r the sec to enforce the. i put forward a draft bill to begin the legislative discussion about how best to put such rules and the statute. like most 1st drafts our bill is not perfect. i invite members of this committee and stakeholders to offer ideas on how we can improve so the final draft can win bipartisan support and provide everyone with the certainty that they need the recent action accomplished the exact opposite. rather than exercising regulatory humility the three commissioners chose to take the most radical, polarizing, and partisan path possible. instead of working with me and my colleagues on a bipartisan basis to find consensus the three of you chosen option that i believe will only increase political, regulatory, and legal uncertainty which will ultimately hurt average internet users. your actions jeopardize the open internet.

the tech the tech and telecom industries agree on a few regulatory matters. the internet is not the telephone network, and you cannot apply the old rules of telecom to the knew rules of internet. three weeks three weeks ago three regulators turned their back on that consensus i i believe the internet and its users will ultimately suffer for it. the debate illustrates the importance which makes it all the more amazing that congress has not reauthorized. since then representative mark's bill was passed a quarter century ago. the situation i i intend to rectifying this congress. today's hearing marks the beginning of the commerce community's efforts to write and pass legislation to reauthorize. contentious matters like title to divide the membership of this committee reauthorization is an area

where i believe we can and should work together. it should not be a partisan goal. both sides of the aisle have common sense ideas to make the agency more responsive to the needs of consumers, congress, and regulators alike. i look forward to hearing the commissioners thoughts on ways congress can help. leading a knew authorization bill should not be a one-off effort. it is my hope the community will get back to regularly authorizing the commission has part of its normal course of business. in order to do that effectively the community must be diligent. it should expect to come before this committee again. how again. how the commission works is just as important as what it does.

in addition to discussing important communication policy matters i hope members will use today's hearing to explore operations, processes, and budgets. requesting $530 million for fiscal and $30 million for fiscal year 2016, the highest funding level in history. that alone raises eyebrows when american households continue to do more with less. but they want to fund it is increased by rating the universal service fund paying for budgets by siphoning money from us staff. members of this committee may have varying views one thing we can all agree on is that the limited funds should not be used as a reserve fund. that is what the commission's regulatory fees are for. funds should pay for services. i don't believe they should jeopardize the stability and integrity in order to pay for its record high budget request. given given the significant interest i do not expect this to be short. in order in order to more quickly get to members questions i have asked

witnesses to limit oral statements to three minutes apiece. i look forward to hearing from our commissioners and what i hope will be a productive a productive afternoon. with that, i yield to my ranking member. >> thank you, mr. chairman. a few weeks ago everybody in this room today knows that the fcc responded to the dc circuit court and responded to 4 million americans by restoring essential protections for consumers and competition on the internet. obviously there will obviously there will be a lot of discussion today about the content and development of those rules. there will be much scrutiny on the legal justification that the fcc used to support its adoption of the rules.

now, while legal means are important, in fact, they fact, they are the statutory tools that congress gave the fcc to perform its job. we we must not lose sight of the results of this will making in terms of the protection that the fcc adopted. as the senator has said repeatedly as i had discussed with the chairman i remain open to a truly bipartisan congressional action providing that such action fully protects consumers does not undercut the fcc's role and leaves the agency with flexible forward-looking authority to respond to the changes in this dynamic, broadband marketplace so much of

which what we think we know today is often changed because of the rapidity of development of technology. many many of you have heard me speak of title ask as a get to be defined. i use the term as a way to think beyond the rhetoric that has now engulfed this political argument. the key question is, we must ask how or is it possible to take what the fcc has done and provide certainty that only legislation signed into law can provide. is it part -- it is part of the larger debate on the appropriate role of laws and regulations of the broadband age. as we have that broader discussion, i invite you mr. chairman to continue to

work with us to craft the right policies to accomplish that goal. as important as important as the issue of net neutrality is to this nation, we should never forget the other vital work that is done by the fcc with ongoing regulatory with ongoing regulatory oversight over as much as one 6th of our nation's economy this agency plays a critical role in ensuring universal access and promoting competition and protecting public safety and protecting consumers. the the fcc recently closed the biggest spectrum auction in history. 41 billion. funding the nationwide public safety wireless broadband network and providing 20 billion for

deficit reduction. that is huge. and it is in the midst of planning for the voluntary broadcast television incentive auction a new form of spectrum auction that could fundamentally change the nation spectrum policy. yet we cannot rest. when it comes to spectrum continued public and private technological development will continue to put strains on our spectrum resources. congress the fcc, and the rest of the federal government needs to work together to develop a smart, forward-looking spectrum policy and i certainly, this one senator will certainly try to help that effort. the fcc is also overseeing the ongoing evolution of the nation's communication

network known as ip transition. one of the trial projects associated is proposed in my state. i am looking forward to an update on that. generally i have concerns about how the ip transition might affect public safety. and the fcc has done a lot to modernize its universal service fund program including expanding. and this program provides critical support for our nation's school and libraries. the enhancement, increased funding will help guarantee the nation's students have access to 21st century technology not just some.

and i also appreciate the work that the fcc has done to increase the availability of affordable, high-speed broadband in rural areas around the country.@of affordable, high-speed broadband in rural areas around the country. i encourage you to redouble that effort to ensure that there is not the digital divide that keeps going on that urban kids get one thing and rural kids get another. i want to thank the chairman and the fcc staff on improving the agencies consumer complaints department. senator and i sent a letter to the fcc last year asking them to upgrade the commissions consumer complaint website to make it more user-friendly.

the knew consumer complaint website is light years ahead of the previous system and i hope that we can continue to see the additional upgrades. i want to thank all of the five fcc commissioners for your public service. i want to thank you for subjecting yourself to five committee hearings -- no it committee hearings in five days. mr. chairman i thank you for the privilege of serving with you on this committee. >> thank you, senator nelson we we look forward to working together on a lot of these issues. some important work to be done. we start by hearing from our commissioners. then we will go in alphabetical order after that with commissioner clyburn, riley.

thank you for being here. welcome. please proceed. >> thank you very much. it is a privilege to be here we are five taipei individuals who have been working together for the public interest. three quick observations in keeping with your three-minute rule. the open internet decision as you indicated, is a watershed. your leadership has illustrated that they're really are not any differences about the need to do something. we need your rules. there are different approaches, to be sure. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> he almost ran out of things to say. >> sorry, mr. chairman. >> please proceed. >> as i said, there are different approaches we take no doubt, we will be discussing those. we have completed our work. a strong open internet rules also be in place. let me touch on a couple other issues. one is that there is a national emergency. congress holds the key to that issue. the the vast majority of calls to 911 services come from mobile.

just a just a few weeks ago who require 911 location capability from wireless caller's. the carriers are stepping up the delivering location information from the phone is only the front end. there is no national policy on how to maximize the life-saving potential that is now being delivered as a result of the carrier activity. there was a tragic example in georgia a few weeks ago. a lady by the name of chanel anderson who was calling from a sinking car in the middle of the lake. her car was picked up by an antenna in a different public safety answering.'s jurisdiction. you can hear this heartbreaking conversation as she says where she is and the dispatcher keeps saying, i can't find it because this other jurisdiction did not have

the maps to where this woman was all because of the vagaries of how a wireless signal gets distributed. there is a real opportunity. 6500 different public safety answering points are staffed by dedicated, qualified individuals but there is an absence of a federal program that recognizes that mobile is changing the nature of 911 and we can't just worry about the signal coming from the collar. we have to worry about what happens to make sure that that signal is used. and just so we can be clear this is not an fcc power grab. i grab. i do not care how it gets done, where it goes in terms of responsibility but we have a responsibility as americans to make sure the information we are requiring

be transmitted actually can get put to life-saving use and that congress has the ability to do something about it. the broadband progress report that we recently released found that rural america is falling behind. the disparity between rural and urban america is unacceptable. only 8% of urban americans lack high-speed broadband's, but 53 percent of all americans to. we tackled that with the eve ate modernization and the rural fiber gap for schools. 40 percent of public schools , 40 percent of rural schools are without access to fiber. they now have alternatives. the commission the commission recently revised the support mechanism for price carriers. an additional $1.8 billion from universal service fund

operating activities in areas that are not participating but begin the process that we will lead to an auction next year where alternative providers can step up and say, no, i we will provide service. but hundred million dollars out to actually test alternative pathways. we plan to act on rate of return carriers this year to create a voluntary path for those who elect to receive to find amounts of funding to deal with the tying of voice and broadband together which is a problem that they experienced, to deal with replacing the infamous curare. that is a process that would be greatly facilitated if stakeholders could agree on a common solution. i thank you for the opportunity to be for you.

i i look forward to discussing any issues you want to discuss. >> thank you, chairman. >> chairman, ranking member members of the committee good afternoon. my written statement details my views on some of the difficult decisions facing the fcc. for purposes of my oral summary i will focus on just to. while i prefer competition overregulation, the truth is that marketplace nirvana does not always exist. here are two examples where markets have failed and regulatory backstop is needed. i made rule call completion a priority as acting chair because it is unacceptable in this day and age of calls are not being put through. we tackled this practice by prohibiting a ringing signal unless the call is actually completed and have required carriers to retain and report call data.

data collection rules go into effect april 1, and we will use this information to ensure that the fcc has the tools necessary to take additional action is appropriate. while a petition requested relief from egregious inmate calling rates remaining pending at the fcc for nearly a decade, fees and rates continue to increase. calls made by deaf and hard of hearing inmates top $2.26 per minute. add to that add to that an endless array of fees, $3.95 to initiate a call to my feet to set up an account another to close my account a fee to use a credit card, even a, even a fee charged to users to get a refund of their own money. there are 2.7 million children with at least one parent incarcerated and they are the ones most punished in the downstream cost of inequities are borne

by assault. the the fcc finally adopted interstate rate caps in august of 2013 in what has been the result? despite dire predictions of losing phone service and lots of insecurity we have actually seen increased call volume as i is 300 percent in letters to the fcc expressing how this release has impacted lives. i hope we answer the call the permanent rate caps on fees for all of these customers this summer. i am grateful for the opportunity to appear before you today and look forward to answering any questions you may have. >> thank you, commissioner. >> thank you, mr. chairman members of the community.

i have always held this committee and the highest regard given my past involvement as a congressional staffer with oversight hearings and legislative efforts. i recommit myself to being available. in my time at the commission i i have enjoyed the many intellectual and policy challenges presented by the innovative and ever challenging communication sector. it is my goal to maintain friendships even when my fellow commissioners and i disagree. to provide a brief snapshot, i have only but the chairman of approximately 90% 90 percent of all items. unfortunately the percentage drops significantly for the higher profile open the house. one of the policies have not been able to support is the insertion of the commission and every aspect of the commission. and ends justify the means approach. even worse the order upon's

authority to review current and future internet practices under vague standards such as just and reasonable, unreasonable interference or disadvantage and reasonable network management. this is a recipe for uncertainty and ultimately and providers. nonetheless, i continue to suggest creative ideas to modernize the regulatory environment. for instance i have advocated any document be considered in open meeting should be made publicly available at the same time it is circulated to the commissioners. under the current process i meet with numerous outside parties prior to an open meeting but am precluded from telling them having read the document that their concern is misguided or already addressed. the stated objections are grounded in resistance to change and concerns about resource management. in addition the commission has questionable postadoption process that deserves significant attention. i i generally refrain from commenting on legislation but appreciate the idea put

forth to address these and other commission practices such as abuse or delegation that what the public at a critical in stages. i believe these proposed changes would improve the functionality of the commission and consumer access to information. i have been outspoken on many issues such as the need to free up spectrum resources. i look i look forward to working with my colleagues on this and many other issues and stand ready to answer any questions. >> commissioner. >> chairman, ranking member members of the community thank you for the opportunity to testify this afternoon. it has been an honor to work with the members of this committee on a wide variety of issues. it is a particular privilege to appear before you today.

when this committee held my confirmation hearing he was kind enough to introduce me and i can only hope his kindness will continue. i last testified in front of this committee march 122013. since then things have changed dramatically. i wish i could say that on balance the changes have been for the better. unfortunately, that is not the case. the foremost example is the commission's decision to apply title ii to the internet. the internet is not broken. the fcc did not need to fix it. our partyline votes have returned a 20 a 20 year bipartisan consensus in favor of a free and open internet. with the title to decision the fcc voted to give itself the power to micromanage virtually every aspect of how the internet works. this decision will hurt consumers by increasing broadband bills and reducing competition.

the order was the order was not the result of a transparent rulemaking process. the fcc has already lost in court twice and its latest order has glaring legal flaws that are sure to keep the fcc mired in litigation for a long time. turning to the designated entity program the fcc must take immediate action to end its abuse. what once was a well-intentioned program has become a playpen for corporate giants. the recent auction is a shocking case in. dish with annual revenues of 14 billion in the market of over 34 billion holds an 85% equity stake into companies now two companies now claiming $3.3 billion in taxpayer subsidies. that makes a mockery of the small business program. the $3.3 billion at stake is real money that can be could be used to underwrite over

580,000 programs school lunches were over 6 million children or incentivize hiring of over 138,000 veterans were a decade. the abuse had an enormous impact on small businesses from nebraska to vermont denying spectrum licenses that they would have used to give rural consumers a competitive wireless alternative. the fcc should quickly adopt a a further notice of proposed rulemaking so we can close loopholes before the next spectrum auction. chairman, ranking member members of the committee for thank you for giving me this opportunity to testify. >> thank you, commissioner. >> good afternoon chairman, ranking member, members of the community. today today communications technologies account for one 6th of the economy and are changing and a breathtaking pace.

how quickly? well, consider it took the telephone 75 75 years before it reached 50 million users. to reach to reach the same number of users television to 13 years and the internet took four years. more recently years. more recently angry birds took only 35 days. [laughter] so we know that the future is coming at us faster than ever before and know that the future involves the internet. our internet economy is the envy of the world. it was built on a foundation of openness, and that that is why i support network neutrality. with an eye to the future i want to talk about two other things, wi-fi and the homework. first wi-fi. few of us go anywhere without her mobile devices in our palm, pocket, or purses because every day in countless ways our lives are dependent on wireless

connectivity. while the demand for our airwaves grows the bulk of our policy conversations are about increasing the supply unlicensed airwaves available for commercial auction. this is good but it is time to give unlicensed spectrum and wi-fi is due. we should do that because it is, after all how we get online how wireless carriers manage their network with licensed spectrum. wi-fi is a boon to the economy. there are there are studies that demonstrated is responsible for more than 140 billion dollars of economic activity every year command that is big. big. we need to make unlicensed services a priority. the commission is doing just that with our work and next year with our work on the 600 megahertz band. but it is going to take more than this to keep up with

demand which is why the time is right to explore greater unlicensed use in the upper portion of the five gigahertz band. going forward we need to be on guard to find more places for wi-fi to push. second, i want to talk about the homework. today today roughly seven in ten teachers assign homework that requires broadband access. fcc data suggests as many as one in three households do not have access to broadband at any speed. think about those numbers. where where they overlap is what i call the homework. if you are a student in a household without broadband today getting your homework done, just getting your homework done is hard. it is why the gap is now the coolest part of our digital divide but it is within our power to bridge. more more wi-fi will help,

as will recent efforts to upgrade connectivity and nation's libraries. more work will remain in the fcc needs to take a a hard look at modernizing programs to support connectivity and low income households, especially those with school age children. the sooner we act the sooner we bridge this gap and give more students a fair shot at digital age success. thank you. >> thank you, commissioner. we have a lot of participation on both sides today. i no it will be hard. a lot of questions we would like to ask. let me start by talking a little bit about an issue that is important to me. laws and policies laws and policies that are outdated often the tools that are arbitrary which ultimately limits consumer choice and raises cost. the current universal service fund rules require a rule to provide voice

service in order for that carrier to be eligible. if the same rural consumer decides to buy only broadband services without telephone subscription the carrier is no longer eligible to receive support for that subscribers line. this contradicts and undermines the mission of the new broadband centric usf. it makes broadband more expensive and increasingly threatens the sustainability overall communications networks. last year senators gardner clover chart, and i love letters to the commission that urged the fcc to propose rules to solve this issue. nearly a year later it remains unsolved. ..

in addition to other things who would like to talk about as well well. i have a father who is 95 years old. he was in my hometown of myrtle south dakota with a population of about 500 people and he is a user of the internet. it strikes me if i had to suggest to my dad that we are going to regulate the internet that he uses with a law that was

passed during the great depression when he was 14 years old i think you would probably be flabbergasted. essentially that's what we are doing. we are trying to take something that was designed for a dare -- very different era and squeeze it and try to fit it into modern technology. one of the issues that statute allows for is rate regulation. now i know chairman u. have contended that no rate regulation is going to result from the open internet order. let's just say hypothetically that someone files a complaint at the fcc alleging that the rates they are paying an internet service provider for broadband service are not just and reasonable under section 201. let's say commissioner pai as a result of title ii reclassification isn't the commission legally obligated to

investigate and rule on that type of the complaint? >> mr. chairman that is absolutely right. order opens the door to the commission in courts around the country and at that point it would be up to the commission to adjudicate whether a raid is just and reasonable. it limits itself to say that we don't engage in anti-post-regulation that says nothing about post-rate regulation that's why it's a very real prospect. >> so with that circumstance were to happen commissioner rosenworcel if the commission says it's unreasonable to the fcc require the afp to adjust its raids on the isp? >> what we don't have such a case before us right now but i think it's important as a matter of due process than any provider that is having difficulty succeeding in getting the interconnection they need to provide service has the opportunity to complain to the

commission and seek resolution. >> so the answer is yes the fcc could. >> we will see when we have a complaint before us. >> and i'm not saying you should come i'm saying you could. commissioner clyburn and a raise complaint case how will the fcc decide if they rate is unreasonable or in just? >> so given the same context to set up one of the examples i gave in my opening statement was on a firm to assault at the bars incredibly high when it comes to the scenario that you put forth. we waited over 10 years to even think about addressing what was obviously a market failure so again we will know like my colleague said when something is before us but it passed its prologue bar is extremely high for that case to come to the resolution in which he put forward. >> but you would have the discretion to determine if they rate is unjust or --

seamy. >> if that decision is made up at that conclusion is reached the fcc could in that circumstance act in a way that would adjust rates or impose fines? >> i jokingly say even though i'm from the south that we have the other south, south carolina and that we have been known there've been interesting people who have predicted the future. i unfortunately do not have that talent. >> i would have a hard time i would think explaining how that adjudicatory process would not be rate regulation. and like i said granted the chairman has said that something which they would forbear but if the cases brought forward it strikes me at least that the fcc has an op occasion to respond.

i also think that things that are decided by this commission certainly don't bind the future which is why working constructively on legislative solution that sets clear rules of the road is the best approach to doing this. but that being said my time has expired. senator nelson. >> chairman wheeler, rate regulation, unbundling, tara singh these are things that some of the big corporations are quite concerned about and no doubt you have had conversations with ceos of those corporations and you have explained what your order is. how did you explain it and what was their reaction? >> thank you senator.

rate regulation tariffing all of those surf for. we are not using them out of title ii. the point that senator thune was just making 1993 senator markey and congressman markey created section 332 of the communications act in the house which was sought by the wireless industry. when i asked to be treated as title ii common carriers and to have forbearance from parts of the act that are no longer appropriate in a monopoly situation. that included specifically as a decision by congress section 201 so the kind of example that was

just raised about section 201b being some kind of a backdoor into rate regulation has existed for 22 years in the wireless industry and the commission has not been confronted and has not acted in this kind of way that suggested some kind of backdoor regulation. in fact what has happened is with the absence of consumer rate regulation, that industry has been incredibly successful. the wireless voice industry has had $300 billion in investment since them and it was that model that is actually more forbearance than was created for the wireless industry that we patterned the open internet order on so that it is not your grandfather's title ii. title ii has 48 sections.

27 of those sections we said we will not use which is 50% more than mr. markey resulted in 22 years ago so i think the record is pretty clear that if we say we are not going to have consumer rate regulation, we are not going to have tariffing and unbundling and we explicitly remove those sections and say we are not looking at those sections and we pattern ourselves after something that has this kind of a two decade record of not having these imaginary horribles happening at runs a pretty good course. >> and things like transparency and a host of other issues there is wide acceptance. >> the interesting thing is there are for regulatory actions in our order. no blogging, no throttling, no pay privatization and transparency.

which are the same things the legislation and the chairman and others have introduced contain those four and the isps run ads saying we are all for these and we would never think about doing these kinds of things. those are the four regulatory constructs. the thing where everybody gets agitated as we also say and there should be a basic set of ground rules for things that nobody can anticipate that are not prescriptive regulatory, saying we are smart therefore you will do this but are saying well let's take a look. is that reasonable? is that in the consumers interest? is that in the public interest and on a case-by-case basis and the fascinating thing to me sir is the isps for years have said we don't want the fcc to have such broad rulemaking authority. they are looking at things like

the ftc on a case-by-case basis and now what happens is we come out and we said okay we do something that is likely ftc on a case-by-case basis and everybody says oh that's terrible uncertainty. if only they would be making rules and telling us what things were, you can't have it both ways but i think what we have built is common on four aspects, the only four regulatory aspects and then says there needs to be a set of rules and there needs to be a set of standards and there needs to be a referee of the field who can throw the flag if somebody violates the standards. >> and i would just conclude mr. chairman by saying that certainly the five commissioners in front of us would never do this kind of dastardly stuff but what a future commissioner do it and the flipside of that, and i would like you to comment

chairman wheeler what about the future ceos that presently you have confidence in them but what about someone that subtly wants to go beyond the scope of your intense? >> ceos comments senator and they say you know we trust you. we think we agree with everything but were not wild and crazy and we think there will be decent responsible decisions that we trust you but what about that crazy person that's going to follow you some years down the road? my response is i the same way about you sir that you have said you would never do these kinds of dastardly things to the internet but what about the wild and crazy ceo who follows you so all we are trying to do is say

let's have a basic set of rules. is it just come as a reasonable and is there a referee on the field that can measure against that yardstick and throw the flag if appropriate? >> senator nelson. senator fischer. >> thank you mr. chairman ranking member nelson. chairman wheeler there a number of members of congress who believe that new technologies can help the united states remain innovative and i'm working with senator booker senator schatz and sandra ayotte on the internet of things. i think that's going to be a very good bipartisan resolution and moving forward hopefully legislation so we can see that innovators are able to grow their businesses and they are going to be able to solve problems with clear rules and clear expectations. i think that's necessary and innovators have to have that certainty out there. when i look at the general conduct rule that is proposed

that you have here i'm concerned it could jeopardize that regulatory certainty that i think we have have to have that we are going to remain competitive. the electronic frontier foundation has described this rule as an overreach and confusing. specifically the eff said the fcc believes it has broad authority to pursue and a number practices hardly the narrow light touch approach we need to protect the open internet. "the wall street journal" reported that at a recent press conference you said with respect to the general conduct rule that when they don't really know, we don't know where things will go next the order says the agency will watch, learn and act as required. a process that is sure to bring greater understanding to the commission so my question to you is how can any business that's

trying to innovate have any kind of certainty that they are not going to be regulated by the fcc under what i view as a very big world that you have here? for example when will it be applied, what specific harms does the general conduct rule seeks to address that the rest of the precedence open internet order does not capture? what are you after? >> thank you senator. first of all i would like to identify myself as an entrepreneur and as somebody who has started multiple companies and spent the 10 years before i came into this job as a partner venture capital in investing in those companies. i know from my experience that the key to innovation is accessed and when a gatekeeper is denied access innovation is stifled. that is what we want to avoid. we do not want to be in a

situation where we are having prescriptive rules. we want to be and what we have structured a something that says okay let's ask a couple of questions. what is the impact on consumers of this action what is the impact on content providers, those who want to be delivering what is the public interest? and i think we can probably all agree that nobody wants to sit by and see something evil happen to any three of those legs of the stool. and those are the tests. and we look and say okay now what happens when those three legs of the stool with this kind of inaction that we have had a complaint on and the important thing is as i was saying to senator nelson, that this is not us saying we are so smart we

know what you should do. this is specifically doing what they isps have been saying to us, don't make rules but rather look at things on a case-by-case basis. that is what we tried to build them, that kind of flexibility. >> but that flexibility though what do you do with these entrepreneurs and innovators that are coming up with things that i can't even imagine and there's a process that they're going to have to go through with the fcc that they don't know what they are going to be required to go through it or not. do they way to get their idea hijack? >> we are talking about delivery services. we are not talking about regulating two guys in the dock in a garage and they have to get permission. >> do you think that's clear? >> yes maam we are very clear on that and that is an essential component of this. first of all it's questionable

what our reach would be in terms of statutory authority. we are dealing with the delivery of what these creative people want to do in making sure that they have open delivery. >> and if i could just switch gears here, in your testimony read you are trying to move forward with a voluntary incentive auction no later than early 2016. are you committed to that? >> yes maam. >> thank you. >> thank you senator fischer. senator mccaskill. >> i want to begin by associating myself with commissioner pai's remarks about designated entities. we have visited about this. the rest of the story that was not explained is that not only was this a very big company using small businesses to get a 3 billion-dollar bandage, a

3 billion-dollar damage, one of the entities that was useless and alaska native corporation which i think most people are aware that they don't have any rules about being small. so it is insult to injury because alaska native corporations are multibillion-dollar multinational corporations. they get special deals under our law. they don't have to compete. they don't ever age out of the program. they never get too old for the program. they never get too big for the program and you can front legally so this is really think outrageous and i hope we can figure out a way to get to the bottom of the credit wants to talk about lifeline a little bit. i visited with many of you about lifeline. i think it's a program that began under i believe president reagan, president bush. it was a subsidy that morphed into a program without any kind of controls, without any kind of regulation and it was a mess.

now i know we have had some enforcement but i know we have had a pilot program on expanding its broadband. let me ask you first chairman wheeler when will the report on the pilot program be available? >> senator i can give you specific day but i would say in the next couple of months. >> there hasn't been much in a year. there is a list of reforms i think that include and if any of you disagree with any of these reforms if you would speak up for the record i would appreciate it. taking eligibility determination at the hands of carriers. competitive bidding, making sure consumers have some skin in the game placing a cost cap on the program. anybody disagree with those for reforms? okay i would like to see those instituted and i would like a discussion from you about

whether or not it makes sense to continue the lifeline program. doesn't make it make more sense to make it a broadband program looking at the homework app looking at the capability of making calls over the internet. doesn't it make sense to institute these structural reforms as we transition this from a program where no one has given the game skin in the game and we have allow the carriers to commit massive fraud in this country? doesn't make sense to convert this whole program over to broadband and i would love your take on that. >> i'm not sure -- the. >> i would love anybody to speak up who disagrees with doing it. >> i was showing my southern braces. i cannot sit before you and say i necessarily agree with everything you laid out. one of the things i am adamant about that put forward five

principles last year one of which i think is the most important ever get to the heart of some of the problems we are having is getting the companies out of the game. they should not be in that space. when it comes to grocery stores do not certify brunette people eligible for snape. they are not in that game. doctors do not qualified people for medicaid. providers should not qualify people for that program. it should be an independent and i truly believe that a lot of the issues that have plagued this program if we take them out of that would go to the heart of what we are seeing. >> i'm willing, commissioner pai and commissioner o'rielly have had it opportunity to talk the chairman about this idea. would you be willing to work

with the democratic commissioners on a program that had controls and had reforms and at that transitioned over to broadband program? >> absolutely and as you may know i put forward some of my principles and i thought they would be helpful to start in a review of an existing program issues that face before we go to the broadband, expand the program to broadband. that hasn't seemed to be the direction we have been getting signals internally so reforms i think we could do going forward. think we should have a conversation and should go in place before we go there. >> how many in lieu of? >> i would be open to that as well. >> i want to thank you and your leadership on fcc fiscal responsibility including lifeline. with respect to lifeline and broadband is critical for us to learn the lessons from the pilot before expanding the entire broadband industry.

secondly i put forward in the speech citizens against government waste reform and is critical for us to goes first to ensure the program is on stable footing. a lifetime program is that the all-male one of the universal program services that is not cap sopa don't have the basic reforms if we expanded to include broadband there is no telling what kind of problems we might encounter. >> sure. in 1985 when ronald reagan was in the white house that's when we started this program. it was last updated during the bush administration. it's time to modernize this program along the lines you describe, make sure it's free of any waste fraud or abuse and then make it address broadband and things like you described with the homework app. >> this is not a question of how do we take what is there now and do a paste here are a change there. we have to look at this entire

program soup to nuts and say wait a minute they started in a twisted-pair environment metamorphosis i sent to a mobile environment. we now live in a broadband environment. why in the world are we sticking with the decisions of the past? >> great, thank you all. >> thank you senator mccaskill. senator heller. try to keep it to five. >> thank you mr. chairman thanks for calling this hearing. on the statement for the record i would like to submit -- i want to thank the commissioners for being here and chairman thank you for attending. today what i would like to focus on is how rules are adopted and commissioner o'rielly your opening statements and comments were near and dear to the sum of the comments i want to make today but before do that i want to make an observation that i have. it is my opinion that the purpose for the affordable care act was to guarantee all

americans have the same bad health care. i believe this title to decision made by this commission is to guarantee all americans the same bad internet service. i also believe two things that i don't believe i'm wrong. one is the purpose of this open internet order is one to regulate and restrict content and never two is to open the door to taxation. i would like commissioner o'rielly and pai to tell me why i'm wrong. >> center with respect to taxation you write it opens the doors to billions of dollars in taxes and fees on broadband but with respect to reclassification that along we are expected kids in order but reclassification will lead to position at new broadband taxes and if you look at some and it promises some of the fcc is considering with the

universal service fund that extra spending has to come from somewhere. that somewhere is going to come from the consumer's pocket. in addition to taxation one of the issues that has been relatively unremarked upon us up unremarked upon this affect the reclassification opens the door to a lot of taxes on the state and local level. for example with respect to state property taxes a lot of jurisdictions tax telecom providers a higher rate than they did on telecom broadband providers. the district of columbia where we said d.c. imposes an 11% tax on general gross receipts. that is an 11% tax off the bottom line that broadband providers will have to pay an cost will be passed on to the. the taxation aspect of this completely respective of the tax freedom act which is act which does not apply to fees associated with broadband is so critical for us to keep mentioning because it does affect consumers were where it hurts the most. >> senator i don't do health care anymore so i had no comment regarding that part of your

point but in terms of your substandard comment on the content i may ever find and say i do believe eventually decide in the direction we are going will get extra providers. if you look at where we are going on interconnection and how far we have gone on interconnection there are word lines between what is the middle mile and what providers are offering today. so in terms of their structure. to believe eventually this is going to affect providers and the wonderful benefits they bring to the american economy. >> i want to go your opening comments calling for admittance to a rule at least 21 days prior to publication of her rule that would be displayed and made available to the public. i don't think that is a partisan issue. i think there other ways to make the fcc more transparent. accip suggested for example that

i have concerns with staff changes that take place after votes have arctic been taken. i think i'll commissioners should be able to ask for a vote on any order of bureau passes. commissioner should be able to collaborate more freely but a rule that impacts the economy by more than $100 million should be subject to a cost-benefit analysis. commissioner o'rielly i believe that would make or increase the transparency and the collaboration of the commission that you have but i guess the question is one do you agree with that in and two are there other suggestions you believe would add more transparency? >> there are some good changes that i would wholeheartedly agree with but i should be clear i don't think it's reflective of the item we have just talked about. this issue applies

across-the-board and it's not just about net neutrality but it should apply going forward for everything is certainly on the 21 day availability. i have a host of ideas that would help in my time being a congressional staffer and now being someone who is famous for 15 months and you highlighted thethe delegation issued by the one interesting thing, we have a ununiformed situation now where is called a 48-hour rule. in some instances we are notified we have 48 hours and we are basically given a heads-up for 48 hours but only certain instances. sometimes it's 48 hours and sometimes as 24 hours and sometimes a zero. i got an e-mail on friday saying as a courtesy we are letting you know. that's how it comes to me. it's a courtesy they are letting me know what they're going to do and i think that's the wrong approach. i went to the process to get him the commission and i'm happy to vote in a quick and timely way

but i don't think it's something as a courtesy i'm allowed to know what's happening at the commission. we see that problem the delegation area where things get delegated by previous commissions that i was part of an alpha delegation authority continues. i don't even have the ability to track what is being decided by the bureau separately from what's happening on my level. >> thank you very look forward to working with you. mr. chairman i look forward to working with you on the reauthorization of the fcc but i hope some of these ideas what myself and the commissioner mansion could be put forth and look at as we move forward. >> i put -- appreciate the work you put into it already and i look forward to working with you on it. >> senator blumenthal. >> thank you mr. chairman thank you for working in a bipartisan way on this hearing of the bills that we will be considering relating to these issues. first of all thanks to all of you for being here today. chairman wheeler i appreciate your remarks about the wild and crazy ceos in the wild and

crazy commissioners who might follow the present occupants of those offices. i want to assure you no one ever asks us about the wild and crazy senators that may follow up. i'm not going to go any farther with that. i want to express my strong support for the fcc's open internet order. this decision was unequivocal, emphatic and ethical and its effect. it was a victory for consumers and innovators. that's all too rare in washington these days and i know it will be challenged in the courts and i want to commit to you that i would be pleased to lead whatever amicus efforts may be necessary to support it. i believe there'll be a lot of support for such involvement by my colleagues and i believe it is strongly founded in the authority that the united states supreme court has provided repeatedly plunged chevron most

recently under smiley face bee citibank and you alluded to it in paragraph 329 of the order. i also want to express my gratitude to all of you for joining in the bipartisan vote to repeal the sports blackout rule that i long called for with my colleague senator mccain. we plan to pursue that issue and the fans act because the sports leagues unfortunately have themselves continue to retain the power to blackout games to their private contract agreements and my special thanks go to commissioner clyburn for starting the proceeding could commissioner peco for focusing the agency's attention on this issue but i want to express to all of you the action that you have taken, strong and again

emphatic action on cramming particularly to commission a rosenworcel for coming to connecticut about the pernicious effects of cramming and the attention that they need to pay for it but this action on stopping cramming through the settlements that you reached with at&t and t-mobile i hope will lead to rules that go beyond those settlements. as important as they were i think there need to be rules established and embodying the conditions that were expressed in those settlements that require express consent for any third-party wireless company and a wireless carrier allows third-party access to their customers bills.

ensures third-party bills and provide free service to block third-party charges should they choose to do so and i would like to know from each of you, you can say it's simply yes or no whether you commit to updating the fcc's rules to apply these forms to hold industry and make sure industry protects their subscribers from all of these deceitful practices rather than profiting from them. i'm assuming that you would agree and you can indicate simply yes or no. commissioner clyburn? >> yes. >> yes. >> guests. >> guests in two flavors. one is used to just and two we are going to keep enforcing them. >> thank you and i hope it will be possible for those rules to be promulgated.

i don't ask for a firm commitment mr. chairman.i hope by the end of spring weekends as bait those rules will be on the books. i would like to just turn briefly to the comcast time warner merger. as the fcc reviews this merger i would like your assurance mr. chairman that you will take into account anything that the fcc can do to protect consumers because i think a number of us are concerned about the potential increases in prices and reduction in consumer choice that could come from continued excessive consolidation in the broadband marketplace. >> senator as you know this is an adjudicatory -- adjudicatory proceeding and i should not opine as we are sitting in judgment. the responsibility that we have

is to make a decision in the public interest as a necessity and that will be the basis of the decisions. spann thank you. thank you mr. chairman. >> senator markey and then senator gartner. >> thank you so much and i want to congratulate you on your title to decision. think it's very consistent with the positions the fcc has taken over the years including mr. chairman what you mentioned in 1993 about the light touch approach for the wireless industry under title to that led to an explosion of hundreds of billions of dollars in investment in that sector. that's in the best tradition of what the fcc does and i think under title to you will be able to continue that as well ensuring not only that there is a robust competitive barker place but also that privacy is

protected and the rights of the disabled are also protected that we move to ensure that those additional protections are built into the law. and i have a letter mr. chairman from 140 advocacy groups and companies who support the title to decision of the fcc and i would like unanimous consent to have this put into the record. >> without objection. >> thank you mr. chairman. i would like if you could just to talk a little bit more about title to and how in fact it was rate regulation that made it possible for the universal phone system across the country and without it and the subsidies that flew within that system that we could not have had universal service. the opposite here is the goal of the fcc in terms of your

intention to use the 1993 wireless precedent as they approach in what you think is wisest. can you expand upon that again? >> i think there are two historical approaches. the first is the internet wouldn't have existed at the fcc hadn't required that telephone companies controlled who was able to attach equipment to the phone network and it was those old screeching hayes modems that we bought and hooked up to our first-generation home computers that allow the internet to begin to take place. so the root of the internet is an open access. and then the question becomes okay, how do you balance out the fact that there needs to be consumer protections at the same point in time that you want to

be incentivizing competitive construction of ever faster speed capabilities. and it was clear because everybody knows i had an evolutionary process in my own thinking on this and the realization that in 1993 which you have structured in section 330 to produce the kind of access where there was not rate regulation, there is not tariffing about these things that used used to, this old structure. the most important thing they are senator i think is that the realization that on the day after this order takes effect the consumer revenues for the isps should be exactly the same if not better than the day before it took effect because we

are not touching those. and one of the things that is key here also is that when the president made his announcement and joined the 64 members of congress including you and many on this committee who said that we ought to be doing title to the following day stocks went up and so if the concern was that there is a negative impact of this kind of light touch regulation that allows rates to be set by the market not by government officials there was a concern that was going to have an impact on capital formation and it certainly has been disproved and disproved again after we made our decision and the stocks are beating the s&p. >> it if i may say what we have done is you have created a more predictable investment environment where we know 60% of

all venture capital in america two years ago went to internet and software companies knowing they could get in a reach their customers and they would not be discrimination there would not be throttling and blocking and they could reach their customers. that is where the energy and the growth is in the sector and you have done a great job in identifying those tens of thousands of companies that are out there. similarly i just want to say here that the internet tax freedom act originally passed in 1998 prohibits states and local governments from taxing internet commerce and is reauthorized every few years. this center next freedom forever act and i'm original co-sponsor so i think we have to be careful in this area and i would just say to you commissioner rosenworcel that you have done a fantastic job. the whole commission has on focusing on a rates. as we passed new trade bills as

we speed up the pace of change in our economy we have to make sure that we speed up the pace so young kids get the skills that they need for the jobs in our country. you're talking about ttip or ttp and he wants to speed up the pace of change you have to speed up the pace of change for kids and by raising the rate to 4.9 billion for here you are going to close up homework gap and make sure the kids in the poorest homes get access to the skill sets they will need to compete with the smartest kids in the world and i congratulate you for that because the vision of what america has to be in this global market. >> thank you senator markey. senator gartner. >> thank you mr. chairman for holding the hearing and thank you to the commissioners for joining us today. chairman wheeler chairman thune cover this so i want to reiterate what he said. last year led almost 90 members of the house members of congress signing a letter asking the fcc to adopt a mechanism for rural

rate of return characters. we talked about that and i wanted to reiterate my support for a tailored update of the mechanism that would allow carriers to move forward with broadband deployment in areas where it's needed. >> if i can do a commercial here for 30 seconds. >> would have the same unity that you're hazarded earlier? >> yes. we are doing that. >> the great thing about the rate of return is that there are these small vibrant heart of the community organizations in very small communities. getting a court amongst them as to the best way to help them do their job is worthy of henry kissinger. i hope that we can have the help

of u.n. senator thune and the committee to help send that message the said hey folks it is time to quit bickering over details. let's have a common approach because we are going to move and we will make that decision if we have to make that decision. but it sure would be good if we understood that the various segments of the industry could pull together and say hey this is the kind god. >> guiding to. >> we are so close to each other i feel like we ought to have a -- [laughter] commissioner clyburn if there's one thing the fcc title to perceiving and something that senator heller talked about the need for greater transparency for such sweeping regulatory reach. it makes little sense the general public did not have access to tax the order until two weeks after the commission voted on it. my question to you commissioner

clyburn is this should the fcc publicly release items put on circulation prior to the commission vote especially those that significantly impact the economy? >> one of the things that i like to talk about in terms of this process it is among the most open and the world. we had a notice and 4 million comments that allowed people to weigh in. one of the things i'm also conscious about when we talk and i'm open to any type of ways that we can improve the transparency and the like is there is a deliberative process that takes place among us that i would love for that to continue. i am able to speak in an unbridled fashion and one of the things i'm worried about in terms of releasing things what i would say is prematurely is that would be be compromised. if i have a question or concern or want to get some feedback i would not like for that to necessarily get out before it

come to terms with the exchanges exchanges. there are quasi-judicial body and abide by apa requirements all of those things i think need to be fleshed out before we make any type of ruling in that direction. >> thank you commissioner clyburn and commissioner are really spoke to this. commissioner pai? >> i completely agree these documents should be revealed at least three weeks before the commission vote. the point of this particular case the fact that it wasn't revealed created a big haze of confusion both among supporters and opponents in what you saw in the days leading up to the order was a substantial portion of the order was revised with respect to the so-called broadband subscriber access service in response to a particular company and special interest that wants it removed for a variety of reasons but it is a great deal of press interest. if you google it you will find a lot of people wondering what was to change about and how does it

affect the order and how we'll respond to it that because of the sunshine prohibition of those people were able to have been put. if we had our product on the table on day one what is circulated the american people could see them ultimately would have made our product better. it would help it be more legally sustainable. >> i'm running out of time but a couple of questions and perhaps you can work out answers for the record. a number of petitions before the fcc for considerations for forbearance petitions and other petitions that have been before the fcc and wondering how we can make sure that these petitions are addressed in a timely manner so perhaps you can get back to me on what internal processes should be changed at the fcc to have a more timely processing and one last question chairman wheeler $25 million transferred out of the fy2016 budget from the universal service fund to fcc's general budget. i'm concerned that could affect

some things that i'm concerned about him that is rural funding usf issues. chairman wheeler what additional additional, not ongoing agency activities will this funding shift pay for? >> well it's proposed and the attitude is this, the ideas this. the money has to be spent. that kind of money has been spent traditionally on the activities of the wireline bureau and others on usf. we fund our auction activity to the revenues from auctions. the question is why should universal service activities be funded by people who are not involved in universal server so why should a broadcaster have to pay fees for programs that they are not involved in? why should some marine licensees, etc. etc. so all this

was was an attempt to say okay how do we make sure that they are balancing each other out because it has to be -- and at that decision is that the congress wants to say hey we want to make sure broadcasters pay for this so be it. what we were trying to do was to say what makes logical management since? >> let me clarify so the $25 million isn't dedicated to anything. it's just been put back into the general budget? >> the money gets spent so the question is does that money kid raised by the general assessment that goes against everybody who is involved with the commissioner orders to get raised through the program that it relates to? there will be a significant decrease for broadcasters for instance if they no longer contribute to something that

they do not participate in. >> thank you. senator gardner. senator booker. >> first of all i wanted to say thank you to all five who are serving our country. often debates in congress get personal but every single one of you have done a great service in trying to achieve noble aspirations and goals and i'm grateful for your work. some of the individuals issues have been important to me. honorable clyburn criminal justice reform is incredibly important to mean what you are doing with your advocacy and your fellow commissioners and with the chairman to me is absolutely essential to end the nightmare over broken families and those linkages that are so important for us to bring justice back to our legal system. i just want to jump in and commissioner wheeler gave you a chance to address some of the things that i hear said consistently that i see no

evidence for whatsoever and i would just like to give you a chance to talk for the brief time that i have a little bit about this idea that somehow what you did was antibusiness that somehow it undermines the ability for companies to thrive in this marketplace. some of the end and other folks talks i'm a passionate believer in the importance of the staff are free and open internet, net neutrality. it is critical for the growth of the american economy and more importantly as i work with kids especially urban kids and see those skill sets that they can learn democratizing force of internet access for education information, job opportunities business opportunities access to capital capital. all that excites me so as a guide who is pro-business i wonder if you can address the issue because when i read that t-mobile, google, cablevision windstream have the knowledge

using title ii with forbearance doesn't change their investment plans. executives at verizon and folks in my stake comcast time warner cable charter of have said the same thing to their investors. wall street and capital markets barely notice the title ii news. that's because investors understand the order and the fcc title ii framework does not regulate rates or impose so-called utility regulations. so wall street didn't budge, that the companies i know and talk with on a regular basis it's not going to affect their behavior, so what these rules too plain and simple is keep broadband providers from discriminating. we address the mountain of evidence rebutting the speculation about investment harms and i think users deserve the right to an open internet and it's not just rhetoric and how title ii in a sense does not undermine but in my opinion

could provide an environment with more investment in this space? >> thank you senator. i think it would be hard to find a bigger capitalists sitting at this table than me. i am a c. e capitalist and have been involved in starting companies and helping build companies for most of my professional life. there are multiple keys to the success a risk capital enterprises. one is that we have to have access to the consumer. the reason that steve case was able to build aol as he was is because you have this open network that would scale like this. he could get six people over here and someplace in new jersey in seven people in boston in a couple of people over in albuquerque and excuse me and

out of that build a whole. if he had had to go serially to the various folks who provide services there and say can i get on, i get on which we have had so many times it would have been that successful. so open access is key to innovation and growth. secondly you need to make sure that those who are providing that access are getting the rate of return that they deserve because that's the only reason they are going to invest the capital to build the pipes to begin with. that has been a threshold issue with me from day one of this topic. and again i come back to the model that the wireless industry has used most successfully for their voice services and not having rate regulation, not

saying this is what consumer prices are going to be not having tariffing and saying you have to build something and unbundle it is a structure that encourages the investment and i think thirdly that is a reality that has been proved by the market. as you said, sprint says the works for them, t-mobile says they will invest. google fiber who has never been regulated under title ii since of course we are going to continue to build even though we are now under to title ii. cablevision says is not going to change our business practices. the small burr rate of return carriers we are talking about here in this hearing they filed in support of title ii because everybody understands that appropriately done title to provide certainty and serious

opportunity for return. >> i want to stop you there. i see the chairman benchpress mother wants to take them off. >> thank you senator booker. deferred that one from the record. we have senator daines up next. snack that's quite a statement from senator booker. >> my background was 12 years in technology and cloud computing part of start up we took public and we were part of their freewheeling wild west of the internet and to see what that does for value creation and jobs. i am one that believes in speed up like commerce and i'm just hoping the only constraints we will see in this incredible story of the internet is technology constraints but not regulatory constraints. it just gives me pause and i have great respect for my friends across the aisle here and some of the points

demonstrated that the capital markets in move with these announcements and ceos are saying things are going to be okay and his companies. i'm more concerned about where this goes long term. there've been a lot of hearings in washington and i go back and minister the record says what began as perhaps well-intended and good ideas turned into overreach. i've not seen many federal agencies and regulations ever diminished. they tend to only grow so i'm looking for kids and grandkids and where this has because i think we have very special here in america which freed an open internet. with that as background i do want to shift gears and talk about the transparency and accountability of the fcc. i'm concerned about the commission's routine practice of granting broadband editorial privileges to staff beyond technical conforming edits. commissioner o'rielly in your testimony discuss the problems associated with editorial privileges. can you describe specific examples of what needs to be addressed to ensure a transparent and open process?

>> i have had difficulty in the last meeting the chairman asked for, the bureau asper writes for editorial privileges and i objected and part of the reason was i had an opportunity to look at our manual and they are not contained within, there are no rules on what we have. there just practices we written down in the commissioner's guide to what the agenda meeting should be so what i've suggested is one we ought to codify our practices rather than having them as free-floating but two i've had a problem with the practice of cell. ..

>> he had argued that it had been done separately. then the interconnection issue would be separate. and here they put a footnote in and said no it's contained in here. they had to back out. >> just to be sure on that. what you you're quoting is a speech that i made over one year ago in which i said that i'm not so sure and i have been saying as we lead up to it that the

interconnection needed to be on the table. and this is not an editorial decision this was a policy decision put forth to everyone. >> bringing it back here quickly. >> okay. >> i would like to identify myself with the commissioner and the points that he made in his blog. i feel that he made some very valid points. and i think that we have to deal with it. he and i both locked in at the same time. and we were handed -- >> chairman, why did you choose not to have the entire commission revoked especially if they made extensive change? >> the changes without made or changes that were in response to the sense which we are required by law -- >> you make that available to

us? >> sure, it is on the website. >> rivera 26. >> it's on the website. >> okay. >> the final one that we voted on. >> yes, the final order is on the website. and that is the issue. the issue is -- >> we need to get to the bottom of it. the issue of transparency in accountability. >> the document as we voted on was not on the website. >> the final document. >> and the question has been back in point. >> then improving the transparency of the process. and i would like to associate myself with the individual that said that this is an editorial process and that the going back and forth if we'd open the

process up there are multiple things going to happen. markets are not going to understand that the commissioner wants to change glad to have you. what does that mean? this is a judicial rule that we exercise and we need to be going through and having the ability to have our own discussions. thirty seconds more sir. i think there has been a misunderstanding that at the end of the game it is the final ruling. because what happens is that you put it out in the next thing that happens is that people are going to file for reconsideration. what is reconsideration? it is the entire decision that is out there for everyone to see and then the public comes in and says no we think that you need to reconsider. >> i am out of time but just to summarize by saying that the stakes are awfully high as we

are looking at this stepping into title ii with the internet. i would hope that we can work to improve this process so that one can ensure that we have trust as well as other outcomes and with that i'm out of time. >> senator? >> chairman, thank you for enduring today's hearing and yesterday's hearing. thank you to all the commissioners for your great work because we appreciate it. i want to thank the chairman for the bipartisan process that he is undertaking to explore the possibility of legislating in this day. i am not clear that we will be able to get their. is i don't think that we have a meeting of the minds on the basics of the negotiation, which is to say that it's hard to imagine white house and senate democrats would agree to with legislation that would undermine the basic principles of net neutrality. and i think that there is some of this to enshrining those net

neutrality principles and statutes, but if we are unable to kind of reach common ground in terms of the beginning of a negotiation and i'm not necessarily hopeful, but i think it's worth exploring and worth discussing, i'm a little concerned about litigation risks not just on the title ii side but on the forbearance is side. so i think it is worth exploring and i also think that we ought to be direct with each other about what is realistic in terms of a legislative strategy or a litigation strategy. and i am not sure that at some point that we are not going to have to decide which is the practical course of action. can you tell me how you arrived at at the forbearance is. did you start with a net neutrality principles and then forbear everything else order how did you arrive at that? >> that is a great question. we started with this and those

19 that have clear clearly been a part of experience shown. then we said what are the other ones that in this situation are not applicable. that got us a list of 27 from the 19 earlier. >> so what remains that isn't theirs part of the net neutrality that hasn't been forewarned? >> the highlights. the big-ticket items. section 201 and 202 where this was out, section 208 which is the consumer protection aspect. section 222, which is which is the privacy act. section 254 which is universal

service. and that is probably the firsthand of priority issues. >> is it fair to say that this is unprecedented in terms of the number of things that have been forewarned? has that been done before at that scale? >> there was don for section 332 and has stuck. >> okay. >> it has stuck. >> has the commission in its history undone a forbearance? has the commission? there is this concern that he may have for barn all of these and a statue but that does not prevent that. is there any evidence that they would do that in the future based on past actions? >> section number 10 of the act instructs us that we must forbear if certain things are

part of that. if you were to reverse that there would have to be an on the record notice proceeding that follows section number 10 and says here is the record that builds. so technically you could and realistically there's a lot you have to do. >> my next question now which is how you could do the evaluation on an operational level. but i think the my question is in the sec history has been undertaken to undo a forbearance does it do that? >> not that i'm aware of sir. and again, which you would have to talk about, let's just hypothetically say that five years from now someone wants to come and end forebear on rate regulations. there will be a serious test that must be done to say what is

it that has changed. of course that will be and appealed decision within itself and it will be an open proceeding and it will have everyone in the country involved. so i think the ability to do this is going to be a high bar to hurdle. >> thank you mr. chairman. >> thank you i am reminiscing of the time that we had a major discussion about just and reasonable and the manipulation of energy markets. the majority of commissioners still had a long time and struggled about whether these could ever be just and reasonable. i would suggest that that interpretation is probably going to be left up to the interpretation of who is in the majority of the commission.

so hopefully people will get common ground on that as well as a framework. thank you for your work. i would like to follow up on the senator's question is a related to the auction of spectrum's. people are saying that we want to get it right and we also want to get it done. when we are talking about it the way for a third time i just want to make sure that we have all of the tools and information that we need but i think that this is for the rural communities something that we need to pair so that we get broadband networks out there. and we have any problems that are undiscovered that we think that will actually cause a problem in getting this done. >> starting in the fall of 2016.

>> it has never been tried. it has never been tried. and that is a huge problem. we are inventing. so when i walked in the door i said that we have to have a timeout here because i come from space that runs like you from software. and i have never seen the code works the first time. 's and and we didn't have an appropriate testing structure in place. so we delayed six months while we could put a red team in place, do the kinds of things that normally get done. but having said that i believe that we will be able to begin the auction in the first quarter of 2015 and we are managing our

goal and will bring the sport to the commission later this year in april times of the people who might be bidders we are on road trips which i'm not supposed to call road trips this is what they want to keep in mind. we are managing this for first-quarter 2016 options. >> besides the uncertainty. are there any other obstacles that you see at this point? >> well, we have a lawsuit that we must get through here. and it has been filed, but i am confident that we will get on the other side of that and be able to move on. we have a situation where, you know, everybody when you start to talk about the spectrum,

everybody wants a piece or to keep their peace or to not change. and we need we need to deal with that. the commissioner makes a incredibly valid point about this. we need to make sure that there is an unlicensed spectrum in here. congress instructed us to deal with this and use this that wireless microphones and others have been using and we have to find homes for them. so i believe that this is all doable. and i do not underestimate the challenge that we have been at it for three years. and so i can see light at the end of the tunnel and better than that we are managing to that. >> thank you. i felt inclination to speak but i have have a second.

>> if i could jump in i think the biggest challenge that we confront right now is the complexity as it is currently structured. to give you two examples the dynamic pricing proposal which is on the table is exceedingly difficult for members of the commission and myself to understand exactly how we are working in real time. so when you're dealing with this it is going to be exceptionally difficult. if you want to incentivize them to participate, this proposal would undercut the amount of money that the market would determine they are eligible to get. the second complexity is the potential variability and so you have some situation from which this might be occupied by a wireless character or a broadcaster. so how about interference will work is a very complicated issue and we have to get it right and we only have one shot, otherwise you end up with a difficult situation for the carriers and broadcasters alike. >> what the commissioner is

talking about are those kinds of issues that we have to deal with. >> i asked the question so we could expand on a little bit. >> mr. chairman the fcc it is an independent agency commission created by congress. is that correct? >> yes, sir. >> walking you through a timeline. i really only need yes or no answers to confirm that i have this right. on january 14 2014, the dc circuit struck down forces of the sec 2010 open internet order. in that decision in the dc circuit provided the sec with a roadmap to follow to crack net neutrality rules that it would uphold. is that correct? >> yes -- they said -- >> quickly. >> it was a solution if you're not going to do title ii. the reason we were throwing out this decision, the court said

is because they did not use title number two. >> than on february 2014 you announced intent to follow the roadmap that they laid out. is that correct? >> yes two than you circulated noticed of rulemaking that concluded that they should base the net neutrality rules on the authority under section 706. is that correct? >> yes. >> that was voted on in may may 2014. is that correct? >> yes. >> you're planning on holding a vote on net neutrality on that order in december 2014 based upon section 706 or a higher approach. is that correct? >> or a approach? no. >> so you did not announce your intention to hold a vote? >> i said that we were trying to do things in december and what we were trying to manage it at that point in time was a title ii section number 706 approach.

>> on november 10 2014, president obama announced his support for regulating the internet under title ii. were you aware of that announcement before he made it? >> they came to see me on november 6 i believe. >> so you are made aware of that a few days before that two. >> yes sir. >> ultimately we decided not to hold a vote on this order in december. >> that is correct. we could not get it done. >> yesterday told the government affairs committee delayed the vote because you do not have the time to complete an order for the meeting. >> i think i used a metaphor like that. >> finally the fcc voted to reclassify broadband services as telecommunications services under title ii unterberg 26th ,-com,-com ma 2015. is that correct? >> yes. >> the next day on february 27, the dnc sent an e-mail boasting that the fcc has approved

president obama's plan. did you see that? >> yes. >> do you think taking those actions would view your actions are determined by matt and you don't come to this conclusion? >> i was looking at this approach before the president filed his position and we came out with this approach. the president in his filing did not suggest that we could cover interconnection the president did not suggest the breadth of the kind of forbearance that we have talked about and he talked only in terms of doing something

with title ii. so i think we came out with something stronger than what the president filed with us. >> were you surprised with the about-face of chairman wheeler on his order of the internet two. >> are you concerned about potential lawsuits on will be for one? whatever that is? under this current rulemaking? >> yes, i think that there are significant legal thoughts and with respect to this alone, i think that they crafted a completely unprecedented competition analysis and the fact that the order repeatedly

at this time was unprecedented. >> there is going to be a great deal of uncertainty in terms of investment and how they view the internet over the next two years because of this ruling two. >> yes, if i could elaborate on this. they have told us that title ii the smallest providers have told us the same thing. it will hinder our ability to further talk about broadband. you could ask what corporate titan wrote that statement. and it was 43 municipal broadband providers including the very bodhran provider that

we visited who told us that title ii was a roadmap among the monopoly. and this has been the made repeatedly to this diluted title ii, and it is a recipe of success. that is completely not the case. the reason that we refrain from rate regulations on this is because the fcc expressly found that there was competition in the wireless marketplace and that these regulations weren't necessary. the market forces would protect the consumer here and the net neutrality order, the agency said there is not sufficient competition which is part of the reason that this is necessary. people are going to invest any way. the bottom line is that networks do not have to exist. the fact that google fiber is declining, right now they do not offer voice service. they have already dealt with fiber. the reason and they have said

this on the record is because there are title ii regulations. and it's strange to think that on one hand you can apply this regulation that is stronger than what the president suggested and then on the other hand revenues will not be affected. you cannot or you can sharing this but on a the other hand we are going to increase this to from this under the universal service fund. you have to pay the piper when it comes to title ii. the proof will be in the pudding in the months to come not in the ephemeral stocks. >> my time is up and i will say if it's not broken do not fix it. >> thank you mr. chairman. >> thank you sir. >> thank you very much. thank you for your presence here today. i look forward to this conversation and i have appreciated what i have heard so far and look forward to seeing some of you will again. okay i have had one-on-one

meetings with each of you other than the commissioner and i would welcome that up to some point in time when it fits your schedule. and i have actually enjoyed the conversations we have had and i appreciate the respectful manner in which that has occurred. let me ask as you would expect my focus will be upon rural providers and consequences to rural america. on net neutrality, then i'm going to shift to this issue. on net neutrality one of the providers has shared with me the regulatory burden that currently exists. they have a calendar of things that they do to comply with the regulations. three pages in front of me. they indicated that it would take -- and this is a less than 20 employee business covering less than a thousand square miles of service territory and has less than 2000 customers.

their calendar indicates that would include 62 different federal filing mandate that would work either 1400 personhours. i am worried that net neutrality and the order that the commission has entered will only increase that burden and in the same way i think that mandating health insurance is only valuable if you can find a doctor. mandating network management rules does nothing to protect a person that has no access to the broadband. many of our conversations have been about access to folks who live in rural places in the country. so let me ask i will ask the commissioner this question. because i would lose all my time in the answer. commissioner, how does the net neutrality rules impact

providers. did the commission collected data that would provide the commission and evidence input before making the decision related to net neutrality as for the cost of compliance and ultimately who paid the price of those regulations. >> thank you for your concern. i think that the title number two is when you have a devastating impact on customers. as it stands to build broadband networks given the sparse population and etc. it will make it exceptionally different for companies to take the risk and to deploy this to make that of the structure work. i use the example from my hometown would you know well and as it is it is tougher than to get a reasonable our turn at it. it's going to be challenging enough for them to comply with

these regulations and it's not going to be easy for them to deploy more infrastructure in the field and unfortunately the fcc neglected the only credible evidence when it comes to this. which was the statements of many companies that have said that broadband, title ii is a bad solution for the small rural areas. for example we have a letter from 24 countries all of which serve less than 1000 customers. one served for customers and they told us that title ii will badly strain resources because they don't have budget line about items for counsel. it will repeatedly reduce the ability to compete. one of the great ironies of this and its debate has been the key thing that people say i think when they say net neutrality is that we were competition. we want more broadband providers on better choices with better prices and faster speeds.

title to take us in the opposite direction. it affects smaller competitors and we see this in the industries. >> a want to make sure that you don't take all my time either. [laughter] >> i thought we had another standing here. >> setting a record for a 32nd response. >> the record and the information that we gathered in the record does not ignore the question you ask is been suggested. the npc a comedy association that represents all of these 20 kinds of companies, has filed an represents a consensus in the industry, saying that they supported title ii in this open internet. >> this is absolutely critical. what they supported, they already offer as the

transmission service, they do not assert this jurisdiction over interconnection. >> next time i will ask the commissioner, commissioner o'reilly. perhaps then either the commissioners can respond. >> thank you, my time is up. we always say that before we asked the next button. we have a great appeal that has been on file for four years. we would ask you to respond and it has not been responded to. we would ask for your commitment that we would get details. >> for four years, in 2011 we will follow up. mr. chairman, thank you very much and i will cement the rest

of my questions for the record. >> thank you, senator cruise? sumac thank you thank you for being here. the internet has become the an opportunity. and i believe that this proposes a profound threat on the internet. ..