public-service or be teachers. cindy kelly school carrying 65, 75, 85, $95,000 debt load. .. this is what is going to happen to me. so i thank you for being here to discuss this with me a little bit. as you know, we are having a debate in washington as to how we structure the various loans that we have whether we cap

interest rates, let the them float, whether we cap them at the time you take the loan but have a market-based before that. there are all sort of different alternatives. and obviously consumers are for the lowest possible interest rates; right? that's a no brainer. all of us are for the lowest possible interest rates. which is a lot of us who owned homes refinanced them. the interest rates kept going down. so i want to hear from you, and the first thing we'll do is start and just go around -- czar sara is already -- i already introduced sara. >> i'm are is a republican. the assistant vice president for financial aid here at the university of maryland. >> my name is -- [inaudible] communications -- [inaudible conversations] >> my name is allison thompson, junior engineering student. >> where are you from?

>> chicago, illinois. >> you? >> maryland. >> i'm from annapolis, maryland. [inaudible] i'm a junior this fall majoring in government and politics. >> i'm from maryland, my name is andrew. i'm a rights and senior government politics major. >> where in southern maryland. >> -- [inaudible] >> i'm a rising soft more government and politics major. my name is -- [inaudible] i'm a second-year student here at the yiewferred -- university of maryland. -- [inaudible] >> from new jersey and serving as student body president here. >> the president i call her. [laughter] i'm from new jersey as well. my name is amy water how's. i'm a rising senior arabic and french double major. >> i'm candidate lynn. i'm a second year graduate

student. i'm a i'm from baltimore. >> [inaudible] >> my name is alissa from new mexico i'm a rising senior orchestra major. >> i'm brandon, i graduated a year ago. i'm a baltimore and work for the criminal justice policy foundation. >> wonderful. again, i want to thank you. you spent some effort trying to encourage people to participate, i appreciate your participation. what i would like to do -- now i have -- tom, where are you? tom moore? he's my policy director. he's a big wig. he's work order the -- on the hill for many years. he was the legislative directer for eighteen years. i'm lucky to have him with me. the reason i introduced him to you and -- you to him is because he's in

charge of this issue. so he's here to listen, and to learn. why don't you come up to the table here? and tom is also with the -- he runs my congressional office. mario who is my communication director here. went to saint mary's college. kristin? no. kate lynn. okay. where is kristin? [inaudible] oh, okay. okay. i knew i met a kristin. and betsy is my district director. she runs my direct shops. what i want to hear from you and what tom wants to hear from you. because it makes a difference in the debate and the conversation. you sit around writing a bill, like i say, you are not necessarily thinking of, you know, alexis or sam you think what is this policy going to be? but ultimately policy means something to somebody in some

circumstance. we want to hear that. [inaudible] >> i didn't know that. [inaudible] how are you? come on up. have a. do we have enough seats? we have enough seats? if not we'll move some up. both of them. here we go. move in a chair right in here. >> okay. okay. got room here. [inaudible conversations] all right. does everybody know the doctor, by the way? she makes sure they did the right -- that i do the right thing. [laughter] okay. who wants to be first in telling me what your situation is what your challenges are, why it's important to you? as you know, we have a bill in,

some of us, that freezes for at least a year, maybe even two years the 3.4% on the subsidized loans, stafford loans for another year. which we did also last year, as some of you probably know. there are other proposals, once we pass them in the house, which has a floating market value and it contributes to -- continues to float even after you take the loan. unlike a house loan i take out and have a fix-rate mortgage, this would not be fixed-rate. it would float based problem the market. the problem with that is you wouldn't know. the president has a market-rate for the establishment of the rate but then frozen from the time you take it. there are some other nuances. that's the major one. so i know you have been talking about this. i know, this is important for your education.

i know, i couldn't have completed georgetown without my nda loan. it's going hurt you also. i think i borrowed $1,000? [laughter] that was for two years. i think it was $5 00 a semester. i was working so i could meet some of the costs myself. i borrowed $500 one year, $500 the next. i didn't borrow the first year. and so i ended up with $1,000. it was the best loan i had. i fade back in ten years, you can imagine that. i can't remember what i paid it must have been minuscule though. so, again, this is not so much for you. i want to make that point, and the people watching, its for our country. it is so critical that you young people be given the best education we can give you. bright minds developed to contribute to our country. so this is about investing.

not just paying. okay. who has a thought? who has a challenge? whose got -- i know some of you do. i read some of your résumes. go! >> congressman, i have a question, i'm currently now part of the -- [inaudible] currently a grad student. i went to georgetown previously for my masters. while there, i first encountered the nabt grad students do not have access to sub subsidized stafford loan. what is the reason behind that in most degree you can't stop at the degree. you have to go to grad school to excel any particular career or field. i'm wondering why is that not available to us as an option? >> well, in today, bill gates is not sure that's correct. zuckerberg is probably not sure that's correct either, but as a general rule, you're correct. now, we deal in a world of agent

-- alternative. there are x number of dollars available. the congress made an judgment getting an undergraduate degree of the priority. if you have more resources, you can subsidize more loans. that was the priority. so i think that's essentially a shorthand answer. there are other -- but the shorthand answer is the most efficient use of resources to ensure the undergraduate degree feeling that the graduate degree, while loans are available, i got an nda loans. they are not disiezed loans on the theory that the graduates make more money as they go up the educational ladder, everybody knows if you don't graduate from high school, your chances of making a decent wage are very substantially reduced. if you graduate from high school you are going to do better. if you get some college, community college. you're going do better.

data, data, data, as you point up out the chain. that's the reason. there was a sense that -- let me sort of key off that. something i didn't say, i believe, because this is in the best interest of the country, that we ought not to look at student loans as a deficit reducer. it ought to be neutral. that's to say at worst, we ought not lose any money or at the worst we ought not to make any money at best. so it ought to be neutral. in other words, and the reason for that is we ought not to be asking students to subsidize with deficit something they incurred in my generations and other generations incurred that. because we want toen encourage you to go to school. that's one of the debates, by

the way. is to whether the president wants neutral, the democrats the president neutral. the republicans have $5 or $5 billion. >> even if somebody's goal was to reduce a deficit with student loans openable the putting bandage on a larger problem. i'm a graduate student, but a lot of my friends have gone to the working world. i have friends who pay more in loans and can't buy a house or rent and live with their parents. so can't buy new cars. so really you're just creating a generation of adults who can't put any money in to anything really but their student loans. so in the long run, you are only hurting the economy. >> good point. >> by freeing up money that young adults today actually pay, put toward the student debts we have people able to put money toward a down payment on a house, a new car, toward supporting, you know, local businesseses. supporting any business.

that's my take on it. >> i think that's -- that's an excellent point to the extent we put some of our most capable people deeply in debt in a comment 70% driven by consumer spending. we undermine not only their lives, be and their ability to purchase cars, houses, you know, necessities. have children. we diminish our ability to grow our economy. you are absolutely right. you are grip ling several generations by putting undue strain. >> you are right. i agree with you. i'm glad you made it. >> i'm working now. i graduated a year ago. -- [inaudible] it's important to have a -- [inaudible] a sizable part of my income.

as you were saying it definitely does make it more difficult to buy a car, buy a house, you know, that's more than my rent. i'm living in d.c. and if i didn't have a fixed rate, if i didn't know every month how much i would have to pay. it would be so much more stressful and harder. i would probably not be able to live where i am now. because i wouldn't know month to month if i could afford it. it's important we have a fixed rate as in the past not just variables based on conditions out of my control. >> i agree with you 100%. the president does too. the question is what rate do you use when you take it out? once you take it out? again, my mortgage is a fixed rate mortgage. i know what i'm going to pay now until satisfied. and i have that confidence that i have to set aside this much money every month to pay my

mortgage. absolutely right. >> i have a question. >> sure. [inaudible] come a resolution that is rote are active. it seems they are so close and splitting hairs. it seems like everybody is on the same page but ran out of time. >> i think you are right. it's retroactive. >> yeah. >> i don't think we'll take something that is not retroactive, and hopefully resolve between now and -- tom when do we get out? august 2nd? 3 forked. >> whatever the first friday in august we get out. i think it will be retroactive. in other words, although everybody said the deadline july 30th, they will go up on the subsidized stafford. that's true. but i think we'll hold back. because there's no intent in the congress whenever you are,

republican, democrat, that we not address it as of july1t. >> okay. i can't imagine we wouldn't make it retroactive. >> yes, sir? >> ma'am, actually. [inaudible] a rising junior, criminal justice major and minor in -- you ask asked for a more personal opinion. you want to know how it affects us directly. i can k basically give you a background and sum up how it would effect me. both of my parents are ill. i'm from new orleans. financial aid, the loans, that is pretty much what put me through college. i am the youngest of twelve. my parents have put six kids through college, and now i have

to pretty much find a way to make it for myself whether that be citizenships, -- scholarships, which come rare, typically out of high school in to college to transition, just like you. my grade in high school were much better than any grades in college. i think i do pretty well. but the loans themselves -- my parents are back in new orleans, once i graduate college within a year, i will have to make do. so the trying to find an apartment or a car to be -- to have a job or just just enough money to have an apartment and metro access would be difficult having to pay back the student loans. so i want to give you that little tidbit of my life. >> yes. do you have a student loan now? >> yes. >> yeah.

>> yes. >> have you had a student loan every semester? >> yes. every semester. >> what -- if you don't mind saying. what approximately do you think at the end of your junior -- rising junior? >> yes. >> so you have another two years ago to go? another four semesters? what do you estimate your debt will be when you graduate? >> proabled around, i take out about $3,000 -- >> a semester? >> yeah. just to cover -- so $6 ,000 a year. you talk about another $12 ,000. >> yes. pretty much. $25,000. >> $25,000. >> in debt by my -- once i graduate. so you all can see pretty much how turn effect me once i graduate. many students like me, we would rather try to either stay in school, i'm going to graduate. i'm not going to try to stay in school at all.

i know, a lot of student that would rather try to take extra year or more classes so they have enough time to be able to produce enough revenue to try and even live. >> good for you. what are you studying? >> criminal justice. >> you said that, i'm sorry. it's one of the more affordable colleges you have. you have a very good education here. it's affordable. but affordable ised in the eye of the beholder or perhaps in the thickness of the wallet. you know, it's -- so you to have it to be able to spend it, even if it's a loan. >> right. >> and, you know, eu68d, i made, like, my first job, like, maybe, $60 a week put in to context.

>> yeah? >> good afternoon. my name is -- [inaudible] also from boise university. a psychology major and a rising junior. >> where are you from? >> washington, d.c. >> all right. okay. for me it's a little bit different. i whole heartedly support the idea. i'm an out of state student. so -- i'm on campus. i don't have the means to commute. i pay about $13 ,000 a semester to attend. so like, you said, affordable but much more affordable for people instate. i have to taken loans out since my freshman year, and to have the idea of the interest rates flux waiting is scary. my mother is seeking a higher education, so she has her own loanses to pay back herself. so the idea of me having loans to pay back once i graduate and me possibly, like, the coming

year will be harder i'm only getting loan. i don't get the grant anymore. so to have that idea in mind, if it was like, a constraint struggle for both my mother and i once i graduate from college. it's scary. i support the idea of fixed rates. >> one of the things i heard from both of you, that this is a family decision. and, you know, i've been in financial aid for 22 years, and you can see how the culture is changed over time. that the decision even though it's called a student loan, it actually is basing your repayment based on the family's circumstance. it's an interesting concept of how student loans are working today. >> sure. [inaudible] i don't think people recognize it's a family issue. i'm sure you know when you get interested in a report, you get something called an efc. your expected family contribution. that's based upon your family's salary. now that doesn't take in to account all the bills or

expenditure your family may have outside of that. i think you absolutely right. >> yep? [inaudible] >> that's started to help me. i love my two jobs. i met great people. i learned a lot. if interest rates were to go up, it would make it harder for me to be in in school and graduate in time. it changes what i want in the future. i don't know if i want to ache a couple of years off and work, it depends on the interest rate and how much i can take out in loans. i work a lot with high schoolers. i spend the spring break in philadelphia teaching a class in high school. we were talking about college at urban city school. not at love them graduate and go to scoot. we were talking about -- [inaudible] the main is cost. we talk about financial aid and everything. i feel if we increase the most talented seniors and juniors wouldn't apply to --

[inaudible] any school in the country they won't apply because they don't think they'll get the aid or don't get enough aid. that's something that -- [inaudible] we're basically discouraging future generation from going to higher education. >> which is bad for the country. which is my point. i agree with you. sam? >> i think it's important also to look at this conversation in the context of higher education. so right now we're just talking about the interest rates. and maryland has done a great job in keeping college affordable compared to many states around the country. but we're having a fight over interest rates not even the actual, you know, crux of keeping college affordable. and thing what students are looking for is a permanent deal. you know, we fought the battle year ago, and i was at the bill signing, you know, a year ago.

and we did all the work a year ago, and, you know, i think student advocates and people in congress, you know, want to move on and, you know, we want to work on youth unplowment -- employment and keeping college affordable and those kinds of i i issues. i think it's important for student to see a permanent deal. whatever, you know, hopefully it's the one we're look for. but i don't think anybody wants to see at the table a year from now and the next year and the next year. >> sam, i think you are absolutely correct. unfortunately, we have been doing too many things on a temporary short term pay basis. for instance what we company sate doctors for medical care for medical care. we do it on an annual basis called a sustainable growth rate. it will be permanent. research and development tax credit to businesses for research and development to encourage them to develop new

products anddevelop new ways of creating jobs and making money. that r&d credit is reuped every year. none of that -- there are a lot of other thin like that. none of that lead to confidence. you can be confidence i know what my payment will be two years from now. i can plan around that. sam, you are right. we need to do it on a inerm innocent basis. frankly, i think all party -- i don't mean political parties. autopeople want to do it on a permanent basis. for exactly the reasons you spoke about. it's not a good solution to do it figure, talk with my family. guess what they upped it to 6.8 or some other percentage that i don't know is going to be. you are absolutely right.

[inaudible] pay paying the loan effect the decision of the family. i'm the oldest of three. i have two degrees, my sister was really only able afford the dream school because a full athletic scholarship. and my little brother who is 16 very talented student, you know, interested in engineering and doesn't know you know what he's going to do without a citizenship. is he going to be apossible to go -- afford to go to a good engineering school? it effect the way that my family, you know, using their income on a daily basis. it effects the way that we make our decision. it effects the that way that he goes about school every day. not that, you know, motivation to do extremely well is a bad thing, but the anxiety that accompanies a high schooler these cay days. will i be able to afford college? how hard am i going to have to work. will i be able to afford to pay

off my loan. it's too much for young country to bear. they should be worried about what major they're going do in school or what creer they are interested in. >> let me -- my own experience. it's not a new problem; however. the magnitude is new but not a new problem. for instance, i got a $14 00 scholarship out of high school i went to a high school t not too far from here. i got a scholarship to a good school in pennsylvania. it required me to get another 1800. there was no way in the world i could get $1800. so i went to work i went here because it was affordable. and i went to work starting the first year 8-12 then 3:30 to

12:00 at night. my family had zero money. my family gave me zero money for college. not because they didn't want to. they didn't have anything. so they would have come up pretty well on the family contribution index. i never did that index. it was an affordable alternative. now that's not necessarily the case. [inaudible] maryland is extremely competitive not only the athletics but the affordability. student who otherwise would choose the school for affordability have to fight to get in. >> it's very, very tough competition.

i couldn't have gotten in maryland. i had a 2.85 graduating high school. i couldn't have got anyone here. i graduated with high honors. i was the god -- god outstanding it department predict what i was going do. but i couldn't have gotten in to maryland today. no way. would have gone to a different school. no way i could have gotten in to maryland the first year. with the standards that now exist where you have a 3.6 or a 3.7. i don't know what -- you all so smart and the s.a.t. were off the chart. i did all right in the s.a.t. my grads weren't that great. okay. who et. cetera? tell me what their thoughts are. >> you are the guys participating and looking at this. right now i have grandchildren. they're not yet to where they're

applying to college. and my children are already through college. although sue san, my oldest daughter went to the university of richmond, which we believe it was far enough away we wouldn't visit on a regular basis and close enough where if show she got home sick she could visit. that was about $10,000 a year. that was in the '80s. late '80s. and we can see how escalated from that. i'm sure in the $40,000 right now. maybe more. enter. >> so like you said, you could have gone to a private university for more money. you choose to go to university of maryland because it was an affordable at. tive. >> i didn't say. it was the only alternative. i could not afford the other alternative. >> yeah. i was in a similar situation. >> which has happened to be one of the best decisions that was made for me. >> i'm the youngest of four. my mother is a single mom. she put all of my siblings through college.

when i was applying to school it was apparent she made it known i will have loans whenever i go. she laid it out to me, in an excel spread sheet how much my loans would be if i went to each college. i ended up applying to all state school. i knew i didn't want to have six fig figures of loans. i went because of the instate tuition and i love my decision. i was educate right off the bat to know how much i would have in loans and how much i would have to pay when i -- some of my peers it was clear just people i talked to. they didn't realize the decision they were making. they got do go to the dream school. it was great. when they got out they graduated with six figures with loan. and some were unemployed. they didn't necessarily know about the affordable alternative. i felt like we have a culture of

not really educating our youth as much. and just telling them -- it sounds terrible you can go whenever you want and have them be saddled with the debt. i think that's even sam said talking about interest rate. i think there's a larger problem as well. >> i think sam and you are absolutely right. we are talking about a bigger problem. i serve on the board of it'sees of saint mary. i was on the board of -- [inaudible] for some period of time until i became the -- [inaudible] but saint mary's college we pride ourself being an affordable, quality, constitution. we're having a struggle to keep it affordable. to keep prices down. to keep quality up and prices down. we have to grapple with it.

sam is right. t not just what are the interest rating going to be next year problem. >> affordability. >> you are next. >> i was before coming to maryland, i was an academicked a vierser at the university of district of columbia which is an affordable institution. we serve a lot of nontraditional or first-generation student. even for the students when working with them on financial aid among many other thing. they were very adverse to loans. to increase the amount of pell grant. even at ab affordable constitution they still couldn't manage to pay the extras like the fees, like the books with like the met throw transit. i'm wondering i think thigh go hand- in-hand in a certain

degree. it can't be necessarily reducing or keeping the rate fixed for financial aid. >> you are absolutely right. the good news we have pell grant an they grants. the the bad news is that right now the debate in congress is about freezing dollars at 2008 level. yom how many of your families think if they were making that they could afford to live in 2013 five years later. some of them are probably doing that. but they find it tougher and tougher every year. most people are not living on the same include in 2008 in five years later, 2013. they have to keep up with the inflation if nothing else. the debate in washington is not

about increasing pell grants. it's about cutting pull grants. -- pell grants. in '09 and '10, we increased pell grants. pell grants, when they were adopted, sir, do you remember when they were adopted? they say thirty years ago but the sake of argument. was it 65? longish? replaced essentially i was on the labor of health education subcommittee for 23 years. it eroded over that period of time to where it was less than 30% in the neighborhood of 30%. half of the value the dollars may have been incremental. we increased significantly in 2009 and 2010. it's starting to wither away. why? the number we are marking to, which how much money have we decided is available to spend and invest in discretionary

spending has been substantial and reduced. it labor health education bill is projected to be decreased. nih, center for disease control, pell grants, other matters dealing with education and health care is scheduled to be decreased by almost 35%. which put back less than 2008. what is happening is we're deciding to spend $45 billion and take discretionary spending. it's not social security, it's not medicare. if you take from a trillion dollars if you take $45 billion,let say defense about half -- defense a little more discretionary a little less.

let's say it's half for the sake of argument. you take $45 $54 and put it on the defense side that means so you $54 billion less. which is about a 10% cut. so that make an adverse impact on ability to keep grant not only from decreasing, and you don't have to decrease them in term of dollar amount. if you don't raise them at least by inflation you increase the value of pell grant. you understand that. you are right. we need increase the pell grant. again, not for you. , for the country. if we're going to keep in the global marketplace, which we want to do, if will be because we educate our young people to, the kind of growing economy that we need to be to great the kind of jobs we need.

not only for all of you, but for the millions and millions of people who don't go to college. but who have skills and the knowledge to work hard and a welder. do you know how much welders can make in america? $80 to $90. why? if you make things in america what do you need to do? you need to put them together. we have 3-d printing so, you know, maybe it will be done one stream, but you get my point. pell grants are something we ought to be increasing not decreasing. because they are a way to give students who have a lot of ability but not much means in to college so we can use their talents. >> yeah? tom. i'm sorry you said you were going to go next. >> i think it's kind of interesting. >> cheryl said lean forward.

[laughter] do you know who she is? ceo of facebook. she wrote a book about leaning in. >> well. [laughter] my name is amy water house. i'm ab out of state student here at maryland. >> from new jersey? >> from new jersey, yes. >> new jersey is a -- maryland is a magnet from new jersey? we are. >> when i was here we were a lot of new jersey students. >> i think it's the most densely -- one of the top five. there are new jersey students everywhere. all across the east coast. what is interesting about affordable and talk about how, you know, you were able to make $86 in, you know, however -- like a week, week and a half worth of pay and especially because washington, d.c., is a big hub for unpaid internship. >> just to clarify, that was working when i was full time.

of that was $45 a week and you take taxes out of nap i was probably at the time i paid that probably making net $28 or $30 a week. >> but still. because i personally the idea that washington runs so much on unpaid internship and it is creating a gap between sober owe economic classes where people can afford to use unpaid internship washington, d.c., especially benefiting from. that's the way they get so much of the work done. creating further divide for students. i work a job. i work during the school year. i'm working about 65 hours a week but only getting paid for half of that. i'm making a little bit less than minimum wage. that is, by the way, no with this am i covering what i'm paying for the tuition every

year. my -- i have two younger sisters. one of them goes to university of delaware, she was lucky enough, she was brilliant enough to take a program in high school she graduated high school with the associates degree and the high school diploma. because of that, she's able to graduate with less debt because she can do only two years of regular college. but my parents have been encouraging her to do all four years because different experiences and whatever. she can't afford it because of the loans she would have to take out for the college. >> which leads to the broader discussion sam is talking about. why four years? have you thought about it? is four years the magic number is three years the magic number? that's part of the larger discussion what are we talking about -- [inaudible]

just turn to shortly afterrer graduated. guatemala a lot of countries have three years of higher education. then a transition to maybe the last year, the third year being partially law school or medical school. we have four years of medical school which adds to the expense. sam is saying what we need a larger discussion of how long is enough? what do you need? how much should cost? a lot of big issue we need to discuss and put your finger on it. i didn't know of the defs program. that's a fantastic program. i don't think we have such a program in maryland.

[inaudible] >> that's what i meant. >> but i said delaware but i meant -- i know you came from new jersey. but you said delaware. i think we have to be thinking along the lines where there are clearly some people who can take a first year of college if their junior and/or senior year. they are gifted. and we ought to take advantage of that. again to save them money but also save us money and have them in the stream sooner. -- think about how much money he saved. >> i know the governor is interested in programs like what amy's sister did and doing a lot

of course redesign and doing ways we can cut cost on the university level, you know, and get kids out quicker. so, you know, we are not only saving ourself money but also the taxpayers, you know, especially with instate tuition. we rub disiezing everybody's education so we can have a better work force. i think we are looking at that here, but making sure that we're being support order the national level you know. we accelerate people getting out of school. have a job one of our principle objective in america is to great jobs, grow the economy faster. i will make it an agenda i talk about. which in the manufacturing field, but if you grow manufacturing jobs you grow jobs in every sector of the economy. as a result we need to focus on that.

we are no focusing as much as we ought to be. but we ought to be doing that when you get an accelerated education, there's a place to use your talent. your sister, for instance who you say is brilliant, i'm sure you are brilliant as well, amy. but she'll have some of place to use her bril began and make things happen. somebody else had a hand up? what is our time frame? tom, betsy? we need it. okay. 4:30 now. we have to wrap up? >> sam obviously is the president of the sga here. and somebody who had an unpaid internship in my office. that's a really good point about the unpaid internships. it's a little bit like the volunteer army. the connection there, you know.

from an economic standpoint we have an army that is not as diverse as it used to be. when i came here to the university of maryland rotc was mandatory. there were 4,000 male student here. it was mandatory. that was part of the reason cost were deferred. it kept costs down because the federal government participated. why? because it was yule -- d useful for the country. you make a good point, tom, o'ought to look at that. although interns critically important work, it may not -- i was essentially an intern when i started working on capitol hill. i was a senior here.

i didn't do fancy work. i wasn't writing great reports or great speeches. i was being exposed to something that was obviously helpful throughout the years. it you can't afford to take nonpaying internship and devote -- sam how many hours a week? >> there was for winter break. i was doing four dayses a week. >> you worked during the winter break full time. some people can't afford to do that. you're right. we need to think about that. what is the option? paying intern bhap is the problem there? cost. all the discussion in washington is not about increasing but decreasing costs. we need a big deal. we need a big balanced deal. simpson bowels, gang of six, you need it. we need a big deal. it doesn't mean you have to agree with every point in the recommendation.

we need to get our country on fiscally sustainable path with certainty. so you know from year to year what the tax rate will be, what our budget will be, et. cetera. it's hurting the country. this is just one facet of that and not the big picture. i want to thank you for what you do every day with your peers, with -- and your what you're doing for your country in term of making yourself more able to contribute and participate in a productive way in the life of our country. i mean that very sincerely. i almost walked out of maryland and found out if you open the book it make a difference. i really did. [laughter] but so you to work at it. i didn't work very hard in high school. i was okay.

but i didn't work very hard. i came here, i didn't work -- i worked less. [laughter] then it dawned on my in my second semester of my what would have been my sophomore year. we need ditches dug, i understand. i don't criticize people digging ditches. i didn't want to be a ditch digger. i got my act in gear. you have your act in gear now, you are obviously outstanding students. thank you for doing that. sara, i want to thank you. sara has been here for some period of time. she's been helpful to our office and lot of our students that we have recommended but she's extraordinarily conscious and focused on helping young people get a good education. sara, thank you for all you do.

i appreciate it. and i appreciate sam the effort helping us to get this group of extraordinary people together. we will take your comment, i've been writing notes down and we'll enter those to the debate. adds i said i'm hopeful we'll resolve this particular -- sam is so insightful in saying look with it's a facetble problem. higher education costs. that's the big problem. it's like health care. medicare and medicaid everybody said you have to deal with them. if health care cost were contained they would be fine. they are not contained and government is 50% of the pay health care costs. we need deal with that. thank you all. best of luck to you. and if we can help in any way. give us a hollar. okay. thank you very much.

[inaudible conversations] glmpleght booktv in prime time continue tonight with special reflections.

tonight on c-span we'll bring you a discussion about mass shooting and mental illness. jeff from the duke university and the center for american progress take a look at the nice's gun law and talk about the medical, legal, and social responses. >> we think about mass shootings. i think there a probably a compelling case you can make that mental illness is quite involved in mass shootings. so mother jones magazine analysis of 62s mass shootings looking at the record and, you know, that might relate to press reports, but also some of the

court document. you suggested that most involve some disagree of mental illness. i think if we think about the mo prominent recent mass shootings shootings from dlans adam lanza to joran van der sloot, -- jared lee loughner. when we think about everyday shootings. everyday gun crimes, we see that people who have serious mental illness tend commit cry -- commit crimes at the lower rate than the overall population has a serious mental illness. though are responsible for a lower portion of crime than the portion of population. like wise, when you look at crimes with weapons, which, you know, most of the times will mean guns, again, a crime

committed by people mentally ill is underrepresented. and you know what how does the u.s. fit to the picture of everyday shootings. we may not have a gun crime problem that where the mental illness component is exceptional, but the gun crime problem in the u.s. is exceptional. we're not a uniquely criminal society. we're not a uniquely violent society. we have a uniquely deadly society. the level of homicide in the u.s. is especially unusual when you compare to similar. [inaudible]

but when we think about the everyday shootings -- [inaudible] we can see the sea of humanity coming from union station. we knew it was going to be big. we were supposed to be leading the march. there were people already marching it was like saying, there go my people. let me catch up with them. [laughter] and the sea of humanity pushed us, pushed us so we marched on.

and start smiewfing toward the washington mown monument. toward the lincoln memorial. of it a wonderful period, i think in the american history. at 8:00 p.m.

the the sun did shine a little bit more benignly here. i remember them telling me it was an even more cruel kind of racism. smile on the face but a dagger behind the back is how they described california. they were not allowed to life in any of the cities. not even the small towns. they were locked out. the patches of land. when you ride up on the land and it looks salty. look as if snow there had. it was land available to them. they built their wooden shacks here. no water. had to go to town to fetch the water. no city suers. they had outhouses. no police roam the area. it was a no man's land.

a hearing on the future of wireless communications witnesses including ctia wireless sober policy. they taunted the need for more broadband spectrum as the industry expands as well as the important of controlling cost to consumer. the senate commerce subcommittee hearing is two hours. [inaudible conversations] nonetheless we want to say thank you it to the witnesses for being here. thank you for your preparation. this is the third in our, quote,

unquote state of hearings. which we are trying to inform members about issues going on in the industry, but also hear from industry with about what is going on not just in the industry but really around the world and the trends are. wireless communication is the focus of today's hearing. we are going to hear from panel -- panelists and panelists who analyze and monitor the industry and to advocate on behalf of wireless customers. as we all know, wireless communication are used more and more. if you can say that are a thing of of a traditional cell phone. from traditional cell phone that many of us relied on for the last several years, which was primarily voice communications, to now we see an increase in the use of internet through wireless devices, even things that we are beginning to just take for

granted. these wireless devices by garage door open, tv remote, internet connect picht the licensed or unlicensed it's become present. with a smartphone or tablet, someone in the room could have a video chat with a family member turned on our off the home entertainment system, and purchase ticket to tonight's washington national baseball game. i'm looking forward to hearing from the panelists. there are any new developments and new services that the industry is providing. ..

will provide their insight to these questions and many others. i'm pleased to be joined today by senator wicker, my ranking member on the subcommittee. and also, we are going to have many of our subcommittees come and i know this is a busy day on the senate floor. so, senator. >> thank you mr. chairman. i am glad to join you on our fair hearing on the scene of the industry. today our focus is on the state of wireless communications in the united states. there is no platform for

broadband delivery as dynamic and probably growing as one year less communications. consumers are turning in droves making it their primary way of access to the internet. last year global mobile data traffic grew 70% when it comes to voice services american consumers are consistently cutting the cord and transitioning from traditional wamp linus service to winder less as the primary means for voice communication. according to the recent study, interestingly mr. chairman mississippi and arkansas are leading the way in the wireless households with 42% of adults in mississippi and 44% of adults and arkansas making the full conversion to the the same study by the second half of 2011, one and three households had only

wireless phones. the rapid migration to the wireless raises a number of critical issues for policymakers many of which will be mengin and discussed by the witnesses in the penalty. as the chair mentioned one of the key issues for congress to consider is how to maximize commercial access to the spectrum in order to meet the consumer demand for high-speed service and content rich applications. one of the main avenues to achieve the goal is making the 1755 to 1780 megahertz ban available for commercial services. identified in the national broadband plan for its commercial potential when paired with the man, the spectrum can be quickly used to expand existing systems and spur innovation and drive economic growth. i understand the wireless industries have been working together to study this issue and the industry recently proposed a

road map for clearing the federal systems out of the ban. i urge the dod and other government entities currently using the ban to continue to work together productively and in a quick and conclusive fashion to relocate operations and free at the spectrum for commercial and ultimately consumer use. this committee also needs to monitor closely the progress of the fcc's incentive auction of wireless broadcast spectrums. the success public safety broadband network established in this back to comment. it also would free up spectrum and raise much revenue for the deficit reduction to achieve success it is imperative that there would be widespread all-inclusive participation in the option.

this is the best way to maximize revenue and also to mandate going forward as congress mandated. i would like to think the witnesses for testifying today. we look forward to hearing your views on the issues of specter on availability, the incentive option and the overall state of wireless services in the country. thank you again for holding this hearing and for the members of the committee for their attendance and interest. >> thank you. let me say that what we will do is dispense with opening statements and everybody's opening statement will be made part of the record. but we would like to move quickly to the panel. we have a very distinguished panel today. we will recognize each one of them for a five minute opening. we would appreciate if you could keep it to five said that the subcommittee would have plenty

of time to ask questions. what i will do to save time is go right down list and then turn it over to the first we will have the honorable president and ceo of the wireless association. second, we will have mr. stevan barre, president and ceo of competitive carriers association. third we are going to have mr. douglas webster, vice president, service provider, routing mobility and video marketing cisco systems. fourth, we will have mr. thomas nagle of the strategy communication data services for comcast corporation. next we will have george ford, the chief economist for the phoenix center and last and certainly not least, we will have policy council of the consumers union. again, welcome to all of you and again, thank you to the subcommittee for being here.

if he would leave us. thank you. >> is that on? okay. ranking member and members of the subcommittee thank you for the opportunity to testify on behalf of ctia debate i met the need to return from the annual spring show and i wish you could have joined us. you would have seen a testament to the state and environment in which u.s. leadership is a consistent and defining characteristic. perhaps the best indicator of the vibrancy is its investment record. if you believe business is commit capital to markets that are open and competitive, then the $30 billion that america's wireless carriers invested in 2012 alone is a very good sign. this massive investment serves as a catalyst for what we like to call the cycle of one year less investment and innovation.

here is what i mean by that to start, capital expenditures drive the creation of networks capable of supporting greater speeds and functionality spitting it those networks create a demand for new and more powerful devices which then drive the development of new applications and content that leads to more consumer usage and as that grows so does the need for more spectrum. it is a virtuous cycle is spending at an incredible rate in the u.s. and is the reason why we are the world's leading wireless market. we have more than 50% of the world's subscribers. with me repeat that, 50% of the world's 4g subscribers in spite of the fact that the u.s. is the home to just 9% of the world's wireless subscribers. these subscribers use sophisticated phones and tablets that run on operating systems developed by great american companies like apple, google and

microsoft. event works are devised to serve as the foundation for the u.s. based applications industry that is creating jobs and transforming the way that we consume information and engaged in commerce. changing the way consumers communicate, advanced wireless networks are in a bowling whole new vertical markets to emerge. mobile commerce and finance and intelligent transportation, smart grid and mobile health services and applications are all made possible by the existence of robust wireless broadband capabilities to aid in each of these opportunities to transform our economy in a positive way. succumb as i hope i've demonstrated, there are a lot of great things emanating from the wireless communications industry. the benefits of those developments are felt throughout our society. success is hard to achieve and can still be harder to maintain kildee as a result, there is a vital role for congress and other government entities to enact smart policies that help the private sector continue it's

hard work and innovation to advance u.s. leadership in this industry. the area where the policy leadership is most important is access to spectrum. carriers must have access to additional licensed spectrum to keep up with americans demand for mobile broadband. fortunately, the congress recognized this when it included provisions in last year's spectrum act authorizing them to conduct incentive options. although they are moving to implement that legislation, it is critical that the incentive option process move forward expeditiously. even if the auction process yields will fall on hundred 20 megahertz called for in the national broadband plan numerous projections on the increased traffic clearly indicate that we are going to need more spectrum to keep up with the demand. in fact much more committed to address that difference from the congress should as it has in the

past repurchase the band held for commercial use. it worked well before and it can work well again. one that is especially important enabling the wireless companies to expanding the demand is the 1755 to the 17 eda netroots spectrum. while that is currently used domestically by the dod and other federal agencies it is used internationally for commercial mobile services. harmonizing the allocation with international news would produce significant economies of scale and scope and importantly make it possible for consumers to use their wireless devices outside of north america. there is a broad industry support for repairing the 1755 ban with the specter of currently available for licensing at 21552180. current law requires 2155 to be licensed by february, 2015 and it's our hope that it can be made available so they can be auctioned to get there. paring the vans will ultimately maximize the value to the

industry, consumers and the government as an option of the advance together will deliver more to the treasury. ctr looks for what to working with you on this objective and thank you for the time today. >> members of the subcommittee thank you for inviting me to testify about the competition in the industry. i'm here on behalf of the association representing a 100 wireless carriers and the newly 200 suppliers that support that ecosystem. my membership believes and includes innovative competitors of all sizes from sprint and wisconsin, and every member's district and member state that is here today. i would like to talk about competition and what is needed to have a competitive wireless industry and i may differ little bit from my colleagues sitting next to me.

we are at a crossroads. policymakers have to traces. one path leads down a path of continued concentration and the other creates a framework for competition. without a competitive framework increased regulation will be needed to artificially replicate the benefits of competition and none of us want that. the virtuous cycle referred to become the vicious cycle if they can't get access to the spectrum devices. at&t and verizon dominate the industry that's already heavily concentrated more so than the although, we will or banking industries. the largest wireless carriers control 70% of all revenue in the wireless industry compared to the two top auto makers controlling 35% come all oil controlled 25% and the top two largest banks only 20% of the wireless industry revenue. policymakers should took the lead to focus on a framework that creates the next generation. i met with my members and

diverse membership and one of the main themes was growth. with the right framework of our competitors believed that we would have economic growth, job creation and expansion of mobile oacompetitive framework that supports continued life touch regulatory regime. there are three things that it can do today to help make this happen. first, they should immediately restore interoperable the into the law were 700 megahertz man. interoperable lee has been fundamental to the loyalist industry since its inception and supported the devices and the relationships that all changed after option 73 and at&t was allowed to carve out a ban in the lower 700. mr. chairman, in 2008, following the option you said history will show the way that it's structured to option to basically help the wireless companies to the detriment of the competition in the country. history has proven your concerns

to be accurate yet it may not repeat itself the law were 700 megahertz ban unlike kump tnt it can be put back together again. it requires immediate action and the record is now complete and the fcc must immediately act to restore interoperable devotee which will allow competitive carriers to your lives to billion dollars invested in the beachfront spectrum that will allow access to the devices expand mobile broadband, especially in rural women at the and sparked new competition in the industry. second but maybe more important in the long run, competitive terrorist must have access to spectrum. the fcc must revise its broken old spectrum screening and apply the new rules to the upcoming auction. using the authority the congress just reaffirmed the congress got it right, set the right tone and now it is up to them to implement a competitive auction. the spectrum must be made available lewis all geographic areas so that the greatest number of carriers can purchase

a pate. size by all carriers. this means that it should be a market area in the blocks of spectrum that would maximize revenue to the treasury and the taxpayer will thank you. let me be clear that all carriers in putting verizon and at&t should be able to participate. however, limiting how much spectrum any one carrier can obtain in a particular marketplace makes sense no one or two carriers should be able to walk away with the entire pie. some claim that the analysis tried to rig the option. i don't read it that way and nor does the attorney general of thornburgh whose during the week assigned in the five presidencies and wrote the sec and suggested that policy is consistent with the competition policy under the republican and democratic administrations alike i would like to have his record included. >> speaking of the spectrum, incentive options shouldn't be

the only use of additional spectrum. the need a functioning secondary market and federal holdings must be reviewed and where possible reallocation for commercial use. i totally agree the 1755, 1780 and 21 eda needs to be paired and sold and we need to do it to a cade file the access to the network is critical as the transition to all of the network's move forward, the bedrock technology neutral interconnection principles directed by congress and the 96 act must be reaffirmed. the members stand ready to help you and the committee restored competitions for investment and innovation, create jobs and expand the level of probable and implement a cookie and thank you. >> mr. webster. >> speak the for the opportunity to appear before you today. mr. chairman and members of the committee, we are in the midst of an absolute avalanche of mobile data. i'm representing cisco systems, the leading company that has

unparalleled insight to network data traffic. every year we go for the data looking for emerging trends and share our predictions to the annual visual that working index. in our latest 4:00 forecast it will be 487 times greater than it was in 2007. think of that, 687 times the volume of mobile data traffic compared to six years ago. the growth shows no sign. five years from now there will be nine times as much mobile data traffic in the u.s. than today. more e-mails and apps and especially more video which by 2017 would represent two-thirds of the traffic. the question is are we prepared for this. can the current network infrastructure handle the growth that is coming and the answer of

course is no. imagine a washington beltway of russia that's basically the network to the cabinet is sometimes open road but frequently congested especially at the peak hours to imagine getting 50% more traffic to the velte each year for the next five years. in line for an increase you would get the grinding grid lock and major delays, frustration and anger and major loss of productivity. that is precisely what will happen if congress and the fcc do not act to address the spectrum crunch. how do we get to this point? mobile data traffic and was in a relatively low level. the product of a handful of text messages mostly by teenagers. fast forward to the few years later each of us has multiple devices continuously one-year loosely connected to the internet. smart phones, tablets, video streaming devices, smart tv and

gaming councils to name a few. the devices will continue to proliferate. we forecasted there would be eight devices for every american. not only do we send e-mail and text messages constantly but we are watching massive amounts of video from children's first steps to movies on hand-held devices. cisco related the data for custom and there is no stopping the growth. we've become attached to our mobile devices and have integrated into our daily lives. a social policy makers do now to ensure that we have the infrastructure and investment in place to meet the demand? but some become more license and unlicensed spectrum must be allocated for blood and access to been to return to the beltway metaphor, adding spectrum would add more lanes of traffic, why in the land but today are narrow and create more on randolph had

bottlenecks. congress speech that authorization of the senate spectrum auctions in 2010 was a critical first step on the license side of the equation and i want to thank you for taking that meaningful action. thanks to the committee we are studying the expansion of wi-fi the five gigahertz band. we are conducting analysis whether additional commercial purpose is technically feasible. we hope this analysis can be completed as quickly and faeroe as possible to help increase the broadband speed and production. this is increasingly important given approximately 50% of the data moves over the wi-fi networks and given that wi-fi helps alleviate the pressure on licensed cellular networks. at the bottom line is the mobile revolution is here. it's changing the way we communicate, the way we analyze data, the way health care,

education, government and public safety services are delivered, and it's creating new american jobs and growth everyday. as if you need more reason to act, studies show doubling mobile the the results in half a percentage of increase in the first domestic product growth which is necessary now more than ever. it's imperative that we address the looming specter of crunched in the united states and allow providers to invest private dollars in network infrastructure. this will ensure the united states remains at the cutting edge and continues to be a global leader when it comes to mobile technology. thank you again for the opportunity to appear today and i look forward to questions to beat >> thank you. >> mr. chairman, members of the committee thank you for the opportunity to testify today. i've been in comcast for over ten years and one of my responsibilities as the strategic development of comcast wireless efforts.

licensed services such as wi-fi have grown from an extension of a wire broadband to a central component of the ecosystem and important means of communications during emergencies to refine pleased to talk about the benefits of wi-fi as well as the policies that needed to ensure the services continue to serve as a platform for innovation, investment and economic growth. comcast operates a network that is expanded 11 foltin 18 months. from 5,000 access lines last year to over 55,000 access points today. we also partnered with the other cable operators to build one of the country's largest wi-fi networks with over 150,000 access point and many more to come. because these efforts customers can use any wi-fi device to enjoy high-speed wireless internet service in many locations in the country. our experience confirms the important role and licensers play in the system.

consumers increasingly use the wi-fi networks are cost-effective and robust wireless access to the internet making the spectrum a key complement to licensed wireless technologies. in fact the ceo recently stated wi-fi would eventually carry 80 to 90% of the roof of the sale networks. various studies confirm unlicensed services contribute tens of billions of dollars in economic value each and every year. important the wi-fi network has proven to be completely valuable in times of emergency. the aftermath of hurricane sandy and the tragic attack of the boston marathon commercial mobile wireless networks or overloaded or not times the were down completely. comcast was able to operate and provide free access to anyone with a wi-fi enabled device so people could receive urgent information and establish communications with loved ones.

because of the breathitt expansion of wi-fi enabled devices and networks like the one we all three are in a valuable. they allow consumers to community and stay connected in emergencies regardless of the carrier. wi-fi has become the interoperable communications standard for consumers. looking ahead, we must ensure there is the spectrum to meet the growing consumer demand to the spectrum used to deliver wi-fi today has become severely congested. especially in the densely populated areas. the result is reduced performance. if we fail to provide more spectrum for the services, we risked falling behind other nations preparing for the life i could it also called a bigot because of its potential to alter dramatically improved speeds. to address the challenges policy makers should begin by removing unnecessary barriers to prevent more efficient spectrum sharing in the five bigger hertz ban.

operating rules undermined the a levity to utilize the spectrum to deliver a robust unlicensed services and next generation wi-fi. congress, the administration and the sec have taken several steps to ensure unlicensed services continue to thrive. in particular the comcast, in this congress for passing the landmark spectrum act of 2012 which took significant steps towards addressing the challenges facing the licensed and unlicensed services. including provisions that pave the way for identify in this picture on licensed services can share with existing users to read additionally we support the effort and the recently initiated five gigahertz proceeding. the proceeding will be critical for the development of the next generation wi-fi. the five gigahertz plan presents the best chance to advance the administration's spectrum sharing policies. under the proposals put forth by the sec the services will be able to share the spectrum without causing harmful interference to existing users maximizing the value of spectrum

for all americans. congress considers the state of the wireless ecosystem it must ensure the nation has a balanced spectrum policy that promotes both licensed and unlicensed use of spectrum. the services offer enormous economic and social benefits and comcast is prepared to continue to invest to help americans enjoy the benefits. we are committed to working with congress, the administration and other stakeholders to reach solutions the will maximize the value of the services to the nation. thank you for the opportunity to testify. i look forward to answering any questions. >> thank you. >> thank you mr. chairman for the invitation. the wireless industry is an institutionalized complaint box at the fcc so there is always a lively debate about various issues going on. i think by far the most important today is the lack of sufficient spectrum to satisfy

the demand for data over the wireless mobile networks and wi-fi networks tuna i've written a lot about the spectrum - you and i will summarize my testimony that covers those issues in more detail. there are three major questions related to spectrum. one is how much does the industry need and i think it is to say a lot. 500 megahertz which is what the fcc recommended that is twice with the wireless industry has today so that is a significant increase in spectrum. it will be interesting to see if we can get near that number in the next couple of decades. the next question is given the lack of the spectrum where are you going to get it and i think the answer is after some initial low hanging fruit you will profit from its present owners hands in some cases from the

cold dead and i suspect. there are three ways in which we can get some spectrum we of the secondary markets and in which the industry engages in transactions that doesn't necessarily increase the amount of spectrum for the wireless service that shift sitter around into a more efficient configuration. there are two things the fcc can do to improve the market which doesn't functional level today. one is to increase the flexibility of spectrum that they would need to be involved in that as well and that we we could move the spectrum are around without constraints or limit on how it can be used within the bounds of reason and technology. second for the fcc to quickly approve transfers that do not have demonstrably anti-competitive effects. in some cases they are used to fund the project right or wrong

in the form of the voluntary conditions. the other source of spectrum is government. there's been a huge discussion of that lately. most of the reports i've seen are not promising in that regard. i think the congress will eventually have to be involved in the process. one report by and blazers to the president said we will not or did not recommend ever again giving government spectrum to the private sector through auctions. that is a pretty bold statement i think. the other which is under way it will be interesting to see how that works out. it's a very complicated process with many constraints and objectives but we do have some very smart people working on it so there is hope. the major question is who gets hit. there is going to be to pull spectrum so there will be a fight over who keeps it and who gets it. we are going to have the debate

of the licensed and unlicensed spectrum that can be solved relatively easy to beat the unlicensed spectrum low-power devices can use it more flexibly than the broadband networks that need higher quality spectrum under an exclusive license. the other question is how this spectrum gets distributed among the firms. we have the calls today for the spectrum caps, participation limits by at&t and verizon in the upcoming options and people will use the government process to advance themselves when they can although i think people also believe that there is a valid reason to do this to read in this regard i think what i would say is we need to make a decision in the country whether or not we are going to use the options to allocate the spectrum in which the highest bidder wins

the spectrum and that is how we do things in most markets or we adopt a competitive hearing approach where the government chooses who gets it in an effort to control what the industry looks like, control the market structure and market share and that sort of thing. is this a question of honesty because as an analyst you want to know what the objective is before you start designing their rules and analyzing the policies. if we intend to hold them among the winners, it makes it difficult to understand what it is the are giving. making the decision is that of my pay grade but i'm suggesting we of honesty in the process and in that regard. and in that capacity, the economic theory is very important. when you introduce spectrum exhaust which everyone is talking about right now, it radically changes the way competition works. in one of the papers, it is summarized in my testimony it's

a paper entitled wireless competition in the spectrum exhaust to the one you find when an industry faces the exhaustive spectrum that competition in the way we normally think of it which is a headcount of firms is no longer a valid way to think about the industry because if there is a constraint on the capacity you can't increase output and global competition is to increase output to competition is essentially made important enough regard and if you include the assumption of an economy of scale and the use of spectrums of the capacity rises faster than the spectrum you get which is an assumption that is expected you could have a case where having few firms in the industry has lower prices and better quality services than more in the industry. that's a very important addition to the analysis. we can't simply think of it in the way we normally think of competition which is inaccurate in itself but in this way it is profoundly inaccurate.

the spectrum caps in the past have largely been intended to increase the number to expand the base of competitors and move people to the game. i don't in the free to happen. we have people outside of the industry in the spectrum the end up going back to the industry to try to use that spectrum selling it to fertilize an and in other cases additional entries are unlikely in the current conditions so we can't think of having a fifth nationwide provider for example pity we need to be more worried going at this point given the financial condition of some of the warrior with carriers. so that purpose of the spectrum cap is no longer valid and the spectrum cap theoretically has to my knowledge never been taught contemplated as a way to shift the market share among the various players. and probably going over. the of your question on the

spectrum caps with the restrictions relates to the revenue. this is intended to raise revenue for specific purposes. i think the argument that eliminating those high demands for spectrum will increase the revenue is not really possible. the theory really doesn't support it and they decided to support that they would say you should exclude all incumbents from the option, not just the major incumbents. history shows the are in high demand and make significant profits reselling it. there are some other issues. people are looking at me funny. [laughter] there are some other issues. you know, unlocking interoperable devotee, that sort of thing covered in my report. if you care to read it or have any questions about those issues. thank you. >> thank you.

>> i looked right over there and was zero and i thought it wasn't working. i couldn't be through five minutes yet. >> ranking members of the subcommittee on behalf of the consumers union the policy of consumer reports thinking for the opportunity to testify before you today. consumer reports is the largest independent nonprofit organization with a mission to ensure the marketplace for consumers to the we appreciate being included in a conversation about wireless. it's become a part of consumers' lives to be a growing portion has chosen to replace the land line phones with wireless voice service including those in the rural areas and low-income areas and communities of color rely upon in their cell phones. in light of the importance of wireless we would like to highlight a number of practices that unfairly reach into consumer pocketbooks and one that competition and choice. we are concerned about the

wireless. we were pleased the industry and fcc came to an agreement and the carriers not provide a works as they approach the limits for data and text in and incur the national learning charges. the fcc announced all participating carriers are in compliance with the voluntary agreement. the consumer report plans to continue to monitor the performance closely to ensure that they work for everyone as intended. unfortunately we still have concerns about the placement of a novelist george on the phone bill. queening billions of dollars each year. we explain in the report charges often go unnoticed because they can be as small as 99 cents were described in a way that makes them sound like legitimate phone related charges. we were disappointed the land line rules didn't extend to wireless. it is as serious a problem as one year less and even more so with which it can occur. in the wireless contact all the

need to operate is a customers active customer. we appreciate the committee's continued access in a concern including the letters that the chairman rockefeller recently sent to the major carriers identifying their growing consumers. third, we are consumed about the legal barriers on locking cell phone. the library of congress has a recognized right of consumers unlock the mobile phone for use on other networks. as a result both protect it is now potentially subject to criminal prosecution. we are pleased and number of members have introduced or co-sponsored bills. in our view they should be able to use the mobile devices they purchased as they see fit. research in this debate to indicate the agree. acquiting to the poll that consumers reports in 2011 and overwhelming 96% of respondents felt consumers should be allowed to keep existing headset's from carrying a defeat could changing

carriers and they should believe it should work on any network the choose. the fcc began a proceeding to promote interoperable the among the wireless devices and we support efforts for them to use the device the purchase on any network of their choice. first we remain concerned about the structure of the wireless contracts and early termination fees which created barriers to competition and consumer choice. they lock the consumers into the contract and determine the carriers from entering the market. when consumers have a hard time switching competitors the carriers have no pressure to respond to the demand. for the more on the cost of the devices are built into the carrier service contracts, the consumers may not necessarily want or need a new device but forced to pay for it over the course of a long-term contract to indeed consumer reports found customers that were able to shop for the best deal on each of the purchases could significantly benefit from lower prices. recently we reported online

consumers that switch from long-term services to no contract services can save hundreds of dollars on a two-year period. we would like to express support for the universal suffrage because service on the and we believe the program plays a role expanding the benefits communications service to those who would otherwise be unable to afford them. we remain concerned about the proposals to exclude the program and we support the program's expansion to broadband. any efforts to expand abroad and access shouldn't leave behind the communities that deserve them the most. consumers have more to gain if it is made available for the commercial wireless services that the additional spectrum won't be beneficial unless future spectrum auctions actively promote competition. the largest providers are positioned to dominate the auctions unless the government puts in place appropriate rules to give small carriers the opportunity to build on the restores. consumers benefit if the

government agrees to set aside a sufficient spectrum. these schools need to be at the forefront of any policy decision in order to promote competition and welfare. thank you for the opportunity to testify. i look forward to your questions >> let me if i may start with mr. webster. you spend some time in your opening statement talking about wi-fi and hauer important it is. are you saying that the wi-fi space can get too crowded? >> it certainly can get too crowded. that's why additional spectrum is needed and of the arena just as much as it is in the license to reena. there are no questions technological innovations that can work to minimize some of the crow and that that isn't going to be enough. the growth that we are having on the networks across the board especially in mobility which is

very much inherently tied to the growth in general means we will need additional spectrum. >> did you mention the five gigahertz spectrum as a possibility -- >> that's correct. >> my understanding is made the auto industry tried to use that for the vehicle to vehicle communication, is that right? >> that's correct. both the auto industry and the telecommunications industry's all of the key bases in the systems and we want to work on a win-win situation. first and foremost based on making sure the spectrum but automobiles is absolutely safe but there is an underutilization of spectrum is there an opportunity to have it shared by other purposes? that is something we would like to investigate and work with to see if that is an opportunity so it can provide that situation to

both sectors. >> the same question for you. you mentioned wi-fi in your statement. how do we manage this going forward? it looks like more and more people want to utilize wi-fi and it seems to be more prevalent. you talk about the flexibility it said in a. but you think that five gigahertz is the way to go? >> when you look at what is going on it's no different with this unlicensed or licensed. the spectrum utilization ms. moore increase stand evin mr. webster said between six years ago today the increases over 600% and i think what happens is the spectrum available the hasn't really increased and so you get more and more usage. the spectrum is the realistic as you go to more and more houses it gets crammed and that's where we are. the importance of the fight the

gigahertz is twofold. first is we are already using wi-fi in this space on the high end. the second part we can easily digest additional spectrum in that band and the more we can put in the land next to the other existing spectrum we can do wide channels that need faster and faster services support of law is important to us is that it allows us to not just add more customers but provide more speed to the customers. the other pieces and you that the five gigahertz, the environment you can utilize the spectrum and make as much benefit as you can there's about 555 aubuchon 8 megahertz spectrum but only 100 is to twist for the unlicensed wi-fi so that is less than 20% so what's great about the five gigahertz is that it's

available. wi-fi can work in the environment. we understand the have no desire to interfere with those incumbents. by its very nature it is a secondary surface, it's built so that they can share. what's important you mentioned the vehicle to vehicle. there is no question we can solve the sharing problem with that industry. the challenge is when you look at that band, the timing of how long a would take them to develop that is measured in decades not years and i think we need to solve some of these problems now. bringing this together, the committee could help but assertive bring us together to start solving these basic problems so we can make the sharing work. >> let me ask you something that you said midway through the testimony. you were talking about spectrum and the cellular market areas which are smaller geographic

areas. you said if they went to the sale or the market area approach it might generate more revenue. can you tell the subcommittee what you mean by that? >> yes mr. chairman, thank you. >> the market areas are smaller slices of spectrum for the smaller carriers. they have to the level to bed and have some expectation of winning. a good example would be bluegrass cellular if they sold only the large market area they would have to bid on the markets outside of that election in kentucky all the way down to nash fell -- national. it isn't doable making the bid on five to 6 million pops of megahertz and the only need 1.4 is another way of putting them

out of business. the block had only 12 of those and it had six dtv chris 76 cents. the block that was pared through the economic area bought a dollar 16. but block that was in the cellular market area, 734 of them brought to dollars and 68 cents and that is because the small carriers could actually did and when against the largest in a small area. and - that is what we have to do if we are going to have multiple competitors in the option to the estimate we have been joined by senator thune who's the ranking member of the full committee. and i want to recognize you for an opening statement and senator wicker and make a statement and follow-up with a quick question if i might. but i think that we all know

from our daily experience how important this issue is to people across the country whether it is a farmer in a field checking the real-time commodity prices and a college student video chatting with the family back home or executive on the road dealing with a crisis back at headquarters, the ability to communicate with others and get online without being tethered by the court is no longer a luxury. it is a necessity communications become a part of american states to the lives and i'm glad the subcommittee is exploring the issue today. the private sector won't be able to keep the pace with the demand which is growing exponentially. we must make it a priority to increase availability of spectrum for the commercial use of licensed and unlicensed. one important bloc to open up is the 1755 ban of the total spectrum because when paired with the free block there is an ecosystem of devices and networks the nation can happen to be rid of the working with of

the secretary of commerce and the department of defense to find a solution the balances the need of the wireless consumers and the federal government. it's my hope we can find a report that allows the spectrum to be cleared in the future. the proposed industry road map may offer a workable path to achieve that goal getting more spectrum into the marketplace to the parties that fell in the the most is the best way for federal policy makers to encourage new services and spur competition. some voices in putting the purpose of justice are calling for the federal communications to the spectrum among wireless carriers. i stand with of the chairman and others of our house colleagues that challenge the perspective in a letter back in april. i believe the commission shouldn't pick winners and losers but instead what all interested participants compete against one another in the open market. the fcc began using the spectrum

because it recognized the free market is more effective public eating spectrum than on the opinions and predictions of the unelected bureaucrats and with the u.s. being of a global leader in the 4g lt connectivity the process has been successful. the commission should focus on maximizing purchase pension and the upcoming incentive option among both broadcasters and potential bidders. for example one way to encourage more activity in the rural areas during the option is to offer licenses and a variety of geographic size is. the fcc shouldn't be distracted by proposals that could lead to less spectrum available and less proceeds being realized for the national prairies like deficit reduction. american consumers including the farmers, students and executives i mentioned earlier are driving the mobile economy. and they not the government should pick to win the marketplace. if i might follow that up with a question, i would direct this to dr. ford. as i mentioned my ultimate concern is for the welfare of the wireless consumers and a concern that i think many of our

-- a lot of my fellow members of the committee share. you stayed very clear in your opening testimony and i want to quote of the firms are precluded from obtaining more spectrum particularly successful firms serving the large customer base is the quality of service will suffer and consumers will suffer. could you elaborate on how manipulating spectrum option participation may have unintended consequences? >> sure. there are many ways. but what i was speaking of is spectrum allows the firms to provide the service more cheaply or more effectively, better quality, whether it may be. and if you limit the terms that are demonstrably more efficient than others, if you deny them access to that resource and keep that from having a lower marginal cost than providing service, then the consumer doesn't realize that benefit is getting a 10 megahertz of

spectrum allows the firm to reduce its marginal cost by $2 for a small firm by 1 dollar would obviously want to give it to the large firm who could have a larger cost reduction and pass that on to a significantly larger customer base. so it's always the case in the novels of the spectrum caps and a location you have to think about efficiency and who is winning the auction, who gets the spectrum and usually the most efficient firms win because of that reason. >> i want to thank the panel for the great testimony to the end of like colleagues on this side to ask questions. thank you. >> senator klobuchar. >> thank you mr. chairman pete i thought this would be a good occasion to announce four-member has been inducted into the wireless holophane this fall. that would be senator warner for

his fine work in the business area. [applause] i'm sure he really appreciates the little brought that up. i have questions as you'll know i've been very involved in the unlocking issue and some of the cell phone bill of rights for many years and despite sitting at the kids table at the end it's very shocking. i was appreciative of the points that you made on behalf of consumers everywhere and could you talk about how the locking of the cell phone service that you consider a detriment to the competition and how it can hurt consumers. i heard this as a possibility and i put them on the bill to fix capricious -- to fix the decision and we have the consumer choice act and it goes a step further to add to the address given to take action to ensure consumers can unlock their oftentimes very expensive phones when they switch carriers. can you talk about that from a consumer's standpoint?

>> we appreciate the efforts of the committee. and we support the commerce committee's approach to fix the solution through the fcc. and as i mentioned before, i mean, these devices, some of these devices are extremely expensive. we feel that for the consumers to pay for this extremely expensive device the should be able to use it in a way that they wish and that is really what it comes down to is giving consumers more choice to that oftentimes i believe that the industries have a diverse number of devices and choices available to the consumer. but that doesn't really matter if they are not able to make a meaningful price and it is not able to do that on the carrier that they wished the that is where we come from. >> i know that they argued in favor of the decision by the library of congress pay even though many of your members actually done voluntarily unlock the phones for consumers. can you explain this? >> i was just going to say that there are over 600 devices that are for sale to consumers today.

many of those are sold off by carriers. so a person can buy an unlocked phone today at best buy and put that on a carrier of choice. that ability we support. and even the idea that a consumer can unlock the phone that they've gotten from an at&t or verizon or whoever. we support that as well. but the reason there is an ets is because they are typically sold for $99, $199 they are a 79-dollar phone. there has to be an opportunity to the carrier to recoup the cost that they have on the phone. and once the cost is recovered, then they would allow all the consumers to unlock their phone. and that is the policy of most of the carriers if not all today. >> i just know you responded to this a little bit and other countries that they unlock the

phones quicker and allow the service to be decoupled from the phone. you want to talk about how this could affect the local consumers if they get stuck with a certain tone and a certain carrier more likely and that the move -- i know this from driving this week in rural minnesota. certain carriers work in certain areas and others don't. >> senator come thank you for the questioning and for all of the good work that you have done. as you know, i testified in favor of the continuing exemption for unlocking phone that the library of congress. and i thought that not only was it a good issue to do to focus on but many of the global carriers really don't have access to the iconic phones. getting smart phones and the handsets and the state of the art are difficult. it is one way of distinguishing themselves in the marketplace and attracting the customers. as a matter of fact one of the carrier's come t-mobile at the time i testified they had over

2 million iphone on a network and they didn't sell them. they didn't have permission to sell the iphone. so we think it brings consumer choice. and especially in the consumer bets in a suburban area that moves to a rural area they ought to be able to not only take the right tone but all the content that is in that or whatever other from the may have a galaxy or android and bring it to the network and utilize it. and we think that that is the right policy decision to make. >> thank you. i will just end with you if you want to respond i would appreciate your work, and also the important issue that you raised in the testimony on the service transparency. senator blumenthal and i are working on a bill which we introduced in the last conference the would require the wireless carriers to give the consumers more complete and accurate information. i am going to comment on the response to the comments the were made here. and then also a little bit on transparency to the it >> with regards to transparency,

we feel it is the duty of the carriers to provide them the tools they need to make meaningful choices. all too often this doesn't happen and the consumers have told us this as well. so yes bigot >> do you want to respond at all to the comments about the expense of the devices and the importance of unlocking? >> as i mentioned, the honorable -- >> has he been conducted into the -- [inaudible] [laughter] >> i can assure you he's been inducted into the hall of fame and we all appreciate that. [applause] >> now i've lost my train of thought. so, again, i would just reiterate that time and time again i feel the wireless industry has the fact there are as you mentioned 600 different

devices out there but what difference does it make if consumers don't have a meaningful choice among the devices? that is where i will leave it. >> thank you. >> thank you. our next will be senator heller, senator warner and cementer fisher. >> thank you mr. chairman and thanks for the opportunity to discuss this issue that i think it's critically important for our economy and for -- i want to think the witnesses for taking the time and spending time with us today and for every the that is in the hearing who has expressed and show their concern for this issue also. i was appreciative of your testimony. you went through some of the statistics and the growth. what we will see in this area is especially the traffic and also the mobile devices that we are going to see about 2017 of course it underscores the need and the understanding that we need more spec on and that it

will go into the hands of the wireless providers. we although the fcc is working on a complex spectrum option right now and we are hopeful we can incentivizing of broadcasters to voluntarily sell their spectrum so they can auction it to the highest bidder. hopefully that revenue will be enough to cover and accomplish several goals. one is enough to purchase the spectrum from a broadcaster themself to fund first net and hopefully provide enough money to reduce the deficit. those are pretty aggressive goals and obviously maximizing the revenue and an auction like this is the key. so to you, congressman, i think that all of this is from the train to the ranking member most of us are talking about revenues from this auction.

if the government intervenes and suggested by mr. barry to set up the rules that limit some in the markets from entry to this auction, would that reduce the amount of revenue available? .. in order to bid on that spectrum what the outcome's work, we are still wrestling with the a block the steve mentioned because of that. and so i just think that if you just have a clean auction with a lot of spectrum and you that

people bet on it that you will have the best outcome in terms of money to the treasury, being able to pay for the broadcasters to relocate and compensate them for their spectrum. >> i am trying to keep an eye on this reverse auction portion of this. if we don't provide the right incentives for broadcasters to sell their spectrum we are addressing the whole goal for first man and for bringing more meaningful spectrum to the market. in your opinion is the sec getting the reverse auction right? >> that is yet to be seen. i am hopeful, optimistic. i talked to people at the sec. there has been a lot of changes at the sec over the last month. so that is a question yet to be answered. but i am optimistic. i am hopeful. they understand the concerns that we have, and nothing they're trying to address the.

the end of the day i can give you an affirmative answer, but i am hopeful. >> i will give you a chance to respond. for myself and my constituents, it's important that we enjoy robust competitive wireless market which leads to innovation and nelson think it lowers the price point for expensive -- some of these expensive devices. in your testimony you are you for a robust spectrum screen that limits the amount of spectrum a company condone. and for rules that insure competitive carriers a you represent that would be able to bid on this, can you give me some idea of what the with look like? >> yes. thank you very much. let's say that the -- 700 mhz spectrum auction is a somewhat good reference. the fewest dollars amount --

cutest amount of dollars brought in was the largest size. only the largest carriers can bet on it. and it is sort of playing a bluff game. i don't think that we should. an ss his study which has provided last year the total better participation and reduce option revenue i want them in the same ecosystem. our carrier seven ecosystem that they can participate in. there will get fooled again like it or in the lower 700 mhz if you don't have every option that is conducted the one and two largest carriers should not walk away with the pike. your rules will be essentially

equivalent to let the big dog eat. i don't think that will bring in the most revenue to the u.s. the cma is brought in almost twice the amount of revenue as did the large aggregated areas. in that think we will see that again. the sec should have a device to bring certainty to the marketplace. that is what all of these carriers want, certainty. if you can answer in the and knowing what you're expected to be able to walk away with you will bit more in the american taxpayer will benefit. >> thank you. all the witnesses, thank you very much. >> thank you. >> senator. >> thank you. >> i have been -- i get in the wireless industry 31 years ago. the panel, my colleagues, when it started 31 years ago everyone in the industry, everyone on

wall street that would take us 30 years to build up a wireless network. the end of that you have 30 percent market penetration. i made a lot of money. but one. have would make, and i want to kind of play off of my colleague's comments because this is -- the most efficient allocation. load as many the revenues, but i have to tell you, history showed -- a fairly blunt instrument with the sec did 31 years deal and breaking in the wireless block to an a and b band, wireline, non wireline. lots of consolidation, but i can assure you, particularly in rural communities, there were a large amount of income and carriers that did not build up nearly as quickly as some of the startup for smaller companies. there were a whole host of innovations in terms of marketing plans, and building

plans and other things that really moves the industry along. if it had been left to the bill passed those original projections might have been correct. nelson made the appeal to like colleagues to -- and get this in a moment, if there's one common theme, we need a lot more spectrum. think he made it, always -- never allow any government spectrum to be commercially used. one of the things we've tried for some time just to get a spectrum inventory -- and i would urge any of my colleagues want to join me in this, we don't even number if the government has a disproportionate amount how is being used and how efficiently is being used. they've gone off and on things

like public safety allegations, additional spectrum than the takeback of opportunities, some that may not be fully utilized. alenia least a road map of where the spectrum is much business in the areas with tnt in intel and others, but the host of other public functions that if we're going to reinforce fiscal, having some skin in the game would be a criterion. i guess i am -- want to go to you, steve. i no -- and trying to put you a little bit more in the box because i do think one potential way to try to maximize revenues but also maximize players without some undue restriction because you have the big two but then the next two and then we have a small player. out of the not just make it, something that just defaults to t-mobile and sprint.

but this ati takes the position on the verses the cma, the one thing about the cma is that smaller carriers who were targeted in a market that might be able to provide better customer service, better quality service, and quicker delivery of the service that an incumbent that might amount to an otherwise warehouse the spectrum might be away to kind of get at this. would be interested to see the comments on this in terms of -- >> i would say, senator, that first of all, congratulations on your word. >> not as cool as yours. [laughter] >> second of all, i think that what you're talking about is -- number one, we don't get involved in the size of the licenses because we have a lot of members, the big carriers. so we don't get involved in that

debate. i would tell you that the more spectrum that you bring to the market, the fewer debates like we're having today will exist because everybody is going to get a chance to supplement their spectrum. and that's what we have always pushed. get as much spectrum as possible to the market as soon as you can and then a lot of these debates that we have between steve and myself for our carriers, those go away. should there be any distinction between my spectrum below one skynyrd and that. >> yes. i would draw the line at three and below. as the spectrum we are particularly targeting for auction for wireless carriers. now, we support the other folks that want to have wi-fi and other services. we support that, but in particular the spectrum that is below three garrett's is all we're really looking for

wireless. >> my time has run out. i make one other comment to my colleagues. this debate about on locking phones is important, but if you don't have in our probability it doesn't matter if you knock because the phone can be used across systems. one of the things that i hope we can get more consensus on is not lose track of the fact that we would not have all lion -- a wireless system but for the requirement the sec made 30 years ago. >> thank you. senator fisher. >> thank you, mr. chairman. we seem to be having a focus here in our conversation on how the government is going to get the most revenue out of the spectrum auction. i guess i would -- i would open this up to mr. webster and dr. foreign. i am interested in your opinion as well. first, i would like to inject

this into the conversation. to you think the wireless service is of right of every citizen of this country? if you do, do you believe that smaller companies and service people in areas have difficulty in receiving service or receiving timely upgrades? should the government somehow recognize that bright if it exists and how should it be addressed? have asked mr. webster first and then doctor. >> we believe broadband is a great enabling for societies, education, business, productivity, the economy, telemedicine, public safety, is simply better quality of life and all that can be done that can help foster even greater broadband penetration, higher-quality broadband and faster broadband is something

that she very much be pursued. >> i think if you want to maximize the auction revenue you need to sell one license. monopolies. that's really not what we're trying to do. i mean, i think senator warner mentioned tracks might -- maximize revenues. it is this playoff between the two. as far as the royal markets, i think it is interesting to think about the problem. i don't know if i have a specific answer for you, but i have been backing about that as this issue comes up. take roaming, for example, the argument is we have to force these people their recommendation might now works to permit smaller companies that don't have nationwide networks to use the networks because if they don't there's no demand for the service which is essentially saying is that demand for local wireless service. it's a national market.

to some extent, if we keep forcing, imposing these roles we are creating entities there really don't fit into the market . so that's an interesting problem. it's sort of the way with in our ability as well. if having a certain market share or operating in a certain place is what drives the equipment market, if you're not in that you're not big enough and he the right brand to serve this market? pegasus someone who works for an unbundled element, i'm a little bit worried, of business plans that and she on government promises and rules rather than the underlying fundamental economics of the business. that they were getting into that area love it, but i can understand why people would say,

they're not going to get served as something like that, but that sort of a secondary market problem. the larger carriers don't want to serve rural markets then why would they allow someone else to use the spectrum. nothing there is some that we need to study carefully what it is about the secondary market that's keeping firms added to address many of these problems. >> do you think some of those ideas that we just heard i going to help with access into rural areas? do you have other suggestions on how we can improve the access? >> yes. i don't agree with much of anything he just said. you won access to wireless. monday consider it a writer not, i think the competitors out there would like to provide it. but we have seen is the smaller carriers are willing to build up the most difficult to reach, most costly buildup in service

as a few customers because that is the business model, the larger carriers, it's barely a decimal on the profit sheets. it would be the last place that they would build out unless there were build up requirements in germany they did a reverse spilled out. bill about the rural areas first. in germany and are not a whole lot of rural areas, but there are countries in the world that it just canada. i don't know if that's what we would do. there are ways that government suggestions, you can insure that every consumer has that access to broadband. we did a study your soda they showed in rural america alone out of the 14, 19 states that have less than 90% penetration, if you were to build out mobile high-speed broadband you would increase the median income of

every family in that state by as much as 5%. that's the type of growth through with like to see, and that's the type of job promotion. over 110 jobs created just in rural america with the mobile broadband held up. those of the types of economies of scale that might not show up in an economic study will we sugar should do. >> can i add just one thing? >> my time is the. >> was just going to say, before ge technology that wireless is providing. today 90 percent of people in this country are covered by that ltv network. were talking about another 10 percent, and this is technology it is just been around for less than 18 months. we are rapidly covering the country. is the 10 percent were talking about now that i think will be covered in the near term. >> thank you.

>> thank you. our next two senators would be senator johnson and senator nelson. >> i love it when people agree on things. looks like we're all agreeing on any more spectrum. going down -- anyone who wants to chime in, the greatest roadblock, the stumbling block to creating more spectrum. >> well, i would answer to things. one is on the auction that is immediately scheduled to occur in 2014. keep it on schedule which will be a challenge with the vacancies at the fcc today. secondly, the additional spectrum that we need beyond the broadcast spectrum, even with it going back to the broadcast spectrum, there is no way to insure how much spectrum will be available because they may not buy into it. our companies are working with the broadcasters trying to erase as many difficulties a we

possibly can to try to free up 120 mhz of spectrum if we can. i don't know if that will be possible. put the one on hold and watch and see. in addition to that we will need , if we get to the 500 meyer to spectrum that was called for, then we have a lot of work left to do. the government is not always willing to part with the spectrum that they have. of all the usable spectrum that there is, the government owns 70 percent of it. 30 percent we have or wi-fi has or somebody else has done the government so we have to find a mechanism to coerce the government to give up some of the spectrum. that's hard to do because they're sitting on spectrum that there were given, and there is no reason that they have to give it up because they don't get the

auction proceeds. we think they should, but they don't get the auction proceeds. live voluntarily give up spectrum you have? that will be an issue for us going forward. the short answer is government. the government has a lot of spectrum. >> government is not that easy to coerce. >> i agree with steve. there are two areas to look at. you go where the vast majority of it is. one is government owns an exceedingly large amount of spectrum. they do need to be much more efficient and we need to find a way that we can move them out where they're compensated and actually when you think about it, they did need devices, new technology. the ltte networks are five times more efficient than the networks that are out there now. the area could give five times more efficiency out of the spectrum.

120 megaris would be nice. you have to ask yourself, the broadcasters, for ahe goo they have done, 90 percent of the american people listened to the broadcast over some other wireline capability, either-or satellite or cable. in 10% to 8 percent of the american people this into the over the year. the economic justification for those two imbalances? $166 billion is estimated of new growth in the economy if we added 500 megahertz of spectrum.

most promising premise standpoint of making large channels to drive fast wi-fi, the idea that i own it. i think that what we need to do is sort of have a new view which is a spectrum sharing. they're people in

>> i know i am overtime. i hate to not give you the opportunity. >> very quickly. beyond the problem of just freeing up spectrum and getting it to market, it also must be built upon it correctly. consumers will the will to benefit unless it is built out upon. for that reason i would say that we probably disagree with the analysis that consumers would benefit from spectrum going to largest carriers. but economic theory, as you said, it may be. the proper metrics are consumer welfare. >> just to summarize, it will require urgency from the federal government. i certainly appreciate your holding this hearing because we have to create that sense of urgency. thank you. >> thank you. >> senator nelson. >> well, what happens if we don't release a lot of spectrum? so what i would like to ask is,

to what degree can you make equipment and systems more effective if that were the scenario to play out? >> well, i would rely on the experts on that. so i looked to a company like qualcomm who bills efficiency into wireless networks. there ceo said it our show not this year but last year that we are fast approaching the time where we have gotten all of the efficiency of the market that is available. they don't have any new tricks of their sleep to develop more efficient systems to take it vantage of the spectrum that we have today, the we're going to have to have more spectrum is the bottom line. and what are the results if we don't give more spectrum? i can tell you that what you will see happen, my guess, i have never been told this. you will see higher prices because that is how a carrier or

a manufacturer deals with inefficiency in the marketplace and a lack of new materials or new spectrum, by raising the prices. is the only way you can monitor or control the usage that is on your system that you have today. that's not the world that we want to see. >> the way congress is up to five operating is not the world that i want to see either. and yet we find that it often does not work. anybody else want to comment? i prices and lower quality. >> you will find innovative new business plans. it will be what people want. we will be in imitation of what people wanted. >> my belt way analogy center.

nine times more traffic. there is going to be a great loss of productivity. a great loss of quality of life that would affect the economy and it makes for out fairly unpleasant experience for us all. the way they're is a requirement on technology innovation to continue to improve the efficiencies. there will also be in need to have network management that is appropriate to actually direct the proper supply to demand wind necessary to optimize the experience for all. it's a combination of all four. is not an either or, but both dance area. >> cisco can do all of it to make a lot more efficient. >> i wish i could tell you that were the case. we definitely can advance the technology innovation and we can

be pardoned advocates to help promote national broadband for the betterment of this country and all others around the world. >> thank you. did you have a comment on that last -- >> i was just going to say thank you. we're going to have to get better on the technological side . 90 percent of our capacity has been through technological innovation, not increasing spectrum. over the last 20 years we are getting to that point. there has to be significant breakthroughs. whether it suffered define in tennis or radio frequencies skipping radius, we're always looking. there are five or ten years away. we're on an immediate head-on collision.

last year they introduced the legislation that would actually put some real flexibility in utilizing and use spectrum in those rural and regional markets hopefully we will start looking at innovative ways to do that. it will stave off the draconian impact, but it will allow us to survive a few more years. >> let me ask you a quick question. i see we're being joined by another colleague, but let me ask you a quick question about spectrum. we all talked about how we need more. is it fair to say that not every area of the country needs more spectrum. for a lot of areas of the country is just really infrastructure limitation more than truly a spectrum limitation although there are clearly some urban areas that definitely need more spectrum. >> in our experience every major operator in the developed world

is in need of spectrum one way or another. certain developing nations don't necessarily feel the pinch, but very much the united states there will be requirements both licensed and unlicensed. we are seeing to your point a definite need in the very dense metrolitan area right now where there is just a very high concentration of people and devices that will take advantage of the benefits of that. that is why any and all spectrum that can be made available would be helpful. >> and let me just follow upon that, if i could. are there ways that we could offload the need for spectrum with some of our wireless devices jack for example, a wireless device could pick up just over the air broadcast television and radio. does that move the kneele much? >> sir, in terms of the overall demand of offload you very much are accurate and that there is going to be a need to offload from the more tightly

constrained license radio spectrum more cellular radio off to the on licensed radio spectrum, largely through wi-fi. in the key is going to be those two technologies working together as seamlessly as possible to have a very smooth mobile experience. terms of broadcasting of the year, that is one option to consider. the vast majority of demand now is on demand. broadcasting to many does not necessarily work. >> senator. >> thank you. i guess my first question, the secondary market. considering the growing spectrum of demand that we have in the amount of time it takes to get spectrum from auction, tearing into the marketplace, secondary market transaction has become that much more important and necessary in order for carriers to acquire spectrum. should sec approval be streamlined, particularly for smaller transactions?

to have any thoughts on how we should do that? >> i recently wrote a paper on that cause certain aspects of it i think certainly if you have a capacity problem, spectrum problem and somebody passes on that they don't need and somebody does, you make a transfer. but these transfers get bound up in the politics of the deal as people see opportunities to impose voluntary conditions and things of that nature. a lot of the smaller deals to go through. it's when you start getting, as we have been talking about, at&t and horizon, then you run into the problems where people of saying there's too much spectrum concentration. but the sec has been a little slow in approving deals recently without too many conditions. there is some help there, but at secondary market needs to be figured out and resolved. i don't know all the problems, but it is not working as well as

shed. >> you raised the issue of secondary market. a secondary market is actually working for the small carrier right now. they're always being outbid by the largest carrier because spectrum is that a premium. if you look in the last two years, over a little less the 1200 license transfers, 800 went to at&t and verizon. in the last year 300 license transfers went to at&t and verizon under one gig of spectrum. we have not talked about here today is the efficiency of the spectrum itself and how much more efficient certain propagation values are over higher figure hurts of spectrum. so the secondary market, would like to see ways to enhance it. i think the senator's bill last year would help open up some of the secondary markets for the smaller carriers.

is something that increases still be exploring. >> my second question, and anyone can help answer that. now want to make sure that the industry is focused on the 25 megahertz from 1755 to 1780. do we have a cost estimate for clearing federal users from that? if we don't, i guess the question is why not. does that really hurt the chances? >> the industry has done a study on that and used government figures to come up with this result. the result was it was born to cost about $4 billion to move the federal users. >> i should note that steve is exactly correct. if you pair that with the 2155 and 2180, the entire value, and you have to sell 21552180 by 2015 according to the direction of congress, the value would be

told billion dollars. so there is an opportunity here for us to act and act now. i totally agree on that. >> my last question is based on testimony. you stated that mobility has the potential to generate hundreds of thousands of more jobs if the federal government act promptly to assure additional spectrum is made available. i guess my question is, what happens if we don't act promptly? what are the implications for our economy? >> i believe the implications are their record to stall a very growing, private sector of our economy, minimizing productivity and in beating communications. frankly it will start to put this behind. the global landscape. if we cannot have a strong mobile broadband there will be in of the @booktv number of

sectors that very well may choose to reside elsewhere, go somewhere where they can actually get the band within need. >> i have a couple of questions. the help of won't cover grants that has been covered already. the differences, all created equal so the speak as the sec weight in on exactly this issue, on how the commission can structure the spectrum policy to encourage competition and promote consumer benefits. and they noted it just like in real estate suspect term is the

equivalent of beachfront and others less desirable. so my question is, beach front property is already heavily concentrated. 70 percent of the spectrum below one deer herds belongs to four is controlled by at&t and horizon. that me ask both, what can be done to put more sensible limits on spectrum consolidation before reviewing mergers, do you think that there ought to be. the spectrum license transfers, the quality of spectrum.

>> well, senator, the ideal situation for carrier is to have both high and low band spectrum. one is better for when you're dealing with concentrated users and the other is better to cover broad areas in rural communities so ideally carriers -- spectrum both below one terrorist and above one garricks there is not a unified position within the industry about the direction that we should go. >> senator, i have a chart here that you might want to look at if you can get the clerk. it is a coverage comparison.

putting this together. they did this for one of the stockholder meetings. it shows that there is a significant difference in the value of love and inspection and high ben spectrum. as a matter of fact, four to five times as many powers to cover the same amount of spectrum. becoming available, absolutely prime real-estate. that is where they should do two things. finish the spectrum aggregation that they currently have to identify what is a spectrum amount that is acceptable in every market and then put a triggered, i double triggered the says if you're in a market where your exceeding or about to exceed the spectrum triggered then you ought to be able to justify weather not any the spectrum and not. those two things put in place for the auction were poorly in

the plummeting certain markets when at&t and verizon could accumulate over a certain spectrum out. and that would go a long way to making sure that the smaller media in intermediate could actually buy the specters of the need to continue to be competitive. >> there should be some kind of sensible limits or controls. >> i think it will bring certainty to the market. hopefully it will keep at&t in verizon bidding and heavily we will have an ecosystem that everybody can participate in. yes, i do believe there should be some kind of getting mechanism. one carrier can walk away. >> let me shift to a text messaging. maybe you can explain why there is a discrepancy between the low cost of transmitting text messages to immobile care and

text messaging rates would seem to be increasing. >> well, i can tell you that i personally, my rates are not increasing and is not because i am that heather cta. we have an all you can eat plant. the majority of americans have a plan similar to that where they pay one fee. i think it is -- >> my understanding is that actually, most consumers are many are paying more for text messaging of the past several years, carriers have been offering fewer options and text messaging plans and that higher rates. most carriers now tell customers to choose between $20 a month unlimited tax messaging plan or a per message rate of $0.20. so the options are fewer. you may have chosen one where the cost incrementally is not rising, but for other consumers text messaging costs are

increasing and the point is that the cost for the carrier is increasing. >> what i was say is the great thing about this innovating industry, there are always ways that you can get around that as well. there are many applications a you can download and iphone where there is no cost to test message. so i just think in this really creative competitive and innovative industry there are ways to work around these different issues that consumers have. frankly that is why this industry, to me, is so exciting. >> you talk to your wife. the children who have to pay their children cell phone bill. and that per math the jury, if that is the one that they choose, can add up pretty quickly. in the point here is that maybe there should be options for that

per message rate. >> and that's what i'm saying. there are lower-cost options are available. system matter of the consumer finding those out. is not like it's hidden. to look for the mayor will find them. >> my time is expired, but i appreciate you being here. >> thank you. >> i just want to follow-up. i am one of those mothers that did not want to get the and limited testing. i know what those higher bills are like. i still have not changed in the hope that she will change. the questions i had, spectrum, we talked a lot today about how they're is a growing demand for spectrum. and with the increase discussion about relocating government spectrum users in order to increase spectrum available for commercial -- consumer broadband usage, no they suggested providing financial incentives to government agencies to participate in relocation.

and as i understand it she has proposed allowing agencies to reclaim a portion of the revenue that would come from auctioning off their spectrum, and this would be used to relieve the significant budget pressures facing all federal agencies. could you explain, congressman, if you envision such a proposal could work? >> i think it absolutely cannot support that. i have relayed those comments to the commissioner. i think it's a great idea. >> anyone else want to comment? >> yes. actually, we did that in the 20012002, when a kayseven .. 45. it was at ct i at the time and we pass legislation. authorized to actually get reimbursed for the cost of their new capabilities, moving to a different sizes spectrum, and i agree with steve god. it will be helpful and we ought to try it because we need to

give more spectrum analysis to the federal government for sure. >> anyone else? okay. the share, nominal one caucus. we're always looking for ways to improve public safety clearly into upper ability. the whole spectrum. she will be helpful. we have about 27 percent of the rural areas. 70 percent of our motor vehicle accidents occur in rural areas. we know there are a number of reasons for this disturbing fact. could you speak a little bit about the public's safety implications of widespread access to wireless networks, especially in terms of decreasing response time. did you discuss either of you at the end how your members are working with the sec on the implementation of text and 911 services which we know a lot of people are now using tax to communicate with 911. >> we're actively working with the sec to participate in in 911

panel that they have, the committee. and my hope is that we can expedite this process. we have done a lot of work. frankly, a lot of work still needs to be done the government side of the equation to get them caught up in terms of the equipment that they have in the ability to receive information from wireless carriers that they cannot now. so that really is one of the most inhibiting factors. they receive the information at the centers you're referring to. >> you want to add anything? >> we two are working with the sec in actually complying with the bounce back, the text 911 bounce back. may take them longer, and i think will work with the sec to actually be able to meet the

requirements. but it is absolutely right. with that capability comes a responsibility, and my carriers are stepping up to the plate. but they're absolutely right. would be nice to have peace steps in the public service, public answering systems compliant also. >> very good. >> you raised the issue of cramming earlier in your testimony. i no there it intricacies. at the same time, i have seen consumers show me their bills and then decided not to on the regular phones, but also on the wireless. none of the fcc is looking into this. no wonder reported to you think it is? i just know we have a minister who went through the bill every single day. i don't think everyone is doing that and looking at the bill that carefully. >> absolutely. this is a big and important

issue. we have been alerting readers to the practice of cramming in alerting them, telling them to carefully look at their bills every single month. fact is that when a consumer does not anticipate these charges, when the consumer does not initiate a request to have these charges they're not looking for them. so that is the problem. the industry often points to the fact that these members, the complaint number simply aren't there. the fact of the matter is these are under reporter because censors have no idea this is happening. >> i put my last question on the record. the senators year. but to you, the interoperable the issue. it is true that we need the in proper ability to do the unlocking. my question was calling to be focused on the rollout of four g's service and the problems with that in rural areas of we don't have in dropper ability. >> especially in the lower 700

without in chopper ability this will be a long time before our carriers can get devices. >> exactly. thank you very much. >> thank you. >> thank you, mr. chairman. i appreciate the witnesses being here today. i wanted to ask you about -- i have constituents in more rural areas, new hampshire, to some extent grafton county. there really don't yet have full access to wireless or broadband capacity that they need camino, so many households, roughly a third of american households don't even have a land mine. and then for economic activity and growth. so what can we do to increase access in these areas? and how does the competitive marketplace in rural and urban -- i think it's very clear to people how it works in an urban setting, but how can we increase

access using the competitive murder place in the more rural setting. and i will also have a follow-up to mr. barry, understanding your you represent and the smaller carriers, like to hear your thoughts. i'm not a big fan of the universal service fund the way it's structured now. it's a $20 million net donor. yet we have these needs and talking about car real needs in rural areas of my state. the guess i would ask first from the competitive side what you saw. and then mr. barry, what is it, how to lie with the smaller carriers, knowing the way the universal service fund is structured. count me in to someone it is not one answer to continue to be in a donor the loss to adjust this issue. would like to get your thoughts. >> well, whether the market is competitive or not there will be areas of the country's richest is not pay for private company to provide service.

and in those cases, if the government can make it happen, there will come in with some kind of universal service program. like he noted, those programs are not all that could. so that is of fundamental problem with the government trying to do nearly anything. and the problem with just living in a place where it is not economic to serve. in some cases there is an economic case that comes from the carrier who wants to be nationwide and wants to sell coverage who might cover an area that is not really profitable in and of itself except for the fact that people might vacation are drive through. there are a lot of areas where there is no business case. the government wants to come in and create a business case, that's possible. competition is a problem in some respects because in the old days we were internally funded where

a carrier serve the whole area and would take profits from an urban area. that was fine. when competition develops, the margins were stolen by the competition and he could not support that internal subsidy. there are probably some very creative ways to do it. i think the universal service might keep people from molly searching out the competitive waste to solve the problem. in know, the government make it do to some simple things. towers there could be shared. as just don't think there's much discussion of that. i am not certain of that. partly because there is the system that is supposed to take care of it. people think that will and it doesn't. far wanted to, maybe i can get a little bit of money and talk to a guy who would arrange to build a wireless network on some water tower for the greuel community of northern alabama anti could not get any one else to do it. it was not very expensive, $60,000. could not get it from the nba on

the broad band thing. you know, i think it is just the failure of an institution. in navy that institution will always fail. maybe government just can't do it now we have to live with it. >> thank you, senator. universal service fund, the connect america fund, you should be our race -- >> our race for my constituents. >> you should be. the share the same position as most of the wireless carriers. 44 percent to the universal service fund perry wireless carriers take less than 20%. the universal fun dollars. the so-called reform on usf was disastrous to wireless -- world wireless carriers. it totally decimated the revenue. a 60% increase, 6% increase.

it's nra's to say that we did anything to improve high-speed mobile broadband. your state was one of the ones that the severely hit. i like to see a program at the sec that is technology neutral. it gives everyone an opportunity to bid. what they're doing in the mobility fund, i think it was outrageous. in the wireless carriers, the continue to support contributions. 44 percent of the total fund and take almost nothing. i love to talk to you all about some of the things we're working on at the sec to make them or at least get them to look at their next phase. you're talking about a connect america for wireline companies that was $300 million. $185 million of it was not accepted by the wireline companies because they did not

want to commit to carol blasters are responsibility. we have wireless carriers more than willing to. wireless will be the most efficient and effective deployment of high-speed mobile broadband. i'd love to talk to you about some of the things we're working on an awfully we can make some positive inroads down there. thank you. >> i would appreciate that. i know that my time is up. have a couple more questions that i will submit for the record, but i appreciate your being here. i'm glad to hear the you are as outraged as i am. thank you. >> thank you for being here. and i do have one follow-up question. and it is about cramming. years ago when i was attorney general we don't allow with this

just on your home telephone. cramming on bills. i remember with the telephone service it was hard because your typical telephone bills were not the same every month depending on who use the long distance toward ever won on. sometimes the customer doesn't really know kind of what their averages. if it's high when mounted on a look at it. eyes investor with a lot of wireless plans. you can get the packages and get all the data. you know, a lot of this just depends on month-to-month. so the question as, do you think that the wireless companies should do something proactive white, for example, maybe send a text to their customers when something is placed on the bill so that customer can be notified and see it and verify it? >> absolutely. we were glad that this was the case in the proceeding.

we believe that -- we hope that the effective rates you alert consumers in a freeway to enter that they don't go over their verges. you know, we were glad to see that a land line rules were put into effect last year at the sec. these were clearly separated out charges. i really do think that carriers plan active role. not only make meaningful choices to protect themselves. >> i want to thank the panel. we have kept you for two full hours. think we had to all senators come and ask questions. so thank you very much for your participation today in their preparation. this will conclude the hearing. "i want to say, we will keep the record open for two weeks.

members can submit questions. some of them said that they would submit questions. we appreciate your getting back with us as quickly as she can once this question as command. thank you all. your outstanding. really help the subcommittee understand the lay of the land when it comes to wireless. we are adjourned. [inaudible conversations] >> what came out of those buildings, and we can see a sea of humanity coming from union station, and we knew was going to be bake. the people were already marching.

there go my people. let me catch up with them. [laughter] and this sea of humanity just pushed us. so we just locked on and started moving toward the washington monument all toward the lincoln memorial. wonderful in american history. >> this fourth of july on c-span at 2:20 p.m. eastern, civil rights pioneer congressman john lewis shares his experience on the march on washington 50 years later. and a 445, some of the places we visited in the stories with spoken with during the first season of our series on first ladies. although after seven, built surprise when photographers display their work and talk about their coverage of world events. a p.m. former president bill clinton and new jersey governor chris christie this does director steps against natural disaster. and the 45 panel talks about what it is to be a modern-day american citizen. ..

and they build their little boy in shacks. no water. they had to go into town to fetch the water. no city sewers. if they had outhouses, no police rome this area.

it was a no man's land. the wife of 2012 republican presidential candidate mitt romney. sh