserve better and the commission has a lot of highly technical work ahead. These complex and difficult issues will require the best efforts of us all. I hope that we can work together to bring back an effective, transparent, and apolitical government agency that produces fair outcomes and good policy. Let's get the train back on the tracks. ---------- [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]