looking at the level of l and g and other energy experts. toolncern is trumping up a that is in effect in the short to medium term they have counterproductive consequences. ukraine does not have an l ukraine does not have an lng terminal. and turks allow lng tankers to go through the bosporus it would take at least two years to build. we don't have any capability of sending any lng until maybe 2016. and, the volume of the capacity that the department of energy has already approved, is quite robust already. it is about 95 billion cubic meters of per year, more than the consumption of germany. so what we are doing is already having an effect but to threaten

the russians with something that they know can't happen for two, three years is, may be counterproductive and, my reaction as an energy person is to say that the russian reaction would be, if that is the best you've got, then we have nothing to worry about. >> thank you all for your testimony. i >> once again, thank you. mr. chow, let me follow up on that for a moment if i might. and that is you mentioned that any solution with lng in regards to ukraine would be midterm, long-term solutions, not short term. can you just review with us what we should be doing in the short term?n russia has a double-edged sword here. they can absolutely imply different pressure on ukraine by either raising price or, or

cuttinger off but, it's a very profitable source of income for russia. and of course a lot of the energy goes through the pipelines to other countries. however, ukraine needs to make itself more independent and have alternative sources and use less energy which is an area that i think the imf is very interested in energy conservation. that there is a lot of wasted energy and of course the pricing to the consumer has not been reflective of the cost. the imf is instituting certain reforms where there will be better pricing and some of the imf support will go to low-income families to make it affordable but do you have other suggestions as to how ukraine could become less vulnerable to russian pressure on the short term on energy? >> yes, yes, sir. ukraine is not without leverage

on its energy gas relationship withy russia. even today more than 50% of russia's exports to europe, which as you pointed out is just prime market for gas exports, go through i ukraine. the problem in the past 20 some years is that that leverage has been used by individual ukrainian politicians for private profit other corruption state interests. so even today the ukraine has the means, has the leverage to stablize its gas transit and supply relationship with russia if the overall political relations were to calm down. but, in order to do that it needs toco remove the pervasive corruption in the energy sector in ukraine particularly on gas and one thing i would do for sure is to completely restructure the national oil and gas company, which is at the

center of their corrupt practice. the other thing i would do in addition to what the imf rightfully has done in terms of getting market-clearing prices on the consuming side for fast is also the to increase wellhead gas prices. what is happening today is that if you are domestic producer of gas in the ukraine you are getting a small fraction of the price that you ukraine pays russia, even three months ago. that iskr a disincentive to produce more domestic energy and, one, might question why it is they way it is? well, multitear pricing helps create a gray market for gas domestically in ukraine which once again privileged access to politically-connected folks are the ones who benefit from it. the rest of the ukrainian public suffers shortages, even though they're the ones who supposedly

are benefiting from the low prices. so pricing reform is key to this but not just at the burner tip but also at the wellhead. >> thank you for that. i think they're all important points about the economics of the issues but still i would hope that we would look at alternative sources other than russia energy in the event that there's short-term strategies deployed by russia to impose a crisis in ukraine. i understand it would also hurt russia and i fully appreciate the reforms that are needed in the energy sector. i couldn't agree with you more but i think your points are very, very well-taken. let me shift gears to the the security issues and i followed with great interest the testimony on, on the seriousness that russia takes the commitment

to defend territories whether it be ukraine or the countries in that region. and yes, one thing we know, russia does not want to see nato expanded on their borders. they do not want to see troops on their borders. they're concerned about that, that was the agreement that was reached we would not station there. i think they're very much aware of our treaty commitments to nato allies. zoo i think that is consideration foerr a person evn like mr. putin before he would take action against a nato ally. there are other countries in that region not nato allies. georgia is interested in becoming a nato partner. that would present an interesting dynamic to russia. ukraine is a little bit early. they have notey moved in that direction. russia does not want to see

ukraine become a nato partner. i think moving in that direction would be exactly what russia doesn't want to see happen t would be interesting from the point of view of trying to counter what russia is doing today if there were more interests in common defense with regards to nato in regards to that region. europe has been reluctant on nato expansion for reasons unrelated to the russian crisis, created crisis. there will be a meeting later this year in which there there e considerations of countries for nato accession. what is your view how helpful that would be and making it clear to russia that we are very serious about protecting the territoriala integrity of countries in the region? >> well, thank you, senator, for that question. you're right, there is, one fundamental question is, what does, russia want? and you're absolutely 100%, they clearly don't want to see any

additional rounds of nato enlargement. the other question of course, is what does nato want? and the answer to that on nato enlargement depends on how you askyo as you rightly pointed ou. this is a controversial subject. there is a divide. part of the alliance is not prepared to advance forward with nato enlargement. i think the united states feels quite passionate about the fact that the door remains open and we should not give a country like russia any sort of veto over this a process whatsoever. there is question what a country like georgia wants and what it deserves. in my personal view i think we've come so down far the road with a country like georgia it is hard to figure out how we would ever exit. i wouldn't recommend we would exit but think i countries would be inside the alliance would be comfortable prolonging the process forever. if you look at thefo sacrifices georgian soldiers made in places like afghanistan and all they have done as a true-blue partner to the nato alliance and how they worked to meet the criteria

for membership, to meet it is unimaginable we could slow down this process. personally i advocate for georgia to move forward with math at the next summit but again i'm skeptical whether or not we'll succeed in doing that because there appears to be a great deal of hesitation, particularly across come countries in western europe to do that. i recognize that that would add an additional security burden to the alliance but, what better sign of our commitment from europe and the united states to a country like georgia than to move forward with math. >> before i turn to mr. brzezinski, wouldn't you think russia's reaction to nato expansion in georgia would mean? >> it could be quite devastating. i mean emotionally and symbolically they will raise a complete stink about this and they will cry foul on all accounts. it's not that the same as us

stationing ground troops in a place like poland where they will say, hey, in 1997 you promised not to do that. there is nothing we ever said about stopping nato enlargement. we never made that promise. they can't claim that they will claim they're infringing on their security. we're trying to encircle them. trying to contain them. there will be all sorts of complaints but the question is whether orla not we see russian irritation, tension inio the relationship, further russian aggression if we didn't do it and that is theur question insie the alliance. half of the alliance thinks this will provoke additional russian aggression. some say, no, it will prevent it if we move forward with map in georgia and i fall into that category. >> thank you. mr. breast skins ski. >> let me -- brzezinski. i think what julie said is accurate. there is great division in the alliance, there is predisposition in the alliance

for further ending largement as she puts. part of it is the administration hasn't pushed for nato enlargement. the support of enlargement it is not surprising it withers on the side of europe. the second point i would make nato is on russia's border. norway is on russia's border. estonia is on russia's border and membership of nato has not undercut relations between those two countries. norway has a good relationship with russia and very proud of the a cooperation it has in the arctic for example, and it is a stalwart nato member. poland a country has a troubled history with russia actually had improvement, a significant improvement in its relationship with russia ever since it became a member of nato. so there isn't a real track record of nato membership undercutting a relationship with russia. whatip is undercut, undercut russia's relationship with the west and r nato is president pun

and his aspirations for antiquated notion for empire, dominion over the former soviet union if not control over that space and that is the problem that we have. i think if we're going to counter that the most effective way is to continue the process of enlarging europe, extending e membership to countries steadily pushing nato forward for countries ready for it. it is not threatening to others. it is solid foundation for actually a, a context of enduring cooperation with russia. as julie points out, we want to eliminate gray zones from europe. gray zones are like walls. they create separation and distance of the we can bring communities together based on secure democracies, we're all better off including russia. >> thank you. i think thatng is very helpful. again i thank all three of you for your testimony. this is an issue that is going to be around for a while. we have frozen conflicts in unfortunately in georgia,

moldova, azerbaijan. looks like it is getting pretty cold in the crimea. looks like we'll be with this for a while. there is certainly a lot of provocative action by russia in eastern ukraine. an there is concern in other areas that russia is very much planning for additional military options. so this issue is very fluid. and, i can tell you, i think there's very strong support in congress to make it clear that we will not ever accept the, the grab by russia what it is doing in the ukraine or any other countries. so, i thank you all for helping the record of this committee and with that the subcommittee will stand adjourned. thanks.

>> in washington, d.c., a look at the jefferson memorial at the end ever the cherry blossom season in the nation's capitol. a little bit of news to share from "the hill." a headline reading, house speaker john boehner make as surprise voice to it afghanistan. this is at a time when both the house and senate are on break from here in washington, d.c. and in afghanistan, speaker is leading a republican delegation to assess the political and security situation in afghanistan. now this is during a year when the u.s. is expected to draw down its troops and after the recent presidential elections in afghanistan where the votes are still being counted looks like there are two leading candidates who will be headed for a runoff. speaker boehner met with troops and the u.s. ambassador to afghanistan as well as the commander of u.s. forces there. and he is calling on president obama to strike a security agreement to keep some u.s. forces in afghanistan. and a look at some of our live

programs later this afternoon. we'll be discussing the rise of islamic political parties in pakistan and the current state of u.s.-pakistan relations. we'll hear from the former pakistani ambassador to the u.s. haqqani. that will be live in two hours, 2:30 p.m. eastern time on c-span2. over on our companion network, c-span, a look at human rights in north korea with the chair of u.n. commission of inquiry and findings of a recent report on atrocities committed by the government there. we'll have that live at 3:00 eastern over on c-span. >> we should have finished al qaeda in 2001. our general who was there, but more than just a general, think all of us, think back, we were attacked on 9/11, 3,000 americans died. more americans than died at pearl harbor and we had al qaeda

and we had osama bin laden trapped in some mountains called tora bora. we didn't finish him off. then we let him escape over the other side of the mountain because we said, that is pakistani territory. oh, wait. thank you for a moment. can you imagine during world war ii when we had admirals win the battle of midway, which changed the entire war against japan, he sailed across the international dateline in the pacific and attacked the japanese. destroyed their fleet, 1942. he went across the international dateline. supposing he turned back and said, well, that is the international dateline and japan has said if we don't cross the international dateline we'll take this part of the pacific, you take that, and we'll live happily ever after. we get to these mountains in the middle of nowhere and we allow al qaeda to escape? makes no sense.

our entire country had become more legal listic. we should have gone and finished it right then. >> this month, booktv's book club selection is bing west's "the wrong war." read the book and join in the discussion at booktv.org. live sunday, may fourth, look for our next in depth guest, luis rodriguez, former gang member and turned author and poet. and his 2011 release, it calls you back. find booktv every weekend on c-span2. >> the chair of the federal communications commission, testifying recently before a house appropriations committee on the fcc's budget request. tom wheeler saying he is committed to keeping the internet open and accessible. we'll also hear from the commissioner of the fcc during the hearing which is about an hour and 45 minutes.

>> looking at me the whole time is a real punishment so. okay. the meeting will come to order. want to welcome our witnesses. chairman tom wheeler, and commissioner ajit pai, for before the committee today. the first time both of you have appeared before our subcommittee. so i want to welcome you and thank you for being here today. the focus of today's hearing is the fcc's fiscal year 2015 budget request. your request is for a $35 million or 10 1/2% increase over the current level and while the fcc is funded by fees, these are fees directly passed on to the consumers. so i believe that congressional oversight is an important check

on the commission's activities. learning that the commission prior to your arrival had planned to spend money on a inappropriate study outside of the agency's jurisdiction on newsroom operations leads me to think that perhaps the commission has more money than it really needs. while we understand that you may have some funding needs in order to keep up with the ever changing technology landscape, we expect you to look at your current spending first before coming to us for increases. as you both know the middle class tax relief and job creation act of 2012 provided the fcc with the authority to conduct spectrum incentive auctions and this is in itself a complicated process. it is expected to raise over $25 billion in revenues as well as create a nationwide communications network for first-responders. so that's auctions will be quite a task for the fcc to implement

and i look forward to hearing more about the development of these auctions and how we are moving forward. given today's technological and competitive landscape, my interests in seeing a leaner, more efficient, more transparent fcc has not diminished. chairman wheeler, i hope you can take seriously the committees request to review our organizational structure to reform and reorganize the fcc to more appropriately reflect the commission's current role and to keep up with the pace of technology and industries that you regulate. this committee is committed to fiscal responsibility and we take that charge seriously. we expect all of the agencies that are under our jurisdiction to operate as efficiently and effectively as you can and that includes the fcc. so the industries and services that the fcc regulates are crucial, critical to american communications and businesses.

these technologies are advancing at an ever quickening pace. and the fcc must keep up while not deterring or stifling competition and innovation. overregulation hurts american businesses and markets. the fcc should consider the impact of its regulations and should employ rigorous cost benefit analysis in rule makes wherever possible. i look forward to discussing these important issues with you all today and there's much to discuss. again, thank you for being here today. i look forward to your testimony and now i will turn to ranking member serrano for any remarks he might have. >> thank you, mr. chairman. i would like to join you in welcoming chairman wheeler and commissioner pai before the subcommittee. both of you are testifying before this subcommittee for the first time so we'll try not to be too hard on you. besides we're too close to be angry. technology plays an ever growing role in the lives of most americans. people increasingly depend upon

television, radio, satellite and internet service to connect with others to better understand the world and expand their economic opportunities. and from insuring consumer access to the internet to promoting media diversity, the fcc is the primary regulator and sharing fair access to and fair play within every aspect of our wide variety of communications methods. as technology rapidly changes, it is important that the fcc be able to continue to meet these responsibilities and that is why we are here to discuss your budget request today. given those broad and growing responsibilities it is not surprising to see you are requesting additional resources for fiscal year 2015. your budget request is approximately 36 million higher than the funding level you received in fiscal year 2014. i look forward to discussing how how you will prioritize this money and how we can better understand the various increases in light of your goals to protect consumers and insure the

integrity of the public's airwaves. one area of tick interest to me is some of the problems that have cropped up with regard to the growing use of smartphones. as smartphones become common in our society, their use has been accompanied by a steep rise in the number of thefts of these devices. unfortunately while some steps have been taken by the if cc and others not enough has been done to deter smartphone threat which can be lucrative here and abroad. i recently proposed legislation to require all smartphone manufacturers and service providers to make a, hate the word, kill switch available to consumers which will allow individuals to render their smartphones completely useless if taken from them and any incentive to steal these devices. i'll give you an example. in new york city i think like 30% of crime now is related to the stealing of a smartphone. i believe, may have the wrong

number. i think 20 something, attorney generals including new york's have come forward said this is a serious issue. that we have to address. i hope to get your thoughts on this issue and i want more, and what more needs to be done in this area to protect consumers. once again, we welcome you, i must say that, this is one of those hearings notwithstanding our starting hour i take very seriously because i'm a, i'm a user. i have every ipad you can think of. i have ever smartphone you can think of. i'm not ashamed, member of congress to say that i watch tv. most members of congress only watch cnn or fox. i admit i watch westerns channel everything else. i have radio. have satellite radio in both cities. i take seriously what you do and what chances you have to better the quality of service that you provide the american people. understanding always that the

airwaves belong to the american people. and mr. chairman, lastly, years ago i was very strong on the issue of when the fcc was going after some broadcasters for the way in which they conducted their programing. and i said at that time, all you got to do is turn howard stern off if you don't like it. don't get upset. just turn it off. i'm a big believer in that freedom of expression, even if it upsets someone. so thank you, and thank you for being here with us. >> thank you. and now to turn to chairman wheeler. we'll make your written statement part of the record and you would limit your remarks to about five minutes that would be great. >> thank you very much, mr. chairman, mr. serrano. as you both have pointed out this is my first time presenting a budget before an appropriations subcommittee. it is not my first time presenting a budget however and what i thought might make some sense, would be if i revert to

form as i used to do in my days as a businessman and kind of hit issues that think are important that we ought to pay attention to in this budget. you are absolutely, right, mr. chairman, this is a $35 million increase, it's a 10% increase. this is serious money. you have the right to take a serious and hard look at it because it demands explanation. the increases break into approximately thirds. about 1/3 is for technology upgrades which is a cost saving and efficiency increasing expenditure. about 1/3 is for universal service reform which is expanded enforcement and new rules. and about final third is for two things. one it's inflation, salary, benefits, mandatory things that we have to do. we're required to do. and the other is the movement

from the, of the broadband map from ntia's responsibility to the fcc's responsibility and how we pay for it. let me see if i can unpack each of those quickly. information technology, 13 1/2 million dollars is our request. our i.t. is old. it is, it is inefficient and it is insecure. 40% of our i.t. systems are more than 10 years old. this means that for many of them there is no vendor support. and they are costly to maintain. we have amazingly, i discovered when i came in, 207 different computer systems for an agency of 1700 people. there is not a business in america that would put up with that. our systems are incompatable. they can't talk to each other.

and they're highly inefficient. and worst of all, they're insecure. i would be happy to go into more detail about that in non-public setting but there are serious challenges that we have. $13 million as you point out, mr. chairman, is a lot of money. but, the reality here is, if we don't spend that now, we'll spend that in the next two years in the bailing wire and glue that we have to do to hold the existing systems together. the second issue, universal service fund reform is about a $10.8 million expenditure. we oversee an $8.4 billion universal fund, universal service fund program that is going through significant changes that brings sizable

challenges with it. the lifeline program has been abuseed. we'll save $160 million this year through eliminating unqualified recipients. companies, not just consumers, have been involved in this. we need to beef up enforcement. the, if you talk to the enforcement bureau folks, my line from day one has been i want heads on pikes and we need enforcement capability that we don't have. the high costs of rural part of universal service we're shifting from voice to broadband. we're running some trials in rural areas to help accomplish that as well. the resources of our wireline competition bureau are constrained and pulled in other directions, not the least of which is overseeing the

transition to all ip networks which is a key component of this and we don't have resources there. . . strike force to focus on waste, fraud, and abuse. we have today 25ftes for enforcement in an $8.4 billion program.

i don't think it's sufficient to do the job. we need more muscular enforcement. we need investigators, weed in auditors, financial enforcement. it's not just more lawyers. we need people who are out there and can make sure that the program is being administered efficiently, and weed in to spread them throughout the agency. the enforcement bureau, the managing director in the office of the inspectionor general and in the wire line bureau. the last third, as i said, there's $5.7 million for mandated personnel benefits pay obligations and $3 million for the broadband map that ntia idea to pay for. finally, mr. chairman, two quick notes. as you noted, the agency pays for itself through fees, and also as you noted, this is a huge growth area for the economy.

we are trying to bring to regulation, we're trying to wean from regulation, the idea that the regulator knows best. we're trying to encourage competition as a force that regulates the markplace to protect competition, to expand competition, and we're trying to have a regulatory policy that reflects that when there is competition, there is less need for regulation. and we also have the responsibility to make sure we're providing stability for those who make the investment and the capital, for those who create jobs, and that we're fulfilling the consumer protection obligations that the congress has laid down for us. i take your admonition about our responsibility for fiscal responsibility very seriously, and look forward to discussing it more with you. >> thank you very much.

commissioner pai. would you like to make an opening statement? >> i would. >> members of the subcommittee. thank you very much for inviting me to testify here today. i expect and welcome your questions about the budget specific nature of this hearing in the colloquy, but today in my written -- opening statement, i'd like to focus on two very important policy issues before the fcc. first, the incentive auction and, second, erate reform. first the incentive auctions. given the subcommittee's focus on appropriations it is worth noting the fcc is one of the few agencies in the u.s. government that can generate a profit for the government. between 2005 and 2008, for instance, the fcc held spectrum auctions that raised over $33 billion devoted to deficit reduction. the commission's auction program has not always turned a profit. from january 2009 until december

of 2013, the fcc raised a paltry $72 million in auction revenue. indeed, when you account for the commission spending on auctions, our actions program actually lost money during those five years. and in 2012, congress tasked the fcc with pushing new spectrum into the commercial marketplace and raising $27.5 billion for national priorities. the spectrum act targeted more than $20 million for deficit reduction and $7 billion for the build you of a nationwide broadband network for public safety. that make goods on a recommendation from the 9/11 commission that first responders need interoperable communication systems in times of disaster. the spectrum act set aside 147 bill for state and public safety officials and 300 mental for the

research and development wireless public safety communication, and up to $115 million for the deployment of next generation 9-1-1. the broadcast incentive option will be the commission's best opportunity to hit the $27.95 billion target. now, at this point, my greatest wore about the incentive auction is participation. in order for the incentive auction to be successful, we welled in robust participation by broadcasters and by wireless companies. and that in concern means avoiding unwise policy choices that will defer par tis mission the reverse and forward actions. my position on reverse auction is simple. prices paid to broadcaster for their spectrum should be determined by the mark. the commission should not set the prices by administrative fiat. on the forward option the commission should not limit the care area's able to participate, such as setting a spectrum cap. the result would we less

spectrum, less funding for national priorities, a higher budget deficit and increased chance of a failed auction. under the law we have only one option, which is success, because we only have one chance to get it right. the second issue i'd like to discuss briefly is the universal service funds $2.4 billion schools and libraries program. better known as erate inch many ways erate has been a success, just last year, for instance, 87% of educators responding to an independent survey reported they had, quote, adequate band width for robust instructional needs in all or most classrooms on a school campus. but erate has had its share of difficulties. the probation process is so complicated the majority of the universal service funds entire administrative cost is focused on erate. many schools and libraries feel compelled to hire outside consultants to manage the

complex advertise. others don't bother applying. services like paging are prioritized over next generation services like connecting classrooms. money is wasted. one brooklyn school, for instance, has received millions of dollars in erate funding, even though it doesn't allow its students to access the internet. and there is no meaningful transparency with respect to either the amount of the impact of erate funding to solve these problems i propossessed a student e-rate program so schools and libraries know in advance how much money they can spend and have strong incentives to spend it wisely. this means simplifying the mix process and targeting funding at next generation technology and letting local schools set their own priorities, and this means making all funding and spending decisions accessible on a central web site. mill proposal would reduce

administrative costs and in its first year alone, a student center approach would provide an extra $1 billion for next generation services, all without collecting an extra dime from the american people. accordingly, my view is we should not increase the e-rate program's budget and should not do so without find corresponding savings in the universal service fund. we cannot ask americans to pay even more in their mom phone bill especially when median annual income is now lower than 2007. finally i should note that while all commissioners are asked to vote on a budget proposed by the chairman and submitted to the office of management and budget if have not been asked to participate in our agency's bug. i will respond to any question you may have. so chairman cren shaw and ranking mesh serrano, thank you for letting us testify. i work forward to your questions and working with you.

>> thank you very much. as we get into the questions we're going to observe what we call the five-minute rule. will recognize members in order of seniority. if they were here when the meeting started. then the late, coppers will be recognized in order of they're late-coming and we'll good back and fort from side to side. let me start by just reiterating what commissioner pai said. he wasn't involved in putting the budget together. that's something the chairman does, and his office. you'll have a perspective and so if people want to ask him or chairman wheeler about budget items, certainly feel free to do that. i'd like to start by just saying that chairman, you came out of the private sector. you have had a lot of experience and probably bring a fresh approach to a lot of the issues that will come before your

commission. and you and i talked a little about how you balance regulation, both from the inside and outside. you have become somewhat famous for your famous seesaw -- >> you have to go like this -- >> the seesaw so maybe you can tell the subcommittee a little bit about your view of that seesaw as it relates to regulation. >> thank you, mr. chairman. yes, and you have the movement down real well. it's a simple concept. if we're existing in an area where there is competition, that is watching out for consumers and the marketplace, there's less need for the agency to do things. but the seesaw goes beth ways. our responsibility is how to encourage this, and in a period where there is so much rapid change in technology, we need to

recognize that we're not as smart as the internet. we shouldn't be trying to guess it. we should be facilitating competition. we should be protecting competition where it already exists. but we shouldn't be going out and -- i talked in my testimony about we're trying to wean ourselves from the old regulatory model that the regulator knows best. and that is the approach we're on. >> when you talk about the 10% increase, you outlined a third, a third, a third, and i appreciate that. as it relates to the regulatory aspect, do you find any places where you could save money, where maybe not as much regulation might be needed that you saw? because bureaucracies tend to just say i'll take whatever i had last year and add on to it.

and one of the things i think you probably learned in the private sector, sometimes it's good to make sure you're spending the money in the right places to start with before you ask for more. so, i'm just curious, did you find any areas you might be able to save money? >> one of the hardest adjustments in coming to this job is the inflexibility that you have in allocations of funds. so you have 70% of our sne budget is people. and in business, you can deal with employees one way that you can't in the government. so what you do is you end up moving people around as priorities shift. and what i can assure you is that priorities are constantly shifting because of the new

realities in the market place. one day you're worrying about narrow band spectrum activities, and you get through that, which was a huge undertaking, and you got to pull those people off to go over and plug this dike, and it's a constant situation of doing that. >> so you're looking at that. let me just ask commissioner pai, the same kind of question, recognizing the office of the chairman really puts together the budget. when you look at the way that fcc is working, does it look like the budget is as lean as it could be? are there areas you just have observed without being part of putting the budget together, that there key about some savings? >> mr. chairman, i think there are program efficiencies the fcc could wing out. some on our own and some with congress' help to give you an example. my own el-rate proposal would reduce the cost the fcc has to

spend because it would simplify the application process. the hundreds and thousands of forms we have to monitor from schools and libraries across the country, we can simplify that will be approach use, weed in to simplify it for the schools and libraries applying. >> without question. >> because of the fact we created this structure that doesn't work for them, either. >> exactly. we found a lot of schools and libraries don't even bother seeking the funds because the process is so complicated. with respect to the latter category, costs we could save if we had congress' help. the consolidated reporting act. fcc staff -- i used to be one of them -- spend a lot of time compiling, reviewing and submitting reports to congress on an individual basis. this takes up a lot of staff resources. with the passage of the consolidated reporting act we can submit to congress a single book, essentially detailing all of the facets of the communications industry that save us a lot of resources and would be better for congress as

well. you have a one stop shop where you can good for all the facts you need to discharge your legislative responsibilities. those are just two examples. i'd be happy to good into further detail. >> thank you very much. mr. serrano. >> thank you, mr. chairman. i seem to get the sense that you both agree that changes need to take place, but you don't agree on how or what changes need to take place, at least that's what i'm getting from this conversation here. the fcc is one of the few agencies that touches just about every american. who doesn't have a phone or a tv set or a radio or so on? and so i would like to see wherever possible -- and the ranking member -- i'm not chairman but i speak for him also in saying that we would

like to say a more united front in telling us how and what role we should play. it's not simply for us to say, you're spending too much money, which i must remind people, 35.5 million increase is fee-funded and does not increase the deficit at all. so they're not asking us directly for money. but i'd like to see if i can be a mediator here, something of more of a joint effort in telling us how we can help you. and you can start off -- talking about my personal bill. the smartphone bill. does your information, commissioner, say that that crime has gone up in the country and in our bill, which is put together with the assistance of attorney general schneiderman in new york, we leave it up to the manufacturers to use the

technology they have available. we don't say, you must do it this way or that way. and they have the ability to do it. number one. have those crimes continued to go up? is that an issue that you are concerned about? and secondly, can in fact congress not waste time in telling manufacturers, use what you have available to make sure this done happen anymore? >> thank you, mr. serrano. let me take both parts of that. i agree with you about the importance of a commission that is working together, and ajit and i checked this before coming here. ajit and i have agreed on 90% of the votes taken at the fcc since i have arrived. sure, we disagree on some issues and we disagree on some major

issues. and -- i think that's what makes the commission stronger, and the other part is that at some point in time, we have to sit down and decide, and i think that my job as chairman is to help push decisions. and when you can have an environment where you have 90% of the time you're agreeing and 10% of the time you're not, and when you're moving for decisions, i think the commission is better for that. let me talk specifically about your bill. i agree, it's a problem. i agree it's greg. i just had a meeting, interestingly enough, with my counterpart, the director of communications in colombia, who was talking to me about the great problems they have -- it's

not drugs anymore. it's cell phones. and how do we work together on this? and the kill switch is an idea that is right in concept and problems and implementation. and i think it can be solved. i'm a guy that came another of the technology business, so i believe in technology to solve it. the problem is i lose my cell phone. i think it's been stolen. i call and they kill it. which means they fry the inner arizonas. i find it in the seat of the couch two days later. my phone is shot. there's got to be a way of overcoming that problem. i am on the phone later this week -- >> when you're in the subway -- i don't want to knock my city --

somebody rips at it off you -- >> so you have to be able to dole with both situations. i'm on the phone later this week with -- i won't say who it is but a major figure in the production of devices that have redefined the way in which we use mobile devices. and this is my topic with him. what can we do -- >> fruit attached to it? >> a fruit attached to it. and you're very perceptive, sir. but this is one of my topics. we have to solve this. one of the jobs -- this is something that ajit and i agree on -- again, one of these places we agree -- is that it's not just true, thou shalt regulation but it's all through the bully pulpit. he does a great job with hotel safety. we're going to try to move on this. i'm talking to folks about it

now. i understand your iand it's legitimate. >> maybe quickly -- commissioner pai. >> i appreciate the question and i think the chairman has eloquently stated the rationale behind some of the legs you have talk about. i do want to say that by and large we do agree on a lot of issues. i want to lay done a marker now. there is one issue we're never going to agree. he's never going to root for the university of kansas. will never root for ohio state. >> i will stipulate to that. >> i do agree in the power of something he said in his answer and that is, the power of technology to solve problems. that where is we unite. technology has the ability to cross borders, cross cultures and solve problems that before have been unsolvable. we might disagree how to get there but i never question his love of country, his care for the agency, his knowledge about the issues and his determination to meet what he believes to be in the public interest. my own view of regulation is

different. i think generally speaking that it should meet three criteria, being consistent with the statute, costs should be outweighed be the benefits and restrained by dynamic markses. nine times out of ten we tend to agree and that heralds well for the course of our dialogue going forward. >> very briefly, mr. chairman. i was just informed by the good people who are always smarter than i am and more prepared back here, that our legislation allows for technology, which exists already, for not to fry it, as you said, but actually to bring it back to life in a certain way but only by the owner. >> and the challenge becomes -- i don't want to have a hearing on this but i understand that point and the challenge becomes, how do you prevent that from being hacked. there are solutions. we have to find those solutions. that's why i'm talking to these folks and saying, let's find

them. >> thank you. mr. womack. >> it is refreshing to know that the two of you can agree on a lot of things, with the exception of rooting for each other's team. i'm assuming that one of you will not be rooting for dayton and the other won't be rooting for stanford in the context of the ncaa basketball tournament. but i want to join in congratulating you on your positions and welcoming you to the committee. i want to go to cyber first. while examining the budget request, observed a surprisingly strong emphasis on improving cybersecurity. the proposed improvements include storage expansion, big data sign-under security analytics, metrics, and other things. can you expand on the commission's goals of these programs, both in the near term

and over the long haul? >> okay. yes. and i'd be happy to go into more detail without cameras. >> absolutely. >> we are on the edge of the dhs' minimum standards for what is expected for a federal agency for security. we need to fix that. you just ran through the things we want to put in place to address that. if we are charged with responsibility for the networks of america, and everybody keeps saying those networks have to be secure. by golly, we'd better be secure in what we're doing. and so as you point out, using

big data to do tests in real time on security -- security has moved so far past white lists and black lists and fire walls. how do you use big data for real time security? how do you make sure that you've got networks in place that themselves are secure and that the equipment is secure and that you're not using soft war program -- software programs that themselves are so easily hackable and when you're using ten-year-old equipment, it is kind of per se it's an invitation to hack. but i'd be happy to talk a lot more about it. cybersecurity has to start at home. has to start with us. >> commissioner pai. >> congressman, with respect to internal systems used by the fcc, i agree that cyber security is critical. under the law the fccs

authority with respect to cybersecurity is relatively narrow, and so i see the fcc's role in the overall public dialogue about cybersecurity is being more of a supporting one. i think other executive branch and independent agencies might be a better place to take a leading roll. >> how do you work with other agencies? >> so, we are part of an interagency working group on this. we also are the home of mull by stakeholder processes. which guess in exact point to what the chairman was talking about, how do you get the people themselves to worry about it rather than walking in and saying, i'm smarter than you, here's how to do it. for instance, we have what is called -- a working group on security and reliability of networks that includes all the major network providers and

suppliers. they have come out with voluntary standards to address the botnet issue, with standards on dns security, with standards on router security, but they all did voluntarily, sit can around a table that we asked them to come to, we have now asked them to help develop metrics so you have to understand, okay, are we meeting the goals? because that allows you to say, i need to zig or zag to do that. and to use this same kind of a process, they multistakeholder process, to address other issues that may be arising in cyber, but to do it in a way where we're bringing the industry in and we're the convening force and we're saying, okay, what do you think we need to work on? how do we work on it? let's come to conclusions on it.

>> i know i'm about out of time. i'll yield back on this round. >> mr. quigley. >> mr. chairman. gentlemen, thank you for your service. in my district -- obviously in the country -- there have been incidents that bring about the need for the implementation of positive train controls as quickly as possible. it's a difficult enough issue for the rail industry to meet and the final frame that has been given and the costs involved, but we're learning of other issues that makes this even more difficult. you all play a role with the -- transmitting this information, and while i hear that they're going to be able to get done within the time frame needed, we're hearing otherwise, that seems a subject one can take three to four months. how does this work out where weed in both deadlines? >> are you asking me? >> yes.

>> well, congressman, it's a critical issue. i think that the fccs general focus on speeding the deployment of wireless infrastructure really hits home when it comes the positive train control question. recently the chairman can elaborate -- the wireless telecommunication bureau issued a public notice involving trying to streamline the process and identified road locks, and -- road blocks and i'm hoping in the coming weeks and months you'll find a speedier process that allows the industry to deploy better. >> both hear it's taking three to five months. >> so the issue is -- there's two components to ptc. one is spectrum. and how you have to have the spectrum to be able to do that. and we have facilitated the transfer spectrum and the licensing spectrum and you recall heard from the railroad folks that has been a success.

on the tens of thousands of polls that have to be -- poles that have to be put along railroad tracks, there's a statutory requirement that we have to consult with a native american tribe on the placement of any such poles. it's been true of every cellular tower ever put it-et cetera. that was never really factored into the thinking on this, but there is a clear statutory requirement. i think also that the railroad industry was not mindful of that until recently, and in fact went out and put thousands of poles in without this kind of approval, and then realized, my golly, we have to do it. so everybody has been in a scramble to do this.

here's what we have done. so, we have convened two meetings thus far with the various tribal groups and the railroads, to sit down and develop an expedited batch processing, so the that -- because, frankly, just weren't structured for the kinds of tens of thousands of requests that are coming in. it used to be, okay, here's this pole in this area, one at a time, and we have a batch processing structure in place. and so what we're trying to do is two things. one, we're trying to expedite the process and, two, we're trying to be true to the statute that we are mandated to enforce. and we -- it is crucial that we have the rapid deployment of ptc, period. >> there's another issue, and i appreciate your response from both of you, but for commuter

rails in urban areas, like mine, like met -- metra there's an issue with the high cost of purchase of spectrum that has to take place. there is something you're considering that will help along these lines to assist these rail industries across the country, industries like metra? >> my understanding is that a group of the freight railroads got together and acquired spectrum, and that that spectrum is now being shared with metro and others, and that we have been working to facilitate the necessary license transfers, et cetera. if there is another situation that we're not aware, i'd be happy to get on top of it. >> we will get back to you on

that. thank you both for your answers. >> mr. graves. >> thank you, mr. chairman. gentlemen, thank you for being here and just listening to the discussion today, i can only imagine how difficult it is, the broadness of issues from railroads to cellular communication and spectrum auctions. mr. chairman, quickly, about a proposed rule that is going to be changed here -- i guess taken effect at the end of march dealing with jsas. the intent of the commission is to provide more diversity in the marketplace and seems to be a lot of disagreement that might not be the deseries outcome, and in fact might have an adverse effect on diversity in the marketplace, do you sense this rule change will provide more minority ownership of stations or broadcasting or less minority ownership? >> more. let me give you a couple of statistics. in 2006 there were 19

african-american tv stations. in this country. today there are four. during that period there was an explosion, a tripling of the number of these jsa waivers in which -- let's just make sure we define what is going on here, what happens in a jsa waiver is that the commission approves a waiver from its rule that says there can be only one owner per television station per market. and so what has happened is as there has been this explosion in jsas, it has enabled the companies that are the base company for, that have the agreement with other stations, to buy stations at a price that,

frankly, is higher than would be otherwise available for an independent entrepreneur to come in and by it because they have these economies of scale. and so the issue about js as is is that jsas are a way around the commission's long-standing rules and that they have been done in an of-the-record, nontransparent manner over the years. what we're going to propoet at the end -- proposing at the end of the month is that it be made transparent, that you need to establish why it is that this jsa is in the public interest, and that we believe that one of the results -- this is not the main purpose but one of the results will be an opening up of

broadcast license licensees for minorities, women, small entrepreneurs because they're currently being sucked off the mark. this is one place -- not part of the 90%. >> but just for clarification for the record, you said in 2006 there were 19 minority-owned -- >> television broadcasters. >> and today? >> four. and three of those four are existing under jsas. >> commissioner pai's thoughts on that. do you agree? will it provide more or less minority ownership of broadcasting. >> this proposal will result in less minority and female ownership of broadcast properties. anecdote and then data. the general manager of wlo, in jackson, mississippi, is -- sat on my chair in my office and

told me point blank that without the cost efficiency the jsa he is involved in with wbdd allows him he would have to hire his own sales staff, stop gathering as much news, and he worried the entire station would go under. wloo simply does not have the cost structure that allows them to employ their own sales force, and if you think about it, any business in the -- especially one in the broadcasting industry -- has certain fixed costs. if a jsa allows small entrepreneur, like mr. parker to spread costs among parties and still maintain the independence of his own news and entertain. operation, that's a good thing. that helpses minority entrepreneurs across the board. with respect to data, mr. parker is not alone. 43% of broadcast television stations owned by women operate under jsa. 75% of african-american owned broadcast television stays under

under jsa. it strains credits adult you can take away those efficiencies and promostly smaller areas than new york and los angeles, and hope to have diversity embodiesed in this industry. it's not going to happen given the current economic environment. >> if could ask one followup barks us there is disagreement and i know the rule is taking effect at the end of the month. is this something the commission has had an opportunity to -- >> we're voting at thened of the mock. need to clarify one -- >> when to. >> the vote take place at the end of the month. >> the rule -- >> two parts to it. one is a rule that will then follow and the other is a notice proposed rule making which we'll solis it comments. i need to be clear. wire taking anecdotes we can talk anecdotes. the difficulty is that bad practices often hide behind the

skirts of good people, and the reality that we're facing here is that jsas are being used to circumvent the commission's rules and if we're going to name anecdotes, let's talk about the anecdote where one broadcaster buys a station, realizes that it is in a conflict situation because they can't have it, gives it to his mother, and then agrees to operate it and take all of the cash from it. and then buys another station, gives it to his former financial manager and takes all of the revenue from that. we have a situation where public company broadcasters are saying to the fec, we have control of these stations, and saying to the fcc, oh, no, that's a different company.

what we're trying to accomplish here is transparency, openness, common set of rules, and, indeed, a waiver process that will make sure that the examples that ajit gave, get taken care of while at the same time we're being faithful to our rules and our process. >> we'll have time to come back to this. each of y'all got one anecdote. >> i got more. >> i think mr. wheeler's was more complicated. let me call on mr. holliday. >> thank you, mr. chairman. thank you for being here today. i don't expect -- five-minute speed dating process here in the next few minutes. i expect to follow up off the record with you. however, i do want to -- doesn't sound that good on our of -- i represent an area that is largely rural. used to be the whole state of

nevada minus las vegas. now it's about half of what it used to be. i got to tell you my rural folks, whether they're broadcasters or carriers, are scared to death because they don't think that while we're talking about things for the majority of the population, that we should, that there's a lot of protection for folks who are still over the air folks in the rural areas in a backup condition text in terms how that's going to be handled, and even the carriers in terms of the -- the cell carriers in at the same areas when you talk about getting rid of spectrum in that area, all well and good but do we have a safety net for system want to highlight that for both of you in terms of what is going on with the rural? just off the top of your head, does the fcc have an offers or something that is kind of focused on rural service in both contexts? that we can use as a point of contact or is it something where the same folks are trying to happen things all across the board, regardless whether it's packaging for broadcasts, sale

of spectrum for communications? how do you handle that internally? >> you want to do it? >> sure. there's no particular office that is focused on rural issues about i can tell you a lot of people, myself includes, are. i come from a rural area myself, and i visited everywhere from my home town to small towns -- all due respect conditions is a pretty big state compared to nevada. go ahead. >> that's right. >> they made a movie about -- dorothy and a dog and something. >> 75 years ago this year. i think a rural issues pop up in different cop texts. in wireless, if have been trying to make more infrastructure available in rural areas where you might not necessarily see a business case for doing. so on the wire line side i've trade to focus on getting the usf to -- more support for broadband so rural companies can deploy. >> we'll be back in tough with you specifically to get into a little more specifics, and i

appreciate that. also, there's an issue in terms of -- once again it hits -- has to do with belowing floors floor communication carriers to make sure the folks from big places like kansas aren't getting their service in nevada because they can get a better deal. and i get that. but i do also have a concern that it appears -- i hope i'm wrong -- it appears that is being done kind of without any regard for what the state public utility commissions processes or, to where it's look i don't know whether i want to say that's a major charm school faux pas but there is anything that prohibits the fcc from saying this where is you need tend it but you can go through the processes so they feel like they've had the benefit of their communications public utility regulation processes at the state level before you get there? >> yes. we actually have joint boards that work with the national association of regulatory utility commissioners, in

identifying issues that need to be addressed and how do you address them and who does what? >> that's something we can follow up with -- >> absolutely. >> -- some ongoing discussion how that works? >> yes. if i could just add a quick -- this issue was adopted in 201 before the chairman and i got to the fcc. >> something congress did before i got here. >> i've spoken out against it because in some areas it will increase the rates that rural americans pay by up to 46% without saving a dollar for the universal service fund. >> i didn't realize that was the specific issue you wanted to talk about, congressman. >> probably a poor question. >> and so as ajit just said, this is something we beg inherited. it was unanimous vote of the commission that was following through on the statutory instructions from the congress

that said there must be reasonable comparability between urban and suburban rates, and rural rates. and so the commission and -- as i said, unanimous vote of the commission, developed an algorithm. what that algorithm spit out was what the commissioner just said, difference where there is -- there are subsubsidies going not to the high cost of building -- not just to the high cost of building in rural areas, but there are subsidies going from urban, suburban consumers to rural consumers to lower their actual bill. now, the law says they have to be reasonable comparable. the question becomes the implement addition. so we have put this out for comment, comments are due on monday. i am going to be proposing that we do a couple of things. one, we need to be moving the effective date on this to

provide more time for people to get ready, and, two, we need to be thinking about how do we phase it in so there's not sticker shock in this. but we have to mandate, a statutory mandate, what we're supposed to do. i think our challenge is how do we make sure -- >> i don't disagree with the purpose at all. i'll yield back, mr. chairman. i just say you do not have a mandate to ignore state regulatory processes when you accomplish the federal mandate, and to the extent you can doomed those that would be a nice thing for the federal government to endeavor to do in this context. thank you, mr. chairman. i yields back. >> thank you. mr. yoder. >> thank you for joining us today. a special welcome to a fellow kansan from god's country -- >> objectively spoken, sir. >> i understand. i appreciate that. >> and certainly as a jayhawk, you won a lot of jobs -- you won a lot of respect on this side of the table. thank you both for coming.

thank you for your work and service. as we debate about what our priorities are in the country, debate our pry ores within the fcc budget, our job is to help support those programs and things that have the greatest amount of sponsor and we think are consistent with our values as a country, and one of the sort of more controversial issues that's come up in recent months is related to the multimarket study of critical information needs. i thought for the benefit of the committee you might give us a little background how we got to this opinion. certainly we have limited agenda in terms of what the fcc can accomplish each year, dollars are scarce, and clearly that's got to be a top agenda item, and i guess, mr. chairman, ask how we got to this point, what the methodology was, what the theory was, what you're aiming at, why was it eliminated? you both might speak to this and what does the future look like in terms terms of the objectives

originally attempted to be achieved? are those going to be achieved in a different way? how too we -- we want protection of free speech and to ensure our federal government isn't in a position where they may be putting pressure on our media entities to portray the news in a certain way, which we certainly would hope would not be the aim or goal. >> and we identify entirely with. >> great. >> so the act requires us to do occasional studies on the critical information needs of various segments of the economy. it's something that commissions have done, whether they're republicans or democrats sitting at the head of it. when i came in, i discovered that there had been a decision made to move ahead on one of these, and that there had been some concerns raised about some

of the specific questions that seemed to tend towards asking for news judgments. and i raised questions.that. we subsequently heard from the energy and commerce committee questions about it. and i asked that those questions be removed from the survey. subsequent to that, commissioner pai wrote an op-ed piece in "the wall street journal," and in this -- this became a cause celeb despite the fact the questions were out. and i took the whole thing and

shut it down, the whole survey. and i think it really became the dog that didn't bark because, a., the questions were taken out and, then, b., it was shut down. the reason they were taken out is that we have a strong -- i can assure you i have a strong sense of the appropriate role in -- of the federal government in newsrooms. period. that was period. >> period, end of answer. period, end of sentence. >> congressman, my position is pretty simple. the government does not belong in the newsrooms of america. government-funded researchs don't belong in the newsrooms asking what it your news philosophy. have you ever been asked to cover a certain story but been told by management you shouldn't

do that? those questions are inappropriate as matter of constitutional prim, they're inappropriate in completely i irrelevant to our duty under section 257 to report of bane years that small business and entrepreneurs face. there's no relationship whatsoever, and those who support the study is to increase minority participation. i'm chock-full of ideas. i came out in support of increased foreign investment. and i have been -- talking about media incubators for minorities and others to enter the business itch championed a revitalization of our am radio rules, one place where -- there are a lot of ways to actually take action on this issue without devoting up to a million dollars to pack health researcher that has no expertise whatsoever in fcc related issues. so i applaud the chairman for stopping the study, and i look forward to focus on the values

to get new wraps into the substance. >> -- entrants into the business. >> i appreciate your answer. if this was in the study, there was a lack of acknowledgment it was a problem at the start, and i applaud chairman and commissioner for both of your efforts to move us forward. obviously we have continue to be vigilant in this regard because it if was thought of as a good idea at some point it's not going to mean someone won't say, let's ask this in a different way. so we have to continue to be village -- vigilant and i appreciate your efforts. >> thank you both for being here. i was in another appropriations subcommittee, got a lot going on. following up on what was brought up -- about the issue of the urban rate floor, commissioner wheeler, what i'm interested in

are details regarding how the data that the commission used to determine the urban rate floor, specifically the data and the methodology used. as was said a lot of folks in my area are still struggling, especially the rural areas, and i want to know more specifically how the commission determined this rate because the 46% increase in their phone bill just -- in my view is not leveling the playing field. it's putting an unfair pressure on folks who have the least ability to pay, and i think i would say, commissioner pai, you definitely hit the nail on the head in your statement that on the urf and would love you to expand on that if there's still remaining time. >> sure. one, we're statutorily required to do it. before either one of us arrived, the commission came up with an algorithm which i'll be happy to

get to you. i can't cite it to you. but it produced these results. now, seeing these results, your response is a legitimate response. i must say, i am -- whoa. we have a statutory responsibility. we had a unanimous vote of the commission to use this algorithm. it produced this result. the question becomes, okay, what is the best way to stick with our statutory responsibility and to cause as little impact as possible? and that's why i'm going to be proposing that, one, we move the date out, and, two, that we have a phase-in process so that it's not, bam, 46% sticker shot hit, but you move it out over time. there are parties, including in the industries, who are opposed to that. that's not my position now.

and as the chairman of the commissioner, that's what i intend to propose. >> can i ask, did you -- so i understands a you put data, information, into an algorithm, it's going to pop out something. i guess what i would like to know is the data that went into it, and i want to know the validity and the quality of that data. >> i'll be happy to get that for you. >> sounds good. >> i would simply add we have a statutory responsibility with respect to comparability but that gives the fcc a lot of discretion, and i think if you ask the average person, well, impeeve in washington pay $21 and people in parsons kansas, who receive telephone services from a company that gets usf support, pay $14, do you think it makes sense for the people in par sons to suddenly pay $21? i don't think many people would agree that's very fair and certainly not consistent with the overall promise of the statute that universal service should mean that everybody everybody has access. so i hope we revisit that decision and try to not just focus on the data but the entire

concept of what it means for these services to be volleyball you the joy -- comparable. >> the joy of being chairman you've get all of these on your desk, and the universal service fund, statutorily exists, for the purpose of offsetting high construction costs, so that rural consumers can have equivalent pricing. that is a transfer from urban, suburban consumers, to rural companies on behalf of rural consumers. what this study identified -- and you question about the inputs is spot on -- what the study identified was that there is a transfer from urban and suburban consumers, not just to

companies to offset their higher costs, but to subsidies area consumers. and that is not provided for in the law, and so my challenge is being incredibly sensitive to the point you raise about the impact on real people, is how do we obey the law and mitigate the impact on people? and that's what i'm trying to work towards. >> thank you. >> thank you. i think we have time for another round of questions if people have more questions. i'd like to ask one question to start with. chairman wheeler you have been involved in the telecommunications industry and now you're head of an agency that regulates that industry. sometimes people's perspective changes from being regulated to being the regulator, and so i'd

like to ask you, when you're in the private sector, can you give me an example of one or two complaints you might have had about the fcc when you were not the chairman? >> yes, sir. two things. one, i think my philosophy in the chair, as chairman, is based upon what i learned in business, and that is that competition is the root of everything. competition encourages investment, protects consumers, competition is the goal that ought to be primary. the thing that business people hate more than anything else is uncertainty. is not knowing what the rules are. and when an agency is not

decisive in terms of saying, like it or not, here are the rules. we're not going to run away from tough decisions. people get paid a lot of money to figure out how to exist within the rules. just tell me what the rules are. and so my goal has been, one, how to be competition-driven, how to have competition as the gel, and, two, how to make sure that we don't keep competitors in limbo, and that means you have to make decisions. >> now, i guess the second part of my question would be, having outlined those criticisms, complaints, how do you plan to address those now that you're the chairman? >> so, i hope that the first five months of my chairmanship we demonstrated we're going to make decisions. and that we are pro competition

and we believe in the regulatory seesaw, and i hope to keep per suing that kind of -- pursuing that kind of path. >> mr. pai, comment on that. you're there. ... >> how you observe what the commission's doing to address the complaints that the chairman talked about.

and then, two, touch on your view of new rules versus statutory-required things to do. >> sure. thanks for the question, mr. chairman. i agree 100% with the chairman that uncertainty is one of the things that that frustrates businesses most, and i certainly defer to him. in his 29 years, he has accumulated vast expertise on the private sector, in my 28 years -- >> i was going to say, where's a your math? laugh. >> speaking for myself, two of the things i have found in my somewhat shorter time are, number one, beware of industries seeking the reputation of rivals. a lot of companies would support a particular regulation probably entirely because it would disadvantage some of their rivals. we see it in non-fcc-related context, we see it all the time at the fcc. number two, be restrained about regulation of dynamic markets. i can tell you when i first got into this industry in 1998 at

the department of justice, the hot issue was whether to let local telephone companies into the long distance business. a few years later we were told in a merger that if we allowed it to be consummated, aol would have a stranglehold on the instant messenger business. a few years later we were told myspace would need to be scrutinized because of a dominating foothold in the social media industry. markets change, and ideally regulations would be tailored to the marketplace as it is, not as regulators would wish it might be. things go in unexpected directions. just before the hearing the chairman and i were talking about the fact that the iphone, a platform for innovation that we now take for granted, didn't even exist a few years ago. and now we see all sorts of applications and services being delivered on that platform. so the lesson i take is that regulators should be modest. certainly, they should stay

within the construct of the statute, but more importantly, i think they should have a sense of constraint because consumers benefit the best when the marketplace is left generally unfettered from government intervention. if there's an anti-competitive actor, then we have a role to step in, but otherwise i think we should, we do well when we regulate a little bit more modestly. with respect to your question about media ownership, as i pointed out in my testimony, congress charges to reevaluate our media ownership rules every four years. we still have not completed the 2010 quadrennial, and some of these rules have not been updated since 1975. they're screaming for updates, and i support pro-competitive regulations that reflect the marketplace the way that it is, and i would hope that my colleagues agree with me on that score. >> well, thank you for that, and i would hope you all would talk about that some as a commission, because so often agencies pick and choose what they do and

don't do. and i'm sure there are probably reasons why things happen slower or faster. but it's just something to bear in mind as you seek to restructure the agency, bring it up-to-date, do all those kind of things. i think that'd be something to consider doing. mr. serrano. >> thank you, mr. chairman. you know, about the study, i understand why some of our colleagues especially from the majority party would be crned about an -- concerned about an intrusion or a lack of freedom of the press and so on, but then there's the other side of the story, and i play in two of those, and one i understand. as an elected official, i know i'll never get a positive story. [laughter] that's just not the way it works. you read franklin and all those guys, and they never got a positive story either, you know? but as a latino, i'd like to know at times how people decide to pick what stories they put forth.

and why it seems that there's so much negative stories about what we do and very few positive stories about what we do on a daily basis. you know, like any other community. we're no different than any other community. so i find myself -- and this is really going to sound like a politician -- agreeing with both of you. because i don't want intrusion. i don't want government to tell people what they must print and what they must put on the air. but then i also say as we said back, you know, growing up in the public housing project, give me a break. why does it always have to be so negative. and so i wonder if you could comment in your newfound unity that -- [laughter] today if there is a middle ground where we cannot intrude, where we can get my colleagues on the other side not to say that it's a violation of freedom of speech, freedom of the press,

but at the same time find out why some groups are treated in a certain way and some groups not at all. in any positive stories. >> so you wrote the article. do you want to respond? is. >> you're the chairman. [laughter] >> mr. serrano, i think that the information is needed. the question is, what's the impact of a survey that arrives with a federal eagle on it? so i would hope that we will see academics, we will see foundations, we will see groups such as that conducting these kind of surveys. i think the question you raise is entirely appropriate. and i think that mr. yoder's question about the role of a federal agency in that is legitimate as well. >> we've been agreeing a lot lately. >> so here we are, we're all

agreeing -- >> yoder and i are agreeing a lot lately which worries me. [laughter] >> but there are solutions, and not all solutions reside this the federal government. >> right, right. so how do we get to protect those who don't get a chance to be seen properly? >> congressman, that's certainly sensitive, that issue. i can tell you that growing up in a small town in kansas in the late '70s, early 1980s, it never even occurred to me that someone like me, frankly, could be a lawyer. everyone in my family was a doctor, an engineer, and i never saw from the popular media anything depicting indian-americans as participating in american public life in the way that they are now. and so i think, you know, it's important for us to make sure that the media landscape represents all americans. the question is, how do you get there. and so my own view is nothing, certainly from the fcc or from the law it, prevents anybody from studying these issues, from talking about them, from

publicizing gaps in coverage or poor coverage as you might say. but when it comes to the government, there's a special limitation on what we are able to do. it's not just what we are permitted to do, but the mere appearance of what we with might be doing to others raises constitutional concerns. and i think that's where with this particular study you saw a lot of the concern being raised. i will say i feel like i personally represent both of your polls. i was born in new york and raised in kansas, and so i'm quite confident we can come together on this as well as many other issues. >> he's a new yorker. >> look at this. [laughter] >> i just ask one more -- >> certainly. >> let me ask one more question. and i do hope that we reach a middle ground, because we need to have that information. and the last point on that would be, yes, government should not intrude. but in this area it's different, because those airwaves don't belong to the government. they belong to the people. can and everyone's known that. so if you are lucky enough to

get an airwave to transmit, i think you have a responsibility to be fair to all the people that you're reaching or ignoring or whatever. let me just talk to you or very quickly about the gsas. your claim that gsas support minority, commissioner pai, is undermined with by fact that nearly every minority media group, including the minority media and intelligence council, national association of black journalists and the national hispanic media can coalition and public interest groups decry these as harmful to promoting a diversity of voices. they claim gsas and the fact of consolidation they're allowed deny them ownership opportunities and result in the loss of jobs. how do you explain this difference between those advocacy groups who do a job on a daily basis, in your view? >> i work well with many of those advocacy groups on a regular basis, but all i can tell you what the facts on the

ground are. a gsa between two stations to provide the only spanish-language news in the entire state of kansas. without the gsa, they was told me that news goes away -- >> one clarification, just to be clear here. there is nothing in what we're doing that would make that go away. >> we hope. i mean, i think wall street has spoken. you've seen the tanking of broadcasting stocks in -- >> listen, that's a whole different issue. so are we talking about encouraging minority voices or protecting wall street barons? [laughter] >> well, i'm certainly not, never having spent any time in the industry, i don't, certainly don't show for them, but the point is access to capital is the life blood of a lot of these broadcasters. if they don't have the capital, they cut back on what they're doing or go dark altogether. a lot of companies across the country have told me these have been pro-competitive atraining rangements. -- arrangements.

so similarly, across the border in job lin, missouri, a jsa has allowed those stations to save $3.5 million in costs. they've poured some of that costs into doppler radar. now, when the tornado hit joplin, missouri, in 2011, i would vouch that a number of lives were saved precisely because they had those cost savings. not necessarily that i think the chairman is acting in bad feint, i would never, obviously, believe that. if his concern is correct that you have a bucket of apples and there are a few bad ones, let's not throw the entire bucket away saying this is an anti-competitive arrangement that's meant to circumvent the fcc's rules. i certainly would never advocate that. >> so the reality, so we're trying to deal with a situation where, as i said before, there are people hiding behind the skirts of good people. we are not, there is no way,

shape and form that the kinds of positive things that you have been talking about here will not be allowed under the process going forward. but the decision has to be made in public, on the record, transparently with a known set of rules because what used to happen is broadcast attorneys would go and meet with the media bureau of the fcc, they would sit there and say, okay, now what do we have to do to get this through? and what we have done is say we want this to be out in the open. and we want there to be a known set of rules. and that when there are these situations which i stipulate to, we want those to continue as well. but we don't want the people

that are doing a good job getting spanish language into kansas to be the excuse why others have an opportunity to flaunt the rules established by the commission on the basis of the instructions from the congress. >> we'll give you the last word, commissioner pai. sound like i'm on television. last word. >> quick word. i think it's all too easy to say the waiver process will allow the good ones through and keep the bad ones out. but, point number one, this quos quos -- goes to certainty. how is any broadcaster supposed to know in advance whether or not -- >> [inaudible] >> number two. now they won't know. >> they didn't can before until they sat down and started dealing. >> he's going to wrap it up, mr. chairman. >> just when i had them getting along. [laughter] >> number two, i don't think that the fortunes of a broadcaster that are involved in the jsa should depend on temporary, ephemeral majority,

politically-appointed fcc commissioners. it should be based on the facts on the ground. and let's address those problem ares discreetly without changing the overall rule structure and then setting up an inchoate waiver process where people have to come individually and hope they can get relief from the fcc. >> thank you. unless mr. graves wants to ask y'all to keep going, i'm just going to ask mr. graves to ask a question. >> well, it -- the topic left with me last time, and i want to point out what i appreciate here and that there's a debate, a dialogue, and it's very respect. , and there's two different opinions. i think coming into this meeting today there was the understanding that this was going to be a rule that takes place without a hot of open discussion or debate or without, potentially, even a vote from the commission. so maybe there's confusion in the industry. there's a lot of uncertainty. you've had some antidotes in which individuals say they would lose, potentially, their station or the ability to connect with

those whom they're trying to save their information with. i haven't heard you provide an antidote in which it would advocate or advance or give additional licenses or broadcasting in areas with minority ownership either. so there's different opinions, and i hope that the process that moves forward continues an open and robust and maybe slow down the process a little bit to headache sure that all voices -- make sure that all voices are heard. because there's clearly some division here in what the outcome is. >> thank you, mr. graves. >> chairman, i hope you'll take that into consideration. one thought that was on my mind, and i'd like both y'all's opinion on this because in my ticket i've heard a lot about it, and it was a few weeks ago when it was announced that the u.s. would relinquish control of the internet. you know, something that i think we see as a space of where a lot of enterprise takes place, there's a lot of freedom of expression, we talk about freedom of speech, and then you have the united nations

secretary general praising this decision from the administration, and i guess the department of commerce. and not, i guess, moving forward with signing a contract in 2015. is this something that each of you support? is this the right direction moving forward for the department? i know it's not your agency or department, but there's an overlap of some sort, and i think you've already made some comments on the record previously. so, commissioner, i know you've publicly spoken -- >> sure. i think that as i said in my statement, the multistakeholder model has worked tremendously well over the past several years. and whenever there are changes to that model, they're going to suggest there could be risks. so i think it's critical that there is rigorous statute think from this body as well as many others to make sure that that model preserves, whatever the next model's going to be, it preserves the internet freedom that we have come to enjoy. and that comes into particularly sharp relief when you consider some of the things going around

the world from turkey banning twitter to russia blocking particular web sites, a recent pew study suggesting that overwhelming majorities of people -- not governments, but people -- in developing countries want there to be a free internet. i think it's critical for the united states to make sure that that multistakeholder model, which has yielded so many benefits, comets into the future. >> thank you. >> i think we agree on the importance of the multistakeholder model. i think we also both agree that we're grateful that this is not on our plate. we have enough things that we can wrestle with. but, you know, it's interesting that this was used by other countries of world. as an example of american control over the internet. and, therefore, why they had to restrict internet freedoms in their country. and these two responses are indicative of the visions that you all have to make every day,

that we have to make, that here, you know, commissioner pai is saying that it hurts internet freedom if you do this. on the other hand, countries at wicket and dubai and other international things, one coming up next month in rio are arguing that america's role in this is the basis for why they themselves can't trust the internet and have to get in and do it themselves. that's the challenge that we all face. and in a dynamic situation like the internet, as commissioner pai said, the multistakeholder process has proven itself to be far smarter than people like us. and my understanding is that what this is allowing is for the multistakeholder process to work. >> well, my hope would be that this decision that's being made by the department doesn't lead

to less freedom on the internet. for our citizens whatsoever. and i suspect that is your same feelings as well. looking long term, you talk about multistake holders, united nations certainly very supportive of this which causes concern, as you can imagine with some. do you sense that this willdiminish the freedom of americans' access to the internet, sites on the internet or use on of the internet? >> i have a hard time jumping to that conclusion, sir. >> but you can't rule it out. >> i don't see the connection point how this would affect americans' access to the internet. and, in fact, i think as i said, what it does is it opens the door for removing an argument to deny others in the world access to the internet.

but i agree with you that it's -- the internet is an incred by powerful force -- incredibly powerful force that must remain open on this side of the atlantic and pacific and other sides too. >> commissioner? >> i certainly hope this does not diminish freedom for americans or anyone around the world. it would be a tremendous shame for everybody if that went away. >> thank you. >> thank you. mr. yoder? >> thank you, mr. chairman. on that note, the idea that the internet has been such a inspiration for creativity and innovation in the country and the opportunities it's given for communication and entrepreneurship has been unprecedented. i guess i'd like to know in that vein does the internet need fcc regulation? and this light of -- in light of the united states court of

appeals decision tossing out the fcc's net neutrality rules, does the fcc intend to go around the court appeals in some matter, or is it going to abandon this effort going forward? and what does the future look like under this agreed-to premise that we want to keep the internet free and open, and has it, is it free and open because of fcc regulation or in spite of it? and what does the future look like as the fcc attempts to expand its role in this area? pause it gives great -- because it gives great concern to many of us that once the fcc gets engaged in this effort, that it begins to have impacts on what is already such a great opportunity for freedom and creativity. why do we need the fcc in this world, and what does the future look like once it gets in it? >> an open internet is essential to an open economy, to an open

government, to the things that we've all been talking about here. i'm a big history buff, and i think that you start looking at today and tomorrow by looking at yesterday. the history of networks has been how do you use networks to shut things down? the way at&t was built was on the basis of theodore vail saying to independent telephone companies, hey, i've got this long line here, and unless you sell out to me, you're not going to be able to get on. the internet is not a thing. the internet is a connection of other networks, of multiple networks. and we need to make sure that those kind of connections continue to exist and that there is openness in the ability to use is internet. i would take one thing,

mr. yoder. the court was very explicit in saying that the fcc had jurisdiction over the operation of the internet based on section seven -- i'm sorry, based on the openness of the internet. we're not trying to get into the operation of the internet. i want to be real clear about that. but on the openness of the internet based on section 706. what we, what i have announced that i will propose is that we go back and follow the court's direction at how that should be achieved. and the court clearly laid out in its opinion how that could be done, and we intend to follow that. the interesting thing is that

immediately after the court decision which threw out two of the three specific rules but said you have authority to fix the rules this way or that, immediately after that i got calls from the ceos of the major internet service providers. all the household name that is we all talk about, telephone companies, cable companies, saying, don't worry, we intend to stick with the rules each though the rules aren't in place -- even though the rules aren't in place. and the question then becomes one of that demonstrates that they are not burdensome. but at the same point in time, you need to go back to this issue of certainty, because, well, i've got a voluntary agreement by four guys over here, but nobody else over here really has to stick with that. and so how do you come up with certainty that obeys what the court has said and puts forward

a structure that the carriers themselves have said they can live with that keeps the internet open? and that's what we're going to doment -- do. >> congressman, everyone believes in an open internet, and so the four freedoms that then-chairman powell endorsed over a decade ago -- freedom of consumers to choose content that they wish to view that was lawful, the freedom to use devices of their choice as long as it doesn't harm the network, the freedom to know what some of these practices were in terms of the network management, etc. -- all of these principles existed and were vindicated prior to the adoption of any so-called net neutral try or open internet rules. the internet was open before the fcc took action, and i would dare say assuming the fcc removes barriers to infrastructure investment, that will continue to be the case tomorrow. my own view is that the net neutrality debate has been a solution in search of a problem. so i think it's also a distraction from this, what i think is the higher priority which is removing barriers.

i would also add tying it back to the session we just had about international internet governance, it's increasingly difficult for us to say on an international stage that governments should not have a role in regulating the internet when at home there are strident voices saying that we should classify all broadband internet access as, essentially, a utility like the electric company or like the railroads. that would deter investment, increase government regulation, that would increase the difficulty of some of these multibillion dollar investment decisions that companies would have to mix, increase unearnty to the detriment of consumers. so i hope whatever course the fcc decides to chart in the years to come, it's mindful of the fact that businesses have to invest based on regulatory environment that is certain? and the direction that the debate could go is one that would not lend itself to that. >> appreciate that. thank you both. >> well, before we wrap things up, mr. serrano has a brief

comment. >> thank you, mr. chairman. i have a tv watcher's question. [laughter] which is on the minds of most americans, but no one gets a chance to ask like i do. me tv, cozy tv, antenna tv, they're a result of what action taken by the fcc? was that the transition to digital? was that -- >> yes. >> -- spectrum, all of above? how do those channels show up? >> well, those are digital channels that are existing on cable networks and other distribution facilities. such as the internet. >> but they're owned by -- >> well, me, i guess, is owned by fox. >> right. that's right. >> yeah. which is, and that is a digital television transition -- >> cozy, i think, is owned by nbc. >> i don't --

>> in new york, for instance, at 7:00 they go to the nbc news, and they switch back to their own programming -- >> kind of like msnbc news. >> just one last thing, 4.1 or 4.2, something like that? >> that is what the digital television transition did where you have channel 4 and other channels that now can fit inside that spectrum. >> okay. is and that's what this is? >> and on some of them. i can't generalize, congressman, for all of them. >> i think if he pulls out his tv guide, he'll probably figure it out. you don't get the tv guide? >> you know what -- >> they still make that? [laughter] >> there's a question. >> it's an app now. >> it's an app. [laughter] >> there's an app for that. >> there's an app for everything. but i just, you know, it's something that pops up. i watch it, and people have said what are -- where do those channels come from? and -- >> congressman, as the father of two children under 3, i'm not

familiar with television since august of 2011, so i'm not quite sure what the answer to some of your questions. [laughter] >> thank you so much. >> well, let me just thank you both for being here today and for your candid testimony. i think you each bring a great perspective that helps us. and remember, i think we have a role to play. we're not using taxpayers' dollars, but we're using money that is paid, ultimately extracted from consumers. and when we talk about regulation, we started off talking about that seesaw. and generally speaking when agencies say i want more money, that means they are gonna do more regulation. that doesn't necessarily have to be true. but i think smart regulation, reasonable regulation is necessary. but as you work on that seesaw, keep in mind that it tilts both ways, and we've talked so much about the creativity, innovation, the competition that drives so many things that you

all see, we would hope that you keep that in mind as you make the rules that impact so many people. so thank you again for being here. this meeting is aeuroped. adjourned. [inaudible conversations] [inaudible conversations]