month. >> 1.250. i just lop top 150,000. >> regardless it is a generous amount of money to administer, and while it is sick obligated process i think mr. feinberg is realized it is even more competition than the 9/11 project in many ways with 1 million claimants. it is not a perfect system. if anything, it is a very -- in so many promises have been made by mr. feinberg himself to people who live along the gulf coast not just in alabama but louisiana, mississippi, florida and texas. so many broken promises and foresight so i'm grateful for the opportunity to be here but i will obviously have our questions than will be time for and i would lie to ask and i mentioned to this to the chairman. if mr. feinberg has no objection i would like to invite the

people who live along the gulf coast to take advantage of this time where we traditionally have five days for additional questions for the record that mr. feinberg would respond to. i would like to get people who live in alabama chance to have met with me before and who were promised certain things and they didn't get those promises fulfilled, would you have any objection to letting us get those questions submitted to you? >> no, i would welcome it. >> thank you. a couple of questions. vice president biden said the $20 billion is a floor, not a ceiling. is that correct? >> that is correct. >> let's just rounded up, $6 billion. how much do you think before august the 2013, based on the trends you have seen thus far, how much you think you will exhaust? >> i would be reluctant congressman to take an estimate of that, but i remind you as you

know, that $20 billion is used for purposes other than the gulf coast claims facility. local cleanup costs come out of the 20 billion, government claims that are being paid in alabama by bp comes out of the 20 billion. so i can't venture a guess as to how much the total amount will be that will be spent. i would like to think that the 20 billion would be adequate to compensate eligible claims, but bp has made it clear that if 20 billion is not enough, they will honor all additional financial obligations. >> you also indicated that you were independent of bp. your quote in july 2010, i work with the people of the gulf region. i am totally independent although the federal judge has now questioned that. i want to try to maximize as

much compensation as i can fairly and consistently to the people i'm trying to serve down there. do you still stand by that statement? >> i do, and a. >> but does bp not have the final say of these large settlement claims? do they not have to approve or disallow? >> absolutely not. absolutely not. what bp can do under the protocol, if it so desires for claims that are over -- overpaid by the gccf and amounts of $500,000, they have the right to seek to appeal if they want to a three-judge panel that was set up not by me, but was set up to review the claim. bp to my knowledge has exercised that right in one single case. >> well, that is not the information we have received but we will take that up separately. u. of also indicated in an answer to an earlier question that there is basically 1% of the claims that are fraudulent. is that right? >> we have received i think i have got this.

we have received what we think are 14,000 raw chile claims and we have sent 2800 to the department of justice. >> regardless, data we got from your own web site, the auditor and accounted in my district has collected every day to compare shows that 116,000 of the 331,560 claims processed have been refused payment which would mean 35% of the claims have been refused payment. according to your date are you stating that 35% of those that have been refused payment or because of fraud? >> no, not at all. if we have refuse claims, could be for a number of reasons, no documentation, insufficient documentation, ineligible. it might be a claim from idaho, i don't know. i am just throwing this out. government claims are ineligible. moratorium claims are of course

ineligible. there are all sorts of reasons that we either denied claims or dean claims to be deficient. >> thank you mr. chair. .. we received more claims in a week than we received in the

entire life of the 9/11 victim compensation fund. -year-old and a 2 of the claims will result in some inconsistency. it is inevitable. what we do when we find in consistency, either we find on our own or the claimant bring that to our attention or the client's account or lawyers bring it to our attention. we will look at it. if we made a mistake, if it is inconsistent we will pay the difference. we are not looking to promote inconsistency. it is a problem we don't want to have magnified. >> i yield the balance of my time. >> thank you. i have a few more questions. according to data collected from your web site everyday and analyzed individually by the medical doctor and city officials in alabama, 95% of the

claims that have been processed and reviewed, 54% have been processed issued for final payment, 46% have not received final payment. 69% paid of the quick paid for a variety that require no additional documentation to process. 3% pay for the final payment. i throw those numbers out because basically you would lead us to believe that this has been a success because so many people apply. 2,000 we continue to apply and yet is it not true that the burden you have placed on many of these individuals and businesses for additional requests for information even when they submitted their claims with certified accountant and shown the documentation, that

there has been great inconsistency in the payment process and more people were not paid and have been paid. >> i don't think there has been great inconsistency. that is why you are promoting the notion of the independent audit to get some answers to that question. i think the people that take a quick payment take a quick payment because they don't have any additional documentation to show or have already been adequately paid during the emergency payment period. i point with pride to the fact that overall almost $6 billion have gone out in one year. we are doing something right. when you say people are applying 2200 new claims a week because they are being tricked or deceive i don't think that is the case. they see their next-door neighbor getting paid and they file a claim and make the same argument and hope they get paid as well.

>> you mentioned audit. i contacted you in the spring of last year and asked you to initiate an audit on your own and i don't believe the qaddafi agreed to do that. we had the appropriation bill demanding an audit requiring the justice department to do it because the assistant attorney general who came to our district realized this was not adding up as intended and even the attorney general when he was along the gulf coast earlier this year, then contacted mr. feinberg and said an audit is necessary. this has not begun yet. they are not even named to do the audit. >> that is correct. i just want to say i don't speak

for the department. the department will choose the auditor and move your demand. i want to point out the independent audit it is my understanding. i mentioned this earlier. on the one hand there is a demand for department move forward with great speed to get this over do. on the other hand the department as i understand it from letters, copies of which i get, there are various public interest groups, lawyers, elected officials who want input into that process and some of them in the last few weeks got to the department with their suggestions so the tension between speed and inclusiveness is partly the reason there has been a delay in your view. thank you. >> we have less than ten minutes to vote. if you look at the number of people that haven't voted we have more time than that. i will recognize mr. whitman. this will be the last question

and then we will recess. the time of getting back here is approximately 11:30. we only have a half-hour or so. for those of you that want to engage please get back here after last vote. you are recognized for five minutes. >> mr. feinberg, i want to follow up on dr. fleming's assertion about the worst industry in louisiana. as you know the united states this year be its shallow oysters and interconnected processors in one state rely on harvesters and dealers in other states to have their market needs met in those areas. the mid-atlantic is part of that. you heard this nonsense about west coast also. in that vein there are processors out there that have these relationships with producers that have contracts that have to deliver a certain number of wasters. in this realm of you considering

claims, is it reasonable to consider a claim from somebody that processes wasters in virginia that relies on those oysters from the gulf as a legitimate claim under your process? >> absolutely. if there is a direct link between virginia oyster processing company that depends its livelihood on gulf coast shrimp by all means i can go back and see but i am sure we paid some of those claims. in maryland we are paid a couple of oyster restaurants that we paid that were dependent on gulf shrimp for their livelihood. we say that the seafood industry is interconnected with shrimp and oysters and in some instances even fish. to make sure you are keeping in mind the impact of secondary impact on states and producers is critical. i would like to yield the

balance of my time. >> thank you for allowing me to sit in today. mr feinberg, i share the same frustration as other gulf state colleagues have expressed from bonner to congressman landry. we are frustrated. we are tired. many of us feel hopeless in the whole process. we also feel in salted. we have some very smart people. we have accountants and lawyers trying to help people along the gulf coast provide claims and support and documentation. as they do it they feel like they are given the best information, the claim center once and is still reject it or there are delays in processing so the comment congressman landry made is stonewalleding to drag it out or not pay out the

$20 billion which was supposed to be the 4. not the ceiling on making sure those effected by the worst man-made disaster in our nation's history hold again. but people don't feel like they see inconsistency. they -- a perfect example is omega protein. a large company that got a $45 million pay out in their first year and when you have shrimpers and charter boat captains and others who have made a living for generations off of the gulf coast have yet to receive a first payment or payments being offered or insulting and embarrassing and leaves them with the option to take what they can, cut their losses or go to litigation. people in mississippi litigation is the last thing we really like to go to suppose some people

will go to it. the main thing is i am expressing what south mississippi and my colleagues all along the gulf states, this is what we are seeing and feeling. going forward, you have $14 billion left. give these people -- you are going to send out a massive bailout. if you have your paperwork come in and keep communicating that to the public and letting people know they can receive reimbursements or they have the right to come in and do a claim. also listen to the people who have made living out of the gulf war made a living the fifth court six or 7 generations if your methodology for reimbursement is not acceptable to them try to come in and find common ground. find that place because these are the experts. i don't expect you to know how to reimburse. you probably have an idea but that is not what you are doing

especially going to the cities and municipalities that is not in your range but you have been on ground zero for a long time. the methodology being offered cities and municipalities are in solving. the city was offered $79,000. may be $79 million would be acceptable. $1 per resident. i share the same concern as my colleagues. i appreciate the chairman allowing me to come in. please take that home and make it right. >> i thank the gentleman. for quick question. i am sympathetic to mr. landry on this shrimping question. the question of how we deal with these fishermen. this is a huge unprecedented science experiments that took place with bp dumping all the chemicals in with the oil and now we're seeing the worst

shrimping in 40 years. if it continues past 2013 my understanding is after 2013 all the money goes back to bp. do you have a recommendation to us in terms of how to handle an issue like that given that the science might be pointing to longer-term economic catastrophe brought to shrimpers and that the funds in 2013 -- do you have any words of wisdom how we should handle it? >> i would say two things. one is what happens after august of 2013 is a subject that the congress should raise with bp and are suppose the administration which is part of that escrow agreement. as you pointed out, congressman, this is a rather unprecedented situation. bp in putting up as you pointed out this $20 billion is a rather

unique contribution by a private corporation to try to create a system that is not required by existing law. i think bp deserve some credit. >> i am giving them credit. i did that in the opening statement. it is only what happens given the fact that there is a causal connection between what bp did and what could continue to be happening in the gulf in 2013-14-15 in terms of ensuring there is some capacity to compensate people of the hardest occurring in a significant way particularly for the fishermen. >> one option would be if bp ones to extend the deadline of the program past august of 2013 or the foreseeable future that is something congress might raise directly with bp. >> we are going to break and i will simply sarah reference this in my opening statement simply

this is unprecedented and repeated several times but the fact this initiative did come from this administration without any semblance of oversight is somewhat problematic and this is maybe an experience of something in progress. we will have to see how it works. we are getting close to votes. mr. feinberg, we anticipate the votes will be done at 11:30 and we will reconvene at that time. please stand for recess. [silence] [silence]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> usually what we do is post it on the web site and invite comment. [inaudible conversations] >> everywhere i turn the shrimpers -- the elected officials are concerned particularly about the future of what shrimp harvesting in louisiana area, that is where we're hearing the most. it is rather unanimous. we have always said in the gulf coast facility that we will

monitor events and reserve the right to modify our methodology as we learn more about what is going on in the gulf and this is an example of the committee. something to be said here about doing something about the shrimp industry. >> have they not been fairly compensated? >> i think they have been fairly compensated and a problem is we are hearing now in 2011 that what we have seen in the way of harvesting is problematic. >> in regards to the independent audit, you expressed support of doing that. does congress have to approve that? i am sorry if this is a question from someone who has not been following this closely but has this been started or is there any idea -- >> i am waiting for the top of the justice's decision as far as

to how -- it is the department's call. >> are you expecting that? >> if you are a shrimper that except a final payment can reapply? >> you thought was the right thing to do you released it. >> the shrimpers -- >> that is one of the problems. i want more from prison the system. >> leftover money from 2013, this money left over to congress to deal with. >> leftover money in the congress is congress's. >> the administration and bp signed and escrow agreement. money that is not extended congress. >> i would have nothing to do with that.

thank you. [inaudible conversations] [inaudible conversations] >> the chairman notes we have a quorum and will resume. we thank you, mr feinberg for hang in with us. we are back in session. i believe mr. sutherland, you are up for five minutes. >> thank you. mr. feinberg, thank you for coming up. i have some questions i called

you several months ago and you were kind enough to discuss my concerns on the phone. some of -- some follow-up on the dialogue -- can you hear me ok? okay. i want to ask as far as determining how do you determine loss based on the documentation that you have required and should require in order to pay a fair claim to restore the damage small-businesses have incurred. talk to me for a moment about what your examiners look at as far as how far you go back and if someone asked you this question i apologize. addresses that for a moment for me. >> we will look, congressman, to

income statement, wage statement free still. we will go back and look before the spill in 2009. will look at the beginning of 2010. inappropriate cases 2008. we will try to get a composite picture. what was this small business doing before the spill. what did the trend look like. how were they doing? what does it look like toast still? sometimes a business will say be careful. that was during katrina and that is a bad example and we will take that into account. we try to come up with a fair picture pre-post. >> if i may address that little deeper. are live in panama city, florida. one of the larger coastal communities along the gulf coast. we had a significant event that

occurred in the history of not just our county but our region. we opened our brand new airport in bay county just a month or so prior to the oil spill. the reason i bring this up is that was done in 2010. the ten years preceding that as you can imagine, incredible effort to get this project done. there has not been an airport built from scratch since denver. it was a pretty big deal. we have bounced back and we have bounced back soundly. 2011, taxes were great, businesses were starting to recover and really had a wonderful year. i could make an argument that you have to factor in 2009 and 2011 if you are going to

determine what 2010 would have been like with that significant event. what we have done in securing other airlines into that airport, delta and southwest, airlines we never enjoyed, i can make a pretty good argument that if you just look backwards and not forward then the small businesses that will file those claims will not have the benefit of the doubt of recovering a fair and equitable amount of money. >> these small businesses out to have you representing them. we welcome that type of dialogue to try and get before the gccf, to try and get a good, fair composite picture. let me just say it sounds to me that is probably if it is an airport damage claim it is probably a government claim. if the airport can show it lost revenue because of the spill because people didn't fly in

because of fear of the spill that sound like a government claim that i wouldn't handle. >> we have been meeting with bp representatives regarding government claims and that is another effort for the office. i want to say that our small businesses can have especially around the geographical area of the airport, it's served multiple counties. i have walton -- i am pleased to hear you say that. >> if you want to convene that group or you want me to meet with a group that can explain the situation and make sure we do it the right way i will respond immediately to your suggestion. >> we will do our homework and try to gather those individuals that have that concern and reach out to your office. you will hear from me. i yield back.

thank you. >> the gentleman yields back. you have one more question? >> mr. landry retains -- [inaudible] >> mr. landry, you are up for five minutes. >> i want to go back and clarify a couple things. i noticed directly your responsibility but going to the moratorium, that fund is being closed off. is that correct? you have -- >> until i heard this morning the representation that was closed off i didn't know it was closed off. i doubt that it is closed off but i don't know. i have enough problems of my own with the gccf. >> the problem i am having is to me it concerns me because i believe the oil and gas companies and fishermen and

everyone else, the moratorium was a direct impact from the spill. so there are a lot of businesses directly tied to the oil and gas industry or indirectly tied to the oil and gas industry have been impacted that were impacted by the moratorium and i am concerned that they are not getting paid as well. i visited an oil and gas company, business is down 75% and yet when they send their information over all of their accounting information, they were denied. that falls into or dovetails into another problem that mr. bonner alluded to. i am hearing across the gulf coast from people who applied to

your fund that when they check in, when a claimant checks in and says where are we? we lost some paperwork. could you resubmit this? could you resend this to us? what i am telling you is is too coincidental that the person in louisiana is having the same problem as the person in mobile or pensacola when it comes to the gccf losing their paperwork. it doesn't happen that coincidental. i know that you have set up in louisiana the long law firms that assist people in trying to put their paperwork together and that helps as well. but it just seems like the process is taking away, wade too long. >> three and his. one. there is no misunderstanding

here. i share your concern over the moratorium claims. i wish i could pay those claims. i have no jurisdiction from day one. you are preaching to the choir. i think have 1600 claims that are would like to pay and i can't. >> do you move those to the other fund? >> are move them to the other fund that as far as i can tell it has shown no inclination in paying these claims because -- has congressman holt pointed out an hour ago even if the memorial fund will pay some of those as he cited, they will not broaden it sufficiently so are amish sharing that view. second, we are not losing any paper. when we started congressman landry, when we spoke over for bp last summer into the early fall paying the emergency

payments, transitioning from bp paid acclaims over to the gccf taking over, then we did but the idea that we processed 95% of the claims, the idea that we're losing paper. i don't buy that. >> i don't believe people in the district are being disingenuous as well. of course i have seen a lot of times when we're being told in washington and with you being told in boston is different from exactly what goes on to the ground. i would just put in a request that we look for it in both -- with mr. holt and mr. marky and chairman hastings that we look somewhere in between. maybe we will split the difference between florida and

louisiana. feinberg, if you would come with us and we could hear directly from before we put you up, we will give you the benefit of the doubt and put them up and listen to them and bring you on and somewhere in the middle we will find what the truth is. >> i have received since we took over last august sixty million pieces of paper. it is conceivable. i would suggest if there are particular constituents who claim lost the arguments you get me their name and claim number i will personally get back to you with the status board of those claimants who claim losses documentation. the other thing i want to mention before you depart, i checked during the break and i have an answer for you. if somebody files their claim with the gccf, they are protected by the federal statute of limitations.

>> thank you so much. that is important. thank you so much. i yield back. >> the gentleman yields back. next is mr. holt for five minutes. >> thank you again for the work you are doing and no one here is surprise you are a good witness and very forthcoming. we appreciate that. to some extent following what mr. landry was talking about, if there is money remaining in the fund that hasn't been extended by 2013, what happens to it? do you happen to know although it is not your responsibility, what about the moratorium relief fund? this baton rouge foundation fund? what happens to that money? does it go back to bp? if so, what are the safeguards

built into the system to prevent what would you call it? an intentional tendency not to give it out? >> you ask the same tough questions you did when we were doing the 9/11 fund and i thank you again for what you did ten years ago. ten years ago to get those new jersey constituents to understand how of the 9/11 fund worked. during the break i checked on this because i wanted to make sure i am accurate. in august of 2013 when the gccf was ready to close by agreement between the administration and bp there are three independent trustees in charge of the overall escrow, $20 billion. if those trustees conclude that

there are more than $1 billion worth of claims that appear to be outstanding even though they are beyond 2013 they have the power to keep the fund open and every six months those trustees will review the state of the claims. only if the total claims fall under $1 billion will that money then revert back to bp. so the independent trustees have some say. on the one hundred million dollar moratorium fund my understanding is that is forever gone from bp's dominion. they have no control over it. where the $100 million is used for $20 million is used, that money is going to be distributed by the trustees administering that fund. that money will not go back to

bp has are understand it. finally if anybody in my day to day administration feels that i am not spending the money the way i should, that a claimants feel they are not being paid adequately they have the right to check their claims to the united states coastguard and have the coastguard do an independent review of how our rules on their claim, 1500 people have done that and the coast guard has agreed with the gccf every single time so far. >> thank you. just to be clear, to whom the money would return if there was money left over,

it is administered so there's no hidden bias for them to hold onto it. >> absolutely correct. >> could be p, apart from the trustees ruling on whether there is outstanding billions of dollars could be pea voluntarily keep alive your function? >> i think they could. bp would technically need the support of the united states government to do it but that is up to b p. i must say as congressman markey whatever criticism one wants to level at bp i know of no case in history, i can't think of one where a company voluntarily put up $20 billion to resolve claims. i think the criticism ought to be tempered by the fact that this is a rather extraordinary

-- i think the administration just as the bush administration was able to promulgate this 9/11 victim compensation fund ten years ago i think the administration in getting bp to do this was a major positive step. >> thank you. with the chair's indulgence for 15 seconds the reason i am following this line of questions, the shrimping grounds, that looks as if there will be hard times for years to come. we want to make sure people aren't left out so to speak in the cold. a fairly warm climate but you get my point. the shrimping industry and perhaps others look like they will be hard hit for a long time. thank you. >> the gentleman yields back.

the chair notes we're up against a hard time soon and it is going to work out perfectly because we only have one of your questionnaire. my colleague from louisiana has five minute and that should get us out right on time. >> thank you, mr. chairman. appreciate the courtesy of the committee to allow me to participate and i think mr. feinberg for coming and have a few questions in five minutes. when we talk about the trustees, who appointed the two trustees? >> i have enough problems. i am not sure how those trustees were appointed pursuant to the escrow agreement. was between the administration and bp. >> we will try out specifically how that came about. when we talk about the agreement between the administration and bp an earlier question by mr. landry who ask about issues related to the moratorium. people who have not gone back to

work because of the lack of timely issuance of permits and you said if you can't pay those is there something in the agreement between bp and the administration? >> when the gulf coast claims facility was established it was understood whether it is in writing or an agreement between the administration and bp or bp unilaterally declared this before bringing me on board that the moratorium claims would not be part of my jurisdiction or with government claims be part of my jurisdiction. >> a few months ago i asked you for detailed information and broken down metrics on claims paid out and claims rejected. i was able to get some of the information on claims paid out of the right didn't get it broken-down by state and region and that was one of those things i requested. i would like to ask about that and we were not able to get information on claims that had been rejected. >> i have your staff take a look

at attachment b on my testimony today which breaks out the overall statistics by state including the we see an and under louisiana how much has been paid out and how many denied and accepted and how much paid out. >> do we have that by industry so we want to go into seafood processors? that is my next question. >> i can get you that. don't even send me a letter. have your staff e-mail me and i will get you that information. i do know that approximately as of the middle of this month $1 billion in the aggregate has been paid to the seafood industry but i can get you more information. >> i am sure the e-mail has gone out but the specific request we want to know within the seafood industry how is it broken down by region and if you give it at the state level but if possible even at the local level.

>> i will try to get that to you. >> the complaints we are getting from some shrimpers that have processing facilities and some brought more people in advance of the macondo well explosion and had severe layoffs, still dealing with severe problems from the industry not coming back. you met with a few individually and they have not been an answer. can you tell me what the holdup is with shrimp processors? may be just southeast louisiana. other colleagues might experience along the gulf coast too. >> we have processed and paid plenty. i can get you the numbers as you requested. from processors and harvesters and the shrimp industry but you are absolutely on to something here. earlier i mentioned this. up and down the gulf as you know to your district it is clear

that the gccf has to be more responsive to the shrimpers. there are a lot of shrimpers that haven't filed a claim yes with the gccf because they are watching and waiting to see how the gccf will treat the shrimp industry. you have been very constructive and very vocal with me about the need to do something about those shrimpers. we will in a matter of weeks take another look at how we deal with the shrimpers but i assure you that your concern about the shrimpers is not going unnoticed. we are going to try to find a way to be more generous towards the shrimpers in louisiana. >> i will continue to work with you because there are a few specific shrimp processing processors who filed a formal paperwork with gccf and have not gotten an answer yet. i will push to make sure we get those results that may provoke others to get involved.

only a couple seconds left so i will give a plug for the restore act because this is a separate issue not in your shop but all five gulf coast state of come together in the house and filed legislation a few weeks ago that would dedicate 80% of the finds bp have in the water act to allow us to restore environmental and economic damage not covered by your operation that we may have for years to come. >> if you can get me the name of those shrimper's i will look at those. no one is a more constructive critic than you. i hope to continue to work with you. your people have been very forthright and i appreciate your concern. >> that will be included in the e-mail. the other one went out but i appreciate your coming before our committee and appreciate the chairman and members for their discretion and allow me to ask questions. >> the gentleman yield back. mr. feinberg, we have one more member who has appeared in an effort to be as fair as possible

to both sides if you indulge one more question her i would appreciate that. i now recognize miss lee from texas. >> i thank you for your kindness and i will be pointed. i am an interested neighbor who has worked with your constituents because of my role in the homeland security committee and my familiarity with the or original work mr. feinberg was assigned to and i thank him for that. and however, express i am likewise a boy scout serving on the boy scout board having a husband boy scout and a son boy scout so i am an unhappy camper. i would like to ask how much of the money have you spent of the

$20 billion? >> we have authorized about $6 billion. >> the life of this fund you have a period of time? >> august of 2013. >> i am disappointed that the pace when asking whether or not you heard the discussion of shrimp -- shrimpers and i did not know if i came in too late to listen about the oyster men. have you engaged with the oyster blue -- men? >> we created a methodology to take into account oyster men concerns. >> as you know i have attempted to meet with you. it has been frustrating and i would like to make a request to meet with u.s. and as possible in my office. who should we reach out to to get that done? >> i will get in touch with you in the next day or so to set a

date. i will be in houston monday, tuesday and wednesday. one of those dates, november 28th through 30 i am working with congressman green of accused and to get community leaders together in houston and i will be glad to meet with you as well. >> if we can work on that i would -- we are in different jurisdictions. there is a group led by dr. william s.. i would like to ensure you meet with her. i may ask her to come to houston for the meeting or how we can arrange that meeting and so we will work together on that. let me just proceed with line of reasoning. one of the points as you well know that is may be played the shrimpers people will be oyster persons and others is the

documentation questions and that is a challenging question about individuals working in a different kind of work and not having the documentation. how are you responding to that? they still exist? there's the issue of collateral damage. how are you dealing with that? >> we work with these claimants to try to come up with proof, some proof that their claim is linked to the spill and they can show some damage. i don't need -- as you know from my 9/11 work -- i don't need a full panoply of tax returns and profit and loss statements that a minimal amount of documentation and we continue to work with claimants in trying to get the bare minimum that will allow us to pay damage. >> we will meet with some of

those you may be able to give them courage or encouragement because you may say what they already have. the reason i know some communities, i see dick gregory -- have not reached out because they are intimidated by the process. you got $15 billion left. we were talking about 2013. that is a long road for somebody to have their doors closed. the reason i came to this hearing is to indicate my region is impacted as well. i lived through not only the bp oil spill but hurricane katrina and rita. that is not your responsibility but there are those who can connect present status to this incident that occurred. we want to make sure these funds that rebuild communities, so as i close respecting the time you have to leave we need to reconstruct or have some of your

staff work with these community organizations so they can present documentation to be compensated. >> i completely agree. >> i yield back. >> the gentlelady yields back. i thank the gentlelady and also thank you so much bleaker turtle mr. feinberg for appearing. thank you for holding over. you are obviously a very sincere person, very candid and doing the best job possible and we appreciate that in louisiana, texas, mississippi, alabama, of the state that are affected. with that members of the committee may have additional questions for the record and i ask you respond to these in writing. if there is no further business without objection the committee stands adjourned. [silence]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations]@@

>> whenever you are ready. thank you. >> good morning, mr. chairman and commissioners. wireline competition in wireless communication bureaus are pleased to present fundamental reforms to the commission's universal service fund and the inter carrier conversations

system. when the national broadband plan was released you issue a joint statement saying they should be comprehensively reform to increase accountability and emphasize the importance of broadband to the future of these programs. today we present you with a report order accomplishing exactly that. today's or recognizes they have complemented each other in supporting availability of phone service in rural america. the order holistically reforms both programs to eliminate waste and inefficiency, targets the point where it is needed and transitions from voice only to broadband connections capable of supporting voice as well as other applications. the order would establish a connect america fund for supporting voice and broadband communications in role, insular and high-cost areas of the country. for the first time such support would be allocated according to

a budget set at $4.5 billion annually based on the existing level of service. up to $2 billion would be available for areas served by rate of return carriers and up to $1.8 billion for areas served by broadband carriers. $500 million would be dedicated to ensuring ongoing support for mobile, voice and broadband coverage in private sector areas not likely to reach including up to $100 million for tribal areas and $100 million dedicated to a new remote areas fund as described in an accompanying further notice proposal making. a reform of this magnitude, only be accomplished through collaboration and team work. we have acquired two slides to acknowledge many dedicated legal drafters, financial analyst speaker economists and others who contributed their expertise to this roughly 500 page item.

the leadership team included many of these folks seated behind me. randy clark, patrick callie, kevin king, how lewis, jenny prime, eric rolfe and mark woods. in addition to those joining me at the table today rick kaplan, chief of wireless bureau and his deputy bureau chief and options division chief marty winner. wireline bureau deputy chief carol mackie, rebecca goodheart and steve rosenberg, pricing deputy division chief amy bender and marcus mayor and advisers. amy and mark will present a wireless portions and victoria will present the icc reform. >> today's order establishes rigorous public interest obligations for all elements including broadband performance

and build out requirements. we maintain a strong partnership with state commissions who will continue to play an important role for estate carrier last resort obligations and by designated the pcs meaning carriers eligible to receive support. recipients will be required to submit annual reports to the fcc and state commission to assure effective oversight and accountability. this will provide support for broadband in two faces. in phase 1 all existing price cap legacy high-cost support will be frozen and subject to obligation to advance our broadband goals. an additional $300 million in funding will be made available to price cap carriers that will commit to expediently deep for a broad band to a specified number of and served locations in their service area. for phase ii a price cap

territory, the order establishedes are framework that will provide support in the first instance based on a forward looking cost model and direct the bureau to undertake a public process to developed the specific model. in each state and territory incumbent price cap carriers will be asked to undertake a state level commitment to surf high-cost location in their service territories in that state with police and broadband excluding areas where there's an unsubsidized competitor, extreme lehigh cost areas and low-cost locations served without support. kerri is accepting the state level commitment will be obligated to meet robust, available broadband service requirements. in areas where the incumbent declined to state level commitment competitive bidding mechanism will be used to distribute support. the further notice proposal structure and operational details for the competitive

bidding mechanism in which any broadband provider that has been designated etc may participate. 4 rate of return carriers the order of reforms rules to support continued broadband investment while increasing accountability and incentives for efficient use of public resources. the reforms recognize the nature of bravery tearing carriers and allow them the predictability of remaining on the current system in the near term. further notice seeks comment on establishing a long-term broadband focused mechanism for rate of return carriers and adjusting the interstate rate of return from its current level of 11.25%. as a transition to the new support mechanism for mobile broadband service the order eliminates identical support rules that determine the amount of support from mainly mobile competitive e t cs today and phases down existing support over a five year period. ..

for ongoing support to extend and maintain the availability of mobile voice and broadband, including up to $100 million for tribal areas. phase one of the mobility fund

will provide one-time support to enable swift deployment of mobile and broadband services in areas unserved by current generation mobile network or 3g, this report will be provided to generally not more than one provider per area. the auction will maximize coverage for unserved miles in the budget, reflecting the val our of mobile voice and broadband coverage. auction winners will be required to deploy 4g service in three years or 3g service in two years attention sure that important public interests are met, recipients will be responsible for a variety of obligations, including voice and data rooming, and it provides a one-time tribal mobility fund,

to aired 50 minimum in funding for tribal lands including alaska and hawaiian homeland. the order provides several mechanisms to help ensure that mobility fund support address tribes' needs for service or their tribal land. phase two will provide 500 minimum per year in ongoing support. as part of this budget, phase two of the mobile fund will include dedicated ongoing support for tribal areas up to $100 million per year. the funds available in phase two will expand and sustain mobile voice and broadband service in places where service would be unable absent federal support. the further notice of proposed rulemaking proposes structural and operational details for phase two of the mobility fund, including a distribution methodology, eligible jay graphic areas and providers, and public interest obligations. finally, the order dead

indicates at least $100 million in annual support to provide voice and broadband to the fewer than 1% of americans living in remote areas where the cost of providing traditional terrestrial services is extremely high. the further notice we comment on how to award the support as part of a dedicated remote areas fun. victoria goldberg will now discuss icc. >> i cc is a regulated federal system of payments between carriers for delivering phone calls. the system, created in the 1980s, reflects geography based permanent chances and subsidies. the system is erode rapidly as the demand for traditional wireline service falls and consumers opt for other services, including wire, voice, texting, and e-mails.

this order reforms the ittc system to benefit consumers, including reduced rates for telephone and broadband services and improves the fairness and efficiency subsubsidies and transforming the network into the broadband network of the future. it accommodates rules for fan tam traffic, combating schemes that avoid loopholes that cost consumers millions. the next order tackles the system generally and don'ts a methodical for all traffic. this new methodology provide a unified national framework with states leveraging localized expertise to hell implement the framework and oversee the transition of intrastate, this

involves capping interstate and extra state rates,; the order also adopts and transitional recovery mechanism to mitigate the effective revenues reduced by the forms and providing greater certainty and predictability going forward. productions are adopted to ensure any increases in residential and business rates are minimal and capped. where necessary, some carriers will be eligible to receive cap support, subject to requirement to use the funs to advance our goals for universal service and broadband. the order addresses the treatment of voice, pstn traffic. clarifying that traffic exchanged over pstm facilities that originates and or terms in it format is subject to

transitional itc and makes clear that all carriers originating and terminating voice calls will be on equal footing in their ability to obtain compensation for this traffic. certain packets of cmrs compensation are also addressed to resolve existing ambiguity and address a few. the order promotes the deployment and use of ip networks and the accompanying further notice seeks comment on the policy framework for ip and ip enter connection. the order also makes clear that even while the further notice is pending we expect all carriers to gauche in good faith in response to requests for exchange of voice traffic. the bureau's recommended option on this oil. >> i don't know where to begin to thank you. first let's hear from the commissioner cobbs, please. >> thank you all.

a lot of folks we cooperate get here today. they said universal service was too complicated and too convoluted to permit comprehensive reform universal service was sadly out of step with the times and was broken beyond away. yet here we are this morning, making telecommunications history with comprehensive reform of both universal stories and intercarrier compensation so i want to at the chairman for the leadership be brought to bear to get us to a place where no previous chairman has managed to go. today, thanks to his leadership, we build a framework to support the infrastructure that our consumers and citizens and country so-under -- urgently need. so join in the thanking him for his commitment, his courage, and

his effort to make this happen. in the face of the complex systems we modernize today, it's all too easy to forget the simple timeless goal behind our policies. all of us benefit when more of us are connected. the prim of universal service is the life blood of the communications act, clarion call and a legislative mandate to bring affordable and comparable communication services to all americans no matter who they are, where they live, or the particular circumstances of their individual lives. so, is it all together fitting as we move away from support designed for voice to support for broadband, and we bear witnesses to accomplishments ucf has made to connect america with telephone service. the fund has achieved laudable success. ey how have penetration rates in excess of 59%.

no instruction buildout in our history has done so much to bind the nation together. additionally, it has enabled minimums of jobs and brought new opportunities to just about every expect of our lives. some stark challenges remain, particularly in native areas. the shocking statistic in indian country is a telephone penetration rate that hovers in the high 50th america tile. getting broadband to native areas is a singh singh which will challenge to imminents reform, and it's the only way we can stenthe full range of advanced communication services to places where those services will not otherwise go. the big news here, of course, is that universal service finally going broadband. this is something i have an advocated for along time. it's something a decade or more overtie and something strongly

backed. it's essential to prosperity and well-being for our country. they are the essential tools of this generation, like hoe and he partly cloudy the shovel and the saw were to our forebearers, where he welcome in a factory or on a farm, whether we're affluent or economically disadvantaged, fully able or living with a disability, every citizen, has a need for and a right to advance communication services, access denied is opportunity denied. that applies to us as individuals, and as a nation. america cannot afford access denied unless we want to consign ourselves and our children to growing, not shrinking, digital divides. we already skating around the wrong side of the global digital divide in many ways when we should have learned by now that the rest of the world is not

going to wait for america to catch up. here's the good news. if we seize the power of this technology, and build it out to every corner of the country, and make it truly accessible to every american, there's no telling what we can accomplish. america would be back at the front of the pack. the current system for all the good it has accomplished has outlived its time. it has trade from what congress intended and consumers deserve. inefficiencies and waste creped in where efficiency and oversight should have been standard operating procedural as problems arose they were minimized or allowed to compound. at best we settled for band-aids that never managed to staunch think. seems we didn't try band-aids, and the mission made things worse by calling communication technologies and services things they were not. engaging in linguistic changes with a fury that even the most intense biblical scholars of ol' were capable of achieving.

we lost sight of both the original purposes of the telecommunicationses act of 1996 in general and the universal service fund in particular. whatever the causes -- and we could debate them for hours -- the current regimes are brokenful legacy access rates encourage carriers to maintain yesterday's technology instead of reaping the benefits of ip networks. manipulation of payments cost consumers bills of -- billions of dollars, and. in some areas of the country we subsidize four or more wireless carriers based on a wireline network. all reflected in inflated rates consumers pay. the old saying, if i ain't

broke, don't fix it, but this is broken. no tinkering around the edges is capable of putting the systems back on a solid footing. some will claim we attempt too much today, that we ought not to reconstruction the systems as they arose and worsened over the years. it's not we didn't see the writing on the wall. many people did. years ago, as one example, i proposed putting universal funds to work supporting broadband buildout, like other countries. four years ago four of my colleagues were ready to vote to put usf on competitive footing, and we were ready to vote for lowered rates and an end to traffic and fan from tasking. the commissioner will remember this well because we worked closely on it. what we are doing today is repairing two broken systems and putting in place a more credible

and efficient framework that will benefit consumers, carriers and the country. we're improving and mitigating communication shortfalls. a framework that should gave all stakeholders a clearer picture how systems work and provide predictable for rate pairs, businesses and policymakers. i would have preferred a higher budget, a budget i believe consumers would accept because of its importance putting this nation back to work and providing kids with the tools they need for their futures. that being said, we step down a road that will make a huge difference and that's why i'm able too approve the item, that it would come to no -- price to no one it's not what i would have written. our tarring is areas much needing it most. there's much to said because of the harsh budget reality the

nation faces and because of the perceive to limit university. but i hope and expect our actions today will have spillover effects in underserved areas, too because america will not be broadband sufficient until the underserved become fully served. inner cities can be just has andy capped as remote areas. here, too access denied is opportunity denied. so i welcome the new approach that takes us from scatter-gun and focuses on -- where private investment refuses to go, this means targeting areas where consumers would not otherwise have service, and this is the first time we can really say that about the fund. acting on another long-standing recommendation of the joint board, we for the first time are creating specific funding mechanism to support mobility. this is an historic accomplishment. clearly there are areas, many areas where mobile broadband providers are doing very well in

delivering services and profiting handsomely and where support is not needed. but there are a areas that are strangers to reviable voice coverage and where the market will otherwise not go. the mechanism through which we propose to do this, reverse auctions, is i in call for the commission, this is a new species of auction and we will need to be careful how we approach and evaluate it. i hope it will live up to the high expectations people have for and it become a way to expand our limited universal service dollars to reach unserved areas. i expect we'll learn a lot from the first auction and apply the lessons to the future. let me also say how much i appreciate the items prohibition on package bidding in the mobilities fun. this is a sufficient saveguard against gamesmanship and can only benefit consumers and all consumers. i'm also pleased we are adopting

another safeguard to encourage stability. the auction has two auction phase with the second dependent upon further commission decisionmaking. understandingunderstanding the r predict ability will will halt support if the sect auction phase did not take place as planned. given the financial constraintses we imposed on usf, i'm pleased we were able to grow the mobility fund from the initial proposal. i would have supported and encouraged a larger number given the scope of challenges we face but the the increase is a down payment. i am also encouraged we launched a tribal mobility fund specifically to target support for mobile service in tribal areas.

the state of broadband in indian country is a national disgrace. somewhere in the embarrassingly low single digits. getting this right will take more money than is being proposed today, but also hinges on more than money alone. it hinges also on the commission taking prompt action on other proceedings and spectrum issues pending before us. even in addition to all this, there are a host of confidence-building and cooperation-building challenges confronting us. i do believe the current commission is on the right path to rebuilding our consultive mechanisms with native nations. we have new dialogues and new commitments to working together and working to appreciate tribal sovereignty and the need too accord tribes the more fuller and active role they must have to ensure the most effective deployment strategies for their areas and populations. i feel encouraged we're at long

last positioning ourselves to make progress by working more closely and creatively together. the sad history here, as we all know, is many promises made, many promises broken. we need to turn the page, and i think we are beginning to do that now. i also applaud the strong buildout bench marks that will be a condition of receiving mobile fund dollars and indeed support from any of our new programs with meaningful enforcement and consequences if providers do not meet their obligations to consumers. this injects much needed discipline into the system. it's another really important component of our actions today and one that will enfire much more confidence in the new system than we if had in the old. today is also hoytic because we finally take on the challenge of intercarrier compensation. we take meaningful steps to transform what is badly, sadly broken. this item puts the brakes on

gamesmanship that have playinged icc for years and diverted private capital away from real investment in real networks and cost stimulation a half a billion dollar a year and phantom traffic, -- affects one-fifth of the traffic on carrier networks. today we say no more and adopt rules to address these schemes head on and rid the system of these inventive entirely. my enthusiasm here is tempered by the fact that end user charges under the label of access recovery charges are allowed to increase, albeit incrementally, for residential consumers. my first preference was to prevent any encroachment alternatively we could require carriers to prove the need. props the most profitable companies should not be able to charge the fee.

however the commission protects consumers even as it allows charges. consumers already paying local phone rates of $30 or more cannot be charged the arc. the use of this recognizes some early adopter states have tackled intrastate access rates and their citizens may already be footing a reasonable part of the bill inch the end i'm grateful that the additional charges to end users are not as big, are spread over a longer period or time, and should be offset and hopefully matched by savings by programs we have put in place, and i'm hopeful the commission will do everything it can to make sure the savings are passed on to consumers, although i la moment we don't have a more competitive tell communications environment that would ensure consumer friendly outcomes. while the inside the beltway

crowd and the armies of analyst will be parsing today's oils over who games the most and who begins the least and all the other issues that will cause for rests to be chopped down and vat0s ink drained i hope we can keep the focus on consumer benefits. i would not, could not support what we do today unless the expected consumer benefits are real enough to justify the effort and, yes, the risks, of so sweeping a plan. much will depend upon our implementation and enforcement and i'm sure some mid-course corrections but i believe there are real and takable benefits in the items before us. more broadband for more people is at the top of the list. as just one example we anticipate significant investment with 7 million consumers getting broadband win

six years. means more service, more jobs, it means more opportunities. building critical infrastructure and broadband is our most critical infrastructure challenge -- has to be a partnership. the states are important and central partners as we design and implement new usf and icc programs. i have been a strong advocate for federal-state partnerships since i arrived here ten years ago. i have had the opportunity to serve on the joint boards with our state colleagues to be part of their deliberations to appreciate the tremendous expertise and dedication they bring to their regulatory responsibilities and to have learned so much from them. it is just simple good sense to maximize our working relationships with them. and more even than my permanent preference, which is deeply held, this is the mandate of the law. section 254 of the act is clear, the states have a critical role in the preservation and

advancement of universal service. while i understand the need for predictionibility in an icc regime, i am pleased my colleagues have retained a key role for state, including arbitrating connection agreements, mob tearing tariffs during the transaction, and helping to implement the universal service fund as well as their own state universal service funds. state regulators are by definition closer to the needs of their consumers than fed regulators can be, and they maintain the roll as the venue for consumer complaint. i urge the entire team and stakeholders to think creatively how to expand the state role as we implement these systems. i would hope that carriers would see the benefits of this federal-state cooperation, too. but it is unfortunate, and highly counterproductive to consumers, when some companies exercise their huge lobbying machines to encourage state will

goers to cut state public utility commissions out of telecommunications oversight. this makes everyone's job, except the industry's giants, more difficult, and it harms the nation. on the legal front, some of the calls made on this item are necessarily and unfortunately more circuitous than i believe they need to be. we taught be long past declaring ip obligations are required. we had a chance to do that and declare voice is a tell communication service in gowt 2005, and our failures to do so have had tangibly perverse consequences. inaction delays building our infrastructure and ensures america will continue to be down the global broadband rankings in a world where that just doesn't cut it for us. we need to lead the world, not

so that we can pin a medal on our chest. we need lead the world to regain our prosperity and our competitiveness our capacity to provide jobs and opportunities to every one of our citizens. broadbandded option is as great or greatary challenge than deployment. i will continue to push for doing more on adoption, but we are limited here by the reality that today's emphasis is on reforming infrastructure, deployment in high-cost areas that said i worked with my colleagues to include adoption in this preceding and. these entities often are the places where unconnected consumers get their first exposure to broadband and learn how to use it. i am similarly pleased universal service programs include a real spend forcible requirement affordability. it's only logical and consistent with the mandate of section 254

that carriers whose networks are funded by federal university support should be required to offer service at foodable rates. much of the importance adoption items are still ahead of us. we have an imminent opportunity to update our lifeline and linkup programs i and think we could do that before the sent set on the year 2011. so there's still much two, be done. the success of the framework depends on getting policy calls right. we have to -- this is a situation with huge spillover on the excessive rates consumers are forced to pay, and it has simply wait years too long. similarly, we must act on contributions methodology. the distribution of funds is only part of the broadband challenge of equal importance is

the contribution of funds going into usf. i would have preferred to see such an tonight in front of us. there is inherent inequity in a system that deploy broadband off interstate telephony. once we ensure that quadruple plays that service from universal service bear their fair share. we will not be so subject to the unnecessary constraints our present system imposed. we need decisions that avoid putting too much spectrum in too few hands. that would drive better mobility options. successful implementation of the steps we present today will demand a degree of stakeholder cooperation that we have not seen in many, many years. consumers, states, businesses, the fcc, congress, and the administration, each has a vital role to play, but stakeholder

partnering is how we managed to build america's infrastructure over the past two and a quarter centuries. from the bridges and canals, up to the superhighways and leverage now is the time to practice that american way one more time. and i believe here the process has started off commend blue. when we approved this in february. everyone would be asked to give up a little so the country could gain a lot. that spirit of shared sacrifice has made this action possible. ...

at the expense of the greater public good. if the generally cooperative spirit of the past several months ursus archive going forward, we can avoid those pitfalls. lots of people made a row to get us today's historic achievement. i don't imagine the remarkable leadership of chairman genachowski appeared our internal team put together by the chairman worked mightily and expertly on a whole host of unbelievably complex issues. the data experts and wireline and wireless carriers, cheryl, sharon, carol comer becca, roots, jim, everybody on the two-page list spent many, many

hours answering our questions and discussing our request and they were back by dozens barber typically brilliant and dedicated sec team. my commissioner colleagues spend weeks and months immersed in the tall weeds, taking hundreds of meetings, talking with one another in developing constructive proposals. these are advisers including andrew kronberg and commissioner clyburn staff, christine kurth and commissioner mick dowell worked long days, nights and weekends to make this happen. in my own office, margaret mccarthy and mark stone provided not only great analysis by previous suggestions for getting us to better outcomes. i should note all all of my staff felt the weight of this ml performed at the start of model. it is than professional after by world-class agent b. to which i am proud to be a member. thank you. >> thank you, commissioner copps.

commissioner mcdowell. >> train to a high pass subsidy program to support next-generation members of purification technology while keeping a lid on monday and is truly money mental. as the action today is a vital first step in reforming u.s. to ensuring rural consumers benefit from needed advanced services. as i said several times before come the communications needs of rural america is personal to me. her family has deep roots in rural america. my father spent part of his boy hit on the tex-mex border without electricity, running water or phone services. with a background in mind, i'm committed to paying a congress' intent of ensuring the most upright or country are tonight is. the challenge of solving seemingly retractable universal service compensation puzzle. however cast a long shadow over the fcc for more than a decade.

an archive and a half years here at travel across america to learn more about the practical realities of the program. i hope productive policy roundtable discussions with multiple stakeholders in the least populated state, wyoming, south dakota appeared a traverse tribal lands and some of the least densely populated areas of our country, including alaska appeared have also learned from consumers in urban and suburban areas who pay rates above cost to subsidize sooners. and i know that my colleagues have diligently concluded similar field investigations as well. and trying to encapsulate what the sec is accomplishing today, i turned to one of north america's best telecommunications policy minds. none other than the great one. when greg v. he said without any of us realizing, by implication he predict what we do today when he

said a good hockey player plays where the puck is. a great hockey player plays with a puck is going to be. today the fcc is repurposed in the high-cost program to support unserved use of communications technologies from where they are to pray they are going to be about the technological and geographical sense. october 27, 2011 is the day that marks a tremendous departure from nearly a century old policy of opaquely, opaquely subsidizing analog circuit switched voice communications to using the efficiencies of market-based incentives to support product and connectivity in those areas where economic realities have stalled market penetration. under both republican and democratic administrations, the high-cost fund has become and inefficient. today the republican and democrats are taken a giant leap together to fix that. i commend the chairman for his

leadership and fortitude throughout this process. i also think commissioner copps and clyburn for their graciousness and collegiality throughout the entire proceeding. since i arrived at the commission in 2067 calling for the fcc to achieve five primary goals when focusing on uss reform. the most important of which is to contain the growth of the fund. while our efforts today are not perfect, today we are largely achieving this goal in the town known for its inability to control spending. while i'm on that subject, someone should just be scrapped the usf program altogether. others can have that debate. in the meantime, we're mindful created this program and its ultimate survival is not early for congress to determine. we are duty bound to operate within the statutory constructs and handed to us. in the spirit of being fiscally responsible, we are mandating

that the high-cost portion of the universal service fund lived under a definitive budget for the first time in history. functionally, the budget serves as an annual cap through 2017. until then, the fund may not rates higher than $4.5 billion per year on average after churros about commission approval. after that time it's my hope competitive forces will flourish on the development of new technologies will create efficiency throughout the system. so much of the vacuum will of been filled and the need for future subsidies will decline substantially. perhaps the deal, congress can determine subsidies are no longer needed. of course there's nothing we can do to prevent future commissions from voting to comprehensively alter what we have done and spend our money later. dowd beecher is a matter of law, whether you call fiscally prudent action today a definitive budget cab from a

beret some borough. if the sec of tamara wants to undo it undone today however, good luck with that. you're going to need it. the alacrity with which the commission can accomplish comprehensive usf reform is nothing short of holy show. nonetheless, i hope future commissions will keep their cats on out of respect for fiscal responsibility and the consumers who pay for the subsidies. also today we are only addressing the high-cost portion of the distribution side of the universal service fund is commissioner copps pointed out. we're not addressing universal service on which distributes over $8 billion per year. to put the figure into context, usf is larger than the annual revenues of major league baseball. in separate proceedings, we also reformed the other uss spending programs and i cannot stress enough that all of the fiscal efficiency we realized in

today's reforms will be lost if similar discipline is not apply to all universal service programs as well. moreover, we are only addressing part of the distribution or spending cited the universal service program. in fact, despite all of the exhaustive efforts to get to this point, our work on comprehensive universal service reform is not even half finished. equally important is the need to reform the contribution methodology or how we are going to pay for all of this. it is the secret for years i've been pushing for contribution reform to be carried out at the same time as distribution reform. obviously that is not happening today. therefore we must act quickly. the contribution back here, a type of tax paid by consumers has risen each year from approximately 5.5% in 1988 -- 1998 to an estimated 15.3% in

the fourth quarter of this year. this trend is simply unacceptable. we must debate this automatic tax increase without further delay. accordingly i strongly urge that we work together to complete proceeding to reform the contribution methodology in the first half of next year. in the meantime, today we are undertaking significant reforms. although time does not allow me to discuss each one, and like to mention a few of my favorites. first, it may surprise some observers the figure and breadth to which we give life to competitive bidding, you market-based approaches to begin subsidies also known as reverse auctions. this is more than i could've hoped for in 2008 when a republican-controlled fcc teetered on the cusp of comprehensive reform before our efforts were scuttled and i'm delighted that commissioner copps in the year at this point.

supporting provisions was likely not easy for some of my colleagues and i thank them for their spirit of compromise. secondly, we are eliminating the official identical support role, the lethal air of subsidizing competitors in the same place has come to an end. third, we are finally giving consumers the benefit of more transparency by phasing out hidden subsidies. albeit 15 years after congress told us to do so in the telecom act of 1996. better late than never. as the veil is lifted, industry and government will have to do their best to keep consumers possibly educated on what they will see on their phone bills than what it all means. for the vast majority of consumers, rates should decline or stay the same. so i will look with skepticism by many news stories that claimed the fcc is raising rates. the simple truth is we are not.

forcefully, we are creating a frugally minded, barry's the bull waiver process for highly unlikely cases where carriers are experiencing extreme hardship to chewer reforms. did i say that narrowly enough? said, and i'm going to stop at five. don't worry. in the further notice, we propose means testing to identify qualified recipients in remote areas such as screening process could save money and maximize effect is that the fund. as legal matter, some question whether the commission has the authority to use universal service funds to support broadband directly. as i said many times before, i believe the commission does have broad authority to repurpose support to advance services is handed to us by the plain language section 254. i have a much longer legal argument in my folded statement, but in the observance of time and time and mall blockers, i

will not go on. it has become as no surprise that i cannot support the view that section 706 provides commission with the authority to support broadband to universal service fund. section 706 is narrower in scope than as not provide specific or general authority to do much of anything. we respectfully agree to disagree on this analysis. finally, given the breadth of magnitude of today's actions committee effects will not be fully apparent in the near term. certainly there would be varied opinions regarding what we've accomplished. that said, universal service reform is in intricate process. we will constantly monitor implementations and quickly make adjustments as needed. in sum, i would like to thank all the people sacrificed countless family dinners, weekends, vacations, birthday anniversary celebrations in such of the past many to make this day possible.

i was going to start naming names, but then i'd revise that might be impossible task because i will leave people out. i do notice that a thing for the record i'd like to reflect this is the longest people we've had in front of us in the history of the fcc to the point were often it's in the press section. [laughter] i know you would've that of our tables, but that would've been on the other side of the wall controlling the cameras. but i do want to make special mention not only everyone who sees it front of us, but the legions who stand behind each one of you to abolish it your blood, sweat, toil and tears to make this endeavor possible today. i think perhaps we should really have held this meeting at fedex field, perhaps it is raining today. i do want to commend the fat cats for his tireless efforts, patience and leadership throughout this process. furthermore, what you think commissioner copps' advisors and

commissioner clyburn says well for your collegial efforts to this process. for my office, christine kurth deserves a special mention. when i hired her two years ago from the senate, i said your main mission is to fix universal service. and she accepted my offer anyway. but she is a complete a pass that mission today and i want to thank her for it. many thanks to each and everyone of you and my colleagues. this is an historic day for the fcc. congratulations, mr. chairman. >> commissioner clyburn. >> we are taking a moment to set today, moving ever so close to fulfilling the goal congress set forth for universal service in the 1996 telecommunications act. to ensure all americans have access to affordable voice and advanced communication services. we would not be here but for the incredibly hard work of the sec staff under the direction and leadership of chairman genachowski in his office as well as you can input from

congress, state partners, industry and consumer representatives. i believe we have drawn from many competing sources to form a balanced framework that will create significant broadband appointment as quickly as possible to those consumers currently unserved. the painful truth of the matter is there are 18 million americans who have not fully benefited from our current universal service policies and that is unacceptable. they remain the have-nots of the broadband world forum determined will benefit from the most common than those from what iraq should -- this action is today. as i have considered these reforms, it is the unfair to consumers who are first and foremost in my mind. this claim provides for speedy broadband appointment to many consumers and with an injection of capital in 2012, for both

fixed and mobile technologies. in addition to these immediate needs, i carefully considered how much those consumers are being asked to shoulder when it comes to the cost of intercarrier compensation reform as well as the impact of those consumers who are to have service. it also shouldn't surprise anyone that he was similarly important to me that we give service providers and their investors time to adjust our proposal for this because from day one i made a firm commitment to know flash has. a reasonable transitional. will help ensure providers can navigate these reforms successfully. for those providers who require additional time to adjust, we have in place a waiver process that is for, predict it will yet fear. another benefit of the processes that it provides his commission with the safety net so that we

can adjust support is needed in order to avoid my higher mean this is fast we ever be achieved through a legacy system. overall, i believe the chairman proposals -- the chairman's proposal carefully balances the centrist and will result in a meaningful difference for many americans and they want to commend him and my colleagues for the significant process that is reflected in this order. accordingly, i offer my full support for the actions we take today. as you all know, i have a deep connection to rule america. without comparable modern communication services enjoyed by urban counterparts, those citizens will never adequately compete in the global economy. they need and deserve reliable fixed as well as mobile broadband in order to thrive. without this critical broadband infrastructure, rural americans would forever be left behind.

we are where the financial need to provide advanced services in these areas are significant and yes, i appreciate the fact that setting a budget for the high cuts program will provide overall certainty and predictability. however, it is equally important that we have the flexibility to adjust as needed within and between these high-cost programs. i want to thank the good friends and colleagues were working with to ensure that we have not unduly limited our ability to revisit our current estimate of the funding needed for the high-cost programs in the future. an underlying theme of today's reform is shared sacrifice for the common good. after all, we are talking about the people's money. we are accountable to them and i am confident the adjustments being made to the legacy u.s. support and the funding mechanisms been about good or

the new connect america funds are sent to rule. these reforms will put out the usf and icc regimes on a sounder footing so we may better accomplish our goal in congress' mandate to serve more americans with advanced communications networks matter if they live, work or travel in this nation. for a number of years from the federal state joint board in universal service in the state and federal members have called for this commission to provide for the direct funding a broadband. early on, they recognize the importance of both broadband and mobility service. i am proud that this commission has heeded this call and is formally adopting the principle advanced by the joint board last year and its recommended decision that universal service support should be directed where path well nowhere to provide these services as well as voice services. moreover, upon the advice of the

council of her estate members and colleagues, we are adopting the mobility fund to refuse $300,000,000.3 g and 4g networks in addition, we are adopting a mobility fund to ensure that consumers have access to mobile broadband services, providing support to providers in our desert areas and eliminating identical support. we owe a great gratitude to her estate members. they have been a significant resource for this commission in our reform process. we sat and numerous workshops and meetings to gather, hashing out ideas and concepts. they spent countless hours trapped in a proposal for consideration and they have been more than generous with time and a place. i think them for the good counsel in this precedent for service to our nation. the fcc has heavily relied on the suggestions in the plan.

we are requiring uss recipients to meet brad and build milestones to annually report on service requirements and file reports strictly at the sec and state utility commissions. we also are implementing a cap on total purblind support another fiscally responsible measures to eliminate waste and inefficiency in assistance. in addition, we are clarifying and our order that we expect our carriers to negotiate in good faith and response to request for ip interconnection for the exchange of voice traffic. not only do we hear from the states about how important it is to ensure that ip interconnection occurs, we also receive significant comment from competitive voice providers at the lack of ip interconnection is impeding the development of ip networks, including voice

services. as such, the order confirms that the duty to negotiate in good faith does not depend upon the network technology underlying the interconnection, whether it cdm, ip or otherwise and we expect good faith negotiations to result in interconnection arrangements ip networks for the purpose of exchanging voice traffic. another topic i spent a great deal of time on was state commission colleagues of the intercarrier compensation regime. today's decision says for the national approach or icc reform for both intrastate and interstate access rates. it's probably not surprising that i naturally gravitated to the proposal and notice for proposed rulemaking that would've had the states reformed their intrastate access rate and left to interstate reform to this commission.

but after much discussion and consideration, i will accept the chairman's proposal that a federal approach is afraid outcome in this instance. a multistate process reform would be long and arduous, costly and demanding of the states with the predict the ball and perhaps inconsistent results. in the meantime, the pressure would continue to build for us, to intervene and stabilize the icc regime to provide the companies they predict ability and certainty they need to continue to invest and innovate for the benefit of consumers. however, i think it's only appropriate that our actions today carefully preserved and recognize the reform that some states 30 have undertaking. most importantly, we've provided for replacement funding is intrastate access rates decline as a result of our reform, which released the financial burden that would have been on state in

their own attempts at reform. to that end, we also have carefully balance the icc revenue replacement for providers with the important goal of not hurting consumers with significant increases in their bills or overburdening the uss, which is ultimately paid for by consumers. as indicated by our staff analysis, we believe the overall benefits that will flow to consumers as a result of this reform or fall airwaves a minimal price increases they may experience on the phone does due to icc reforms. i also want to be clear that states will continue to have an important role with respect to the arbitration and interconnection agreements in the operation of the uss. with respect to uss, states will continue to designate eligible telecommunications carriers for usf purposes and will continue

to protect consumers through carrier of last resort application. as technology evolves, so too must the roles of regulators. we are experiencing a significant technological evolution as networks are transitioning to internet protocol and consumers are using multiple modes of communications , sometimes simultaneously. indeed, the underlying cause of reform to implement today is due to the enormous technological shift that has occurred over the last 10 years. one constant i have seen however is that consumers expect the state regulators to serve and protect them. moreover, those of us that the fcc's need the states expertise and knowledge on the ground to properly execute and operate our new universal funding mechanisms for instance, we need the state's assistance in identifying those areas by

broadband. got to talk and i eliminated resources who do not have any broadband provider offering their service. likewise, we will need the states held assessing that those providers who receive funding meet the public interest obligations to build and serve. as such, i am confident these reforms are an opportunity for us to continue working hand-in-hand with our state colleagues to assure that broadband is available to partnership at the states in this important endeavor. the communications marketplace such changed dramatically in one significant reason is the explosion of mobile services in the u.s. more and more americans are relying upon their smartphones to access the internet and almost 30% of americans have cut their court tecumseh service. i work closely to ensure that we

are providing significant support for mobile services of a particularly in rural america. certainly, will consumers and those who travel a non-urban areas expect they will have access to mobile services that are comparable to anywhere else in the nation. we want and expect our devices to work wherever we are. as such, i believe the budget which reflects the current importance of mobility to americans is important that we should offer ongoing support for those areas that would not be served otherwise. i was grateful that the fund is ongoing for mobility support, the mobility fund has been increased 25% over what was originally proposed and circulated draft, reflecting the fact mobility for rule areas is a priority. i also want to thank the chairman for agreeing with me that while the identical support

should be phased out, we need to ensure that mobility fund is operating and funded before the faison is completed for wireless etcs. the pause in the face down i suppose is now fully reflect good so while it can have some confidence that they won't does more than 40% of funding before they know what support they may qualify for and mobility fund. broad deployment of networks to reach individual consumers has been paramount -- the paramount purpose of the high-cost fund, it is also provided for service to community and institutions including schools, libraries cannot care facilities and public safety agencies. in order to ensure these vital and dictation can obtain the modern services essential for service to their communities, we have provided an opportunity to engage with usf for recipients

and network planning stage. as such, communication is carefully considered by providers. similarly, recipients would detail in their annual reports to the sec of the state commissions those community anchored and institutions that have received service as a result of the fund. accordingly, we will be able to account for all of the benefits local communities receive as a result of usf support. although the reforms we adopt today are extremely important for ensuring that basic and advanced service -- communication services are physically available to all americans, those services cannot be surely available if consumers cannot afford to purchase them or of devices they need to access some are not available or if they cannot obtain the skills they need to know how to use these services. i appreciate those who have called for a to address these

consumer needs today. i agree with you that we need to do more in this area. our broad adoption task force is working diligently to find solutions to these issues and i fully expect we will soon be addressing the proposal in a lifeline preceding to adopt pilot projects for broadband adoption to benefit low income americans qualifies for the late-night program. i look forward to continued work with their task force, including finishing the lifeline proceedings before the end of the year so we can make more headway on the significant issue for the link can consumers. to our viewers and their staff, i thank you for your tremendous and herculean efforts throughout this preceding. i know you have made many personal sacrifices to help us reach this moment and i wish to commend you for the result. you planning conducted workshops, reviewed records,

this into numerous interested parties in this proceeding, balanced or concerns, crafted the order and accompanied further notice and yes, put up our office. but please know how much we appreciate all of you. i wish i could say right now that we were at the finish line, but this indeed is a marathon. and for those of you who will compete in sunday's race, sadly it will not be me, you have been preparing for months for this milestone that we've reached today. but we are at mile 20. just a little further to go. i for one look forward to continued engagement on the limitation of these reforms. i also want to join congratulating the chairman and my fellow commissioners on today's though. the task before us has not been an easy one, but it is certainly one for which i am proud this mission -- commission has

finally achieved. commissioner copps and commissioner mcdowell, i know you have both witnessed past attempts at usf and icc reforms and you must be deeply proud today. thank you for diligence and hard work. once again, mr. chairman, i want to express my gratitude for your leadership, engagement and willingness to listen and address my concern and for your honest attempt at reaching consensus. lastly, i would like for you to give me the privilege of acknowledging the hard work of my wire line of cars they are come in cheap on a bird paid her tireless commitment to priorities and willing mix to make incredible personal sacrifices served me and her team well. you were able to capture and defend those principles that i hold dear in numerous meetings and exchanges than i wish she's

fairly thing you cannot commissioner copps, a marker of a car seat, sharon carroll, victoria, rebecca, in fact. i couldn't say all of them. even though we know who's working, right? and for all of those captured in the slides for your commitment to reform and for your willingness to serve this nation. thank you so much, mr. chairman. this is an incredible day for all of us. >> well, thank you very much, commissioner clyburn. today is indeed a momentous step in our efforts to harness the benefits of broadband for every american. i am tremendously grateful to each of my colleagues on the commission for working hard, working together to get this done. the work of the staff has been just incredible and i will have

more to say about those than there appears as well. but this is a once in a generation overhaul of universal service, keeping faith with our nation's long commitment to connecting all americans to communication services. we are taking a system designed for the alexander graham bell area of rotary telephones and modernizing it through the air as steve jobs and the internet future he imagined. we are reaffirming for the digital age the fundamental american promise of opportunity for all. we are furthering our national goal of connecting the country to wired and wireless broadband and helping put america on its proper 21st century fighting, positioning us to leave the world and a fiercely competitive global, digital economy.

infrastructure has always been a key pillar of american economic success. connecting consumers and businesses, facilitating commerce and unleashing innovation. broadband internet is the indispensable infrastructure for 21st century economy. recognizing this fact for years respect the voices have called universal broadband and essential ingredient for american economic competitiveness and job creation. as 2007 report rising above the gathering storm, the national academy of sciences said that accelerating progress towards making broadband conductivity available and affordable for all is critical and they urge government to take the necessary steps to meet that goal. in 2010, international broadband plan be correctly called extending wired and wireless

broadband to all americans the great infrastructure challenge of the 21st century. last year ibm ceo sam palmisano expressed a view we have heard from other ceos from governors, mayors and from the embers across the country, the employer policymakers to fix the bridges, but don't forget broadband. and he said that a pervasive broad and infrastructure would be a powerful generator of new jobs and economic growth. today building on years of hard work by the sec and on capitol hill and stakeholders outside the agency, this commission is acting unanimously on a bipartisan basis to meet this critical national challenge and bring the universal service fund and intercarrier convent patient into the broad and age. our action will enable millions of americans to work, learn and innovate online.

it will open new vistas of digital opportunity and enhance public safety. it will create jobs in the near term and lay the foundation for enduring job creation and economic growth in u.s. global competitiveness for years to come. today's reforms that will be intercarrier compensation will bring real benefits to can them or send communities in every part of the country. over the next year, the connect america fund will bring broadband to more than 600,000 americans who wouldn't have otherwise. and the fighters after that, millions more rural families will be connected and today's order process on the path to get broadband to every american by the end of the decade, to close the broad and deployment cap, which now stands at close to 20 million americans. we are also extending the benefits of mobile broad and coverage to tens of thousands of

unserved road miles, those areas where millions of americans work, live and travel, but better areas of frustration and economic stagnation for so many people today. for mobile connections are needed, but unavailable. for small businesses lose out on customers in productivity, were people in traffic accidents or other disasters can't reach 9-1-1. today we make mobility and independent, universal service objectives for the first time, providing dedicated support to the world's first-ever mobility fund. over the next three years, we will provide almost a billion dollars per year in funding for universal mobility. global is one of the fastest-growing and most promising sectors of our economy and having the world's largest market for three g in 4g subscribers will be a key competitive advantage enabling us to lead the world in

innovation. new wired and wireless broadband will be a life line for rural communities currently being bypassed by the opportunities of the internet revolution. as a result of what we are doing today, young people who didn't see a future in their small home town would now be able to access a new world of opportunity. entrepreneurs and small towns won't need to move to the big city to live their dreams. instead, small business owners doing everything from selling beef to hunting lodges, like a president tonight in liberty, nebraska wanted to do. they will build to reach customers in the next town, to become a or country and boost their markets, efficiency, productivity through services. today's action will empower small businesses that otherwise couldn't exist in small-town america and create jobs and communities. that includes farmers who need rides and to access commodity

price information, we'll time weather reports. turner process we heard this from farmers in rural america. today's action will help connect inc. or institution, which can play a vital role in expanding basic digital literacy training so needed in a world where broad skills are necessary both to find jobs and land jobs. today's action has the potential to be one of the biggest job creators in rural america in decades. we estimate theater as a whole will unleash billions of dollars in private sector broadband infrastructure spending in rural america over the next day, creating hundreds of thousands of jobs. by empowering millions of more americans to engage in e-commerce, buyers and sellers, the order will grow the size of our overall online marketplace and provide a boost for main street business is all over the country, including areas.

today's action will change the landscape for students now served by broadband, providing educational opportunity that would otherwise be denied and elements or paris will change the landscape for seniors and people with illnesses providing remote diagnostics to people with no accessory travel hundreds of miles. it will enable parents and now underserved areas to finally connect with children in military service overseas to video chat or other modern communications means that require broadband. each of these are examples of people we met in our proceeding over the last few months who talked about real needs they have today. by constraining the growth of the fund, today's reforms will also minimize the burden these programs placed on all consumers, keeping hundreds of millions of dollars in consumer's pockets over the next several years. our overall intercarrier compensation system will gradually eliminate the billions

of dollars in hidden subsidies currently paid by consumers across the country through their wireless and long-distance phone bills. our staff estimates the consumer benefits of ict reform will be more than $2 billion annually. consumers will get more value for their money and less waste. this material benefits flow directly from the policy principles of structural reforms would embrace in this order. the reforms implement the idea that government program should be modernized to focus on strategic challenges that today and tomorrow, not yesterday. starting today, usf will be transformed into connect america fund, which will directly take our country's 21st century infrastructure challenge by enabling the are to build robust, scalable, affordable broadband to homes, businesses and make her institutions and unserved communities.

icc reforms will advance the deployment of modern internet protocol networks and of the telephone network transitions to an ip network, firms in expectation of carriers negotiate in good faith for ip to ip interconnection for voice traffic. today's order recognizes as i mentioned the growing importance of mobile broadband. for the first time, we make mobility and independent universal service object is to take significant concrete steps to meet that goal. also, today's order brings market-based competitive bidding and to universal service support. in a series of waves, including options, restructure distribution of public funds to ensure real efficiency and accountability in both connect america fund and the mobility fund. for the first time, our order puts the fun on a firm budget. fiscal responsibility was a principle we announced on day one and a huge vat of this

order, protecting the interest of millions of consumers who contributed to the fund every month. we put in place a series of reforms to eliminate duplicate it and other funding where it's not needed and can't be justified. we also had arbitrage schemes to take advantage of gaps, closing loopholes in our rules. faced with many complex and nuanced policy questions, i believe this commission, all of us together have reached the right solutions because we approach the issues the right way. we didn't rubberstamp or adopt wholesale proposals of any stakeholder, but we welcome all proposal, all constructive engagement. instead, we made decisions on what's right for american people in our economy, based on facts and data gathered at one of the most extensive records in sec history, including hearing and workshops all across the country. more than 2700 totaling more

than 26,000 pages, all of which were reviewed carefully by this incredible team. we are focused on putting consumers first, calibrating policies we adopt to maximize consumer benefit. we've been careful sure that affect the companies face predictable and measured transition paths so that they can keep investing in their networks to better serve consumers and support our economy. we have brought increased clarity to areas of uncertainty, created by tensions between new communication services like voip, voice over internet protocol and our old rules. getting to this point wasn't easy. they required us all to make tough choices about what the connect america fund and consumers could not support. it started at a high level. some proposals would require

consumers to pay a greater share of the cost of reform or would've increased the size of the fun. that would've put too much burden on consumers during these difficult economic times. some but we should dramatically reduce the size of the fund. that would've left behind millions of americans being bypassed by broadband with no prospect of broadband comic dignity, denying opportunity and economic access to those communities. some would've had us operate as if we were writing a link say, but of course we are not in that would've raised the most disruption, buildout delays another unintended undesirable consequences. getting to this point not only requires tough choices, required engagement of many stakeholders around the country of partners in federal government, states, private sector, nonprofit community. i appreciate the broad level of constraint of engagement that made a difference in the result.

that constructive engagement very much includes many members of congress on both sides of the aisle who have worked for years to reform and improve universal service and whose ongoing and constructive input is reflected in our action today. there are too many to thank individually in congress, but i am grateful to all of the members of congress who provided input and guidance. the president has been a consistent leader in broadband and the opportunity technology and our actions today help meet national goals of universal access to wired and wireless broadband. i want to thank our state partners who pioneered many reforms we adopt today. moving forward, i am pleased that the states will continue to play a vital role in ensuring consumers are well served by universal service program and in other ways. now, very importantly, i am deeply grateful to my fellow

commissioners who have worked tremendously hard to make today possible. commissioner copps and powell have been fighting to fix these programs for years and commissioner cliburn's strong experience of the state level in south carolina has been invaluable in our effort from top to bottom, today's order reflects the seriousness of purpose and thoughtful input from each of my colleagues on the commission. it is a better order as a result and on behalf of the american people, i thank each of you. at a time when citizens want solutions, not gridlock, i am proud that commissioners approving bipartisan reform of a broken system that will deliver massive and if it to the american people. of course this would not have had without the tremendous work of the expert staff of this

agency. without you, we would not be accomplishing today what has been elusive for many years, making reform a reality. our staff is all colleagues have knowledge that not only were tired, they have performed brilliantly. crunching numbers, mastering complex technologies, operating at a world-class policy level. today's order is the project of that tremendous at her. i am not the first person today to say this, but you work makes us proud, fulfills the vision of the expert at the fcc is an expert agency serving our country. there is so many people to think of the saucer that list. each of you sitting here, sharon gillett, ruth buchman, carol mattia, carol and i am ruthanne jim and others here have our first conversations by universal service reform 20 years ago.

rebecca goodhart, jim schleicher inc., michael stassen, so many others. steve rosenberg, so many others in the wireline bureau, wireless bureau, general counsel's office over the commission. i want to acknowledge the work of the team that worked on a national broadband plan as many of the people here in people who are no longer with the commission for playing an important role in advancing the ball on these reforms in a suit at the café. the staff of each of the commissioners on the eighth floor deserve a tremendous amount of credit for mastering these incredibly complex topics for ensuring a serious collaborative effort. i mention the fact that so many people from the eighth floor staff amid euros for here late last night, but that might leave

people the impression last night was the only white paper here late. the more important point is that off everyone can remember the last night when you all were here late working on this. and we appreciate that so much. and you have produced a result that you will be proud of for many, many years. i want to particularly salute and applaud my office. the quarterback of this effort, zach, you have ran this process in a way that makes us all proud that i think we have all seen how indispensable you are, bringing all this together simply would not have been possible without your work and

also the work of all the people who work with you in the chairman's office to make this happen is once again the eighth floor and staff of the bureaus. your leadership, your persistence, your sanity, your calmness and strength under fire in the foxhole. we all honor that and appreciate it very much. the bad news to zach and our team and everyone else's that our work is not yet done. we have implementation work ahead and there'll continue to be intensive engagement with all stakeholders in response to the further notice who adopted a and in the months to come. we still of course is our colleagues have mentioned, face a tremendous challenge in increasing broadband adoption. and i'm doing barrier to opportunity in both rural and urban america. while there is no silver bullet

for broadband adoption, the lifeline portion of uss can be part of solution including significant broadband pilot programs. i have asked the staff to gear up lifeline reform for action this year. those are not fake smiles on their -- faces. but wait there's more of my colleagues have noted there's work to do on the contribution side is another important to us that topic commission will address. i will leave with a posing thought. in the 1930s and the teen 50s, when president roosevelt and eisenhower directed federal funding to roads, tunnels, bridges and national highway system, they were investing in the then current technologies to connect our people and our communities. the same was true for electricity. the same is true for telephones or days.

key 20th century universal service achievement. all of those investments have paid truman as dividends for our economy and our country. today, brad and internet truly is the information superhighway, the key connect to the infrastructure of the 21st century. it is what will drive our competitiveness, our economy and brought opportunity for decades to come. our action today is firmly rooted in the sound principles that have served our country well in the past and i am confident it will help deliver a bright future for all americans. with that, let us proceed to it though. all those in favor say aye. [inaudible] >> all the supposed they may. the ayes habit in their quest for editorial privileges is granted. and i am asked to make it

reminder which under the rule of the sunshine. prohibition and expert date context remain in effect to the full text of her decision is released. undersecretary, please announce our next item. >> hi, chairman paul calla bna. on the issue of contributions, do you expect any slow downs given me here were heading into? >> i think you're asking when will do contributions reform. we haven't announced a schedule yet. we recognize that's an important part of the puzzle. as you can see, we've added teamwork and around-the-clock for the clock for quite some time and we have not set a schedule or agenda for the time being for contributions. >> hi, ted with telecommunications reports. there's a lot of speculation

perhaps before you even all major decision here that there was going to be some litigation haste on this. in the last few days, there's been a lot of pushback from our lax moral incumbents, specifically singing what they were hearing was going to be included, was not given them the kind of support he needed to transition with the changes being made. i wondered if that was some pain, you know, that was great carefully by you all more than something else and other aspects that began and if that is something you all are worried about going forward. >> i think all the commissioners talked about weighty series of tough choices in a complicated area to make today. our focus was on transforming the sold program to bribe and, making sure that it met its goal

of getting broad and to conserve americans and to do it in a way that recognized the legitimate needs of existing players. and so, you've heard all of us talk about the importance of transition path for not having flash has. we are all confident that we've made the right set of choices in a series of difficult questions and that our goals will be achieved if the program is out. [inaudible] >> what is your response to complaints that the usf reforms could raise consumers local phone bills as the access recovery charges and subscriber line charge is? >> well, i don't suspect that overall consumer rates will go up as a result of disorder as compared to not doing reform. so the reform -- what we are

doing today eliminates hidden subsidies that ends up on consumer phone bills. it constrains the growth of the fund. and that growth would've translated directly into increases on consumer phone bills. and of course, over all the reforms today will deliver massive benefits to consumers all over the country by getting broad and to millions of unserved americans, boosting small businesses, particularly in rural america, but all over the country and all the other benefits we talked about today. we think it's not a close call. the consumer benefits from reforms today are very significant. >> deeann inside gss. i noted in the summary it includes a provision for wireless and license service -- unlicensed wireless users. could you please address how the

reform would relate to light squared, specifically, would they be able to provide services as an unlicensed wireless service provider? what would they be eligible for funding under the mobility fund? >> well, on the unlicensed piece, i will have to get back to you because i am not searching how to answer the question about what the item does with respect to unlicensed, so we would get back to you on that. i apologize. don not

that's an issue. if you have an accident on the road, that is an issue. if you are at the mine in west virginia that had a terrible tragedy last year, the mine was in a place where there was no mobile coverage so mobility for the first time is being recognized as an objective of the program and as you heard out of the savings of the program that we are generating, we will be creating a targeted mobility funds to meet these objectives. >> hi. mr. chairman wondering if you could take us through your thoughts that lead you to increase the broadband speed standards to 6.5 before employing your -- and as a second-tier to bet what happens

if your cost models come back and you find out that 6.50 is too expensive? >> obviously we made these decisions based on a lot of data and a lot of facts and work that has been done inside and outside the commission. we did think in planning for universal service not just for the next year but three years beyond that, we needed to find a way to embrace robust and scalable broadband and so the numbers we put in there are our best judgment on, of what our sensible target numbers to hit. they are based on a lot of postulated work that has been done. the final cost model has to come out of a transparent notice and comment process. we expect that to be in the range of what we have laid out today. >> hello, jonathan with big con daily. given you have just not talked

about being committed to moving on the success of their form 355 and the public file on line can you talk about some of your other near-term media priorities, things that -- >> the first thing i want everyone to do the work on this is to take some time off, but we continue to focus on obviously the implementation work to do on this. broadband adoption which we have been talking a lot about in the past weeks continues to be important. we will continue to pursue job creation initiatives every day. obviously there are spectrum issues and public safety issues ahead of us. we still have a lot of work to do. >> hi. kim hartman with politico. the lifeline and linkup roe rims were also mentioned by both the commissioners as reform. do you have any idea of when that might be taken up? >> well, i mentioned today that i asked the bureau to geared up

for action this calendar year so that is our goal. is a very similar team to the one working on this and we have to work with the resources that we have that as you have seen, we haven't been waiting on that to tackle the adoption. we have had announcements in the past few weeks on adoption that are very significant that are moving the needle and it is also important to understand that lifeline is -- will be part of the solution on broadband adoption. it can't be the whole solution that we are looking at as part of reform in the lifeline program and the pilot projects to develop ways to determine the most effective ways to close the gap on broadband adoption by using -- >> there is a lot of talk today about anticipating on the part of the commission the future communication needs of the

american consumers. given that wouldn't make sense for wireless or mobile to constitute a larger proportion of the u.s. effort? >> well i think what we have done today on mobile is very significant both in our country's history and also compared to what other countries are doing and identifying the importance of mobility as a universal service goal. the amount of funds that we are putting into that are very significant, and we think we have both found a way to dramatically improve, bring us closer to our goals on universal mobility while also moving forward on the goals of getting basic runback -- broadband connectivity back-to-back to

people who are unserved and rural a america. we took seriously the constraints that we impose on ourselves of fiscal responsibility. and then one can make an argument for putting more money into a lot of different programs but we were committed to funding this transition to universal broadband to the connect america fund, to the ability fund, out of the existing programs and the current budget. >> as this becomes the federal government's biggest broadband effort ever, how would you assess the success of other federal programs and you believe that this needs to be, that this could be a multiagency effort to fund projects like this, or should it lie in one place? >> well, this is, for many many

years, we have been committed as a country to universal access to essential services like electricity, like telephone service, and this fund has helped as you heard some of the commissioners say today, bring telephone service up to essential universal rates in the united states and that is good, but of course today and tomorrow's communications infrastructure isn't old analog circuit switched telephone service but modern broadband internet. so transforming this program to broadband makes complete sense. we are doing it in a way that learns lessons from the past because as we all agree here, usf overtime met its goals, but also developed its own reasons for reform, and in today's order, we have tackled each of

the areas that had been identified as areas where reform is needed to ensure accountability and efficiency in the program. for example for the first time we are bringing competitive knitting into the program. we are eliminating the programs that provide for duplicative support, so we have tried very hard as a commission to learn lessons from the past and make sure this program is accountable and efficient and we have put in place ongoing efforts to make sure that the program remains that way. >> is this a multiagency issue, the use of broadband efforts remained multiagency? >> we are focused on the universal fund, the fund that we administered. >> amy schatz with "the wall street journal." i just wanted to see if you think the fcc is on its tail and -- timetable on mobile? >> as you know i won't comment on specific trending -- pending transitions. >> is this something the agency

is looking at more now since usf is over? >> as i said i won't comment on pending transactions. >> i don't want to violate the one question rule but i have got one question with two items. is that fair? [laughter] the first is on the broadcast bioitem. does that include the program in the noi? >> we set a goal of taking action on those items in the spring. >> so that would -- you are kind of going to go in li report and order? >> let me -- make the commitment i have made is that we will take action on those items by the spring and we will have to work with all of our colleagues to determine what that action is. >> and could you court -- i

appreciate that. can you explain a little bit more about your decision on -- since it seems that is the way of a lot of the broadband telephony is going? >> part of what the order recognizes is that communications has to be part of the systems going forward. one of the things the order does today is provide clarity around the role that voip plays, making it clear that as long as there is intercarrier clearing up some of the confusion about whether voip calls should be compensated under that. so i think one of the many benefits of the order we adopted today is that by clearing up this uncertainty, we have removed a disincentive on some companies to move ç z(j(