>> thank you very much, madam chairman. mr. chairman, good to see you. let me start by trying to telling you that the commissioner, the chairman and his staff have been exceedingly open to us and to my staff and i thank you for that. have the opportunity not want to speak with you but to meet with you. i want to thank you for that. we spent a lot of time to speak about transparency a number of different areas. we were preparing for this meeting, and then the issue of lightsquared kind of came back. we were kind of, i was kind of, since you been to open to me, i was a little shocked that some the things i read about lightsquared, about the fact that you a member of the senate in essence saying he couldn't get the information, the sec told him that information of that sort was only given to members of relative committees

which is one would be included in that. but because of that i started digging in a little bit. because i was shocked because of the fact you have been so to me and my staff. one of the things obviously a cynic would say, there were reportedly contributors to the administration and so, therefore, a kind of smelled bad. but since i don't buy that, we did a little bit of her own digging. i'll tell you what i came up with. something that frankly kind of shocked us a little bit. speaking of transparency. that's the issue of freedom of information act requests. if you look at, i will tell you what the sources, it's u.s. government website, it's foia.gov website. you look at just the number of freedom of information act requests and denials. according to that website, the fcc is denying more foia

requests under this new fcc and in the bastard as a matter fact, significantly, greater percentage of denials compared to other government agencies. for example, in 2010 the fcc denied 48% of freedom of information act requests, while the rest of the government denied only 7.3%. that's pretty darn huge difference. let me also been to put it in perspective, some of that data in that website indicates the sec has started denying an unusually large percentage of freedom of information request because of this thing called not reasonably prescribed. under your watch, the fcc denied about 16.4% of foia requests based on records that were not quote reasonably described. but again not only is that a huge increase from previous fcc

years, only 3% denial based on that, but much higher than even the cia. which i thought was a big deal. the cia denies 0.7% denial rate of the same year on that same issue. so why is the fcc all of a sudden have more secrets than the cia, when you're dealing with foia requests? >> i'm not familiar with those numbers and i haven't heard them before. would be happy to look at them together with you and try to understand the trend certainly we recognize our obligations under foia and we have a team of professionals who handle foia requests and understand their obligations to comply and meet their obligations under lock. >> right. that's the reason i want to mention that first. i was taken back because of relationship i've had with you. we have been able to get

information but it seems that there is, outside of me, or us or congress, and even with some mirrors of congress it seems there may be a difference. again, if you look at, for example, those that are denied for not reasonably described, look at again 16.4% for the fcc, the cia 0.7%. the nsa, 0.5%. dhs, homeland security, 0.2%. there seems to be a problem here. that's a huge increase because just previously to that it was about 3%, still high. i'm sure there's a reason for but there seems to be a huge increase of denials of freedom of information, particularly under this category of not reasonably described, that i don't think shows transparency. and it clearly does not respect -- reflect the president's call for conspiracy.

again because of the relationship i would like to maybe spend some time with you all and look at what's going on because there's a serious issue there. i'm sure there's a good explanation but i don't understand what it would be. that's number one. another issue that i also thought, i ran into, you are talking about, we talked about budgetary issues, about i guess your personnel, your request are basically flat, is that correct? >> correct. >> one thing that also struck me rather large, was, i apologize, particularly with, after 49 and a half and half and a half, my eyesight is not that good, but it's salaries. the increase on the fcc of employees earning $150,000 or above. so even though the number of employees may be flood, those making one and $50,000 above have increased rather

dramatically, and that's what madam chairwoman, this chart reflects. >> i will submit that for the record. >> thank you. it's a huge increase of individuals that are now turning over 150% -- $150,000 in salary. and let me see if i can get you some of those numbers. jumped from 4 46 in 2008 individuals, to 431 in 2009, the 535 and 2011. that's a pretty. so what changed between 2008 and 2009 that required such an increase in pay? is a different individuals? i'm not sure what that actually shows us other than the fact that numbers are pretty astonishing. >> so, i'm not familiar with the reason for that particular increase. in general, the work of the fcc increasingly requires highly

skilled engineers, economists, others with advanced degrees to do our work. over time, the employee base at the fcc has become more and more focus on that as we moved from paper to digital, and there've been consequences for the employee base in that regard. so, that is part of the reason for the trend. a second is, and i'm proud of this, the retention at the fcc has been reasonably high and that's affected those numbers as well. but i'm certain 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 space. i am convinced they so my time at the agency absolutely requires first great talent, engineering talent, economist, lawyers. and we certainly have many

potential employees because we can't come close to can be with other offers that. that's just life in government and understand that. >> and again, because and not being accusatory but when you look at the numbers, in 2006 there were 38 employees, if this is totally accurate, and this is what we found. by the way, this is from a website also of the federal government website. all this is public and that, i do commend you for that. 2006 there were 38 employees in your agency earning 150,000 or above. in 2007, 48, small increase. so basically flat or a few less. then went from 2008, 46, the 431 in 2009. 517 in 2010, and 535. you know, i'm not great at math but that's a pretty substantial increase, no matter what. we're not dealing with people that went from 75 to 85,450 to

70. we're talking people making over $100,000, $180,000. those are astonishing numbers, and again i want to thank you for being opened but you understand that these raised some serious questions. mr. alexander mentioned about, you know, maybe you can look at ways to reduce that 2% increase. when you have these increases in salaries, number of individuals making this much money, it these large increases, that right there may be where the 2% is a little but i'd like to sit down with you and further explore t the. thank you, madam chairwoman,. >> thank you, mr. diaz-balart. mr. your? >> thank you, madam chair. appreciate you both being a. appreciate your service to our country. chance of a conversation deception of look at what our budget parties are, how would before. sortinstarting this committee as congress continues to be focused on job creation, economic

growth, reducing federal expenditures in line with the available revenue. i'm sure you sure those goals, and so i appreciate your comments this morning. one of the questions that mr. diaz-balart was asking was related to lightsquared. i don't know if that's been discussing any kind of, hardened active last you were dealing with this issue. me of us were getting flooded concerns, complaints from the very same issues across the country from federal agencies even, that the progression of lightsquared would have an effect on gps. i think we're 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 an amendment to sort of instruct the fcc to tighten up its process on lightsquared to hit some benchmarks to assure congress that lightsquared was not going to violate existing

gps spectrum. and part of the challenge is, folks like myself, have garmin and others in her district that rely and certainty in these markets before they invest and grow a new technology, it can scare potential job growth. and potential investment. first of all, my understanding is that's the same mindset was placed by the committee in last you. my questions i guess are, one, where are we going with lightsquared in particular? what's the latest? two, how do we avoid getting back into this situation again with is this concern of -- across the spectrum, no pun and intent, about folks who are concerned about this? how do we avoid getting back to this position again with a surely there'll be other companies in the future to want to spend grow jobs, which is what we want them to do, but how do we do it anyway that doesn't offend gps situation we are have in the country with investments

made there? >> the goal in that particular proceeding, there were really two fundamental ones. one was to free up more spectrum for mobile broadband because we do have significant capacity challenge that has the risk of restraining growth and private investment and mobile. and the second was the regulatory. that spectrum had an old regulation on it, prohibiting terrestrial years. and the effort in connection with that was to remove that barrier to terrestrial mobile broadband build a. from the start we said that if doing so would lead to legitimate interference issues, what have to take this into account but as you saw from the actions we are taking into account it is an open proceeding

still so we're content to analyze the record, but we are very clear from the start of it that we would have to address that. there's a larger issue that if you look forward to working with you, all the members of the committee, no reason it shouldn't be a bipartisan issue, which is how do we make sure that we can remove barriers to spectrum use and that incentives are in place to avoid interference being caused a device is being interfered with by spectrum outside their lanes? and this particular proceeding revealed that that is a real issue. it could get in the way of unleashing the full opportunity that investment, innovation and terrestrial mobile broadband but it's something i think we all have to work on together to say okay, to your question, learning what we learn from this, how do we make sure that we can move

across the board, commissioner mcdowell and i both agreed, should be the norm for spectrum policy, get rid of regulations that limit use, but also have incentives to make sure that we don't wake up and say oh, there are interference issues here that prevent us from deregulating. >> well, the number one rule in spectrum policy is to prevent harmful interference. and beyond that, flexible uses, sometimes in the past the fcc has said certain trigger they showed only be used for narrow purposes. by the time that's actually adopted and investors investing engineers build out, networks, than the market has passed that idea by and then you to go back to the fcc with another rulemaking which can take years to change with the next micromanagement might be from the government. so i think it's best for

flexible uses. as far as the lightsquared issue itself goes, that did not rise to the level of an fcc vote of the commissioners, so that was handled by the bureau in the chairman's office of any detailed questions i would defer to them on the. >> i just think it's useful to continue to keep the situation relevant as we discuss how we're going forward. i think there were a lot of fears whether they were going to come true or not, those fears themselves i think have an impact on investment decisions that other companies make it so as with afford our companies are making investments currently today in gps technology that may have an impact on future decisions and future lame issues that boy, a long-term guidance, long-term vision might avoid some of these 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 lightsquared or other companies are competing for the spectrum would have zero impact, or such

a negligible money back. that seems like something that should never be in debt. it was almost like this seemed like the effort we were taken should already be in the prime directive of what your you like to make this determination already. how we got to the situation and the premise that maybe the fcc would approve, even though it would impact gps, but that was the belief and and a lot of, in part i know you're still going through but that was the belief that would occur. so ever we can do to i guess we assure those copacetic current invested in gps that we won't approve technology that would affect their lame i think would be useful and helpful going forward. also wanted to ask just briefly about broadband fiber. just as it pertains to partnerships with public-private usage, it's my understanding that some of the federally funded broadband projects are not all the fibers utilized from

and against what is the opinion of the fcc on sharing or leasing excess fiber situation? >> excess fiber of government supported by request. >> right. government supported by the. to what extent we have government supported fiber going to have public-private partnerships in that regard? >> in general, this may be questioned that we can follow-up afterwards because amish i completely understand, but overwhelmingly, broadband infrastructure in the u.s. is private sector funded and built in the universal service fund context. their support for private compass a row america can get broadband, there may be some local and municipal broadband networks, but perhaps i should offer to follow up with you so i understand the question. >> that would be fine but the final question i have this round deals with airplane communication to some of this has to do with the faa but you're constantly deal with

concerns with constituents and folks were there to just travel, communication that occurs on airplanes, even the most reason, i think alec baldwin situation, playing games when the plane was taking off. to what extent is the sec engaged with the ability for telecommuting devices to be utilize on airplanes? with the opinion of the sec related to the restrictions that currently occur on airlines did a? >> i saw today the report that the faa is taking a fresh look at its rules regarding ipads and other devices, and exploring the possibility that i might adjust its rules to accommodate the new kind of devices the way people use that. i would encourage that, and some of the traditional concerns about people talking on phones on planes may not apply to

kindle or ipad or a user. i would encourage the faa to look at that and ensure that it is doing as little as necessary to protect public safety. >> madam chair, one more related to mobile dtv. i have a sprint based in my district. i know both of you been strong advocates are auctioning wireless spectrum to meet the demand for wireless broadband. loss of mobile dtv would be another way for consumers to access video. and important tool, especially in times of emergency. what steps is the sec taking to make sure mobile dtv will flourish and not be negatively impact in the reback of broadcast spectrum? >> well, we made it clear that the flexibility that broadcasters have to launch mobile dtv on the six megahertz they have shouldn't and won't be affected by the incident of

auction process and packaging. to have flexibility to launch it. i encourage innovation and space. the market will decide whether or not it's something that will work but i think that's an area where there's no reason for the fcc to discourage innovation. just the opposite. and i think we've given assurance to broadcasters. >> thank you, madam 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 bugs that would be really helpful to have, then we can use it to coerce others to follow suit. let me just ask you both a little something about the universal service fund, because i think it was saturday afternoon i was meeting with some constituents who are a little mom and pop cable company.

have you all been anything to address that particular piece of our fees? >> the contribution factor reform so that staff is working on and that we expect to move forward with the fcc in the near future. on the other side of it, in our u.s. avenue reform and a lifeline reform, we work together to limit the growth of those funds, because an aggregate races that sets the fees that are collected from consumers. the contribution proceeding we look at the allocation of those to see you basically pasted in. the most important thing ensuring that the aggregate

level of burden on consumers is minimized, were issues that we addressed in the proceedings that set the outward. 's would have to address conservation because the world has changed and the way that money is collected needs to be looked at very carefully. but i do want to emphasize that putting the programs under budget, setting savings target, et cetera, has already put in place an assurance that the aggregate burden on consumers to be within the limits that we identified. >> so, tell me how the new connect america fund will impact rural american. >> it will efficiently disburse funds to local communication providers to build out broadband in their areas. over the years, a whole series

of inefficiencies, ladies, developed in the program, it would've been hard to say that the money that the program was distributed was going to its intended purpose, and its intended purpose was traditional telephone service, not brain dead and -- not 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 rural america. >> so some a rural service providers, and i did in this thing was with a small company -- cable company i had with a small telecom as well, well, i should probably call the cable company. and so they are really worried that the new 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 concerns very carefully as we implement the program. the easiest way to make sure that there are no effects at all would have been to not constrain the size of the fund, and to allow the increase in the burden on consumers to go up. and we agreed on a bipartisan basis that that wasn't the right answer, that we need to make the program efficient, accountable, and that so we have done. we've established a waiver and other processes so that as we go forward we can't hear the concerns from companies and taken into account the i mention one other thing which has been a core principle of our reform was not to have a flash cut, but to look at transition periods. and so, the various

accountability, enhancing the efficiency and enforcing measures that we adopted, generally speaking, will roll in over the next few years because we all wanted to make sure that companies have time to adjust. >> are you available at 3:45 tomorrow? i have another constituent coming to talk about this, and i think i have another dash of that would allow me to go -- you can do a lot more to help her that i can. >> it may be that they're coming to us after you or before you. but our doors are open. getting the input directly into data and information from companies that are affected is very important to us. >> i appreciate that. commissioner mcdowell, can you explain for the committee your thoughts on universal service fund reform? what i read of what you said is that you agreed, you had concerns about the other, some other parts and you disagree with the other. so if you wouldn't mind explaining to all of us here

your specific problem. >> one of the concerns is that we've not yet addressed the taxing side of universal service reform, that site pay for all this, for funds were spend money under the universal service umbrella and we've gotten to most of those. but we haven't gotten to the contribution or taxing side. so the chairman and i, we talked with his underrated bases radio bases but it's my hope we can launch another notice of proposed rulemaking as quick as possible. concluded this year. we need to expand, broaden the base of contributors and lower the contribution factor, make it sort of a flatter tax of sorts. right now we're taking a lot from a shrinking pool of revenue, and we do need to broaden the base and reduce the overall burden, and it's something i maintained pretty much since i got to the fcc. sosa wouldn't get on with that the better. there is this automatic tax

increase. it's not a hidden tax because it does show up on consumers phone bills but with all but one which at the end of your phone bill regarding fcc fees and taxes. it's a grown from about 5.5% in 1998 to 18% today. that is his bike just in the last couple of years especially. and apart because of an increased spending but also because of the shrinking pool. sosa the less of the taxpayers you have, the higher the rate is going to be. so nice be fixed in this be fixed very urgently, and my concern it being an election year maybe will get done as quickly as we would like so that's one keeping the pressure on. i know the chairman appreciate me keeping the pressure on. but then on the spending side, i just address an association of this morning of rural phone companies, and we talked a lot about this area. so for a lot of the rural phone companies -- >> glad you had a meeting with them. not the chairman because i'm sure my folks were there.

excuse me for interrupting. >> 600 of them all at once from all 50 states i believe, or most of the 50 states anyway. and a very honest, open discussion. i know what their concerns are. some of these rules start to go into effect july 1, but some of these rules also don't face into record of nine years. and also have a steady income stream of $2 billion, which is where it was a four, four rural carriers. the commission will look at this again in 2017. so five years from now. but that is important. on the other side, some of them did express their concern to me that there are certain loans from the federal government, for instance, the department of agriculture or even some other things, where they are concerned about being able to reap a those loans. that money borrowed for five -- other things he wrote america. if it is indeed the case, i know there's a lot of things i do

right now because there's uncertainty as to what the actual reality will be, i think executive branch has an obligation to a working out those loans, if need be. we also did establish a waiver process. but it's very frugal. teen of scottish descent i like that very much, but if indeed there's a carrier that is experiencing undue hardship because of the reform, they can file a waiver with the fcc would have to open the books in very detailed fashion so we know exactly what's going on with the money. but they can get away. so we will learn a lot should that happen. the commission will learn a lot about what might happen as a direct result, but i had an opportunity to been the growth curve on entitlement, and i took that opportunity. >> that's great. we all need to, to do the same on what the different entitlement. and thanks for that explanation. there are some issues with rural utilities service and some o