to exclude any player from the auctions. i'm confident that the fcc can get it right this time if it avoids regulatory -- second is very technique for the taxing side of our universal service fund subsidies. last fall the commission accomplished a complicated task of modernizing the high-cost portion of the usf by repurposing it to support next-generation can negations technologies, all while keeping a lid on spending. as the chairman and my colleagues mr. clyburn deserve a lot of credit for that. thus far however the commission is addressed only some of these spending side of usf. perhaps even more urgent is the need to fix the taxing side. in other words how do we pay for all of this? the contribution factor or the attacks on america's own consumers has risen each year from approximately 5.5% in 1998

to almost 18% this year. this trend is unacceptable because it is unsustainable. we need to update this automatic tax increase as soon as possible. third as my concern regarding proposed new rules affecting tv broadcasters tears -- and i broadcasters. transparency is a laudable public policy goal especially in the context of political spending. furthermore providing broadcasters with more cost-effective means to comply with fcc rules is also a noble endeavor. congress should be aware however that the proposed rules create any factual legal and pragmatic complexities that are not obvious at first glance. the political file contains information regarding purchasing political ads on tv and you can shed light on the spending patterns of the campaigns, political committees super pacs in such. unlike other parts of the broadcasters public inspection files however the political

files do not speak to whether broadcasters serving in local communities are licensed. the political file is a tool instead for examining campaign spending rather than broadcasting behavior. congress should be aware that this requirement could be experiencing mission creep. in october of last year the commission proposed to reverse its 2007 position regarding political file mandates with little to no evidence that candidates, their representatives or members of local communities served by broadcasters have been unable to access the required information let alone that the benefits outweigh the costs. in fact the evidence before the commission today illustrates the proposed new rules could cost the broadcasting industry $15 million in upfront expenses to applied -- uploads and upwards of $140,000 per year and recurring costs to maintain the information in real-time as the

fcc has proposed. before going further or should be thoughtful and deliberative one examining the implications in nuances that could arise as a result of the per post rules. i still see many unanswered questions. for instance number one, it's the public policy of new rules is to produce more transparency in campaign spending, is the fcc the best agency to achieve such ends rather than the federal election commission? member two, what fcc requirements that are duplicative to sec rules violate the reduction act? and number three, while many others -- where are the equities and singling out only tv broadcasters fudge for such disk osha requirements on a plethora such as radio, newspapers, the internet, direct mail, outdoor advertising, cable television, satellite radio and tv, and many

more avenues for voter outreach. i'm hopeful that we as policymakers can strike the right balance that can protect core political speech and encourage transparency without disproportionately burdening one of many outlets. finally all of us should be concerned with a well organized international effort to give an arm of the united nations known as the international token indication union, new powers over internet governance through the renegotiation of a tree. the internet has flourished under deregulation not only within our country but throughout the globe as well. some countries such as china, russia, india, iran and saudi arabia among many others are working hard to change that and we must stop them. thank you again for the opportunity to appear before you today and i look forward to your questions. >> thank you commissioner mcdowell. it is nice to have you here too. so i want to get into this whole

issue, if we could, of lyrical files. i am sure you all read "the washington post" article this morning, and i am curious chairman genachowski, where in your governing statute does it say that the fcc has the responsibility or the authority over campaign finance issues? i am kind of confused about this. >> sure. congress, in 2002, directed, repaired broadcasters to disclose information about campaign ads etc.. that was a codification of fcc rules that have been in effect for a long time and the statute provides the fcc to carry out those provisions. but if i could, the issue that

is raided in this proceeding is part of a broad effort to move from paper to digital, and in fact, the suggestion in the proposal i was made in october which is based on a widely praised report from about a year ago identified the broadcaster public file as one of the last pieces of disclosure that is purely on paper and in fact the files literally are in cabinet said tv stations. and so, the proposal in the notice was to enable the movement of all of that information from digital public files to do digital. it's a proceeding that is open now. we are looking carefully at the effort and all of the issues that have been raised. >> okay, so tell us what

information is available in the political files. in other words, i mean i know that i personally do not have to go to to tv station and i can get this information and sent aimlessly as all of our campaigns do today so consequently i am curious as to why we are doing this. what is it in the political file that you -- tell us all the pieces of that. >> again, the proposal in the notice would apply to all of the different elements of the public file. the items they're broadcasters have to maintain a public file are actually described by statute, the date and time of that, the purchaser is listed in statute. they are in the public file and the intended audience of the public's disclosure is the public at large. and a member of the public who wants to see that information can get it but they have to go

to the station, knock on the door and asked to see the public file. >> i don't agree with you on that because for example or media buyers gave us all of that information in the last campaign instantaneously. we knew within 10 or 15 minutes and i can assure you we were not able to go to paducah kentucky tv station when they were in st. louis in 15 minutes so i think a lot of that information is available now. i guess i am confused as to why you all are doing this when i can still get the information from the federal election commission. in other words let just say emerson for congress made this and then i can certainly go on to the fcc on line and find out who my contributors are, so i am confused by weather, is there a problem that exists out there that we are trying to correct? >> the information that is in broadcaster public files and

broadcasters have been required by statute and commission rules for many years as part of their their -- available for everyone in the public for any citizens for anyone to have access to it. the question in this proceeding is whether in the 21st century, a disclosure obligation that is fulfilled by a filing cabinet alone, whether common common sense says a broadcasters are required to close anything, as they are by statute, shouldn't that the on line? most obligations of broadcasters have and in fact in general with the fcc increasingly interactions are digital, not paper whether its applications, consumer complaints, license information and the suggestion in the report that came out last year was as part of the general efforts to move the paper as a

part of a general effort toward transparency. if we are going to have any obligations at all towards public trustees to make information public, shouldn't that be on line? and if they should, why should we exempt any particular category? now again there've been questions raised in -- raised in the record. record. speakers to mcdowell said do you are referring to the broadcasters but what about cable companies are right about radio stations and where i live you fight or radius then you do tvs so is this to apply across the board to every single electronic media outlet platform? >> we haven't proposed expanding the obligation on others. broadcasters have had unique obligations as public trustees. in this case the 2002 law singled out broadcasters to make these disclosures. there's a lot of histories of broadcasters and having these applications. we are not looking at new

requirements. we are looking at the existing landscape of broadcaster disclosure. should they are shouldn't they move on line? >> so what percentage of broadcasters are not putting this on line? >> guest: well, i'm not aware that any broadcasters are -- >> or have this in the database. not necessarily on line but they keep electronic files as opposed to keeping paper in filing cabinets? >> well, the only way that i'm aware that broadcasters make this information available to the public now is and filing in paper and filing cabinets. a citizen wants access to this information with which the law requires a broadcasters to ask for, i'm not aware of another option. they have to get up from broadcasters so many people do go to the station and knock on the door and look at the public files and have access to this information but in the 21st century the question is whether common sense says let's have it be on line. >> so if i buy a tv, a series of

tv spots and a broadcaster has all of this electronically and decides to pay for it. it is not i'm paper. i pay for it and on the form in the computer it says paid for by joe emerson. anybody's media buyer or -- what are you asking the tv station to then put this, to create a web site if you will so that he can access it as opposed -- sp in fact. >> to let me get into their web site or their database? >> the disclosure goals of the rules are about the public in general and the ordinary public doesn't have access to that information right now. your point suggests that the broadcasters, to make the information available on line

would not be a difficult step. one of the options that is possible here is moving the obligation of broadcasters so that the paper file could be eliminated completely, a laminating so we have that information on line formats anyway and we make it available on line and eliminate the physical public file. and have information that is already required to be subsequently available in tv accessible ways for anyone who is interested. >> why do you care about that? you have plenty of other things that are far more important to deal with. we have a federal commission who has jurisdiction over campaign finance. in the whole scheme of things, you're working on spectrum auctions and other things like the usf. why in in the world this is a big priority? >> again across the board, the fcc has been looking to move

from paper to digital. just in the last year alone, we have taken steps to move tariffs from paper to digital, radio renewable actions from paper to digital. consumer complaints are 90% digital and licensing are digital so anything that is paper let's move it to digital. let's allow companies that have obligations to not file anything on paper and move to digital. it should not be a time-consuming difficult process. >> commission or mcdowell, let me have your thoughts on this. obviously i can tell you are not in favor of it is thomas "washington post" article but i'm still kind of perplexed as to why, why this is such a priority. >> a good question. first of all two key points to emphasize and the word

immediately implies real-time on line posting and also a proprietary information, something i didn't get a chance to talk about in my opening remarks. broadcasters actually came to us in 2007 when the fcc moved to house most of the public inspection file is posted on line and the chairman is right in most cases that is much more cost effective and easier for everybody and also more easily accessible so academics are general members of the public can look to see what kind of programming or local interest that broadcasters are providing to the local community and that is important core mission of the fcc. as you pointed out though this is an election law issue regarding transparency and campaign spending so broadcasters have come to us now in a couple of ways in 07 and 2011 and 2012 now to say that actually this is an in cheaper for them to do. because of the implication of

this would be real-time updating and so some estimates are maybe $140,000 per year or tv broadcaster and keep in mind broadcasters are not the businesses. most are small businesses so it might be an unfunded federal mandate of sorts but also the second component it would require disclosure of proprietary pricing information. candidates campaigns at the cheapest rate and that becomes the competitive issue so one of the potential unintended consequences actually had to being price signaling among broadcasters in a typical market regarding what the lowest rate should be. as you pointed out buyers know what the lowest rates are anyway but having it out there and real-time could cause some unintended consequences as well. so i think we need to sort through a lot of these and the chairman is right and that part of the bipartisan campaign reform act also known as mccain-feingold in 2002, the fcc

is charted with requiring broadcasters to keep political files with some of this information. including the camp pain committee just call call the station inquiring about that, and so that's important for broadcasters are coming to us, saying the proposals might be unduly burdensome to them. so you know i think it's important for us to ask what is the cost benefit analysis here and to way that very carefully and to liberally and also maybe generally speaking as policymakers we should be asking do we want transparency and campaign spending and should we turn the microscope around off of the tv broadcasters and look at the campaigns are the political committees that are spending the money and where's that money going? that would give them a more comprehensive view. i am saying if it is the goal, the fcc is not necessarily the best agency to do that

especially if we are just focusing on the narrow issues of tv broadcasters in no other media. >> so i guess then this begs the question if let's say hypothetically this rule goes forward and broadcasters are forced to do this, then i assume that you would then move to require them to do this for all advertising. in other words let's say i have -- from general mills. some folks have maybe a tv by and general mills wants to make sure that it gets the same information. would that be the next step here? because i don't know why you have to do it just for political and not all efforts icing because if you want people to be digital then they have to be digital for everything not just for political ads. >> that would be the next that then again the political file isn't the goal here. their existing their existing observations on broadcasters that are part of their long-standing requirements as public trustees and the question

is as with everything else, would you common sense say it's time to move from paper to digital? of the commission isn't looking at new requirements, new disclosure requirements. rather, moving from paper to digital in effect giving broadcasters the option to eliminate paper disclosures and move to digital. if i could topically on the proprietary.. it flows from that as well. we are not proposing to require any disclosures of information that already isn't disclosed publicly. the issue is simply, should we move from paper to digital and if we do should be exempt any category like political ads from the general trend for using digital for greater transparency? >> basically you are going to require broadcasters to not only

digitize political ads but all adds? >> no, no, the statute applies -- >> i understand that but if in fact they are so big and intent on digitization of the political ads then wouldn't shoot digitize all of the media buys? >> it's not, it's not in our rules and it's not something that has been raised. it's not something that we are looking at. the question is that the commission is considering it and again we have a record before us. there have been a number of legitimate issues raised and the staff is looking at all of those. of the the general question is once there are disclosure obligations, should they move from paper to digital as across-the-board removing from paper to digital? >> understand what you're saying but it still doesn't compute to

me. have you all done a cost-benefit analysis on determining how much this would cost? >> the record in response to our notice contains a good deal of information on costs and benefits. we will certainly look at the cost and costs and benefits before doing anything. it would be part of the analysis and i think an important part of the analysis. >> commissioner mcdowell do you have anything else to add? >> just to underscore for broadcasters, it bay came to us in 2007 when we wanted certain parts of the public's specters to be put on line that they're the ones coming to the commission saying this sing this might be unduly burdensome with the requirements it would be posted in real time and requiring more and more people to staff in real-time and broadcasters specially in smaller markets and larger markets, that's very expensive. keep in mind that there is legislation that was voted out of the house that would require the fcc to conduct the

appropriate cost-benefit cost cost-benefit and malice is one adopting the rules that are real and not cursory so that might the something to think about in this context as well. >> yeah, and we will push through that at some other point because sometimes i wonder how those cost-benefit analyses are actually performed if you will. but i have taken way more than my five minutes and so -- i just wanted to finish this so thanks. >> no thank you and i understand because i had no intention to discuss the subject but it has become a subject and i think it's important as we look at it, to remember a couple of things. first of all broadcasters complaining. i don't know in the history of this country there is ever been a business person who gladly was told to do something and most people would tell you it cost money to do that and they can't

do it until they are told to do it. secondly, i don't know what kellogg's has to say about granola or vice versa and who the next president of the united states will be, who will be elected to congress and they think we have to understand that at the bottom of this issue is the fact that some folks in the political oomph rainout and therefore people associated with them, have been for the last few years very happy and i must say on all sides, very happy with the fact that they don't have to disclose as much as some people would like them to disclose who the is behind it. it's okay to talk about the fcc mandating and to talk about unfounded mandates and to talk about everything else but i think we can kid ourselves and understanding that there is a bottom-line issue here and that is the understanding by some

folks that this information should not be available. to me, -- but to me, what the chairman has said and mr. mcdowell, the commissioner, has not spoken against it is that everybody is putting information on line. why not this information also? accosts congress money, more than is used to spend, to go on line and put this information forward on what we do and it's causing them right now to broadcast this on line, this hearing. but that's important. i'm sure it cost the supreme court to put all their findings on line. it it'll cause the census bureau, great story i read today about the 1940s census coming out and it will be on line soon and after that you'll be able to trace it by name and so on what happened after the great depression and the migration for an sense of african-americans

the south to the north, in my case from puerto rico and other places to new york. this is information that is being put out that is necessary and it costs money so i think in one hand we should understand that there is a need to take all the information and put it on line. that is just a world we live in now. otherwise i would not have spent all this money on an ipac that i paid for myself. [laughter] this one can watch baseball too. the other thing is that, but there is this desire not to tell. somehow it others people and then not speaking -- though it offers a lot of people in this country that you should know who is saying i'm a great congressman or a not a great congressman. >> i would just ask you to yield for one second to say that all of that information is available on line to the federal elections commission. >> right, but these are commercials put on a tv station.

these are commercials also put eventually on the radio station. there is a role as mandated by congress and a role to mandate by circumstances. this is using our airwaves and our airwaves belong to the public. who is paying to say that guy should not be allowed did and that he once was a member of a group that he should not have been a member of. i don't have a problem with that kind of disclosure. we have disclose a lot personally. we need to do more of that, but that is just my 2 cents. now, another type of question and someone might say it is the democrats a question or comment. as you all know this administration has instructed each federal agency even the independent ones such as the fcc to examine and eliminate if appropriate unnecessary regulations.

commissioner mcdowell, do you see an uptick in this effort given your history at the fcc? >> we have taken our obligation to review unnecessary rules for elimination very seriously and it was something i talked about the very first day as chairman as the president issued an executive order, asking the independent agency to join the other agencies and doing reviews of rules. we said one we are already doing it and we will continue to do it. we have eliminated over 200 unnecessary regulations and we have eliminated five data collection publications. we have identified another dozen data collection obligations for elimination and we will continue to do that on a regular process to identify rules for elimination.

>> before you answer, can you give me just one example for the record. one that was eliminated. one that we would be familiar with perhaps? >> both from eliminating rules like ones that were still on the books that applied to telegraph. second, we eliminated spectrum requirements from our books. we also eliminated requirements that were strict spectrum use, promoting flexible use of spectrum that commissioner mcdowell talked about so the rate relations have been eliminated. they extend from the -- on the books to there are barriers and burdens that innovation that invested that shouldn't be there. >> thank you, and we have a very good working relationship and he doesn't take it personally when it dissent.

i would love to see a comprehensive list of those 200. i don't have one so that would be helpful i think. in some cases, we would have to vote on them and in other cases we don't have to vote on them so it will take him at his word that he says there were two under requirements that have been removed from the books but at the same time there are orders where there were rules added to the book so i think maybe they are 200 that is terrific but at the same time let's make sure we are not taking one step forward in two steps back with more regulation. >> but you don't know of any that have withdrawn? you said there were 200 but you have not seen them? >> i may have voted on a fraction of those but i haven't seen a conference of list of the 200 that might be helpful to refer to. >> i'm sure there is going to be hearing and the example that we said here, if you would like to share that information so that

we know. chairman genachowski please tell us about your initiative and update us on how this effort to increase sensibility to this -- disadvantaged families is working? this has been an issue that continues to trouble many of us and it's clearly a bipartisan thing. .. to be submitted online not

having access to broadband is a very big deal. the percentages that i mentioned our highest in particular communities from rural americans, the elderly and the communities, there are a number of different reasons why. there is no silver bullet to moving the needle on the other option. the connected compete initiative is something we have great hope for. one of the issues that some people facing signing up for broadband is cost. digital literacy they don't know how to upload documents. the cable industry to their credit announced a program to offer roi low-cost broadband, $9.9 a month to families who have kids on school lunch programs. and companies, other companies

join this initiative to help on the digital literacy side. microsoft, for example, is offering more courses to help people understand how to use a basic software. best buy is deploying its antiques squad to help people understand the basics of the internet. this is a bipartisan issue come broad national challenge and i look forward to working with the committee and colleagues to find ways to improve the metric. >> thank you so much. >> mr. alexander? >> thank you. mr. chairman, good to have you here today. you submitted a budget and to the contras about two per cent above last year in the budget of the washington standards that's good when but you get to other agencies for instance 4% less

than last year to regulate that bill. is their anything in your deployment that could be turned back a little bit so we could get down into less than 2%? >> we can accomplish our mission with the budget and did a lot of ford in developing the budget to save as much money as we can. we received a letter example from apple and we heard from some other device makers. very concerned about whether we have the resources we need to deal with the proliferation of new devices like the ipad because each of those devices has to be certified by the fcc has compliant with the missions obligations. concerned about the growing complexity of the war in some of the increase that you mention is

strictly related to saving money. so, for example, we proposed data center consolidation initiatives and cloud computing initiatives that will cost a think the number is about $6 million in 2012. but those we project will save about two and a half billion on an annual basis once they are completed. it's exactly the kind of thing that every private sector company is doing to make targeted investments to save money and lower the baseline. >> you said about a third of the public could have but don't have broadband. tell me what that means. >> there are two universal broadband gaps both presenting significant issues but they are somewhat different. so one is the broadband deployment gap. there are millions of americans

who live in rural areas there is no broadband infrastructure all and in the universal service reform that we worked on together the commissioner mcdowell and others and our colleagues we sought to reform an outdated program to efficiently drive broadband deployment to rural america where there is no infrastructure of all and then there's the broadband adoption act. these are the areas where the infrastructure is there that people haven't signed up. if you haven't signed it you can't work for a job on line and your kid is required as part of their school work to be online. they can do it. we hear from families, there's a teenage girl in florida that process saying that to do homework she goes to the library at night and sit out one side to get access to their work wifi because her family doesn't have a broadband at home and in the metric is the americans haven't

adopted a broadband. >> one more question. there's those of their having town hall meetings in the reports about the self loans. there's the universal service by herself loans for those in low poverty. >> there is a program called lifeline that's existed for many years to help low-income people have access to basic to the dominican surface like the telephone. just last month or two months ago we adopted some major reforms to that program and the most significant reforms to make sure that we tackle any waste and efficiency abuse in those programs. every dollar in a program like that should go towards its intended purpose. >> i didn't even answer. dewey bicycle phones for people -- >> there's a program that subsidizes communications access, and it does subsidize mobile phone use.

only one per person is allowed so people can choose under the program between land line access or mobile access. the program is designed to make sure that low-income people have access to basic communications services. >> we have any idea as to how many phones there are out there that taxpayers pay for? >> i hesitate to guess what we can get that information. stomachs before mr. commissioner for being here today. i have a couple of questions as i was explaining to the chairman before the hearing began i have a little background in broadcasting its small market radio. along the public inspection files as concerns tv broadcasters and what have you. i have a community that owns five radio stations and happens to be my father.

i've been in the trade, my vision to to the business now is he interviews me once in awhile. his argument is the onerous record keeping will that he has to keep specifically in the area of equal opportunity to opportunity employment. you have to understand that his business is in an area there is a pretty significant population of latinos in the area and he has to think according to him if i understand his explanation that he has to keep -- he has to go to great extremes to promote and to try to recruit potential the applicants into his operation from a certain ethnic minority or other minorities and

he is finding it increasingly difficult to do because of the available pool, but at the same time, the fcc has these requirements for the massive record keeping. i understand this is a small business. these businesses are very small businesses and in his case a very small business and this is an extraordinary hardship on the company to try to meet these demands so what gives. >> the obligations are very long standing at the commission and served a very worthy purpose. >> i don't dispute that at all were. when the general matter anything that we can do to reduce unnecessary burdens particularly on the small businesses for

looking at we do run the general proceedings asking for input on how they can reduce unnecessary burdens. i appreciate question but we will go back and look at any issues in that area and make sure any record-keeping requirements are necessary and efficiently meet the purposes of the rules. >> welcome i want to take the word we are going to look at that and obviously the requirements are a matter of law and also a good idea. but if they can't be streamlined i would certainly support it and so we can get working on that. >> fantastic. thank you. >> you know, i was kind of captivated by the discussion about the inspection file, and i can certainly appreciate a fact that, you know, kind of the digital age we're in right now it shouldn't be a problem to upload a lot of the stuff the would be in the paper file to an online presence. i guess my question comes down to what do we have as because it

in the military between the sec, fcc how do we decide and discern between the two federal agencies who is responsible for what because it appears to me that we have the fcc involved in something that is clearly a matter of the ftc. so help me understand that. >> to the extent they are involved in this area goes back many, many years of part of the public trustee obligations of broadcasters and the congress codified this in 2002. >> sorry to interrupt but doesn't proceed the ftc? these rules that go back? >> i'm not sure, but i think it might. the basic obligations of broadcasters to make disclosures when it comes to elections and candidates goes back many years as implemented by the administrations of both parties

and in this proceeding the question isn't should we change those command to those, subtract to those, but rather should they move from the physical public file to online. you mentioned small businesses and the commissioner mentioned that as well. one of the suggestions that came in on the record is now to look at ways to exempt small businesses or give them more time to make the transition. in general, even small broadcasters are engaging with the fcc online. retial applications have to be on line. they are after all broadcasting and to the extent that there are a burden issues that could be addressed and on the record. >> commissioner? >> broadcasters came to us and wanted us to move, a lot of this file requirements to be online

the wanted carved out because the proposed cost so that's really what is the issue. it's not transparency, it is the cost of broadcasters first of all uploading the file and then maintaining in real time so i don't think anyone is against disclosure transparency. you raise an excellent point which is a good point for congress to consider which is the fcc the best equipped agency to be in the federal election level of business or is that the role of the ftc? i think we should keep in mind. >> the chairman mentioned earlier today in his discussions about some of the regulatory burdens that have been dropped over time, and you mention specifically fairness doctrine. what are the requirements today? help me understand in regard to the fairness doctrine what is the requirement today and whether or not there is any initiative under way or thought

process under way to bring back shall we say this fairness doctrine? >> just the opposite. i feel very strongly about the first amendment free-speech, the fairness doctrine in my view was a bad first amendment from the start, and i was pleased to work with my colleagues to eliminate the last vestiges of looks. >> so about a year ago during a speech we were going through the fcc rules to find instances of rules that could have gotten rid of forms that outlived their usefulness everyone thought it died in 1987 and actually parts of it to the heart and soul but remained on the fcc book which is the fcc decided not to enforce it back in 1987, so the chairman i think very graciously took the cue and got rid of it from our books.

but the bigger issue can also be when you say fairness doctrine of a sudden the phones and radio stations to light up and the blogosphere starts sliding a vessel that there are other ways the fcc can regulate speech through broadcast license renewals and that is unconstitutional just pragmatically it can't. so as we go through elbra quadrennial review and media ownership rules which could determine what the licensing term is and what it would be eight years or three years what would be the criteria for getting our license renewed, etc. is always important to look at those rules as well, and i think the chairman again at his word but anything in the future commission that could constructively be a resurrection of the fairness doctrine mark my words it won't be called the fairness doctrine it would be called something else we need to keep that in mind to the estimate i've got questions about broadband to come up later. is the fcc the proponent agency,

and i won't get to this term right but i can expect the royalty fee paid to the song writers, artists, it's not under the fcc and blood, is that correct? >> correct. >> whose umbrella is that under? [laughter] >> that's a good thing. it was a couple of minutes of my round of questions and i will yield back. >> we are in charge of that. mr. diaz balart. >> thank you. madam chairman, commissioner? >> good to see you. let me start by telling you that the commissioner, the chairman and the staff have been open to us and i think you for that and have the opportunity to not only speak with you but meet with you and i want to thank you for that. we spent a lot of time to the speaking about transparency and in a number of different areas. when we are preparing for this meeting and the issue of light

squared came back and since you have been so open to me i was a little shocked at some of the things i read about light square and the fact you had a member of the senate saying that he couldn't get the information the sec told him that information is only given to the members of committees which obviously this one would be included. but because of that i did and a little bit. because i was shocked because of the fact you have been so open to me and my staff. one of the things that a cynic would say that's something that, you know, they reportedly the contributors and the administration so therefore the kind of smelled that, but since i don't buy that, we did a little bit of our own digging and i tell you what i came up with, something that frankly kind of shocked us a little bit of it speaking of transparency, and that is the issue of freedom

of information act request. if you look at, and i will tell you what the source is, it's a u.s. government website to look at the number of the freedom of information act requests and denials come and according to the website, the fcc is the naim the freedom of information act requests under this new fcc than in the past. a greater percentage of denial compared to other government agencies to be a flexible, 2010, the fcc denied 40% of the freedom of information act requests while the rest of the government denied only 7.2%. that's pretty darn huge difference. let me also than to put in perspective some of that data in

the website indicates the fcc started denying an unusually large percentage of the freedom of information requests because of this thing called not reasonably described. under your what should the fcc denied but 16.4% of requests based on the records that were not, quote comer reasonably described. but not only is that a huge increase from the previous year's only 3% denial based on that, but much tighter than even the cia, which i thought was a big deal. the cia denies the 0.7% denial rate the same year on the same issue, so why is the fcc of a sudden have more secrets than the cia when you were dealing with requests? >> well, i am not familiar with those numbers and i haven't heard them before. i would be happy to get them

together with you and try to understand the trend. we recognize our obligations and have a team of professionals to handle the requests and understand the obligations to comply and meet their obligations under the law. >> that is why i wanted to mention that. the reason i was taken back a step relationship i've had with you and my staff and we have been able to get information, but it seems as though there is outside of me or us or congress even with some members of congress it seems that there may be a difference because again if you look at, for a simple, those are denied for not reasonably described you look at again, 16.4% for the fcc, the cia, 0.7%, the nsa, 0.5%. dhs come homeland security, 0.2%. there seems to be a problem there and that is a huge increase because just previously it was about 3%.

it was still high, higher than these other agencies but i'm sure there's a reason for it but they're seems to be a huge increase of denial of freedom of information particularly on not regionally described that i don't think shows transparency and clearly doesn't reflect the president's call or at least public call for transparency. so, again, because of the relationship i would like to maybe spend some time with you all and look at what is going on. i think that there is a serious issue and i am sure there is a good explanation, but i don't understand what would be. i'm showing another issue that i also thought would -- i ran into. we were talking about the budgetary issue, about i guess the personnel requests are a sickly flat, is that correct? >> correct. >> one of the things that also struck me rather large was, it's

too small, i apologize, i will complete my stuff about that. after 49.5, my eyesight is not that good. but it's the salary. the increase on the fcc of employees earning $150,000 or above, so even though the number of employees may be flat, those making 1,600-cent above have increased rather dramatically and that is what madame chairwoman this chart reflects. >> i will submit that for the record. >> thank you. >> it's a huge increase of individuals that are now earning over 150%, $150,000 in salary and let me see if i can get you some of those numbers, and jump from 46 in 2008 to 431 in 20009 to 535 in 2011. that's a pretty astonishing

increase. so what changed between 208 and 209 that required such an increase in pay? is a different individuals, is it increase -- i'm not sure what that actually shows us other than the fact the numbers are pretty astonishing. >> i'm not familiar with the particular increase. in general the work of the fcc increasingly requires highly skilled engineers and economists and others with advanced degrees to do our work overtime the employee base of the fcc has become more and more focused on that as we move from paper into digital and there's been consequences for the employee base in that regard. so, that is part of the reason for the trend. second is the retention of the fcc has been reasonably high and that's affected the numbers as

well but i would certainly offer to work with you on understanding the numbers. the work that the fcc does in terms of generating auction revenue, unleashing investment innovation in this case. i am convinced based on my time at the agency absolutely requires first-rate talent engineering, talent economists lawyers, and we certainly raise many, many prospective potential employees because we can't come close to competing with other offers that they have and that is just my government and i understand that. >> i understand that. and again, to cause i'm not being accusatory but when you look at the numbers there were off 38 employees. if this is totally accurate, and this is what we found from the web site of the federal government. all of this is public and i do commend you for that. 206 there were 38 employees in your agency running on hundred

$50,000 or above and in 2007, 48, increased by 2008, 46. then it went from 2008, 46, to 431 in 2009, 517 in 2010 and 535. why not great at math but it is a pretty substantial increase no matter what coming and we are not dealing with people that went from 75 to 85,000 or 50 to 70. we are talking about people making over $100,000. so, again, those are astonishing numbers, and i want to thank you for being open, but you understand that these raise serious questions. mr. alexander mentioned about maybe you can look at ways to reduce the 2% increase. when you have these increases in salaries, numbers of individuals making this much money that right there may be aware that 2% is alone and i would like to sit

down with you and further explore this. >> thank you madam chairman. >> thank you madam chair. appreciate you both being here and your service to the country and a chance to have a conversation this afternoon as we look at what our budget priorities are and how we move forward. certainly this committee and this congress continues to be focused on job creation and economic growth, reducing and bringing our federal expenditures a line with our general revenue. i'm sure you share those goals so i would appreciate your comments this morning. one of the questions that mr. diaz-balart was asking is you made that light squared and i don't know that that has been discussed today. a kind of hearkens back to last year while we were dealing with this issue many of us were getting a flood of concerns and complaints from various industries across the government from agencies that the progression of light squared would have an affect on gps. i think we are all familiar with how that has progressed.

we move forward in the appropriations committee myself and congressman, one of my colleagues and i move forward with austria and i move forward with that amendment to sort of instruct the fcc to tighten up its process to hit some benchmarks to assure congress that light square was not going to violate the spectrum and folks of gorman in their districts and companies that rely on certainty in the markets before they invest and grow and build technology it can scare off the potential job growth and so the potential investment. i guess first of all my understanding is of that is in the president's budget the same language placed by the committee last year my questions are i guess one rear are we going with light square in particular what is the latest? how do we avoid getting back into the situation again where

there is this concern across the spectrum colin no upon intended, how do we avoid getting back to this position again with assuredly there will be other companies in the future who want to expand and grow jobs which is what we want them to do but how do we do it in a way that doesn't offend the gps situation we already have and the country and the investments made there? >> the goal in that particular proceeding, there are two fundamental goals. one is to free up more spectrum for the broadband because we do have significant capacity challenge that has the risk of restraining growth and private investment committed the second is the regulatory. that spectrum had an old regulation on it that was

prohibiting terrestrial use, and the effort in connection was to remove the barrier to the terrestrial goebel blog bay and build up. we said that if doing so would lead to legitimate interference issues we would have to take into account and as you saw from the actions we are taking those into account it's an open proceeding still so we are continuing to analyze the record but we were clear from the start we would have to address that. there is a larger issue that i do look forward to working with you all the members of the committee there's no reason it shouldn't be a bipartisan issue which is how do we make sure that we can remove barriers in the spectrum and that the incentives are in place to avoid interference being caused by

devices with spectrum outside of the lanes? and this particular proceeding revealed that that is a real issue. it could get in the way of unleashing the full opportunity of the investment innovation and terrestrial mobile broadband, and it's something i feel we all have to work on together to say okay, to your question, learning what we learned from this, how do we make sure we can work across the board of commissioners mcdowell and i agree should be the norm for the spectrum policy, get rid of the regulations that limit use but also have incentives to make sure that we don't like it and say they are interference issues here that prevent them from deregulating. >> the number one rule in spectrum policy is to prevent harmful interference. beyond that, i have abdicated in the commission flexible uses.

frequency's shall be used only for specific purposes. by the plant is actually adopted the investors in vince and engineers build out networks then you have to go back to the fcc with another rulemakings which can take years to change with the next might be from the government, so i think it's best to have flexible uses as far as the light squared issue itself that did not rise to the level of the fcc voted to recall the sec but of the commissioners handled by the bureau in the chairman's office and the detailed questions would defer to the up on that. it's useful to continue to keep that situation relevant as we discussed going forward. i think there were a lot of fears whether they were going to come true or not this year's on themselves have an impact on investment decisions and other companies make so as we go forward there are companies

making investments currently debating gps technology that may have an impact on future decisions and future issues that long-term guidance and long term vision might avoid the problems down the road. there was a general concern that we were getting that they were unsure whether the fcc would assure the world that light squared or other companies are competing with the spectrum and would have zero impact and that just seems like something that should never be in doubt and the effort we are taking should already be in the interactive of what you are utilizing to make the determination already. i don't know how we got to that situation and the premise that maybe the sec would approve it even though it would impact gps. but there was the belief in a lot of i know you are still going through it but there was the belief that that would occur. what ever we can do to my guess reassure the company is currently invested in gps that we will approve the technology that would affect the land i

think would be useful and helpful going forward. also want to ask just briefly about broadband fiber and just as it pertains to partnerships with public and private usage, it's my understanding that some of the federally funded broadband projects that not all of the fiber is utilized and i guess what is the opinion on sharing, selling or leasing of the excess fiber situations? >> access fiber government supported -- >> government support of labor. as ' do we have government support for all private sector committee of public-private partnerships in that regard? >> in general we can follow-up after words i'm not sure i completely understand. overwhelmingly, broadband infrastructure in the u.s. is private sector funded and built

in the universal service fund contact. there is support for private companies through so rural america can get broadband. there may be some local municipal broadband networks but perhaps they should offer to follow-up on the question. >> in the final question i have for this round deals with airplane communication. i know some of this has to deal with the faa but we constantly deal with concerns and constituent folks to travel and communication that occurs on airplanes and even the most recent i think it was alec baldwin's situation playing games and the plan was taking off. this is in the news a lot. to what extent they engaged in the ability for the communications device to be utilized on airplanes and what is the opinion of the fcc related to the restrictions that occur on airlines today? >> dressel the report that the faa is taking a fresh look at its rules regarding ipad and

other devices and exploring the possibility that might adjust its rules to accommodate the new kind of device is the way people use that. i would encourage that. and some of the traditional concerns about people talking on the phone, on the planes may not apply to the kendal or the ipad or other uses and i would encourage the faa to look at that and ensure its doing as little as necessary to protect public safety. smick one more actually just related to the mobile dtv tebeau i have spread based in my district and i know both of you have been strong advocates for auctioning the wireless spectrum to meet the demand. will be a way for them to actually be an important role for the computers to access lummis information especially times of emergency. what steps are we taking to

ensure that the mobile tv will flourish and not to be negatively impacted in the upcoming week packing of the broadcast spectrum? >> well, we have made it clear that the flexibility the broadcasters have to launch mobile dtv on the megahertz they have shouldn't and won't be affected by the incentive process we packing. they have flexibility to launch it and i encourage innovation in this case. the market will decide whether or not something that will work but i think that is an area where there is no reason for them to discourage innovation, just the opposite. and i think we have given that to the broadcasters. >> thank you mr. chairman and madame chair. >> you are welcome. >> first let me ask you, chairman genachowski. could you submit to us a list of the 200 regulations that you have eliminated?

the would be really helpful to have and then we can use it to coerce others to follow. let me just ask you both a little something about the universal service funding because i think it was saturday afternoon i was meeting with some constituents who were little mom-and-pop cable company, and the contribution rate for the universal service fund has doubled the last ten years or so, which obviously has led to an increase in the fees to consumers. have you all done anything to address that particular piece of the fees and the like? >> the contribution factor reform is something this stuff is working on and we expect to move forward in the near future. on the other side of it, and our u.s. reform and lifeline reform, the commissioner mcdowell and i and our colleague work

together to limit the growth of the funds on an aggregate basis that is the peace that are collected from consumers. the contribution proceeding will look at the allocation of the fees, basically who pays it in. the most important thing on the ensuring that the aggregate level of the burden on consumers is minimized or issues that we address in the proceedings that set the outflows so we do have to address the contributions because the world has changed from and the way that the money is collected needs to be looked at very carefully. but i do want to emphasize that putting the programs under budget, setting the savings targeted cetera, et cetera, has already put in place an assurance that the aggregate burden on consumers will be within the limits that we identify. >> so, tell me how the new

connect america fund will impact the rural areas. >> welcome it will efficiently disperse the funds to local communications providers to build broadband in their area. over the years a whole series of inefficiencies, waste, developed in the program it would have been hard to say that the money that the program was distributing was going to its intended purpose and its intended purpose was traditional telephone service, not abroad and come as of the fundamental purpose of the reform that we adopted was to modernize the programs and the telephone to broadband, eliminate waste and efficiency and assure accountability so that any money going into the program gets spent on meeting the goals of the connect america fund getting broadband to. >> some of my providers, and

this meeting was a cable company earlier in the week with a small telecom as well i should call it cable company because there is a difference, so they are worried that the changes to the connect america fund are going to put them out of business. so how am i supposed to respond to those concerns? >> well, we are listening to those very carefully as we implement the program. the easiest way to make sure that there are no effect at all would have been to not constrain the size of the fund and to allow the increase in the burden on the consumers to go out and we agree on a bipartisan basis that wasn't the right answer we needed to make the program efficient, accountable and that's what we've done.

we of the other process these so that as we go forward we can hear the concerns from companies and taken into account. i would mention one other thing which is a core principal of the reforms not to have a flash cut but to look at the transition period. so the various accountability enhancing efficiency and for some measures that we adopted generally speaking will win over the next few years because we all wanted to make sure the companies would have time to adjust. >> are you available at 3:45 tomorrow? [laughter] >> i have another constituent coming to talk about this and that would allow me to go. you can do a lot more to help than i can read estimate it may be that they are coming to look after you. but our doors are always open to be getting the input directly and the data and the information is very important to us.

>> i appreciate that. commissioner mcdowell, can you explain your thoughts on the universal service fund is reform? what i read of what you said is that you agree with them and you had concerns about the other parts and then you disagree with the other, so if you wouldn't mind explaining to all of us here your specific -- >> one of the concerns we have is we haven't yet address to the taxing side of the universal reform so that's how you pay for all this. there are the four funds where we spend money under the universal service umbrella, and we've gotten to most of those. reforming the spending side but we haven't gotten to the contribution tax inside, so the chairman and i talk about this on a regular basis. it's my hope that we can launch another notice of proposed rulemaking as quickly as possible, and conclude it this year. we need to expand and broaden

the base of contributors and lower the contribution factor and make it sort of a flat tax of sorts. right now we are taking a lot from the shrinking pool of revenue coming and we need to broaden the base and reduce the overall burden and it's something i've maintained since i got to the fcc. so the sooner we can get on with that the better. there is an automatic tax increase. it's not hidden because it shows up on the consumer bills but it's that inexplicable language of the end of the phone bill regarding the sec and taxes and funds and things and it's grown from about 5.5% in 1998 to 18% today and that is a huge spike in the past couple of years especially. and in part because of the increased spending but also because of the shrinking pool. so, the less tax base you have the higher the rate is going to be. so it needs to be fixed and it needs to be fixed very urgently. my concern is being and the election year maybe it won't be done as quickly as we would like

so that's why i'm keeping the pressure on and i know the chairman appreciates me keeping the pressure on. but then on the spending side i just address an association this morning actually of the rural phone companies, and we talked a lot about syria. as for a lot of the phone companies -- >> we have the meeting with them -- not the chairman because i'm sure my folks were there, excuse me. >> 600 of them all at once from all 50 states ibp for most of the 50 states anyway. and a very honest and open discussion. i know what the concerns are. some of them start to go into effect on july 1st but some of the rules also don't phase in for a per call with nine years. and they also have a steady income stream of $2 billion which is where it was before for their rural carriers. the commission will get this again in 2017. so five years from now. but that is important pivot on

the other side, some of them did express their concern to me that there were certain loans from the federal government for instance through the department of agriculture or even some other things where they were concerned about being able to repay the loans, the money borrowed for the fiber deployment or other such things in rural america. and if that is indeed the case, and i know there's a lot of anxiety right now because there's a little uncertainty as to what the reality will be i think the executive branch has an obligation here to look at working out of those loans if need be. we also did establish a waiver process that's very frugal. being of scottish descent i like that very much. but, if indeed there is a carrier that is experiencing an to hardship because the reform, they can file a weaver with the fcc where they have to open their books in a very detailed fashion so we know what is going on with the money. but they can get a waiver. so we will learn a lot should that happen. the commissioner is going to learn a lot about what may be

happening as a direct result. but, you know, i had an opportunity to vent their growth curve with an entitlement and i took that opportunity. >> that's great. we all need to do the same on the different entitlements and thanks for that explanation. there are some issues with the utility service and some of those loans, some of them being called in in spite of the fact companies haven't yet utilize all the funds. we will have to deal with that with the rural development and usda but thank you very much. >> thank you. mr. chairman, we are very aware that you prepared the fiscal 2013 budget in advance of the recent congressional action on a voluntary incentive options which will greatly affect the future if the spectrum available the. these will be the most complex options the fcc has conducted to

date. please update us on the agency planned for these options as it stands now, understanding that things will change as we move forward. we want press you for the debate but i imagine they will be additional administrative costs associated with the auctions. can you comment on that? >> they will present an opportunity to deliver a great return for the american economy and the american people to raise billions of dollars for the treasury to free up spectrum for the ipad and other mobile devices. it also will be incredibly complex. the two cited auction the congress authorized, this will be a first of its kind. it will require a great deal of hard work, engineering work, economists work and we are privileged to have that responsibility. the staff is now analyzing the statute developing and implementation plans determining

what affect it will have, and most importantly, developing with you on what needs to be done to maximize the benefits to the public, the benefits to the treasury, the benefits to our economy. the fcc is a good track record at determining the major investments and would like to make sure that the challenges ahead but we don't shortchange the american public because we don't bring the right engineering and economic resources to bear. >> you tell us that you are at the lowest staffing levels in ten years. so, in view of these responsibilities, what can you tell us of the president's staff and taking on what you do need to know? >> i'm completely in favor of having a highly talented team taking on these issues and have no interest in looking to hire

people we don't need. i am concerned in general about the engineering and economics resources at the fcc whether it is interference issues like we were talking about before, the complexity of auctions. there is a basic level of talent that the fcc needs to sustain over time in order to realize the benefits for the american public's, so our goal is to do the most we can with the fewest resources and the fewest people. as i said, ibm -- we have a lot of work to do to make sure we continue to bring in great engineers and economists to meet the opportunities of mobile and broadband. we know a feature of the important aspect of this spectrum auction is set aside for first responders everyone here is concerned with that.

but if you've come from new york city that is still an issue that is with us every day in terms of what happened on september 11th. how will that go, how successful do you think you will be to deal with that issue? >> i suspect that is an issue that will have bipartisan support to make sure they are doing the right thing in the department. it's an extremely important issue. the 9/11 commission recommended many years ago that we have an interoperable mobile broadband network for the first responders. it's a very important thing the congress has now moved forward on that. a great deal of the responsibility for implementing that lies within the ntia. there are pieces we will work on at the fcc. we have a public ct homeland security bureau that's a very focused on it, making sure that we harness the modern communications for the first

responders with a mobile broadband public safety network and next generation of the outbound mobile alerts so they can reach people. these are very high priorities and each case the present some have very challenging issues to work through. spec we wish you the best because it is going to be a challenge one everybody will be looking at. there is a question i've asked in the last couple of years every agency that's come before us that has a special interest. what about the territory's? as you know the territories are always an afterthought. the congress, corporate america and everywhere else, and in fact if he were to ask americans are the folks who live in the territories of the american citizens we may be shocked at how many americans do not know because they don't live in a

state. it got so bad that a couple of years ago at the hearing i was told that satellite retial wasn't available lampert recovery and i asked why and someone sitting right there, if it wasn't you know, it wasn't you, said the satellite doesn't reach their. i said it's a satellite. borrow from the cia which can be reached anywhere in the world. so now they have satellite radio. what are you hearing from the territories, what issues with the have that may be different than the folks in the 50 states or in the continental states people call them and what is missing to bring about equality under the umbrella of the fcc? >> i would say the issue that we most here is the same issue that we hear from rural america which is ensuring adequate broadband infrastructure and broadband

adoption, is whether it's the universal service fund or other policies and programs that we have, we certainly look at the territories, the issues the territories have to the extent they are unique issues we take those into account. but many of these issues are similar and hopefully that will help accelerate across the board. >> i must say to you you can comment on this if you wish, please, that if you think it's rough for the rural areas and this is not political, all of them have two senators and a couple of congressmen, at least one of the territory as a whole different situation and they are treated equally by the military and that is both positive and are speaking of the positive term in the service.

i want you to stay on top of that as we well on the subcommittee, and i know that chairwoman shares that thought with me. mr. mcdowell? >> thank you for the attendee to speak. we do keep in mind the territories in fact just last october i have a conversation with the governor of our universal service reform and the need to make sure that puerto rico and all of its unique circumstances were taken into consideration. so whether it's the end of the upcoming spectrum options or other things regarding injecting a more spectrum in the hands of consumers are broadband diplomat or adoption, as the chairman said, we do take them into account very seriously, and do all we can and a lot of them do in the unique circumstances and we try to incorporate it into our policies. >> thank you for that. it's important to always come madame chair, be aware of what is happening in the territory and what their thinking has a certain candidate come out this weekend for every go. >> indeed.

>> thank you. >> i have a couple of follow up questions. i'm not going to be near as understanding or for giving for what my colleague, mr. diaz-balart brought to the attention of the panel just two minutes ago in regard to the number of employees that are now receiving excess of $150,000 annually in earnings. and he went through the full list. i am just going to take 2008 and 2009 and set them side-by-side because i can't imagine an explanation that can justify this bill, that in 2008 there were 46 and into those and i there were 431. those numbers i cannot reply header not a one-year growth pattern unless magically

hundreds of the workers were making $149,000 a year and then got a couple thousand color of raises and took them over that threshold. so what i am specifically asking is not mrs. ileana explanation today because there may not be one that can be supported better by what research might be able to uncover. but i sit in hearings with the national nuclear security administration and health institutes and other very high level high energy pie competency level democracies in this government, and i would be shocked if all the team with this kind of appreciated number between 2008 and 2009 so i will give you a chance to comment about that significant jump in one year. but for the record i would like to see the justification in where we are headed on this path

to the estimate we certainly provide a more detailed explanation. dalia understand from our staff that in that period from 08 to 09 a certain class on the pay scale went from just under 150. we will get back to you on whether that is the explanation. i can certainly tell you in my time as chairman there was no effort to say but since with the salaries of employees, and i suspect the explanation will be something like the one report. >> certainly you and the commissioner but every that on paper in front of the discerning public out here that is an astonishing jump in one year. >> i would like to understand the numbers better myself. it's possible the pay scale went and this is what i understand

from 150 to over 150 in that year but we will work with you and the committee to provide the fact tools. >> of the risk of being hard-headed and not satisfied with that particular response, let me say it again a member of the public you have to agree with a look at that discrepancy 46 in 2008, 431 in 2009 unless there is a general support argument like you've indicated a change in the pay scale which goes back to what i said a minute ago. if everybody commit hundreds of those people were all of a sudden wind from 148 or even 145 to in excess of 150 overnight, that would be a logical explanation but absent that if that is not what we get back what you agree there is a hard number to justify? >> i would agree that number it

appears to have taken place before i got to the fcc. but at any event, we will provide that information to you and the committee and understand. >> thank you triet i promise a broadband question and i'm going to make this a generalized question because i know there's been a lot of talk already about oral broadband. i represent an area in arkansas that is very cosmopolitan along the interstate 540 corridor and home to some great companies in our -- in america but i also represent an area of arkansas that is very rural. so rural that i've got areas of my district that probably don't get the grand ole opry and tuesday. it's that rural. assure -- to my colleague from kansas -- assure me and help me

assure morrill america that given the tremendous pressure on our public schools in distance learning programs, health care and the enormous impact that broadband is having on the delivery of health care services and the whole plethora of other issues impacted. ..

we made the decision driven by fiscal responsibility to fund the connect america fund out of savings from the program. and to respond to some of the concerns from other parts of rural america, phase in some of the steps we took to increase efficiency and accountability, and so it will be a step-by-step process to get broadband to rural america. in a -- i've argued that the return on investment to our economy and particularly to rural america, of a one-time capital infusion into the universal service fund, would have a very significant payoff because it would allow us to accelerate deployment without turning the dial on the other side so fast that we hear more complaints and concerns from that side. it was in our national broadband

plan, and i look forward to working on that with you. i think it would have a very positive payoff in terms of increased economic activity in rural america and improvement to health, education and welfare. >> there was an op-ed you wrote on the internet, and it was largely about the united nations potentially having more significant authority over the internet. can you -- this issue hasn't received a great del of attention and i was hoping you could discuss for this panel what is happening in this arena. >> this is a very real problem. for the past several years there have been a group of countries throughout the world that have been pushing for international regulation of the internet. it sounds crazy but actually happens to be true, and in years past the united states and uk and other allies have been able to use parliamentary maneuvers

to table some of these actions, but this coming december in dubai there will be a treaty negotiation or renegotiation so back in 1988, about -- most of the countries in the world got together and negotiated a treaty that set up the trend for the internet to not be regulated by governments but be -- regulate by the multistakeholder model, nonprofits and engineers and academics and user groups and folks to come and make the sort of bottom-up rules for how the internet works and how it's going to grow and thrive anded and succeed. but in the past couple of years in particular there's been a bit of a gathering storm, some of the countries, vladimir putin has said -- and this is a direct

quote -- he wants international control of the international through the international telecommunication union, the itu, which is an arm of the unbased in geneva. it helps negotiate and manage international telecoms traffic, but it's been up to this point relegated to telecommunications and some international aspects of spectrum management, but not internet governance. so everything from cyber security and privacy, to domain name administration, to engineering, which is currently administered by the internet engineering task force, nongovernmental group, and other aspects -- technical aspects of swish net governance through the internet society, another nongovernmental group, as well as the long-haul internet backbone where there are privately negotiated traffic swapping agreements between backbone providers, et cetera. all of that they're proposals on

the table to have that be subsumed through the itu and give is jurisdiction over that, among many others. so, it's of real concern. the obama administration and i and others are all in agreement on this there seems to be bipartisan support in this country, but it's becoming a bit of an issue of the developed world versus the developing world, and actually the irony is that should a threaty go -- treaty go the distance and become effective it would actually undermine economic and political progress in the developing world. the developed nations would hopefully out out of a treaty, but the rest of the world might not be the case. they see an opportunity to charge some web sites or application providers, google or facebook to charge them on a per-click basis and that have money flow to sometimes

state-owned telephone companies. so a lot of issues there, i don't want to filibuster here but it's a real concern and we should all be working hard to make sure it doesn't happen, and i'm quite concerned because it just doesn't take place in december. there are meetings throughout the globe between now and december where positions across the globe will harden, and i thank chairman genachowski for voicing this concern. >> mr. chairman, you can commend. >> preserving internet freedom globally is of sitan importance. it's important to the american economy and to the global economy, it's important to the economy of developing countries, and it's important to freedom everywhere. and it is important that we work together on countering proposals that some countries have made that would not be consistent with internet freedom, and that would have the opposite effect of that claim. so, it's very important topic, and it's important that we all

work together to preserve free flow of data and internet freedom globally. >> i want to thank both of you personally for your service to our country and being at this hearing today and answering these questions. thank you so much. i yield back. >> thank you, mr. womack. we all echo what he just said. thank you for your service. let me just very briefly go back to what mr. womack just followed up -- follow up on what he said about the -- there may be a good explanation for it, if there's a whole category of individuals that went up. when you look at the change between 2009 and 2020 and 2011, there's a rather large increase again. there was an explanation what gives me a little bit of a reason to pause -- by the way, i, for one, have no problem if you need qualified people and you have to pay them well, if that's the policy, i don't have a problem with that but we should know that the case. if it isn't the policy, and

then, again, why are these numbers taking place? i think that obviously has to be answered. i knoll you will. in kind of a almost a technical question in several places in the budget request you indicate you expect to keep 1917 employees, that's keeping it flat. and i believe the request was $245.9 million to fund that staffing level. in other places there seems to be an indication that the sec expects to maintain only 1776 employeesment what is the actual number? >> the number is the lower number. the flexibility is requested so that we can continue to look at more efficiency in the overall budget by, for example, moving from contractors to ftes. we don't have any special plans on the table but it would save

the government money by doing something inhouse instead of contracting it out. we should look at that as part of it. but the number in our planning is the lower number, which -- >> 1700. what would the actual amount be if you -- if you're requesting the funding for 1776 verse 1917, what are we talk about moneywise? i know that's not the case but some septics might say that sounds like a slush fund. 1776 employees but asking for funding for 1917 employees. what's the difference in the money? >> if i may, it's the opposite. we're asking funding for the -- if within that funding -- >> you want the flexibility of getting to 1800 with the funding of 1700? >> exactly right. >> could you give me the number, of the difference, if it was 1700 -- you say you might be able to save money.

>> in the past we reduced the number of contractors at the fcc fairly significantly over the years. in general it's a better model, either you need someone or you don't. there are some circumstances -- and the auction may be an example -- for a limited period of time contracting with an expert makes since, but for tasks that are basic, recuring tasks, as a general rural probably more efficient to do it inhouse. we don't have any specific plans to do that about the team developed the budget with that in mind. >> thank you. insure. >> i just have one more question, and then i'll submit a couple for the record. okay? >> yes, please. without ox objection. >> mr. chairman, one of the fccs goals is to increase broadband adoption. since the internet seems to be consuming more and more band with width as people from from checking e-mail to reading news and playing games and watching

more things online, does your definition of broadband change as people need faster speeds to fully use the internet? >> so, over time, i expect that our basic definition of broadband will go up. i would note, without being too theoretical, the challenge of the universal broadband is different and harder than the challenges of universal telephone or universal electricity. because telephone and electricity were binary. you had a dial to be or you didn't. either you had electricity or you didn't. broadband is different. whereas you point out you can have different speeds, and some ways it's the first time the country is wrestling with these issues of how to promote broadband as a universal service everywhere in the country to all people when it can mean different things over time. what we have done at the fcc is two different things. we have set goals for where the

country should try to strive to on broadband. set a goal of 100 mega bits to 100 million people by 2020. one gigabit access to every ninety country. at the same time, for the universal service fund, we have to decide what are we going to actually pay for? doesn't make sense to say we're paying for 100 megabar gites to everybody in the country based on current usages, and a few months ago we defined that level as four megabits, basically with the responsibility to use at participation for the economy, small businesses, looking for a job, education, and making adjustments to that over time as is appropriate. >> you know, let me close by saying that something that you both know already, but i think merits repeating in public. you have one of the most

important responsibilities in our society, in our government, and i mean that. a lot of people who work in government, who head agencies, they affect certain segments of the population and they don't affect others, but the most important person in corporate america is touched by your decisions, and the poorest child in a classroom in a rural area or the inner city is touched by your decisions, and i thinker challenge and what i shook be your mission, is to make sure that while we don't interfere with the able to use the internet to use technology to move ahead, we leave no one behind and we are running the risk of leaving a lot of people behind. and something you're not allowed to comment on, know, but do you have one of the greatest jobs around because you know, before we know, what's being tested out there, and we all would love to know what is next.

but i know you can't tell us. there will be a rush on the market tomorrow and a bad scene. but for my apart want to thank you for your testimony, your work. we disagree at times on some issues, but in general, we approve of the work you're doing, and just keep doing it. remember, it's broadband for all folks. it's broad. not just some. >> thank you. >> let me -- by the way, because mr. serrano is one of the most tech-savvy members of congress, and you might be responsible on your ipad just -- you're probably consuming half the band width in congress. >> just when i'm watching baseball. >> i didn't realize the yankees were on more than one channel. >> the yankees are throughout the world. there's baseball and then there's the yankees. >> let me thank both of you -- on that note, thank both you've

for your service. i echo the words of our colleagues and i was want to finish as i started. thank you no particular for being exceedingly accessible to me and my staff. you always have been and we'll get the answers to the questions we have had, with that, this meetinges adjourned. thank you very much. [inaudible conversations]

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

>> the u.s. chamber of commerce hosting an event for the world trade organization. in this discussion, business leaders from amway and cisco. this is an hour. [inaudible conversations] >> okay. ladies and gentlemen, if you could take your seats. we can get started. that would be great.

four our friend from europe, i'm particularly delighted that we have given you excellent weather and you can put your parkas away because i know it's been a brutal winter for you in europe. let me say i'm myron brilliant. the vice president of the u.s. chamber of commerce. i want to thank my staff. john murphy, christopher, and stiff stephanie for their contributions. this is a very timely program to talk about business priorities for the world trade organization, a road map for 2012 and beyond, and i know ambassador punk will be joining us later this morning, and i think it goes without saying that both europe and the united states are vested in international trade system, vested to work together to establish the ruled of the game,

and we both have a need and desire to great a growth in jobs agenda, and today we're going to talk about how to do that in the international trade field. i want to thank our friends from business europe for hoe coasting the conference today. we have a great relationship with businesseurope as do other organizations represented around the tables, and we are pleased to work with them on a host of issues as well as this. these issues, i should say, include cooperation on the eu-u.s. front, the discussions on the g-8 forum and business heads of major organizations in europe here with us this morning, and throughout the day. as well as the g-28 conversations, discussions you'll hear about this morning about an eu-us transatlantic economic and trade pack we have been discussing now for at least six to nine months, and so we're very pleased to have a very

substantive, deep, and long-standing relationship with business europe. of course, forums like this are not possible without our corporate sponsors so i want to acknowledge the corporate sponsors. they include amway, fedex, ibm and microsoft. for years, our organizations, those of you lettives lettives-representatives in the room have tried to support our governments in that process, make sure, however, that if we were going to move it around, that it would be a robust market access agreement that would be reached. however, after many years of negotiations, we have to -- we have reached -- our governments have reached a conclusion that there's an impasse. that doesn't mean that global trade stops. it doesn't mean that we shouldn't continue to look at ways to move the multilateral

agenda forward. and we at the u.s. chamber have supported these negotiations through many trip is know christopher warning and others have led to geneva and other foreign capitals, and we participated in the wto conference in geneva in december. but we have always said,ed needed to be ambitious and comprehensive, the doha round, and that in failing to reach that we need look at alternative paths for growth and for expansion of trade. and so it's with that in mind that we're going to have this forum today with american and european business thought leaders, to talk about the road ahead. given the state of play in geneva, we believe it is time now for business and governments to start thinking about not just alternatives but value-added

texas, and the world has changed much since it was launched, and obviously a critical time for us all together to think about ways to enhance not only our cooperation but coordination around macroeconomic trade issues, and in the area of trade policy, we do believe there are a number of ways that can do that. in a few minutes, we'll hear from the u.s. ambassador to the wto, michael bunk, who has done a great job on behalf of the american business community and, of course, stakeholders, and he'll give his assessment where we are. let me highlight what the think are the two essential pieces of the conference weapon want to underscore that american and european business communities remate main committed the world trade organization and the global rules based trading sims, second, as notice is with the impeace in geneva, today's

panelists and those who are in this crowd, want to see the development of new approaches to trade globalization, and some of the areas that will be discussed at today's forum include, do we negotiate international service agreement? interesting growing in exploring opportunities opportunities opportunities to unleash trade across a variety of key sectors including finances, insurance, banking, express delivery and other sectors. services are an essential component of the global economic foot print, and it hat -- has yet to be major part of the doha around of negotiations. it got a low priority. so i think it is important for the interested communities to think about how we can launch negotiations towards a comprehensive international service agreement before the end of 2012. something this panel will take up with our participants.

one tick in particular, cisco, i'm, should has that on its agenda. second we want to conclude the trade facilitation agreement this an area of high promise because there was a lot of traction in the doha round, and i think there is widespread understanding that countries can work towards a multilateral agreement on trade facilitation. there are obviously hidden costs or trades that are high if we remove them, they'll be huge benefits to the global trading system. even arguably as important as moving terrorists. negotiations have been productive to date, and we believe a trade facilitation agreement would garner broad interest and support. we need to build and expand on tariff, reduction agreements. the past multilateral rounds, countries have negotiated many

agreements to eliminate or reduce tariffs. including products as agricultural equipment. chemicals, paper, and steel. and we all know with the highly successful information technology agreement which was signed in 1996 by 29 countries, and has grown since then to include more than 70 countries representing 95% of all trade in i.t. products. again, 1996 is kind of dated. why not update it? why not strengthen it, look at ways to include more countries in it? so i think it's appropriate for all of us to consider ways to expand not only i.t.a. but other opportunities. fourth, we want to negotiation an agreement to address nontariff barriers. nontariff barriers are measures that really restrict imports by means of quotas or discriminatory regulations, and this is a concern for not just

big companies but all companies. this is an issue that has grown in importance over the last 25 years, and i know that for manufacturers, it's only going to increase in importance in time that we address this in a robust fashion. discussions have been underway in geneva, and i know that there are a lot of thinkers in the wto system that recognize the importance of taking on mtbs, but we have to take that on squarely. we have to find a way to deal with nat a comprehensive way. fifth, we need to identify new and emerging issues. as i noted already, the world has changed quite a bit in the ten years since the doha round was launched, and we need to recognize that this -- recognize the world trading system has changed, and so we urge wto member companies to use the current impasse as an opportunity to explore these new areas that should be gaps, what

i would call in the wto agenda that should deserve consideration as part of the wto framework. one example is the movement of electronic information across borders. it's critical to businesses around the world. but the international rules governing the flow of digital goods, services, data, and infrastructure, are absolutely incomplete. improving the multilateral framework for digital trade at the wto should be a pry priority for all governments seeking to promote innovation and certainly a high priority for the u.s. chamber and its members. so let me conclude my opening comments here to this forum today by saying that we believe there is a huge opportunity for the american and european business communities to remain committed, not only to the wt0 and the rules-based system but to look at ways to advance our global economic and trade agent. when both continences --

continents need to create jobs this is an opportunity for the european and the u.s., who share many values, to work beyond our challenges and find common ground and encourage other countries countries countries to participate in the multilateral agenda. i hope this conference serves as a road map for 2012 and beyond and contributes contributes to e discussion that our governments are having, and at this point i would like to turn this program over to adrian van den hoven, a very good friend of the u.s. chamber. i want to thank you all for coming here today. ...

>> we are very supportive of the wto. we think the w. two oh, it's working. while we are all out there innovating and selling and collaborating, and we would like to see the wto work even better for our company and for our industry and frankly for all of those other sectors. i thought i would focus my remarks not just on behalf of cisco, but the u.s. tech industry. talk a little bit about what we have been thinking about in the wto is the development agenda has foundered. we have spent quite a bit of time talking about expanding the scope of our current agreement

-- the information technology agreement. which has been very successful for our sector. you were still my colleague and the colleague from microsoft talk about servicing end trade flows and trade facilitation. i will save the best for them in that area, but that is totally a priority for the tech sector. we are also very interested in seeing other countries joining the wto like russia, as well as join other agreements in the wto, like the government procurement agreement. china is negotiating in succession to the gta. we are very pleased to see progress there. of coarse, enforcement of the existing commitment. the industry just went through and enforcement. , and we think there is value in

the wto is process because they're our existing commitments that are good and we would like to see the government continue to abide by them. i thought it would spend the bulk of the time talking about ita expansion. that is where the tech industry and cisco, we really see an opportunity to open new markets. as myron has said, ritually be started with 29 countries joining the information technology agreement back in 1996. now we are up to 73 countries. i think 44 of them are in fact developing countries. trade from 1996 until 2008 has grown in it products from $1.2 trillion to $4 trillion. it has been quite a successful agreement for our sector.

for developing countries, there exports grew doing that. 34% compared to developed countries exports that grew 7%. it has been successful for everyone, but particularly successful for developing countries. if you haven't read it, i would commence you the information technology industry foundation. they have written a very good report about the ita expansion and what some of the economic benefits could be. what they estimate is that two-way trade could grow by an additional $800 million if governments were to successfully expand the scope of the entertainment and technology agreement. products that are new products that weren't around at the time that the agreement was

negotiated back in 1996, such as gps equipment, and there are also products that were excluded from the scope of the original agreement. certain types of equipment, semiconductors, they were not included or had not been invented since the agreement went into place. what we found in doing the math over the iti f. is global demand and it could expand by 28 lu dollars were the agreement to be negotiated. with price drops you see demand grow in ict because of import demand. for the united states, what they estimate it is that, you know, revenues for companies could increase by upwards of

$10 million. we could see u.s. exports expand by $2.8 billion, hoping to support the president's goal of doubling u.s. exports over the next couple of years. and we would see job creation upwards of 60,000 u.s. jobs that pay on average $75,000 a year compared to 42,000 swarthy average wage in the u.s. where a lot of the benefit from ict is derived is from the usage of ict. the same report estimates that 80% of the economic benefit from itt is usage. only 20% from the production of it. when you have pride price increases from it, for every

dollar in tariffs that the indian government had on it products, there was an estimated economic loss of a $1.30 because of the productivity losses that resulted from companies and consumers not having access to low cost it products. what we've seen since indians have joined the ita is that their services industry are highly independent, account number 47% of india's total service export. nearly half of those service exports are it services. we think there is a lot of support and growing support for expansion of the ita, for 40 had sent a message to their government endorsing expansion for this agreement. in 2011 tech leaders from 21

economies pledge to provide leadership in negotiations to expand the scope, and even your counterpart in europe has placed top priority on illumination -- further illumination of duties on it products. that is really where our main focus is this year, as i said, there are also other areas of products we would like to see -- we would like to see countries officially joining the ita. russia has also agreed to join the information technology agreement. adoption of the government procurement agreement by other countries including china, brinkley we would love to see the indians take another look at that. we just went through enforcement process with the eu on the ita.

i think that that, in fact, has put an emphasis on the value of the existing agreement and provided a good example of why it needs to be expanded. we are seeing some local content requirements growing in various -- the use of local content requirements being explicit in the number of countries. we're working hard at those. i would commend those of you who are dead and trade statistics to take a quick look at the w. work called made in the world initiative. there are some events in washington here tomorrow sponsored by the washington international trade association. taking a look at statistics, i think it is important because it characterizes how we think about trade and what we talk about where the real value is. thank you. >> thank you, jennifer. what is important beyond all these technical issues as related to your industry is the

story that you're telling about how your industry is an enabler for services industry and end enabler for procurement and business to business development and i think that that seems to be important dynamic on today's panel. i'm going to turn to another enabling industry, the chemicals industry, because of your condition as a business to business industry and the role that you play in supplying a number of key industries that are growing today. i would like to hear how you see the chemicals industry going forward will tie latterly. >> eq, adrian. good morning. thank you for the indication. it's a pleasure to be back in washington. of course, it is also an interesting challenge to speak about the government in 2012 area given the fact that i feel that we have a patient that is rather ill.

maybe we can procure some medicine chemical compounds that probably help. i am not in as good as a position as jennifer because i cannot say that our chemical harmonization agreement has grown and had a lot of participants after the year where this chemical harmonization agreement was decided. i don't think we have a lot of new comers. whenever somebody exceeded to the government that these no members of the wto should have at least the kind of tariffs. the chemical tariff harmonization agreement was a

coming industry. in 1990 -- i have to say, frankly, the u.s. approach in chemicals. that is an industry suggest why not reduce the tariffs to harmonize level and then hopefully eventually eliminate them. it was mostly -- there are some other countries. the next step would be to eliminate chemical tariffs. and the fact that my industry and agent in the industry -- the industry is whatever you produce the unique chemicals, it is a good idea from a government

perspective to a limited chemical tariffs. what you have to do when you deal as a sector in a sector approach in the wto, you need to look at country coverage. i think that we do have different views inside the countries of concern. the emergence of some of the emerging countries coming, but also you have to look at product coverage. i think you need to be quite clear how you define the sector which should be part of the sector agreement. you take the whole chapters 28

to 39 of the chemical and pharmaceutical tariffs and to put them into the basket for tariff illumination. i think it is very important where the definition is concerned. i think that one of the problems that we see with tariff elimination, and that is the limit limitation agreement of buying goods. i don't think you can define what is meant by environment goods. if you have such a problem if you can't even define the sector coverage, the product coverage, i think you run into problems. what is the issue today? we would like to see chemical turks eliminated in the government. of course, there are two things.

either you do such a chemical tariff illumination elimination. it means that those countries who are newer on the scene, and of course in particular china, should take part of such an agreement. if you look at how the chemical industry developed in the last 10 years, you see that the biggest chemical industry nowadays seems to be that chinese chemical industry and the u.s. chemical industry, the chemical industry in japan, and the german chemical industry. they are the top of the league and should first and foremost eliminate the tariffs. but not only them, some countries altogether which do have significant chemical industry to join such an

agreement. meaning that those countries get together, eliminate their tariffs, leave the turks to the rest of the world. i am not sure whether the approach on a conditional woodwork. i don't think we would be able to agree to such a suggestion because you could have a significant violation of the principle it just half of the room illuminates chemical tariffs that we don't apply to the other half of the room. i think you need to understand how you go about this. of course, another issue is no exceptions. we have made the proposal that there should be no exceptions to this rule.

i think if you stop negotiating exceptions, everybody in the world would have exemptions. if you hang the exception on the negotiating proposal, you have more holes. rightfully we don't want any exceptions. if you have exceptions, you must go through periods. at the end of the day you need to have an agreement, and that unfortunately did not occur last year. we are still working on it and we are convinced that this would be the best thing to do for the future government. thank you. >> thank you very much. we have had a little bit of discussion focused on the tariffs that equation, although i know both of you are also looking at the non-tariff side. now i am going to ask robert hamilton from amway, who is going to talk more about the non-tariff equation including

technical barriers. you can fill us on on ideas that can be included and are achievable. >> thank you, adrian. thank you all for attending. i'm an unusual speaker to speak to a trade group because i don't directly get myself involved in wto or trade agreements. i am a product guide. i am trying to get products into markets. emily is a global company, so i am on the downstream end of all these trade agreements. our activity, and activity that supports the wto and the free trade agreement, that we also believe that there are other actions that need to be taken. i would like to address from a birds eye view, an overview, as

it is, because of the fact that there are so many details i could not hope to accomplish them in the brief time that i have been given to speak. but i think all of you would agree with the sentiment of winston churchill that 10,000 regulations really make for pretty bad law. our effort, as with yours, is to try to see a reduction in the technical barriers of trade. so first of all we need to look at, what is it that motivates technical barriers trade, then i think we can take a look at a few examples related to technical barriers to trade, and then i will present some suggested solutions that i believe might be a good approach. certainly, tariff barriers to trade are driven by politics to a great extent.

there are nations who would say that they have raised these barriers to be protective of their citizens, to protect their industry. for the most part, the recipients of the tariffs are the governments and the governments are the beneficiaries of these arrangements. when it comes to technical barriers to trade, there are other motivations. there are the altar is the motivations of protecting the health and safety of the citizens of the country. there are desires to protect the environment. there are desires to level the playing field so that businesses can be more effective in a free market environment. with all of this goodwill related to tdt is, what could be wrong with them? well, clearly there are barriers and restrictions are not a desirable thing in a free-trade environment. what is it that makes the

technical barriers truly not allowed for tree trade? as a scientist, i would hope that we would be able to deal with the social concerns, the human health and safety and environmental safety with international standards or with an agreement of good scientific principles, good risk assessment principles, for example. the difficulty here, of course, is that with any of those kinds of principles you end up with citizens of individual states being very anxious about issues that are not easily satisfied by science. i think of the disaster in japan and the impact it had not only on japan put on trade throughout asia. many citizens in korea, taiwan, china were concerned about

products that came from japan, and raw materials the raw materials that would go into products made in their country but coming from japan. it didn't make any difference that there were scientific justifications to suggest that these materials were safe. citizens did not want to see them in products in their marketplace. even in an area and europe were you would think there would be an easy application of good science, gm owes have created a lot of nugget argument. genetically modified foods have created a lot of barrier within the european marketplace. in the united states, not so much. where is the science? there is a necessity, i am afraid, for governments to create these technical barriers to trade, even without a science driven decision. so what is the solution? we

would suggest that education is a good start. unfortunately, wto were free-trade agreements don't solve the problem. we have participated, as an example, with a wad of education in china on the issue of vitamins and food supplements. dietary supplements are regulated in china largely as medicinal ingredients, not as food. we encouraged educational aspects, presentations by the international association of dietary supplement associations, a group that represents across the board all kinds of companies in many different sectors. an opportunity to look at the regulatory practices and the safe use of dietary supplements in different marketplaces. even to you look at uses and how

it uses are contained. with that kind of education and encouragement of the chinese marketplace and a raising of confidence, we have been able to see an opening of that marketplace of dietary supplements. it is important also to recognize that beyond the social concerns, there are business concerns. the need to have a fair playing field. there are many of the emerging countries that are concerned that they have missed the train. they have missed the opportunity to be effective competitors and if they open their markets to free trade, the more advanced company will enter their marketplace and swamp out the competition. i think that creates with the fear of competition and effort to freeze the marketplace, to

create non-tariff barriers to trade that stop new technologies from entering. or perhaps shortcutting of some of these things by bringing in technologies from other marketplaces to build a quick, makeshift predatory environment. i think a lot about the concerns that the chinese government had about the contaminations of milk by melamine, they will say our industry is not quite ready. we need to have a little more restriction, not just for parts, but also for our own industry. that convenient barrier is an opportunity for them to advantage their industry within china. one of the things that we look at is how do we answer those

questions. how do we get a reduction in this beer for competition? well, one of the things that we do is to try to encourage regulatory agencies to see the global competition is inevitable. that freezing the market place will only delay the competitive opportunity for industries within their own country. they need to die than with a little more abandon. we need to diminish some of the concerns that they have by allowing industries in more developed countries to enter into those marketplaces and to create industry associations, to provide training, to exercise common cause in areas where that is possible. in areas of human health and

safety. in areas where the environment is concerned. in areas where we are talking about fairness of competition advertising clients, and how they are substantiated. we really feel that it is important to provide that kind of outreach on a business-to-business spaces, as well as a business to government basis. but, of course, the real problem with technical barriers to trade are the political problems where governments are trying to enter in and influence market places. one of the things that we've definitely seen is speed to market with new regulations that add regulations and are developed slowly, markets in europe and the united states, they pick up speed as they enter markets like china or some of the smaller markets in southeast asia. they can borrow the regulations

and adjust them to their needs. it is rather like mobile phones. you don't see a lot of land lines in developing countries. you don't see a real problem with developer edition development of countries. one thing that we see is that you need to have concern of overcoming suspicion. really emphasizing the principle -- the simplest regulation regulates that so that if you accomplish the goal without unnecessarily affecting the market marketplace, you have really got the best possible regulation. so we look at the need for the emphasizing of simple and straightforward regulatory policy. i think in terms of the