>> i'm disappointed in that. did you do anything with katrina at first making it a learning experience about how port and insurance business situations? >> absolutely. we've have prepared it this packet were talk about insurance

being key. we do make loans for insured or underinsured losses. we'll take an salmon of the insurance policy. there's a lot of lessons learned here, but i don't want to state a specific percentage about nonfactual numbers. we can get that number. >> please. the 108 mendes features you'd be interested is your determination as to how many have insurance at how many different. i'm assuming you would agree that's critical of the amount of insurance they have when people look to the federal government to step in and fill a gap. >> just to clarify that's part of our process. we'll make a loan for $1 in the theater $50,000 of insurance. we will miquelon upfront and reduce the full amount by about 50,000 will make the phone for underinsured losses. >> we also take an assignment on insurance prayers these quakes

>> we do when they make it before the insurance is settled. >> that's enough for this round. >> thank you on the senator. let me assure you we can get that information. for the record, is not the insurance given on form -- sba form five, which has to be completed and attached to this? >> yes, ma'am. >> in addition to the two pages, we do want a simple but complete process. there's five other forms, one for insurance, one from the higher ice, one form which is an sba and 2202, which is a schedule six liability and i'll fix that. if there are improvements come a senator that you to suggest, please let us know that the insurance is required and important because the federal government is helping to fill the gap, hope to file quickly

ended at the good sometimes insurance proceeds can be slow and frankly some insurance come and is there better than others about honoring the contracts they have with these businesses and that's another important oversight that i hope the committee jurisdictions, which is not this committee, can provide in this recovery. are there any other questions because i'd like to be to the second panel and give them an opportunity. anything else you will want to add quick >> no, ma'am, thank you. >> we been hit with the $60 billion request -- did that come to the white house? >> it did. the white house and appropriations committee has reviewed it. >> were part of that is attributable to her within this committee's jurisdiction. does anybody have an idea? [inaudible]

[inaudible] >> -- 40 million for the economic initiatives who discuss and 10 million for the ig. >> how much of that on authorization will leverage an additional loans quick >> approximately four and a half billion dollars for lending authority. >> okay. >> one mother not related to that, but who put those numbers together, by the way? was that she do put this together, your shop? >> the agency? >> these numbers you just gave us. >> part of it is mine and the disaster assistance part of it is michael's and the ashburn or development in a surety bond peace and capital access also.

>> isamu for once no more about how you could numbers together we can get in touch quick >> absolutely. >> when someone applies for a small business administration loan, is their insurance fêted at that time? >> is commissary. the le mans circuit application, it's part of their underwriting due diligence that they have to contact as part of the processing of their. >> theoretically anyone with a small business loan will receive compensation from their insurance company has supposed to having an issue coming to the sba. >> is one of the decisions a small business of an estimate. if they have adequate insurance or underinsured, which is providing one option for their toolbox for mental commitment is. >> when you do your due diligence, do you require they satisfied they are fully insured for losses as to their structures, their inventory,

interruption of business in a sort thing? >> when we speak with the insurance agent we've exactly what the insurance total minutes of that time for what they anticipate the settlement to be. >> been talking before the disaster when somebody comes to you for a long. >> for disaster long quakes >> i'm sorry. maybe it's more appropriate for mr. chodos. someone who comes in for an sba loan. >> has come a syrupy but you're long program run through the banks in london partners as part of the normal private sector prior to his of insurance providers. >> about to katrina if he would urge you to give me these numbers, what do you find the sars people who have an sba loan coming back to the sba after a disaster and watching either a loan for disaster relief or something like that? >> for an individual receives a

disaster long? >> there's an opportunity in the event that there's uninsured or underinsured losses. there may be situations where we require flood insurance and there may be additional damage for what the policy covers because of the different footprint or different type of event that occurs from one disaster to another. >> senator, we can issue information about the standalone sba program. i wish is checking with us after the default rate is comparable to the private sector default rate and its mom is tonight the subsidy for that program relative to the leverage it provides for small businesses and that the lender of last resort. i want to make clear and i think the senator has a good line of questioning that insurance underlies this whole recovery process. homeowners have insurance. there's flood insurance. these insurance policies can be

expensive, but it's required in many communities. the small business loans are there to fill the gap or to get money more quickly until insurance proceeds come in. it would be important for the record to submit how many of the businesses successful and not just applying, but receiving loans. what is their level of insurance coverage. but let's go to the second panel if we could. thank you very much. the second panel, thank you all. if you could stay and listen to the second panel, i would receive it. it's very important to hear from mayor's and business leaders on the ground. the first is the honorable john zimmer, first female. she began her career as an advocate for public park space that has become a successful

mayor dedicated to fiscal responsibility, public-private partnerships and improving the quality of life for local residents. unfortunately, hoboken is one of them are devastated municipalities in the region and no mayor can appreciate what you and your city council and citizens have been going through and we just offer you our best in this affair. mr. jim keane has been the state director of the new york small business development and are now part since 1994. he oversees 23 regional centers, 35 outreach centers that serve 35,000 small businesses each year. all of your experience, mr. king, will most certainly be called on it tested for the job ahead of you. mr. kevin law is one of the most respected business organizations in new york. the long island economy is made up of over 100,000 businesses,

90% complete 20 people or less. bit with look forward to hearing directly from you about what your business is their same come, many struggling to recover and how we can be as helpful as possible. mayor, let us start with you and again, hearts go out to the people that you've lost and are devastated, but were going to stay with you for the long haul, long road ahead. [inaudible] >> make sure your buttons are pressed and you speak directly into the mic. >> good morning, chairwoman landrieu and committee members. it's an honor to be here today. i am the mayor of hoboken, new jersey. hoboken is located across the river from new york city for baseball and franks are not shed in the home of cake costs. with more than 50,000 residents and hundreds of businesses call her square mile city their home, which is why we want the most densely populated cities in america. more than new york city. were proud to be one of the most

walkable communities in the country we ranked number one in per capita use of public transportation for commuting. for a vibrant urban community filled with hundreds of boutiques, restaurants and outdoor cafés. with hurricane cindy was devastating for hoboken. for the first time in history the hudson river spilled into hoboken from the north and the south and western half of her city was flooded. our community center, public works, grouch, three of our four firehouses in 1700 homes were flooded. we estimate the total damage to our community of well over $109. thankfully her main street, washington street did not flood and is again open for business. hundreds of businesses located off her main street were severely flooded. even businesses that did not flood have been severely impacted by one of our principal means of transportation to new york, the past train was flooded

has not been restored. many businesses reported 60% reduction in business due to the difficulty of getting to and from hoboken. some businesses that flooded remains closed or for us to operate an alternate location as they try to navigate the insurance, it. i call an assurance: because the flood insurance program is not designed to meet the needs of the urban environment. i believe there's a fundamental unfairness of the system are respectfully asked congress to try to address. when businesses located in a flood zone by properties come in the first to purchase flood insurance by mortgage companies. but the program tree skirt instead of businesses as if they were basements. if they rent, which many businesses do, the direct uninsured costs are often passed on to the small business renters. under fema's definition, the coverage is greatly limited to only those things that euler, hot water tanks and electrical

control panels. these rules do not reflect reality places like hoboken, new york city and other urban areas, basements housed businesses and residences, which are critical elements to vibrancy of our cities. a store or permit the requires you to walk down one or two steps is plain and simply not a basement. the business owners and residents who work and live doors in homes are required to buy flood insurance, require to be premiums in the flood insurance system, yet they received virtually no coverage. after having paid flood insurance premiums for years, many discover the first time their claims are denied because flood insurance they were required to purchase does not actually ensure that peer but we have is unfortunately not a rule that protects against moral hazard, but victimizes people the steeple of the greatest need. for many businesses, the only option is to be administration.

many business owners has spoken with tell me they can't afford more dead, but they do need help and we are at risk of losing small businesses that make community special. i respectfully ask this committee in congress consider other options providing direct relief for small business owners. unfortunately those without flood insurance who do seek assistance from the sba will be the next victims caught in the flood insurance trap. if they're able to receive an sba loan, they'll be required to get flood insurance and pay into a program that offers virtually no assistance for the urban garden so business. their insurance costs will go up excessively but unless congress takes action to address the definition of a base and are the coverage provided to dizziness, the garden so business or home owner will be forever codify many flood insurance system that fails to benefit down in any meaningful way. the inequity of the system is to pair up when we see homeowners receiving $250,000 in coverage for vacation homes on the sure

what primary homes and businesses fall through the cracks of the flood insurance program. in the immediate term i strongly urge congress to provide direct assistance for businesses and residents can't flood insurance trap. specifically ask you to take action to address the unfair basement issue for the future. i suggest rather than deny people coverage businesses and residents should be given incentives to invest in the necessary steps to reduce the impact of flooding. for example, there could be assistance of encouraging a solution of energy-efficient tanks on higher floors installed in closets. the current system does not provide incentive. inflict pain on innocent victims at a time of their most vulnerable. i thank you for your willingness to listen to our concerns and the opportunity to speak to you today. >> thank you, mayer said excellently crafted statements and i birdied the staff to begin working on some of the suggestions. although the flood insurance is

not the jurisdiction of this committee, we most are money are going to fare at the request as quickly as we can to the perp reacher section. mr. king. >> bantam chair, members of the committee, thank you for inviting me to speak about hurricane sandy. since the storm hit, we've done very little else. our previous experience probably help peres. we were among the first responders in 9/11 for the small business community in a few years later i was privileged to travel to louisiana and work with marylin when she was confronting hurricane katrina in laying out his strategy or that affair. she has since returned the favor many times over by sharing much information, materials and she also chairs or associations national committee on disaster recovery, working to institutionalize best practices found nationally so we can be

even better in the future. the sheer magnitude of the destruction can be overwhelming to small businesses as well as responders. it's hard to know where to begin to determine the steps that will be most project is empty with the feeling of isolation. s.b. d.c. are part of the community for small business people turn because they're familiar with us. the same occurs within the family. after the disaster i had other states reaching out to me with offers of support from personnel and just everything else you could think. are plans to get to the holiday season on our own and reach out to request their assistance sooner you. but that background others to comment and when it seemed about the federal response. there is a definite improvements since 9/11 anything since

hurricane katrina. the change in the past disaster teams, when they came in 9/11, did answers they didn't want to listen to anybody. that is changed or is changed manically since then. immediately after the hurricane, i received a call from james rivera wanted to court made effort that is something that wouldn't have anticipated. prior to the hurricane with eight offices in the primary disaster areas with two outreach locations. today we have 25 offices that are operational because we transferred staff around to be in proximity to businesses that were the hardest hit need the assistance that is because a lot of these folks can afford to travel distances to get the help they should be receiving. we also have our staff going basically mobile. we've given them laptops, verizon communication devices for us and we're going into the

businesses so they can deliver information in the assistance needed. the day after the hurricane, with 30 volunteers from upstate. with them to plane is 30 individuals in the area of highest need is the initial days of the recovery. the loss of power is a critical fact year, not so much blaming utilities, but when you don't have the power you don't have communications, the internet and most of them is the communication we use these days are electronic so they went out the window. so far we have 72 locally than basically providing information. we got to go back to the old-fashioned way of putting up posters and word-of-mouth to get the attendees and position. many of the documents at the office of disaster assistance uses are now online in a safe nominal improvement over what i

can remember from the previous disasters. in their communication with us made a huge difference in areas like staten island, which was extremely hard hit. we were able to put them in touch with our local sponsor, the college of staten island and they located their business recovery center they are a college and that made a huge difference. the rockaways -- i don't know if you're familiar, but it's basically a peninsula area in the south part of queens. at 1100 businesses operational before the hurricane. the week after the hurricane did five open businesses. today they have a handful. we recently held an event in howard beach is 45 businesses show up and we were able to provide assistance at the event for all 45 to get them started the process. i think in new york we had 600 dozen businesses in the disaster area.

i consider about 100,000 of them to be the primary disaster folks. we are estimating he could see up to 40,000 of them. >> could you repeat the last two lines. >> we've got 100,000 businesses in the primary disaster areas to receive the most damage and were anticipating seeing up the next several years up to 40,000 ourselves. that's a huge undertaking, especially nick said are the services they require. i reviewed the correspondence with sba. i received over 100 e-mails since the storm from sba. that includes my entire sba team and all the way to the administrator. that's not counting telephone calls. i'd also like to give a shout out to her delegation. a lot of the 72 events have been holding have been cosponsored with her delegation members both in the house and senate. >> thank you, mr. king.

>> bantam chairwoman, thank you very much. i want to thank you for the opportunity to be with you today. we'd also like to thank our home state senators, chuck schumer and kirsten gillibrand who have truly been great advocates for new york state and our country. my name is kevin law, president and ceo of the long island association, which is a business organization in the metropolitan region. for those not familiar, long island is a long island. it goes from brooklyn to montana point, but it's politically part of new york city, so the long island i'm referring to his nassau and suffolk county. we are america's first-ever cover region of 3 million people under the home of the middle class and the middle class is

built on our small businesses. the long island economy is made up of 100,000 businesses in 90% of those businesses have 20 employees or less in that small businesses are clearly the back bone of the long island economy. superstorm sandy had a devastating impact to long island including hundreds of millions of dollars in damages to our roads and rail system from a record-setting 945,000 residential commercial customers lost power, more than 90% of the entire grid. nearly 100,000 individual homes affected by floods surge of 15 feet breaches to her barrier beaches. the wrath of hurricane can be extended to the business community. tens of thousands of small businesses lost power for weeks, which resulted in lost sales and many small businesses were flooded and damaged beyond a simple repair. small businesses already struggling in the sun of the

economic recovery now question whether they can still survive and remain open for business. we think the efforts and hard work of fema and the sba. these two agencies about on the ground on long island doing everything they can to help us recover. in fact two days ago we hosted an event with congressman steve israel and sba administrator karen court mills and we invited businesses impacted on the horror stories that they shared with us work at wrenching. in addition to the lives lost in homes lost, tear the stories of businesses turned and destroyed as well was indeed at wrenching. while the sba has made available to business community those resources which illegally can, we think some changes may be warranted. almost all federal money that is available to small businesses is

in the form of loans. after the storm ended this economy, small business owners are resistant to taking on more debt. most of the money lost by small business can never be recovered. if you're a homeowner, you may be eligible for a grant from fema. if you're a business owner, your only federal should is a federal loan and this has to change because those that do not get back into business fast may find themselves unable to ever open again. small businesses often live week to week have fewer reserves and are more dependent and thus rebuilding him of a long is problematic. thus i urge you to enhance sba's programs so that it could include grants to small businesses as well. there's other items.

you know, senator chuck schumer proposed legislation that would also hit mall businesses in the aftermath of hurricane stan knee and that would provide tax credits and deductions for cleanup expenses and we certainly support those. additional federal effort could also include recognizing that businesses may not have suffered physical damage from hurricane sandy, the losses of revenue to power failures for customers to even come and patronize their establishments. and so, currently most businesses aren't eligible for any federal storm relief and fund approved by congress should have some flexibility and it says state and local governments can adequately respond to small businesses who may never recover from their substantial numbers of sales. not only looking to the federal government. as the senator mentioned before of course there's insurance and

local governments are trying to help. they're providing sales-tax two-income property tax exemptions way or -- our governor, governor cuomo has created a state fund to assist small businesses and has created an empire state release fund from which i vestavia advisory committee member to help small businesses and homeowners with a gap that is not covered by insurance and fema grants. we need federal help, too. long island has always been there for america. we hope that

we had meetings with small business administration, governor's business action center was there and try and to give business is as much information as possible, but the

bottom line is what is available through the federal government is a 4% loan. so if we have only to have grant or possibly have lower interest loan, we are working with the chamber in the hudson county chamber has come in. i will say more or nation sharing also hopeless to help the businesses as well. i think trying -- as a look at these numbers come at the you outline for both new york and new jersey. i mean, the economic impact is tremendous when you look at the total impact. i think this is a situation where we need to do as much as we can on the state level. we need to do as much as we can on the federal level. soberly stepping back insane can make it grants directly to business owners so they can make

sure they can stay in business. i can tell you from personal experience i live in southwest hoboken. i walked every day to work down first street in business after businesses boarded up. so it's a major turn what that impact is going to be. we'll continue that process. certainly extending the deadline would definitely be helpful, but really looking -- schematics and ended up nine, lowering the rate come x-ray screens. >> for those businesses really teetering on the grant will either make the difference between them staying in business and part of a local economy and providing jobs and quality of life i really going out of business. that's where were at right now. these next two months are crucial for somebody businesses. it's a challenge to get to set the stage, but there's many businesses at this stage so that

grant program to help make sure businesses to stay in business ultimately will help the economy and the local, state-level federal government level. >> mr. kane, let me just reconcile some numbers. you refer to something your testimony about 100,000 businesses. the records show 265,000 in new york in 189,000 in new jersey. that's not counting can indicate or mary lynn -- [inaudible] what is your hundred thousand number you put that in your testimony? >> a hundred thousand are the firms we looked at from the population -- census population information in the primary disaster area. these are firms that incurred the worst of the storm. >> how did these jobs with the fema numbers?

>> the fema numbers include the primary and secondary areas. the secondary areas have said it became disruption of businesses, but not as much physical disaster in our estimation. >> overture comparable numbers the furniture's in new york that of the 189, which are numbers speak for new jersey and 7265, what was your numbers before new york? at the end of the day. my other question is if you do your normal business with 24 regional centers and her defiant outreach offices, how do you handle a surge? i mean, if you're processing your daily requirements, which have got to be less than 10% of the pressure you're feeling now,

how are you not searching your capacity to take care of the request that i speak flying over your train some right now? >> what we did immediately is pretty much exhausts my travel budget by transferring people into the impact area and moving people around to the highest need areas. we pretty much canceled vacations, eliminated anything that gets people out of the office for an extended period of time, making sure we have as many professionals as possible. we are stretched, i would readily at midday. we are looking to increase capacity and we hope the president's bill goes through. >> does this map for resent all the sba resource partners in the nation? wish we had purchased the northeast. which you provide him with this?

does this reflect basically your network, this northeast network? these are sba, women's business centers, chapters that could be potentially helpful to people in the northeast that need to find a regular center that's open in addition to these read that better there. please provide the committee with a copy of that as well. in addition to this mound, there are a guest disaster relief centers that are set up where fema as president, any flood insurance agencies are pressing. potentially the red cross i believe is unfortunately familiar with the centers. in addition to the centers are established, mr. law, people can sometimes get their, walking besides doing business by telephone or internet, battery.

but mr. king, my point is that this is mature normal operations are, you're going into a very abnormal situation over the next year or year and a half or two or three. you have a tremendous responsibility to the hundreds of thousands of small-business look into this network for support and help. i want to make sure you and i are working up the same numbers because i have to take more time and am interested in how many people walk in the front door. i'm not interested how many are filled out. i'm interested how many businesses actually received help and support from insurance come in these first and then any gaps from appropriate and well crafted federal and state programs because senator risch knows this that there will be no recovery without small businesses recovering.

homeowners also are workers and business owners if they can't give businesses back or show up for work at the local bakery, they won't have money to pay their home loan back for their home in the community. this is essential to move god to figure out a better way are quickly supported. to make it you further question for a statement. thank you for your leadership. if we don't have them up and running, we don't have any economic recovery. i appreciate the laser light focus on the question getting to

the bottom up our going to meet the needs of these businesses. i do want to recognize their two new yorkers, kevin law, president of the long island association has an unbelievable advocate for business growth for economic development for the past two years he's been leading the effort to stren montana's economy, specifically to attract new businesses and strength than ones that are there. long island uniquely represents major manufactures and small-business mom-and-pop shop. as a leading i.t. companies, advanced manufacturers, research institutions. so the broad array of businesses to come out will be important to make sure the game their needs. i want to welcome the director to state business center. i appreciate your business in the time of great need. you have enormous burden placed on your workload. we appreciate what you're doing. not a mayor, thank you for joining us.

i know how tough it is for hoboken right now. my heart goes out to the families who represent. i have a couple basic questions. i was very interested in your point that the fda loan for someone who has that is to credit a 6%, which seems extremely high given the average interest rate is 5%. i'm wondering if we can get that percentage down, you have a target you're looking for and how much grants would be useful as well. if you were to devise your ideal support for small businesses in hoboken, what would it look like it [inaudible] >> my understanding that loan rate is 4% for sp1, but the feedback we got from the business -- >> if you have other sources -- if you're successful business, your lowest interest rate is 6%.

if you have a tough time getting loans, it's 4%. >> people have said for individuals they can get one by 6%. so i think going as low as possible for me to give -- you know, i'd say getting the same rate individual scat would be a great tire. and then as far as you're asking how miscreant and he would we want businesses? is that what you -- >> one thing that i will say that's a little bit of a challenge is getting the one thing across the board is solid data sharing. click for me, i don't have all the data on our business community. the sba has a lot of misinformation. e-mail has a lot of misinformation and we've had

americorps come in. they immediately have everyone sign a waiver so the information can be shared. if we can start sharing more information, the system from corporations, donations, americorps come in and with volunteers, literally breaking down walls and doing the initial mucking out, that some businesses still have not done. i think that's one place to start sharing more information right away and having the system for the sba and for fema to share. >> let me ask mr. king. but if you set up for new york? because senator landrieu's question about using current infrastructures are you able to leverage the sba infrastructure available effectively to do this outreach and data collection. tell us what you intend to do to make sure your contact and can reach in and supporting every

business in new york has been affected. >> our approach is a continuing because it represents the largest resource opportunity. we work with state and city and setting up micro-loan rapid response was running through new york business on a quick turnaround. some of those 748, 72 hours. totally electronic and kind of a seamless transition from the micro loan initiative into the sba lending process. so it kind of miss the clients want in the process and improves the efficiency it. but that's a very small pool of funds available. only goes up to 25,000 i think there's a total of 15 million available. so that's anticipated to be consumed rather rapidly. if there is an opportunity to bolster those programs imposed relatively small amounts of

money into the hands of business owners so they can enhance recovery effort is very critical. i'm talking about 100,000 businesses are concerned about. we anticipate 100,000 are businesses that are either not going to return when they need to be totally repo. a lot of other businesses received damage, lost lost a great deal of income. we think with the normal process they're going to be back. they're able to make it. but there are some that they been operational, long-term the owner is getting more senior. they don't want to put their home up as collateral because that's their retirement and they're concerned and they just may not return. they may walk away from their business. >> thank you. senator risch. >> thank you, none of chairman. first of all, mayor zimmer, i

like everyone will extend our condolences to losses. these things are very, very difficult. they're hard to plan for without warning. i was interested -- i spent a good part with policy so i understand besides the table. i was interested in your comment about the baseness versus non-easements and what have you. first of all, who are the insurers are talking about here? is this federal you're talking about her private insurance? >> the national flood insurance program as you probably know is federal, but it's private. et cetera because it's back by the federal government and the rules are approved by congress. [inaudible] the bureaucracy more likely than by congress. >> ultimately -- i mean, i've

been asking about the definition of a basement and i've been told that it was required of congress to change the rules of the basement issue. as far as you were saying, do businesses have insurance quite yes, they have those that have flood insurance are going to get that much coverage because they may be in a basement. then there are those who quite frankly never expected the hudson river to comment to hoboken and are not required to have flood insurance and it never flooded before. but when they go to bed hundreds of thousands of dollars of them tore your not going to get coverage because they're told that was a flat, so you're not going to get the coverage. they're trying for an sba loan. once they get the sba loan, for next year will be required to get flood insurance and they're not going to get that much coverage. so it's a spiraling issue that's

a major challenge for local business is in residence as well. >> coverage questions frequent after an event. but let me say this. going to have staff have a look on the issues talked about. can you in a nutshell given executive summary to at the different is in coverage on basement versus the first four? >> yacht, a basement until they were summit in 1984 he studied business for that you get your hot water tank, boiler cupboard and your electrical panels and that's it. >> you can't cover stored inventory? >> no. >> will certainly have a look at that. that is odd to say the least. i've run into a lot of odd stuff on coverage questions. >> at last few weeks of his real problem for new jersey specifically that they had this rule for their insurers that is

extremely odd. we will look into that information. >> thank you for bringing that to her attention. mr. king, you're critical of the federal government's response modestly or at least to a degree. i'm not going to criticize you for that. i was a governor and doubled the federal government rockers the one we had issues with that. tell me about your state. how was your state as far as responding to this? >> the state has been looking at everything that it can. one of the problem so we talk about grand bizarre experiences tend to postpone a lot of small business owners. once you start talking about it, you're much better off if you announce it and firm it up so people can put it into their total development scenario.

our state started talking about grand. the city came out with a small grant of about $10,000 that is being made to small businesses specifically. that really worked out quite well because it was in combination with the micro-lending programs. so for some additional money in the hands of folks that might not otherwise have pulled the trigger and started the recovery process. >> thank you. my experience is exactly the same. when you asked for the federal government come you going to get the federal government in everything that comes along with that. they are slow. their paperwork is just awful. if you start with the mayor, she can make things happen. because the governor and they make things happen. as soon as you get to the federal government, it's awful. i appreciate your frustration in that regard. frankly that you promised things

would be different. but it's been going on for a long time. a lot better people than us have tried things continue to go on. >> a heck of a lot better when i first got bp involved following 9/11 because we were working about 12,000 business is directly impacted by the 9/11 disaster in new york. i was very, very difficult. in contrast is a cakewalk, hugely improved. is there still room for improvement? absolutely. i can't get a situation where we didn't help every small business in a short period of time. we wouldn't be at that point of perfection. i think senator landrieu said there's going to be a lot of businesses needing help and we are struggling with that. were trying to come up with the resources to deal with it over

some of your biggest cheerleaders on getting action on the request with a 60 billion because it does include financing for small business development centers to extend this effort. we don't think you will be a wonder to your situation. were looking at repopulating businesses that do come back for probably five years. >> go-ahead. >> will conclude with this. this recovery is it going to take this unless the small business is recovered yet unfortunately, congress will not help small business in one regard and that is her going through a kabuki dance that there right now, but at the end of the day small businesses and individuals under 250 will keep tax rates the same. if they are a small business, not a small, small business, you can tell them virtually everyone around here agrees with that. it's over 250, the wind up

paying more in taxes. my sites not going to vote for that, but it would have been because the tax rates automatically go up the first of the year and there aren't enough to keep them in place. a happy message to give them, but that's the message you have to take home and is not going to be helpful to small businesses starting in 2013. thank you, madam chair. >> thank you. i'm going to end with you saying how important is for congress to act or not on the supplemental and what are your people saying about the signal that may send to them. i know 60 billion is a significant number. in your experience, what you're seeing on the ground, what are your telling you about the importance of that recovery package click >> is extremely important both for local businesses and for a visit in.

for the people impacted by this time in people staying with friends in other areas are right now making the decision if were going to go out of business. so it's extremely important and the sooner the better can be acted on so we can get this unmet need and get people back to living in their homes and keep their businesses so important for a local economy. >> mr. law and mr. king. >> as i mentioned, our state government is doing their part. philanthropic communities do their part. but i must make it the approval of the president's proposed package of aid to our region, were not going to recover. so it's critically important that we have that.

long island, new york, we've always been there for everybody else and we need america to not be there for our weekend as well. >> thank you. mr. king. >> i would just like to agree with my fellow panelists that is truly critical. if for going to respond us we should and help the businesses and people who are in the center of the storm, we have to have resources to do it. if we don't have those resources, were not living up to our expectations. >> thank you. this committee will come to an end, but the record will remain open for two weeks. i think the members of the region for showing up in think senator wish for his leadership. meeting adjourned. [inaudible conversations]

>> my inspiration was the idea wanted to explain how totalitarianism happens. we do know the story of the cold war. we know the documents we've seen, the archives between roosevelt and stalin and churchill and truman. we know the main events from our point of view. we've read them, we've written them. what i wanted to do a show from a different angle, from the ground up what did you feel it to be one of the people who were subject to the system and how do people make choices in that system and how did they react and how did they behave. >> one of the things that's happened since 1989 as the region we sukkot eastern europe has become very differentiated. these countries that longer have much in common with one another

except for the common memory of communist occupation. >> to meet the increasing demand for wireless services come the federal communications commission plans to auction part of the spectrum now used for television for future use in wireless broadband networks. fcc commissioners testified on capitol hill this week in a hearing that's a little less than three hours. [inaudible conversations] >> it makes a call to the subcommittee on technology for hearing on keeping the broadband bactrim on track. i want to thank everyone for being here today and before it

began i'd like to start the hearing -- the subcommittee hearing recognizing five hard-working members will be departing the united states congress come including cliff stearns, mary butternut, brent bilbray, charlie bass and ed towns. we appreciate the service they've rendered to the people of the united states and the work they've done and we appreciate their service in which the amount in the next chapter of their lives. we also will miss bilking rich inner subcommittee. we wish you well in the environment and economy subcommittee. meanwhile, new brochure and a full subcommittee including billy long, members of his missouri professional auctioneers hall of fame. commissioners come as you write your rules for these options come i humbly volunteer billy to be her auctioneer. [laughter] we are here today to check on

the progress of communications commissioner polyglot implementing incentive option legislation congress passed last year. not only does this new local potential to unleash detect elegy and hundreds of their jobs but also to fund the blood out of the interoperable brought in public safety network. that's an important process for police and firefighters. it's important to get this done. one of the remaining items of the 9/11 commission fingers session after session until her subcommittee of the committee finally got this across the line. i'm not about to micromanage because the he operates your option. i do expect the sec will follow the law, including maxim and proceeds. not only does our leadership for the the worse worse for for a pinch of these efforts suffers, so too does the fate of the public safety broadband network, making this a successful option is a cool each and every one of the shares. the u.s. is on the head with an auction model based on the

elegant simplicity of one course concept, marcus, not the whims of regulator specific to ensure productive and innovative use. i know from some of your testimony you have pointed out, especially some new commissioners the success the sec has had over the years that doing good auctions. however, we've learned overly prescriptive rules can lead to less than successful auction results. the fcc so uncovered the d block auction to lower the megahertz licensed for the prime brought in spectrum failed to garner more than a few token bids and those who are well below the true value of that very important spectrum. the fcc must avoid overly prescriptive option was the land market mechanisms and have a proven record of success. remember, the revenue generated in part to pay for the middle-class tax cut and extension of unemployment benefits will be used to help pay for the interoperable public

safety broadband network and to fund the next jan 9/11 service and invest in public safety research and development. they failed to raise the revenue needed for projects or the unnecessarily give away billions in spectrum to be considered a failure. .. justifies such bans. the six megahertz the minimum

size needed. could they use. as a guard band to reduce the need for additional dedicated guard bands? could the fcc reduce the need by improving sever performance? those are a few of the unanswered and some cases unasked questions from the commission's nprn. finally, let me make it clear i sport the use of unlicensed spectrum to provide much needed offload for the broadband networks. our bill law is identifying an additional 195 megahertz in the five gig band frequencies ideal for the use. i cannot support the unnecessary expansion of unlicensed spectrum in other bands needed for license services especially at the expense for funding for public safety. every broadcast television speck spectrum the fcc does less

revenue already termed by the committee and the congress including prerogatives like first net, next-gen 9/11 thank you for joining us today. i look forward to hearing your remarks. i would like to recognize my friend from california for an opening statement. >> thank you, good morning to you and to the chairman of the fcc and the commissioners. wng. it's wonderful to have you here. mr. chairman, i'd like to begin by asking the december 10th letter signed by more than 370 companies and organizations who care about the future of license spectrum be placed in the hearing record. the letter in the february 13th letter criebt response of unlicensed technology to public safety. and i'd like to request the bipartisan letter i sent to the fcc chairman yesterday with chairman daryl issa, be included

in the record. it demonstrates the significant unlicensed development taken place just in the last nine months since the bill was signed in to law. i ask for anonymous consent to lace them in the record. >> without objection. >> thank you. mr. chairman, ensuring that the fcc successfully. implements the voluntary incentive auction a mechanism that this subcommittee established, holds great potential to produce new jobs and free up more spectrum at the time in which demand for wireless broadband continues to soar. the economic importance of the auction, i adopt think can be understated. last month the new study from the gsma and deloitte concluded that the doubling of mobile data use results in the 0.5 percentage point increase in gdp per capita growth. as the fcc chairman stated in

adopting the proposed rules the commission must engage in a process that is transparent, fact-based, data driven and draws on the leading pension -- experts in economics. i have confidence in the commission to carry out the process in a marijuana. there are three key areas that deserve additional focus. the first is the response of -- democratic beth licensed and unlicense the. the proposed rule make adopted on september 28th of this year consistent with congressional intent recognizes that nationwide guard bands needed for interfeemption protection can smawtly provide unlicensed access ensuring every megahertz is used efficiently. simply put, nowhere in the act does it require the fcc to auction guard bands.

and as a title of today's hearing reflects, the subcommittee has a responsibility to keep the new broadband spectrum law on track. it's title of the hearing. not to go off track, but to remain on track. attempts to rewrite law through the rulemaking process should be rejected by the commission, and will only serve to delay the release of new spectrum. second congress craft spectrum law to ensure that the fcc by rule naming can adopt rules enhancing competition, consumer choice, and innovation. with the potential to free up as much as 120 megahertz of beachfront spectrum, wireless carries of all sizes both regional and national must have have an opportunity to participate in the auction process. promoting a competitive landscape can be further through the completion of the commissionser operatability spreading as well as a revision of the commission spectrum.

the process used to determine how much spectrum any one carrier can followed given market. finally the commission must be proactive, i believe, in the approach to educating broadcasters. without voluntary broadcasters participation, there will be no new spectrum to repurpose. the fcc learning everything about the auctions now the learn program, is an important step in the process and i encourage the commission to engage in individual outreach that ensures that broadcasters fully understand the benefits of participation. ultimately this going have to be a collaborative process that brings together broadcasters, wireless carriers, and technology companies for the purpose of revolutionizing the mobile broad band marketplace. i thank you chairman genachowski and every member of the commission for the tireless efforts to ensure a successful auction.

the first in the history of our country that is voluntary, and to each commissioner for being here today to share your perspective. i yield back, mr. chairman. chairman recognizes the gentleman from nebraska, mr. terri. >> thank you, mr. chairman, and the congress. i expect to be the last official business as your vice chair. i want to thank you far fun and good year. but even though they i lack the tight on the committee, it won't change my enthusiasm and activity on the committee in the 11th. this is option, if it is successful, i expect will it be benefit consumers. as they drill down to a set of final rules i have confidence it can balance the. i want to make sure it's respected. and doing so i want to be sure that the means that the commission must raise the

revenue necessary to pay for the first net public safety networking. it mean that's guard bands must be no longer than technically reasonable to avoid interfernings, and also means that they must be able to follow and participate in the forward auction. finally, and interpretation of the spectrum act requires the commission to ensure that the auction spectrum is not invalued with value, staffing restriction on the use or inailability. i look forward to working with the commission and the colleague on the subcommittee in coming months to make sure that the opportunity it not wasted and that we along with the fcc get it right. this time i will yield to the gentleman from texas, mr. barton. >> thank you, mr. terri. i want to compliment the chairman who is not here for the new seat up here. they are comfortable. i guess it's intentional that the commission still in the

uncomfortable seat. i'm not sure. i appreciate the subcommittee holding the hearing. the digital television transition public safety act of 2005 was passed when i was chairman that created 84 megahertz spectrum to be auctioned. since then we the middle tax relief jobs creation act of 2012. which requires the 64 megahertz spectrum be auctioned 15. when it's my turn to ask questions i'll have two issues. what happens to the low power television stations and the major metropolitan markets who don't have class a licenses. they are concerned they may lose their license and be left out in the cold. secondedly, i'm puzzled about the three-way simultaneous auction. i don't understand how it works. i hope they can explain it to me. with that i yield back. >> the chair recognizes

mr. latta. >> thank you, mr. chairman. and also i appreciate the fcc commissioner for being here with us today. the spectrum act was landmarked legislation by authorizing voluntary senate auction. everyone knows that successful of the auction is critical. appointment of public safety networking to bring spectrum to a competitive marketplace for mobile broad band and continue vitality of the nation broadcasters. it's an issue of global competitive. in fact recent study by deloitte using cicso data revealing a doubling of mobile data use leads to an increase of 5 percentage goint of gdp. while it's a key component to our nation's sectrum policy we must remember it's only one component. the administration need to work with congress to look at ways o clear federal spectrum the megahertz band.

mr. chairman and commissioners, we thank you for being here today. we appreciate your transparency. we hope it develops. we look forward to hering your testimony. mr. chairman, i yield back. >> gentlelady from tennessee. >> thank you. i want to welcome our commissioners. we're pleased you're here for the christmas visit. and chairman waldman, i thank you for holding the hearing, the spectrum auctions have been authorized and they should mack maze the -- maximize the amount of licensed commercial mobile use and maximize revenue to the treasury. everywhere we go all the innovators to the broadband are saying let's maximize it. and get these auctions out there, and the voluntary auctions will be yearsier for the commission is faithful to the statute that congress passed commissioner pi we're delighted you recognize that in your typically. we thank you for that. we know that it is going to be necessary to get the spectrum

out there if we're going achieve our shared goals. mitigating our nation's spectrum crunch, improving public safety, generate billions in revenue to pay down the massive debt we're facing in the country, creating good paying sustainable, long-term jobs. and we need to maximize participation among all interested parties. so we welcome you and looking forward to the hearing. i yield back. >> the chair recognizes the gentleman from california, mr. waxman for five minutes. >> thank you very much, mr. chairman. for holding this important hearing. the fcc imflexation of spectrum legislation, the congress passed with a strong bipartisan support. i'm grateful for the chairman and all of the members of the commission's work in the regard. the public safety spectrum act implemented one of the last remaining recommendations for from the 9/11 commission and created a nationwide

interoperateble public safety broadband networking for first responders. it also providessed new north to the fcc c to conduct incentive auctions with the purpose of alleviating the spectrum crunch fueled by the ever growing demands for mobile broadband services and providing a down payment for the public safety networking. overall, the new law will help drive our national economic growth while keeping the american people safe, through state-of-the-art communications infrastructure for public safety. the act was the result of months of bipartisan negotiations that included many elements of comprise. the federal communications commission is grappling with several of these areas, i'd like to highlight two in particular. the first is unlicensed spectrum. unlicensed spectrum has been an incredible economic success story, innovative services like

wi-fi and blue tooth are huge parts of the communication system. they came about because of the use of unlicensed spectrum. the law advances unlicensed use in several ways. it allows the fcc to use the existing white spaces in broadcast ban for unlicensed use. it gives the fcc authority to reorganization these existing white spaces to maximize the value, and perhaps most important it allows the fcc to create guard bans in the repurposed broadcast television spectrum that may be used for new unlicensed services. like superwi-fi, this is smart, spectrum policy. that recognizes the increasingly interdependent nature of licensed and unlicensed operations. the guard bans will both enhance the value of the spectrum to be auctioned by protecting it from interference and create a nationwide ban to prime spectrum

that can be used for new innovations unlicensed use. that's why i'm pleased the fcc proposed rule are faithful to congressional sphwoant promote innovation in unlicensed use. second, the law preserves the fcc ability to use auction rules to promote competition in the wireless industry while assuring no single carrier is unfairly excluded from the auction process. as the steward of the public air waives, the fcc must have the authority to write auction rules that aim to avoid the concentration of spectrum in the hands of just a small group of companies. the act strikes the proper balance in recognizing that while every carrier should be eligible to participate in some fashion and system of spectrum -- system of competitive bidding. the fcc can continue to promote competition through a spectrum

policies. to implement this part of the law, the fcc is appropriately seeking comment on whether to establish spectrum aggregation limits or other rules to achieve these aims. the conference on the public act spent significant time debating and ultimately rejecting other proposals on unlicensed and bitter eligibility. no coniferree's position was accepted outright and carefully crafted comprise is what became law. so troubled attempt by some to relitigate issues that were resolved earlier this year when the bill passed congress with wide spread support. after the fact has been unfairly twist the language of the law deserves little weight by the commission or the courts. my judgment is that the fcc is off to a good start, in proposing incentive auction rules.

i comment the chairman genachowski and the colleague on the commission and i long forward to hearing your testimony today. i have thirty seconds, if anybody want it is? otherwise i'll yelled it back. -- yield it back. >> the gentleman yields back with the balance of the time. we'll proceed to hear the testimony of the witnesses and chart with the chairman with fcc fcc. we look forward to your statement and commend you on the work your commission is doing. please proceed. we seem to have a spectrum problem. >> there we go. >> it's a pleasure to be here, and thank you for the many opportunities to testify here and work with member of the committee outside of the hearing process work in the important area. i do want to take a minute to thank congressman terri and doyle for coming to the fcc last

week when we adopted our lo power fm order implementing bipartisan act of congress. it was a special day. i thank you for joining us. the past week, commissioner mcdowell and i were part of the u.s. delegation to the wicket in dubai where we worked together to defend free and open internet, i would note that members of the committee staff and bipartisan basis were there and a bipartisan basis were fighting for internet freedom and openness. the situation in dubai right now is fluid. people are meeting right now we have a strong american delegation on the ground lead by ambassador crammer and including represents from across government and the private sector as i said the situation is fluid. the issues are important. and i think we understand that this will not be the last conference which the important issues arise. and fighting for internet freedom and openness is

something we'll be working on together for some time. in the u.s. the broadband sector is strong. they are regrained leadership in mobile communications. we have more 4g sub describers than the rest of the world. we have setting the innovation on the apps. we face acute challenge to meet the exploding mobile demand. and that we must use policy levers at the disposal to address it. a few months ago we freed up 30 megahertz. it's why yesterday we unanimously don'ted an order freeing up 40 megahertz of underutilized satellite spectrum and proposal setting the stage for an action of ten megahertz the h block in 2013. it's why later today i expect my colleagues and i to approve a proposal to make 100 megahertz available for broadband and congress recognize the

importance of innovative policy solutions to the spectrum crunch in authorizing the commission. as a result of this pornltd legislation, landmark legislation, the u.s. will be the first country in the world to conduct incentive auctions. of course, our obligation is to implement the legislation in accordance with the statute. with the vote on a notice of proposed rulemaking they launched the new law. generating substantial revenue including providing funding for first net. driving private investment and innovation and ongoing u.s. leadership in mobile. focusing on the engineering and the economics, engaging with all stakeholders in a transparent, process and doing everything

question to make a complex multipart process as simple as possible. in my written testimony i outline the significant steps tinge ensure success, the new incentive auction poses a long lit of challenges. we are focused together. our proposed wireless band plan for 600 megahertz consists of five to allow for the greatest amount of flexibility and efficient optization for the data world. we are anticipating the first time the possibility we might have more spectrum for down links than up which in a d.a. world could make sense as compared to the is a met call in a voice world. in addition it proposes to free up a a. unlicensed spectrum both license and unlicensed spectrum of crubted to u.s. leadership and mobile. like auction license spectrum unlicense spectrum has a powerful record of driving

innovation and economic growth. hundreds of billions of dollar for our economy and consumers. our proposal sits out a -- concerning repacking, we look forward to comments on all of these proposals as well as ways to implement it with minimal consumer disruption and in the time table set by the law. the implementation in the -- concrete and efficient response from stakeholders we'll be looking carefully at the responses we get deciding issues on a record and consistent with the statute. with that, thank you, again, for the opportunity to testify. i look forward to answering your question. >> thank you chairman, thank you to my colleagues for coming downtown fcc as licensee of the

fcc i made sure to do everything possible to make sure i never had go before them in person. so i'm glad you came. we're going mcdowell for your testimony. >> thank you. it's great to be back here. knock for inviting us. i share your goals of putting more spectrum in to the hands of american consumers, while raising funds for the treasury and a nationwide broadband unpublic safety networking. it's important that the fcc is the earliest stages of developing implement congress' will regarding auctions that will be the most complex in world history. initial are not due until next month. we have to go through a ton of ideas new questions with did not contemplate when we launched last september. it would be premature for me to offer a final opinion where the commission should go with the new auction rules until it's

time to vote. nonetheless, the only commissioner before you today who is veteran of two of the largest spectrum auctions in american history, as well as the digital television transition, seems like yesterday, i have learned through a lot through trial and error. sometimes more error than anything else. in our conversation today i hope i can illuminate a path forward. my entire testimony could be boiled down to one sentence. the fcc should approach the auctions with simplicity, humanity, and regulatory restraint. i'll go on further with four minutes left. [laughter] through intelligently designed plan auction and service rules question provide opportunity for all new entrance to successfully participating in the auctions. similarly we should avoid micromanaging the wireless market through unnecessary rules that interpreters and reduce auction revenue. the goal of maximizing revenue

is important here due to the congressional mandate that part of the auction proceeds fund the construction of the new nationwide public safety networking. we should keep in mind that technology advances constantly. and what may seem impossible to achieve today may be routine tomorrow. solet not underestimate market innovation or worse. let's not preexample it. beyond the spectrum auction american policy makers should continue -- especially internationally. chairman genachowski and i worked together with the u.s. delegation in dubai last week and member of the committee staff. to prevent the international telecommunication commune qon from expanding the reach to the internet complex ecosystem. it's a crucial time literally as we sit here. it's nighttime in dubai. is a crucial intersection and

the next 12 to 24 hours will determine the faith of things but if we are lucky enough to have internet freedom escape of the wicket, this year we have to remember there's a more fundamental negotiation in the year 2016. there's a meeting in may that lays the foundation for that. i'd like to thank this committee for the anonymous and bipartisan resolution opposing even the smallest of international encroachment on international freedom. in the meantime, i hope with can share a new year's resolution to close the title ii docket at the fcc. my hopes may not be realized, i realize. ended this would send a strong signal around the globe that they oppose subjecting the late 19th century descrail policy. instead of new regulation we should revive a concept i proposed nearly five years ago. that is to use the tried and

true multistakeholder model to resolve alleged anticompetitive construct. supported by the backstop of existing antitrust an consumer protection laws the multistakeholder model could spot market failure and cure them more quickly and probably more effectively than ain't kuwaited telephone laws. if this concept good enough for us to preach abroad, shouldn't we also practice it at home? thank you and i look forward to your questions with 46 seconds left on the clock. >> we'll make note of that. thank you. now we go honorable commissioner clyburn. thank you for being here today. we appreciate what you do at the commission. >> thank you, chairman. ranking member eshoo and distinguished represent. good morning. thank you for the opportunity discuss the fcc effort in implementing the historic legislation you passed earlier

this year. i respect that it with be admitted. >> without objection. >> over the past few years consumer demand for wireless services has increased by startling rates. the realities require this the nation put in place targeted, yet nimble legislative and regulatory policy in order to keep pace. it's sometimes hard to believe this, but when i first started at the commission in the summer of 2009, tablet devices had not even been introduced to the u.s. consumer. and now according to the most recent d.a. for this year, 22% of american adults own such a device. when you consider these statistics, together with a fact that tablets consume times 121 times more spectrum than ordinary cell phones you realize two spectrum have become

critical policy priority. first, we must find quicker ways to repurpose spectrum for commercial mobile services and second we must promote more efficient uses. congress understood this when it passed the jobs act of 2012. the plain language of the statute makes clear that through a voluntary incentive auction, we have the authority to find a quicker tool to reallocate spectrum. congress directed that the incredittive auction they must make all reasonable effort to reserve the coverage area and population served. i am pleased to report that the commission has been moving

quickly to implement basic ground rules for the channel sharings a mects of the -- aspect of the auctions this past september, the commission compliment unanimous -- on the full range of spread your and technical rules that it could adopt. that notice proposed a ban plan was six megahertz guard ban that meets the statutory requirement that they are no larger than technically reasonable to prevent harmful interference between license services. it seems to comment on the proposal. i believe it was important for the notice to proposal a ban plan with an appropriate balance of license and unlicensed spectrum.

section 6407 of the act authorizes the commission to permit the use of guard band for unlicenses use. unlicensed spectrum has played a role in helping the wireless industry use the valuable resource more efficiently. commercial wireless carriers are increasingly using unlicensed wi-fi services to offload their smartphone traffic, resulting in wireless carriers not having to construct an estimated 130 cell sites at the savings of more than $25 billion each year. the unlicensed spectrum proposal in the notice would also encourage dwo. of wireless services that can make effective use of unused spectrum or spaces or because tv bands. it is also clear that continued innovation and inlunessed service industry is important to

our national economy. as representative eshoo and issa pointed out, it is at the same estimated that they jeep rate between 16 billion each year for the u.s. economy. the incentive auction noticed also appropriately seeks comment on ways the commission could design the incentive auction to accomplish all of the funding goals of the act including funds for a first national -- national first responder networking. thank you all for allowing know make these opening remarks. i look forward to any questions you may have. >> thank you for your testimony and we'll move to commissioner. thank you for being here today. e look -- forward your comments. >> good morning.

promote the efficient reuse. if we get them right, woe will ease congestion on the air waives and expedite the development of new wireless servicings and applications. if we get them right, we will drive digital age innovation, spur job creation and grow the wireless economy. but before we get there, it is useful to consider what is come before. for nearly two decades, the commission's past breaking spectrum auctions have lead the world. the agency is held more than 80 auctions, it is issued more than 36,000 licenses, and it is

raised more than 50 billion for the united states treasury. in short, the commission's auctions have been a model for government and commercial wireless providers across the globe. we are now, again, poised ton the world's pioneer within incentive auctions. for my part, i believe that there are four principles that should guide us. simplicity, fairness, balance, and public safety. simplicity is key incentive auctions are undeniably complicated at every junctionture a bias toward participates is crucial. simplicity will allow the market to work and yield the most favorable participation. fairness is essential. fairness demands we consider how to accomplish repacking by mine nice -- min nice d public to continue to receive free over

the air television. to develop new programming and i did employ new services. balance is necessary. none of the three lags of the incentive auction, reverse auction, the repacking or the forward auction can stand on its own. for instance, the interference rules we consider will not only impact broadcast services, but also how much spectrum will be available for auction which in turn will impact the revenues raised. we must also pay attention to the balance between licensed and unlicensed spectrum. the former provides reliability and interference protection, the latter provides low barriers to entry and promote the efficient

use of limited resources. good spectrum policy requires both. finally, public safety is fundamental. congress designated auction revenue to support the first nationwide interoperateble wireless broadband safety. the storms in the northeast have provided a stark reminder. success of the auction requires delivering on the promise to america's first responders. even with incentive auctions on course, the demand for our air waives will continue to grow. to meet the demand efficiency is critical. at the fcc efficiency means getting automatic of our auctions done on a clear time line. for industry, efficiency means squeezing more out of the spectrum already allocated for commercial use. now it's the time to invest in technology, geographic,

temporal, and cognitive that multiplies the capacity of our air waives. finally, for the federal government, efficiency means finding new approaches that facility repurposing of spectrum better than our whole three-step process of clearing, relocating, and auctioning. to this end, i believe that it is time to go on a series of incentive to serve as a catalyst for freeing more federal spectrum for commercial use. what if we were to financially reward federal authority for efficient use of the spectrum? if we want to convert for air waives to commercial use, i believe it is time to work with our government partners so they can realize value from using spectrum efficiently, instead of only seeing loss from the reallocation. it is an exciting time in communications. incentive auctions present real challenges with the smart execution can yield great

opportunities. thank you for your time i would be happy to answer any questions you might have. >> thank you. we appreciate your testimony. we'll go final commissioner. >> thank you. chairman waldman, ranking member eshoo, member of the subcommittee. it's a privilege to appear before you today. the spectrum act originated in the effort of the subcommittee. was a result of the bipartisan leadership, hard work and comprise by you, and many other dedicated member in congress. given the pressing need to make more spectrum available for mobile broadband the fcc must act promptly to implement the action. accordingly the past summer i called for the fcc to commence the rule make process in the fall. chairman genachowski launched a timely proceeding in september. i thank you for him that.

as commission moves forward in the incentive auction rulemaking process, i believe that four principles should add to our work. first, we must be faithful to the statute. it's our job to implement the legislation not to rewrite it to confirm to our own policy preferences. second, we must be fair to all stakeholders. this is especially important because the incentive auction will fail unless both becausers and wire less carriers choose to participate. third, we must keep the rules as simple as possible. auction will be complicated enough as it is. fourth and finally, we need complete the proceedings within a reasonable time frame. i believe we should set a deadline for concluding the auction no later than judge 30th of 2014.

these will result in a successful broadcast increntdive auction. that said, i have concern with the distribution of our rulemaking proceedings. most notably september's notice appears -- that yields no net revenue. no money for the first responder networking authority to build out a nationwide interoperability public safety networking. that would mean no money for state and local responders. no money for public safety research or deficit reduction, no money for next-gen ration 9-1-1. it mentions each of these items. mo of the problem in my view stem from the structure of the proposed auction. the only closing condition set forth is that the revenue from the forward auction cover the cost of the reverse auction. this is essentially like ending

traditional auction as soon as the reserve price is met. another part of the problem derives from limit of the fcc might place on auction participation. for example, if we start picking and choosing who may participate in the forward auction, that won't be good for anybody. by contrast maximizing participation in the auction will maximize our net revenue. as we set up the auction i hope we take to heard the guidance we receive from commenters and importantly from congress. from the broadcast incentive auction it sets several additional targets for getting more spectrum to market. for example, i expect in the near future that we will commence a rulemaking proceedings on making available almost 200 megahertz of spectrum for unlicensed use in the 5 gigahertz band. it's a legal obligation to be sure, i'm excited was it's smart

policy. the standard for next-gen ration wi-fi 80111ac has been developed and requires large contiguous soil and water assessment tools high speed d.a. transfer. it identified in the spectrum act is well suited for taking advantage with the innovative standard. the 1755 to 1780 band. these bands already are internationally harmonized for commercial use. which means the deployment will be swifter and cheaper than other options. if we auction off the spectrum within the next two years, it could raise billions of dollars. product uvive collaboration among the fcc, ntia commercial

users question achieve the twin goals efficient commercial use and effective federal use. in closing spectrum act gave the fcc challenging tasks. if we establish them, our nation's commercial and public safety communications capability will improve dramatically. chairman waldman, ranking member eshoo and member of the subcommittee. i thank you once again for holding the hearing. i look forward to listening your view, answering your question, and continuing to work with you and the weeks and months, and years ahead to implement this landmark legislation. coalition announcing a coition will have more than 12525

broadcasters who are interested in selling the spectrum in major market. in letter from the telecommunications industry associations supporting efforts to maximize license spectrum for mobile broadband and a letter from the high-tech spectrum coalition supporting swift implementation of the spectrum law. without objection they will be in the record. commissioners, obviously we have a lot to cover today. i have at least a first step yes or no question i want to start with economieser pi do. you believe they should be ensuring it produces the $7 billion for public safety networking? >> mr. chairman, i believe the commission should focus on maximizing rev now fund the public safety networking. >> yes. we need to deliver on our promise to our nation's first responders. >> commissioner clyburn? >> absolutely. >> commission mcdowell. >> yes. >> chairman genachowski. >> yes. >> i would like to put a slide up and ask consent to include in

the record as chart are about to put up fcc may be foregoing as much as $19 billion potentially with the guard band and unlicensed proposal, i believe you have copies of this before you. commissioner pi before the fcc nets a penny for public safety it has to pay broadcasters the relinquished spectrum and reimburse stations that relocate. we can't know in advance how much it will cost or how much that will relinquish or how much it will sell for. a lot of these unknown. are you comfortable foregoing even a single dollar of potential revenue? >> i'm not, mr. chairman. that's precisely one of the reason in the separate statement on september 28 when we adopted the notice of proposed rulemaking i expressed my concern the closing condition not appear to envision a circumstance in which the auction would yield net revenue. i proposed asking questions, for

example, should we go beyond the contemplated structure of the auction, at this point, as i understand it seems to say the that auction will close once there is sufficient rev now bay bitters reimbursed cause under the spectrum act and the administrative cost. so i share that concern and i believe the closing condition we ultimately do adopt should be structured in way to mack maze that revenue precisely for the reason you identify. >> for those who may not be able to see the slide, what it shows is the spectrum that is available for auction in blue. that doesn't mean it's all going to be auctioned or that many stations that come forward and give up the licenses. that in theory is what could be available, and then in red is channel 37. and then 5 yellow is the remain and green is guard band. some won't be auctionable. i want to put in perspective that even at conservative dollar

per megahertz pop, the fcc plan could forego over $7 billion grows, that would be enough, if it were net, to fully fund first net. these are big numbers we're talking about. these are program that's congress said need to be funded through the auction, and we have also used allocated some of the other revenue from the proposed auction has been sent to extend the middle class tax cut and extend unemployment benefit. it was part of the big comprise that got it to law. my concern is that if we take spectrum off the table for auction right off the top, there won't be a revenue potentially to pay for the coming -- things we committed to. it ends up going out there in the unlicensed world, commissioner mcdowell? >> real quick. look at the chart for right now, it could be very generous. so about 55 megahertz the

assumption that broadcasters will will able to yield. i'm skeptical that actually be able to yield that much for auction. i hope i'm wrong. i'll be the happiyest person if i'm wrong. i'm skeptical it will that much. it's available portion chowch be auctioned. the fixed portion is here. there's a minimal amount of 12 megahertz for guard bands and six for the channel 37 and the remannered. this is the fixed portion. and i want to just to point out. it's a guaranteed amount that won't be auctioned. what will be auctioned is not guaranteed. we don't know. there are a lot of assumption. lastly at the dollar per megahertz pop is 70000 megahertz auction of '08. the a and b blocks the least went for about $2.70 per megahertz. it could be worth two to three times. >> exactly. if it could be a figure of $14 billion or $1416.

now we're talking a lot of money. even in washington. i think that's the issue here, and i know we're having a debate how much should be available for unlicense. i know, there's other unlicense the 5 gig level and others being put forward. i know, we have disagreement within the subcommittee about what the statute says or doesn't say. and we'll get to that in a little bit later. i'll recognize the gentlewoman from california. >> thank you, mr. chairman. i hope that we'll have another round because there are a lot of questions that need to be asked. first of all, i'm troubled by some of the claims in the public safety and spectrum act is all about revenue raising. the last time i checked, it's the energy commerce committee not the budget committee. having said that, i think that we can a good job to bring about a balance to bring about the dollars that would fund the public safety networking, that

we would produce dollars for deficit reduction, but again, this is the energy and commerce committee. in section 309 of the communications act, it expleasant italy prohibits the fcc from basing the auction rules predominately on the revenue generated. during the bipartisan negotiations on the bill comprise was reached to allow unlicensed services to operate in guard bands that could be created as a part of the band plan which would not be auctioned. the cbo looked atm proposal became law concluded that the guard band concept does not decrees the revenue. so i don't know where all of this is coming from. the hearing today is keeping the new broadband spectrum law on

track. i want to start with the chairman, mr. chairman, the commission i know is currently, this is a little off to something else, i'm still very curious. i think it's important that commission is currently undergoing a review of the media ownership rule no agreement has been reached within the agency. i would like to know what is being done to respond to the circuit instructions to address ownership and the viewpoint of diversity. -- it's something we care about deeply and focus on. we have overhauled our data collection on broadcast ownership. we finally are getting accurate information about minority ownership. we have a major study underway right now looking at the issues

that are required in so support legal action and requested funding in 2013 for additional study to do the work we need to do. as you know, the reviews that we have to undergo, the one we're looking at now is 2010 review that started in 2009, they continue on ongoing basis. it's time to get the one before us done. we'll move on to the next one and continue to look at the diversity as a central objective. >> i think on the subject matter of media and consolidation there should be an underlying principle that in a democracy there be as many voices to the many as possible. >> this goes to the heart of democracy is not just something to fiddle around with. and so i just wanted to put that out there. now to the chairman again, some have argue that the fcc's proposal on unlicensed

represents an unlawful giveaway. how do you respond to that. >> i think as you said, the statute clear gliffs a commission the authority to do unlicensed in guard bands. i would add one point to the one you made before, any economic value analysis of spectrum methods i would think would have to look at the hundreds of billions of economic value and related tax ref new that come from innovations on unlicensed platform. when the fcc authorized unlicensed use for the first time. no one predicted wi-fi. it was new platform for innovation that together with license spectrum has made us the global leader. when i talked to my court part overseas they are focused on the opportunities of mobile, they are looking at next-gen ration on license and i think if we don't lean in to this. we run the risk of falling behind other countries. seeing innovation happen overseas not here. we'll operate within the

confines of the statute, which i know that both sides of the aisle were carefully constructed. >> thank you. to commissioner clie burn, on the issue of bitter eligibility, do you believe that consumer would be harmed if the incentive auction freed up the spectrum that was only acquired by the two largest wireless companies? >> i believe that if the fcc should keep in mind as we craft these rules what one of the core missions of this agency is, which is competition. and i believe that if we should, again, craft the rules to ensure that the framework and the environment would promote such competition. it's good for innovation, it's good for the investment, and so it's god to be -- got to be we have to look in a broad framework never forgetting the mandate. >> thank you. and commissioner, it's wonderful

to see you, and hear your testimony. we have heard the suggestion today that auction rules that promote competition could result in lower auction revenues. but stpt also true that allowing one or two firms to effectively shut out other competing bids that result in less revenue in? >> i think that is possibly true. i think fundamentally we need themed in a way where there are opportunities forest fire everyone. that will include incumbent and new entrance. we neat make sure that the revenues we raise are sufficient to support the first responder networking. >> two bookends, money and real competition? terrific. i yield back. >> gentlelady time. we recognize mr. terri of nebraska. >> thank you. we'll go with the chairman on

this one. i think we all believe the auction should happen as soon as possible but of course, getting rules correct. but broadcasters expressed concern about the folks who will lose the signal if broadcast contours change from repacking. what is the commission doing to address this concern number one is there a further npr notice of proposed rulemaking that will delay the process too much? is there an alternative approach to addressing this issue? >> well, in the statute congress addressed the issue and laid out guidelines of the commission has to follow in repacking. those issues were teed up in the notice of proposed rulemaking. we expect comments on that in in a position to make a decision. we are engaging in direct dialogue, workshops, and web are ins and other ways to engage

directly with broadcaster both broadcaster, who like the chairman waldman mentioned who are looking at participating with, and the ones who aren't and focused on repacking. >> [inaudible] following up on gentlelady from california's theme, i'm going move to the commissioner mcdowell and clyburn on this one. many commenters have argued there should be no spectrum cap. do you think that current spectrum screen with the safe harbor of one-third of the total spectrum in the local market is sufficient to protect consumers and create more competition? mcdowell first. >> i do. and i expressed my concern when we launched our spectrum aggregation about reverting back to the day of the hard spectrum cap. it might be under a different name or have a different way of

approaching it. but it's a lot like real estate and so you have to look at each transaction on its own unique case by case characteristic. and, you know, what was considered apples and oranges in terms of different frequencies a few years ago today is no longer the case. lte being built out above 2 gigahertz and below 1 gigahertz. they -- thought to be very different in their obligation characteristic as it's called in the business. so i think we need to be careful where that could go. >> so . >> and -- one of the things they keep in mind and go back to the competitive landscape, which is optimal for us we need to keep that in mind as we craft policy. also in term of the spectrumming

a gracious currently, we have not looked at that proceedings -- there has been no reform or adjustment since 2003. so i think the time is right for us to look at the policies, are there have been a lot of changes in the environment, and also again keep in mind what our goal is to have a competitive landscape about benefit of that, and so all of the -- have an open mind as it relates to this. and i think . >> so you think that the screen may not be conducive as much as you would like for competition? so we need to look at that again. >> a lot has changed since 2003 since i last reviewed. >> and our new commissioner. what would you think and mr. pi. >> arguably our existing spectrum screen has a lack of clarity to it.

i think it's a good thing the agency has opened up proceedings to talk about that. at the same time technology evolve, and we are finding that spectrum in the 2 gigahertz range is vinyl for mobile broadband use. i have concern if we put rijt requirement -- rigid requirements in place they may not respect the way technology evolves. >> congressman, i agree with my colleagues and clyburn that the time right to revisit the framework in light of the efficiency when we kicked off the rulemaking. number one, our current approach understates in market -- my colleagues mcdowell pointed out are in fact used for 4g service like the broadband radio service. ..

to utilize the dance might allow unlicensed and licensed uses to flourish. we understood this to be a good compromise licenses do not have to be exclusive. some suggested proposal to create the gherkins contemplated legislation is synonymous with giveaway. jeremy genachowski coming to

think we have to decide between the licensed or unlicensed model? is there an opportunity to create a plan for both? >> no, we don't have to make that decision. yes, there's an opportunity that uses both licensed and maximizes sacred for the country. he makes an express card being that are too big or not technically reasonable. how would the fcc determine the appropriate size? >> is an engineering we made a proposal a center engineers, which would leave in the first instance and will consider comments that come in. >> what he thinks surrogates come innovators, technology companies, many of which populate my district cares so much about unless inspect term? eckert from the cable industry

indiscrete topo spectrum located that the band's debut it available for unlicensed use. >> inkster a platform for innovation. it has been proven to be that when it was first done 20, 30 years ago as the theory. now we know. do we expand on this good idea for doing that other countries do it before this? the innovation will go to whichever country boasts the most ro licensed and unlicensctrum infrastructure. >> how do you explain the cable industry support with taking chiggers unless spectrum available? >> gave been an ingredient in but cannot unlicensed in the senate to provide alternative broadband access to the tumors. innovation can come from tiny startups in silicon valley for larger companies. we want to maximize all innovation. >> he gave a speech several

months ago in which he suggested there is a war on wi-fi. what did you mean by the word >> i think i asked what anyone would want too much of what wi-fi is the reasons we talk about. this is such a project to come the beneficial policy innovation for the country. my view is recently should lean the consistent with the statute and anticipate that american innovators to take advantage of new platforms for innovation and the things we can't imagine now. >> thank you for the clarification. this is an important revision to people on this committee and the compromise i thought was a good one to allow this kind of innovation to be able to go forward. commissioner rosenworcel, how what 9-1-1 that if it american citizens and first responders and deeply this is an important component of the public safety

mission? >> yes, i think the first duty of the public servant is the public safety. that's not just my opinion. it's a law so the communications act. next-generation 9-1-1 and prove all of our safety. in the future, we'll have a world forever called tourist centers may be accompanied by videos, photographs and your medical records. it can make us all safer. the challenge is getting from here to there and that's going to take three things. first it's going to take technical standards. the sec sober, with their public safety colleagues. second, it's going to take a lot of coordination. the agency will need to work with one in 6000 to produce that outcome. finally it's going to take funding. to that end i would note in the middle-class tax relief as a

result of the work of this committee company said to $115 million in grant funds available for next-generation 9-1-1 from a terrific resource and my hope for public safety answering points will benefit from. >> commissioner clyburn, if i could squeeze in a question to you. you can advocate for the importance of competition as more americans come especially economically vulnerable populations rely exclusively on wireless service. you believe consumers will benefit if the sec exercises already to promote competition in the upcoming incentive options? >> absolutely. competition in the markets are healthy and robust. there's more opportunities, more options, especially for lower income can tumors. it is not a one-size-fits-all. i don't take one-size-fits-all for regulatory standpoint and i believe it should help promote that in the competitive market

standing framework. >> thank you very much. >> the chair recognizes mr. shimkus for five minutes. >> thank you, mr. chairman. welcome to the commissioners. first let me mention how pleased i am that we are working collaboratively with the industry on the text 9-1-1 issue. that is what kids use today. they move with quicker than we do. the reports i'm reading are true, i like what is going on that's what we hope we'd work with regulators in the industry to resolve an identifiable deep. kudos, congratulations and i would say keep it up. obviously the goal of this was to do two things. one was to have spectrum available and try to help fund this and that's where this debate is going and being part

of kind of what anna said. it is keeping the new proud to have spectrum on track and kind of like an oversight hearing, a lot of ss questions that pertain to them. chairman, i was appreciating this because when we talk about the card and, it raises the historical aspect. from the ahead great hopes of a square with fred wi-fi to small-town america. i like gps. we all use it, but there is no band. there's nothing there to protect the spillover and we lost this great opportunity for rural america to really have high-speed internet access. so i think that's part of this debate of how much is too much, where is the band? we don't have encroachment, but we also get full compensation.

>> chairman? >> the discussion about how to get this exciting new opportunity right is the one that we're having. the incentive of shema was a landmark piece of legislation that both people an obligation on us consistent with the statute to get the balance right and drive u.s. leadership in mobile that raises substantial revenues for the treasury and drives private investment and innovation, including things like what the statute anticipates. >> part of the legislation was to fund because part of that debate with some people were saying there's not enough money will go back to congress and give us more and were just not in the world today. we're expecting it to come through this process.

>> one thing here and look forward to working with the committee on which was the channel 37 piece on this chart. we share interests and for you not for auction. as we look at it in our notice process, recite a much higher amounts of actual use than we would like in the congressional authorization for the much acclaimed spectrum for 300 million we believe at this stage won't be enough. this is an area where we can work together on a bipartisan basis, perhaps clear channel 37 and that's an area we can follow up together because it's a way to get more licensed spectrum for auction and move forward to working together. >> that would be an interesting process because of the full deployment is not channel and what it does. it's almost like moving military spectrum. >> other things on this chart aren't reversible decisions if that's true.

>> what the end a question to commissioner rosenworcel and commissioner pai. there's always been a large debate on restructuring, reorganizing. having observed the process in the short amount of time you've been there. what are your thoughts about how we can move the commission from the copper wire era to today? i have a minute left if you could split that, that would be hopeful. >> and part you are referring to the task force said the chairman just put in place. >> your ideas. >> i will say years ago was to all excess the wireline, copper line to our houses at the networks to use today are far more diverse. one part of our household so they have wireless phones.

we are probably 30,000 to 40,000 lines. >> we know that. how do we reform the commission? >> part of reforming the commission is understanding to indication networks out there today and making sure the commission structure reflects those networks. so we do have concerns about how we look at this as a matter stylist today we treat people differently than wireline architecture for broadband and hybridizing across platforms to reflect the way these networks today would be a good idea. >> chairman, 30 seconds for mr. pai. >> what role if any should the economic regulation of the copper era has been the world of ip? it should have relatively little that they don't want to make sense in a world where you have

conversions across different platforms. then there's the question of any particular social goals we could try to achieve in the ip world that are important when somebody calls 9-1-1, should it matter whether it's a landline, wireless or application. this basic questions, the economic and social goals are essential challenges for the commission. that's part of the reason i'm glad the chairman announced the task force which i first called for a july because this is the biggest challenge we face at the fcc. how do we approach the all ip world? >> we now recognize the honorable gentleman from michigan, mr. dingell for five minutes. >> my accommodations for this hearing released about were doing and i commend you for that. these questions will be yes or no. first, mr. chairman, section

6403 e. requires the commission to court and it was canada and mexico when authorizing the reassignment and reallocation of broadcast frequencies. is that correct? >> yes. >> mr. chairman, i would note some court cases that took place for the dtv transition and took a very long time. is that correct? >> yes. >> mr. chairman coble the commission commit to negotiating who will arrange for canada and mexico is mentioned in paragraph 34 the commission's notice of proposed rulemaking before repacking broadcast frequencies, yes or no? >> we are committed to working with canada and mexico. >> is that a yes or no? >> i'd have to look to give an accurate answer. >> or rhubarb requires you to do it.

>> we will comply with the law. >> i hope so. >> mr. chairman commend section 60432 requires the commission to make all reasonable efforts to preserve as of the date of the enactment of this act, the coverage area and population served of each broadcast place and save as determined using methodology described in a wiki olufsen 69 of the office of engineering and technology. does the commission intend to define explicitly what such reasonable efforts, yes or no? >> yes, it's part of our commitment. >> mr. chairman, does the commission how to define such reasonable at first, yes or no? >> yes, that's part of our decision. >> chairman, paragraph 49 of the npr ran state the allotment

optimization model may have limited or no applicability to this proceeding. the commission states in paragraph 50 that quote, it expects interested parties will have an opportunity for meaningful comment on all specific repacking methodologies. it is considering before epic's decision quote. does the commission publicly commit to sharing with the public to repacking methodology it adapts as well as the variables and other inputs it may use to predict repacking results? yes or no? >> yes. >> is a big question. i had a hard time getting out. mr. chairman, i note the

commission has set a proceeding pending on this screen since september this year. does the commission time to complete this proceeding before releasing rules for the voluntary incentive option authorized by the spec are not coming yes or no? >> yes. that's our plan. >> mr. chairman, on a related note, does the commission intend to use its authority under section 309 jay of the communications act to ensure broad participation in the voluntary incentive option authorized by the specter mac, yes or no? >> yes. >> mr. chairman, the commissioner reads a technical paper by the staff in 2010, which concludes an initial 275 megahertz unlicensed

spectrum will need to be cleared in order to meet rising consumer demand for mobile broad ban. does the commission believed that they could achieve that goal, yes or no? >> yes. >> mr. chairman, other than some deductions, how does the committee tend to meet that goal? >> by freeing up spectrum for removing regulatory barriers, liquidate yesterday and a few weeks ago by recovering more spec drawn from the government to respect to sharing approach is, through clearing and reallocating inter-unlicensed spectrum. >> mr. chairman, thank you. we in the border states are very much concerned about what could or will happen to us in this process. the same service, seen stations

go dirk could've seen additional conflict with their neighbors to the north and south. i hope you'll keep that in mind as you go forward. mr. chairman, i ask your kindness and want to do that is to commend commissioner clayburgh for her work on calling us before the commission. he appreciate the progress made on these petitions to encourage the commission to resolve these matters as expeditiously as possible. mr. chairman, members, thank you for your courtesy today. >> thank you, mr. dingell. mr. burton, you're recognized. >> thank you, mr. chairman. i attempted to yield back to mr. dingell to continue asking his questions. sooner or later they'll get to one they can answer. chairman dingell did ask a question that'll put a different slant on.

he referred to the part of the h.r. 3630, the new law that the commission in making these reassignment or reallocations shall make every reasonable effort to preserve the existing population and coverage area for each broadcast licensee. on the next page on page 72, subparagraph five with regard to the power television usage, it says nothing shall be construed to alter spec from usage rates of low power television stations. yet in the fcc powerpoint presentation and response to the question, power television participate in reverse option, the answer is no. i understand that part of it.

low-power television power clay tv stations assigned to new channels. i understand that. but then they go on to say that they have to promote -- they may be required to go to a different technology than the systems for the internet. i can't speak for the entire committee obviously remembers the committee, but i can speak for myself has been a member and supported the enactment. i didn't envision we would have the end result in a low-power television station is simply end up off the air. i would like to ask the chairman and other commissioners if in fact you're willing to commit

low-power television stations acted in good faith understand they may have to move or be repacked. it's not fair at all but the result is a low powered television station has been a good licensee and set totally off the air. >> these are questions we asked in our notice. congress did not change the status of the low-power stations. they remain secondary services. many provide viable programming in their communities. our job is a hard one, which is how do we maximize spectrum we free up, generate revenue for treasury and for first night and also address the issues you raise, which are the number of tv stations providing valuable programs. the difficult question we've not answered yet here we look forward to working with you in getting robust input from stakeholders. >> what can we agree -- you can

come the low-power television stations understand they are secondary. they understand under current law they provide service only if it doesn't interfere and is the full power stations and class a stations operate, they have to work around them. they understand they don't have the right to participate in this auction. the one thing they are not willing to agree to is that they can be kicked out of business, kicked off the air and that's that. can we agree is a committee in commission that will take steps to make sure if a low-power station has operated in good faith and complied with its existing license that we will make an effort to keep them on the air? not necessarily the same channel, but at least in the same market. >> will work with the community. with an obligation that's come up a number of times to act within the statute.

certainly keeping stations on the air where we can do some didn't make sense. at this point we haven't made a proposal. we have an obligation to act consistent with the statute and will continue to work with you in the community is to reach the goals of the statue, some of which are in tension with each other. >> capacitive commissioner, mr. pai, do you believe the current reverse auction, simultaneous system that's been outlined is really workable? >> it is certainly a novel construction, which is necessary since the entire incentive option is a questions and the first impression in the statement. the option has the advantage of certainty in real-time as spectrum will be available.

there obviously complications. participants of the reverse auction aren't necessarily well-versed in the processes and they might not know exactly what the nature of the auction is going to hold for them. on the forward side, they may not know what spectrum they on, which inhibits their ability to form a coherent strategy. there's going to be challenges and i'm hopeful commenters who gives a wide range of perspectives that allow us to understand whether the simultaneous approaches the best one. >> i would encourage the commission and staff and members of the committee to keep an open mind on this because we have conflict goals. we want to maximize revenue. we want to maximize the allocation of spectrum for new uses and we want to preserve rights of existing licensees that don't wish to participate in the auction. when you put that all together,

it's very difficult to come up with a system that makes sense and i hope you will keep an open mind on how to do that. >> thank you, mr. burton. gentleman from massachusetts, mr. markey for five minutes. >> thank you, mr. chairman. could you help us to frame this tension that exists under existing law. that is that what we're trying to do is make new spectrum available for the wireless revolution while at the same time insuring broadcasters are protected, that they only have to act voluntarily, but that there is proper protection against interference. so what is the process you've established that telescopes the timeframe to ensure that issue is resolved and done so in a way that meets technical requirements, but forces the

parties we sometimes have a stake in just waiting until eternity to finally get to the point where they accept the reality of the technology. >> two points briefly. on the timeframe, this is why we moved so quickly to start. we hold an auction in 2014 will try this step-by-step to the conclusion. on the framing, what many people don't realize is many major markets in the u.s. today are many more than people realize. in new york, the numbers 28. there is a large allocation before cable and satellite. what we do now and the invasion of incentive options is to say how come the use market mechanisms to be allocated some spec drowned in a win-win way and that is what were doing. that is why they will be

broadcasters to remain that are healthy and stronger, but also tremendous opportunity to free up spectrum to generate revenue. >> windows to this committee in 199332 star general so you just can't do it. it's technologically impossible to do. again, do you have a process totally fair to the broadcasters and the wireless industry is in place? hadn't had them in office simultaneously to talk about the issues in their experts can hear the differences they have. >> for the common process, also through the workshops with our engineers, that's what i said to both industries, which is future engineers working. these now have innovation goals of the statue.

>> jaffer or had a meeting with yourself from all industries just sitting there, hearing disagreements? >> i very much enjoyed meeting with engineers and business executives and i want express opinion has less fun to meet with. >> i appreciate that. last year the economist magazine predicted the economist predicted the expected economic benefits of unlicensed spectrum alongside finding a crack in the code for curing cancer would be amongst the most significant developments expect it in 2012. do you agree with? >> yes, i do. i don't know about the 2012 piece. as i said before, wi-fi was not unexpected innovation from unlicensed policy when it was first done. there's a reason to expect what you unexpected innovations from a new platform for innovation.

>> we had a hearing on this committee just a couple weeks ago, where one of the sec's top is testified that advances in technology are not likely to obviate the need for card fans anytime soon. do you believe the sec should put licensed spectrum at risk or interference by reducing the size? >> and so we the law of physics and eliminate the possibility, we have to have occurred beyond. >> again, is there a process that gives people deadlines in terms of resolving these type of issues because we are congressional expert, which is an oxymoron compared to real experts. would you put in a broom, we have to remain silent and listen. his said that to us it seems to

me a single question. how timely are the deadlines given here to resolve these issues because i think it's almost like a homework assignment. you've got a deadline company for a to get the answer and will find a tiebreaker to make a judgment as to who's right and who's wrong. i don't know what exactly the time items are here, but it seems the economic benefits are so overwhelming what the risk could be great, but two resulted in in a way that benefits the american people in these industries. >> if i can answer briefly, comments are due in january shortly after that. at my level, we've been encouraging industries to do the hard work to put us in a position. from there as we have in past proceedings, will move forward in the direction you're suggesting, getting engineers together from industries and

sitting there and have a timetable. it will be the first time we've done that. >> justice and engineering exam, it's win-win for broadcasters. one of the exam schedules to make sure we resolved in a timely fashion. >> thank you, mr. markey. the gentlelady from tennessee, despite her in. >> thank you, mr. chairman. commissioner mcdowell reference the wicca conference. chairman genachowski, weiss title ii still open? >> is common to have notices for this public interest and common as there has been here. we don't see uncertainty created by the preceding. the sector is quite strong and investment innovation going up to two geeks and there's uncertainty come from litigation. as i've done before, i called verizon to withdraw its

litigation. that would increase certainty and allow us all to move forward. >> blow, have you had any discussions with the other commissioners chairman. you want to weigh in on that? >> real quick out respectfully disagree. when i speak with wall street analysts, that's one of the first questions i get is that of the future of the title ii docket at the time in 2010 there was an incredible amount of anxiety from the investment community over the docket. if it only comes up in conversations i have with international counterparts internationally. it does create uncertainty in the litigation against the order regarding regulation of management at the biggest cretin and uncertainty. there is no evidence of any

market failure to address at all to begin with. >> i had an entrepreneur tell me this week are distressed that so many federal agencies are trying to solve problems that don't exist and i think there is a problem with that. mr. chairman, have you had discussions about reclassification of broadband services via title ii if the fcc loses the d.c. circuit loses the case? >> no, we're focused on a framework in place that's working, driving private investment and innovation across the ecosystem. if we preserve what we have now come it will continue to be one for the country. >> do you feel like you have the authority to reclassify broadband services under the title ii and subject them to title ii regulation? >> our general counsel has said consistently be do have that

authority. >> when you plan to close that title? >> we don't have a plan to close it. we are seeing effect are strong and growing of wheat in the world. >> so you plan to leave it open as long as you want to? >> is a forum for the public to comment and they've done so unexpected continue to do so. >> yes, sir, i think i hear that of the comment. i think people are going to be weighing in readily with you on these issues and i think the uncertainty that it is generated around some of the activity does not serve our innovated community well and i hope we can provide some certainty. the task force and commissioner pai come i appreciate you mention that and i know you're looking forward to working on that task force.

said mr. chairman, is the task force going to be focused on modernizing an obsolete regulatory framework so we can finally rationalize this to market produce of converged services and hasten the ip transition to next-generation network or do you intend to use it to cut legacy regulation on new technology? so were you planning to have this? >> arcola since iraq in 2009 was to focus on unleashing the broad and in addressing policy issues assist you with that. we did that to the universal service fund reform in the connect america find common disabilities act implementation, et cetera. we will continue to drive the rollout of digital networks, very exciting for the country from a continued private

investment in that. we need to make sure this trend nation -- >> let me interrupt a second. t. think it's necessary for you to drive it or do you think the free market tristate? >> the free market is driving tremendous induction. we create the climate and have to make sure any rules in place that shouldn't be there if it taken away. public safety and competition our place. >> commissioner pai, five seconds. >> i'll try to be brief. the support they chairman in this task was to look forward to making sure we have a regulatory framework that incentivizes, not penalizes investments in next-generation. >> well done. i went to that. i have one question though submit for the record. >> chair now recognizes the gentleman from pittsburgh to mr. doyle. >> thank you, mr. chairman. i want to recognize that it is

good to see all of you last week in your committee room. mr. chairman, just very briefly because this is a little off topic, but i have to ask him and you ask him and you give us any update on special access? >> will be the first time you've asked a question to talk about it. we've been working with a data collection order. i don't office is announced, but i can tell you the order has been voted in as soon as it's finalized that will be issued and will be moving forward in the special access area in the ways they've announced. >> so i'll commissioners have voted? >> it's all been voted and staff is finalized in the process to really say. >> thank you very much. mr. chairman, i want to ask about the commission's the commission's work in designing the forward auction process with regard to eligibility of competitive wireless carriers to bid for a license. if port that we ensure it can

headed up by this marketplace that requires all carriers to have a sufficient amount spent from to offer comparative quality of service. that means being able to deploy 4g lte service in a reasonable timeframe and avoid frequent dropped calls. for every carrier ability to secure licenses means the ability to stay competitive with other providers. so i think it's important for the fcc to be about to give all potential participants a fair shot at the bidding process. i'd like to see more carriers have healthy capability and more robust coverage. that means the fcc has to design options in a way to maximize benefits of this resource. mr. chairman, i want to enter into the record before i go for the letter from editor carrier association addressing the issue of better eligibility because it does a good job in laying out concerns carers have been able

to participate. evacuee no objection so what are. >> thank you. they should be no confusion on this point. legislation passed by congress gives the sec flexibility to design options in a way that allows everyone to participate, including smaller carriers. i want to urge commissioners to take advantage of tools at your disposal to protect competition. mr. chairman, let me ask you come is this an issue to which show the first consideration? >> yes, i agree with the great characteristic. >> mr. chairman, a little about media ownership. but this issue in a previous hearing and i continue to be concerned about moving forward with relaxing cross ownership rules again before we complete and fcc in office on the executable would have on changes in female minority ownership.

mr. chairman, the incentive option envisions television stations could engage in channel sharing to free up spectrum for reallocation. hubby can get the impact of proposal and media ownership and diversity in light of the ownership order your currently circulating? >> would you think the incentive option process will provide new opportunities for minority owners to continue providing service a difficult marketplace by receiving money for sharing channels are potentially receiving money moving from uhf vhf. we see incentive options is a net plus for minority ownership and will continue to work with the community to work through those issues. >> yet, we understand what the seller before we move forward because the concern is sometimes after ruling is made and you continue to these issues come

it's hard to get the genie back in the bottle so to speak. i would urge you in the commissioners to take closer look at the impact of these options in your ownership review. i thank you for the record during and without i got back my time. >> thank you, mr. doyle. i now recognize mr. scully's. >> thank you, mr. vice chairman. appreciate the hearing and especially the five commissioners for being with us. i want to start by looking at the congressional budget office estimates on the spectrum option. if you look at the mpr room, estimates are it would raise $25 billion from the broadcast incentive options. i just want to get your take on what can be achieved if you look at the cbo report, does that match briefing to be? all start with the chairman.

give your take on that. >> the cbo and omb have looked at the proposal insert is not revised revise that scoring. we're certainly focused on winning option that generate substantial revenue for first night and beyond. one of the key factors in that will be podcast or participation in the spy world working together with the industry and the group forum we heard about at the beginning saying this makes sense we want to work proactively to define rules that encourages participation because that's the best way to free up the most amount of spectrum. >> commissioner mick dowell. >> i'm a little bit more cautious. i hate to use the word pessimistic and i hope i'm proven wrong as to how much that would raise as pointed out earlier in the pressure that has 55 megahertz being auctioned. keep in mind these are the

largest cities and that's where spec from constraints for mobile broadband over broadcasting is the most profitable because there's more eyeballs compacted into a small area like new york city with his 28 tv stations. in order to yield 60 megahertz at six megahertz per tv station, that's 10 tv stations or licensees that have to go dark or channel share in new york city, for instance. that's more than a third. that's a lot. i hope that's the case and i hope it actually happens, but i'm not convinced yet that it will. i think we need to be more cautious and fiscally conservative with some of the assumptions that went into the cbo or omb estimates. >> if i could emphasize because there's components of the bill for public safety and other expenditures, but another part of the legislation was to

provide revenue to pay the national debt. $15 billion is estimated to be raised towards paying down the debt. as you're conducting the auction, clearly we want to free where spectrum to create jobs and allow us to do more things we can't do today, but alas an opportunity to have money to pay down the debt. i'd like to emphasize that his boat. i want to talk about the dubai hearings. i know you touched on it, chairman genachowski, chairman mcdowell. thank you for representing the united states in those talks. i was glad to pass legislation of the house. now the senate and house have spoken in a bout and unanimously that we oppose any attempt to the united nations to take over parts of the internet we want to see it continue to be an open and free model this stakeholder approach. do you see some and commissioner

mick towel you touched on this in your opening. tc hypocrisy were title ii is open in the united states and yet we are it by telling them not to use this outdated approach to grab more pieces of the internet internationally, but in the united states seems this open-ended question with title ii that maybe sends a mixed signal. >> eczema question. i'll try to be diplomatic with the response. the answer is yes and no. yes in the international who want government out of the space and the multi-stakeholder model is the way to resolve conflicts and this works very well for consumers ultimately. no end that one of the messages put forth is each nation to determine what its internet policy should be in there should not be an international

regulatory overlay. there's a distinction between international migratory overlake and domestic policy overlay. i happen to think it's more intellectually honest and consistent to say out of the space altogether as much as possible and we should therefore close things like title ii documents. >> chairman genachowski. >> and both cases, vocals and the actions are designed to preserve internet freedom and openness to preserve this we know it and ensure no gatekeepers, public or private interfere with freedom so we have an impatient restates racing for the last 20 years and beyond. >> thank you for your time and answers. i yield back the balance. >> some of time is expired. the chair now recognizes the gentlelady from california, ms. matsui. >> i want to thank you for holding this hearing today and thank the commission for being

here today. as you know, you're going to be arguably undertaking the most complex spectrum auction in history and i think you all know what needs to be transparent and i believe congress has worked closely to ensure the option of success. the search term and, for middle-class tax relief and job creation night to record the to auction up to 120 megahertz of additional spectrum to be the allocated for mobile broadband services from the broadcast incentive option. if we don't see strong participation from broadcasters during the process, that reaches congress' goals. this fcc have a fallback plan? >> our focus is on implementing the statute. it's a very good idea to provide

a mechanism to reallocate spectrum from existing commercial to broadband. i say that not only because congress passed it. i think caution is a good byword here, but we see more and more reason to be optimistic including formation of the group mentioned before. i hope and expect tatian is will see a successful process. certainly up to missing all of her work to make the process simple, understandable and allow broadcasters to be in a position where they can make an economically rational decision. >> okay. just in case it doesn't all work out quite that we feel it it should work out, do you have a next step at all? i mean, but he looked for the next tranche of spectrum? i'm sure you look at this not just in a linear way.

that's not the way it operates here. you think about other opportunities here. where do you see the next tranche of spectrum after the upcoming incentive options? are looking at the 1755 tonight 1850 beyond? >> yes. it's a great question we don't see these as mutually exclusive at all. 1755, 3.5 gigahertz we bought a later today are very excited about. 40 megahertz and the satellite band. this is a very high priority in the commission. we all agree on it and whatever happens we will continue to move forward voluptuously on other opportunities and policies. i suspect it will work. congress will continue to be

interested. but congress has done in the law is to say this is a band where we expect to see a significant amount of spectrum freed up for mobile broadband. this is how we like to see where can i expect can expect industry will get that message. >> okay. >> commissioner rosenworcel, spectrum is a big part of the budget debate in the coming years, so we need to generate new revenues for the treasury. the stakeholders continue efforts for solutions, do you see any opportunities for meaningful revenue that can be generated? at least in the short term sharing opportunities. what are your ideas on ways to generate revenue and waste incentivize agencies to relocate? >> with respect to spectrum, we need to have in all of the above approach that would include things like sharing an issue are

aware of the 17:55 p.m., trying to identify the 2155 megahertz p.m. to auction the next three years. with respect to existing federal users, i believe agencies their mission focused. do you spectrum service of their mission, but they lack incentives to use that spectrum efficiently. it is time we use those missions or three words using spectrum efficiently. if we do that, we are highly likely to call more spectrum that are federal users over time and repurpose it for commercial use. >> in working with some of the agencies and talking with them, i think they understand that. but this idea of relocating the something they can't do. none of the short term anyway. so as we move forward, we need to be very creative about how we

incentivize the agencies to move forward in a way that is timely by trying to figure out more incentivizing ways to do this and also incentivize the sharing is maybe an interim step. what i'm seeing is a need to have a long-term process with certain benchmarks along the way so there is a sense we are moving forward. thank you for everything you're doing and i yield back my time. >> the chair recognizes incoming vice chair, gentleman from ohio, mr. latta. >> tmx for conducting the hearing today and all the commissioners. i have an explanation even the

white spaces and iraq's for the record. >> the statue identifies both 5-k drivers for unlicensed use. in light of that, does it make sense to jeopardize the option safety network to pull him licensees to broadcast and send spectrum through licensed wireless broadband? in the thank you. as i stated, i'm bullish on life used in the van for the reasons i expect are identified in for the record has spoken with cisco and other players who have worked on and help develop super wi-fi technologies compatible with five gigahertz, which i mentioned earlier. the big reasons i'm bullish is because if you think about the idea that use, its fast speeds

for data transmission within relatively small area such as a home for a kiss. it's perfect for that because you can is addition dedicated gigantic channels of 160 even larger megahertz for the sole purpose of transferring data. additionally, would have been informed this the characteristics of five gigahertz are such that don't travel through walls, don't travel far so you don't have the risk of interference you might have lowered the band. if you have gigabit wireless surfaced thanks to gigahertz, that's a tremendous opportunity we should take advantage of. and please the act requires the commission to convince the rulemaking process in five gigahertz by february because this is an area consistent with greater investment and license where we can see something for relatively little box. >> thank you.

commissioner mick dowell, the administration has talked a lot about the need to bring spectrum for commercial use. in your view, has their behavior match the rhetoric and how important the crunch? >> there's two issues actually. what would be spectrum sharing in the federal spec from space and the other would be secondary markets. to answer your question first, i think we could do better to ensure a freer and faster flow of spectrum in most markets to make sure the spec close to its highest and best use as unencumbered a way as possible. secondly, i would see the executive branch federal users actually do a better job of offering up spectrum for auction rather than sharing. sharing can do beneficial as we discussed unlicensed use is a form of sharing.

but there's no substitute for exclusive use licenses. congress can have a role here is maybe trying to provide federal users an incentive to off their spectrum. it's a process right now. the law says to move them off their spectrum would raise the option. so that's two of the kids to give them up spectrum and tracing cares. >> thank you. chairman joe nitkowski, it talks about a geographic area. items available for bid. when i was reading through this side of going back talking about were relocated from northwest ohio and of course growing up as a kid recut canadian television stations in our area and vice versa with canadians. how would you define a geographic area with the

spectrum available in a geographic area? what is a geographic area? >> that's a question we keep it up for comments and input are public receding. if i can say one thing on the border issues, these are very important issues that come up every time there's any transition in spectrum, whether it's commercial or public safety family a very good processes in place with canada and mexico to negotiate through these issues ending decades of work, our countries have solved every one of them. i fully expect that will happen here and we will interest the border issues in a way that doesn't interfere with the incentive option. >> thank you rematch, mr. chairman. i yield back. >> the chairman recognizes the gentleman from new jersey is next, mr. polo.

>> thank you, chairman boldin. i encouraged the fcc to keep on track with implementation to not overlook important details that ensure successful option. in discussing the recent superstardom seem its devastation is greatly impacted my district in other districts and examition. that's why democratic colleagues sent a letter requesting a hearing following the storm. the sims communication services power outages and was disrupted any types of communications, tv, telephone and internet service is. according to the fcc come the storm not doubt a quarter to cell towers spreading across 10 states, leaving cell phone users unable to make