promote greater security in our communications networks. i'd like to highlight not only what the fcc has accomplished, but how we conduct our work. the fcc is committed to smart responsible government we've taken significant steps to modernize our programs and ensure they're efficient and fiscally responsible saving billions of dollars. usf carrier compensation, lifeline, and each case these are examples of modernized programs whose reforms are collectively yielding hundreds of millions of dollars in annual savings already. in addition to our program changes, in connection with this review we've eliminated more than 200 outdated rules and five unnecessary data collections. we've identified two dozen more data collections for elimination. internal reforms like consolidated i.t. maintenance and new financial system has saved the agency millions of dollars. we've done everything i've

listed and more with the lowest number of full time employees at the fcc in ten years. maximizing the ability of 21st century technology to deliver value to the american people and in a smart and responsible way. that's the fcc's record for the past three years and that's our plan for ahead as reflected in our 2013 requested budget. to implement our -- the budget request a 2% increase to $347 million. this proposal is essentially flat for inflation -- adjusted for inflation. as in previous years the amount will be derived entirely from fee collections. the budget includes a few small initiatives primarily technology investments designed to save money and public safety investments aimed at saving lives. the budget provides a flat number of full time employees which represents the lowest number of ftes in ten years. the number of -- excuse me -- plet me conclude the wired to

wireless broad band sectors are important to our economy and global competitive. look forward on implementing the law and unleashing technology opportunities for our economy and the american people. thank you. >> thank you. i do want to compliment you all on finding the $6 million plus in cost savings and efficiencies. that's something we could talk a little bit about. i wish all agencies were doing what y'all are on that front. commissioner mcdowell. >> thank you. i'd like to focus on three matters currently before the commission. number one implementing the new auction line. number two, adopting universal service contribution reform. and number three exampling the complexities of rules governing

the maintenance of political advertising files by tv broadcasters. lastly i'd like to address the speckor of possible regulation of internet governance by an arm of the united nations. first spectrum reform to make more parts of our airwaves available to consumers. as a result of the law, the fcc will create and conduct the most complicated spectrum auctions in history. meanwhile, a debate continues over whether or how the fcc should shape the outcome of this process. history has proven that regulators attempts to overengineer spectrum auctions often backfire. i hope all of us can apply the lessons learned from the commission's past missteps as we implement this new law. our auction rules should be minimal and future proof allowing for flexible uses of spectrum as technology and markets change in the years to come. further more, i'm optimistic that we can create a structure that offers opportunities for small, medium and large

companies to bid for and secure licenses without having to exclude any player from the auctions. i'm confident that the fcc can get it right this time if it avoids regulatory hue bris. last fall the commission accomplished the task of modernizing the high cost portion by repurposing it to support next generation communications technologies all while keeping a lid on spending. the chairman and my colleagues deserve a lot of credit for it. the commission hazardsed some of the spending side of the kwaegs. perhaps more urgent is the need to finish the taxes side of the ledger. the contribution factor or the tax on american phone consumers has risen each year from approximately 5.5% in 1988 to

almost 18% this year. this trend is unacceptable because it is unaccept sustainable. we need to abate the automatic tax increase as soon as possible. third is my concern affecting tv broadcasters maintenance of the so-called political file. transparency is a laudable public policy goal especially many the context of political spending. providing broadcasters with a more cost effective means of come plying with rules is a noble endeavor. congress should be aware that the proposed rules create many complexities that are not obvious at first glance. the political file contains information regarding candidates seeking to purchase political ads on tv and can shed light on the spending patterns of campaign, political committees, superpacs and such. unlike other parts of politics inspection files the contents of the political file do not speak

to whether a broadcaster is serving the local community of license. the political file is a tool instead for examining campaign spending rather than broadcaster behavior. congress should be aware that the could be -- the commission proposed to reverse the 2007 position regarding political file mandates with little to no evidence that candidates, their representatives or members of local communities have been unable to access the required information let alope that the benefits outweigh the cost. in fact the evidence before the commission indicates that the proposed new rules could cost the tv industry $15 million to upload existing paper files to a new government website while also forcing each station to incur upwards of $140,000 per year in reoccurring costs to maintain the information in realtime as the fcc has

proposed. before going further policymakers should be thoughtful and deliberative when examining the implications that could arise from the rules. i still see many unanswered questions. for instance, number one, if the public policy goal of new rules is to produce more transparency and campaign spending, is the fcc the best agency to achieve such ends rather than a federal election commission? number two, would fcc requirements that are due politicstive that fec rules violate the paperwork reduction act? and number three, among many others and there are more in my written testimony, where are the equities in singly out tv broadcasters for such disclosure requirements when political campaigns spend money on a plethora of outlets to conduct voters such as radio, newspapers, the internet, direct mail, outdoor advertising, cable television, satellite radio and tv, paid activists that knock on

doors and many, many, more avenues. i'm hopeful that we as policymakers can strike the right balance between protecting core political speech and encouraging transparency without disproportionately burdening one of many. the arm of the unu.n. known as the international telecommunication union new powers over internet governance through a renegotiation of a treaty. the internet has flourished under deregulation not only within our country, but throughout the globe as well. but some countries such as china, russia, india, iran, and saudi arabia among many, many others are working hard to change that and we must stop them. thank you again for the opportunity to appear before you today. i look forward to your questions. >> many thank, commission mcdowell. it's nice to have you hear, too. so i want to get into this whole

issue if we could of political files. there was -- i'm sure you all read "the washington post" article this morning. i'm curious, chairman, where in your governing stats does it say that the fcc is has responsibility or the authority for campaign finance issues. i'm confused by this. >> sure. congress in 2002 directed required broadcasters to disclose information about campaign ads et cetera that was a codification of fcc rules that had been in efblgt for a long time and the statue orders the fcc to carry out those provisions. the issue that is raised in this

proceeding is part of a broad effort to move from paper to digital. in fact, the suggestion in the proposal that was made in october which was based on a widely praised report from about a year ago identified the broadcaster public file as one of the last pieces of disclosure that was purely on paper. in fact, the files literally are in filing cabinets at tv stations. so the proposal in the notice was to enable the movement of owl after that information from physical public files to digital. it's a proceeding that's open now. we're looking carefully at the record and i know that i

personally do not have to go to a tv station that i can get this information in -- as all our campaigns do today. i'm injurous as to why we're doing this. what is it in the political file that you all tell us all of the pieces of that? >> again, the the proposal in the notice would apply to all of the different elements of the public file. the items that broadcasters have to maintain in the file are prescribed by statute. the date and time of ads, the purchaser. the rates it's listed in statute. they're many the public file and the intended audience of the public disclosures is the public at large. any member of the public who wants to see that information can get it. they have to go to the station,

knock on the door and ask to see the public file. >> i don't agree with you on that. for example, our media buyers gave us all of that information in the last campaign instantaneo instantaneously. we knew within ten or 15 minutes. i sure you my media buyer was not able to go to a tv station when they were in st. louis in 15 minutes. i think a lot of that information is available now. i guess i'm confused as to why you all are doing this when i can still get the information from the federal election commission. let's say it says emerson for congress made this buy. i can go online and find out who all my contributors are. i'm just -- i'm confused by whether is there a problem? >> the information that's in broadcaster public files and broadcasters have been required

by statute and commission rules for many years as part of the obligations for public trustees to maintain certain information available for ern in the public. for anyone citizen, for anyone to have access to it. the question is whether in the 21st century ark disclosure obligation that's fulfilled by a filing cabinet alone makes sense or if common sense says broadcasters are required to disclose everything shouldn't that be online? most ojss that broadcasters have to disclose? general at the fcc increasingly interactions are digital not paper whether it's applications, consumer complaints, license information. the suggestion in the report last year as part of a general effort to move from paper to digital as part of a general

effort for transparency, if we're going to have any oxes at all to make information public shouldn't that be online? if it should, why should we exempt any particular category? again, there have been questions raised in the record and we'll look at those as part of the proceeding. >> the commissioner mcdowell said you're requiring this of broadcasters, what about radio stations. where i live you buy more radio than you do tv. so is this to apply across the board to every single electronic media outlet? >> we haven't proposed expanding the obligations on others. broadcasters have had unique obligations as public trustees. in this case the 2000 law singles out broadcasters to make these disclosures. there's a lot of history as broadcasters having these obligations. we're not looking at new requirements. we're looking at the existing

landscape with broadcaster disclosures. should they or shouldn't they move online? >> so what percentage of broadcasters are not putting this online? >> i'm not aware that any broad casters are putting -- >> or have that in a database. let's put it that way. they keep electronic files as opposed to paper in filing cabinets? >> the only way that i'm aware that broadcasters make this information available to the public now is in paper at filing cabinets. the citizen wants access to this information, which is law requires broadcasters to disclose, i'm not aware of another option they have to get it from broadcasters. many people do go to the stations, knock on the door, look at the public files, have access to the information. but in the 21st century, the question is where common sense says let's have that be online. >> so, broadcaster keeps -- if i

buy a tv -- a series of tv spots and the broadcaster has all of this electronically because i paid for it. it is not on paper. i paid for it. they're going to on the form in the computer it says paid for by team emerson. so anybody's media buyer, anybody -- you're just asking the tv station to then put this to create a website, if you will so they can access it as opposed -- >> in fact -- >> or let me get into their database? >> the disclosure goals of the statute and fcc rules are about the public in general. the ordinary public doesn't have access to the information right now. your point suggests for broadcasters to make the information available online

would not be a difficult step. one of the options that is possible here is moving the obligation of broadcasters so that the paper file could be eliminated completely, elem nating the steps since broadcasters have the information in online formats anyway. they could make it available online. eliminate the physical public file and have information that's already required to bis closed publicly available in easy accessible ways for anyone who's interested. >> why do you care about this? you have plenty of other things that are far more important to deal with since we have a federal election commission? i'm just saying in the whole scheme of things working on the spectrum auction on usf, why? the world is this a big priority? >> again, across the board the fcc has been looking to move

from paper to digital just in the last year alone we've taken steps to move tariffs from paper to digital. radio renewal applications from paper to digital. consumer complaints are now 95% digital. licenses are digital. and so it should be really an easy thing to say anything that's paper let's move it to digital. let's allow companies that have obligations to not file anything in paper and move to digital. it should not be a time consuming difficult process. >> commissioner mcdowell, let me have your thoughts on this. obviously i can tell you're not in favor of it based on this "the washington post" article. i'm still perplexed as to why -- why this is such a priority. >> good question. first two key points to emphasis as proposed by the fcc the word

immediately implies a realtime online posting and also propriortary information something i didn't get a chance to talk about in my opening remarks. broadcasters came to us in 2007 when the fcc first moved to have most of the public inspection file posted online. the chairman is right in most cases that is much more cost effective and easier for everybody and is it easier accessible to members of the public can look to see what kind of programming of local interest broadcasters are providing to their local communities of license. that's the important core mission of the fcc. this is an election law issue recording campaign spending. so broadcasters have come to us in a couple of waves in 2007 and 2011, and 2012 to say this isn't cheaper thr them to do because of the implication that this would be realtime updating.

keep in mind most broadcasters are not big businesses. most are small businesses. this might be an unfunded federal mandate of sorts. the second component it would require them to disclose to the public immediately proprietary pricing information. candidates campaigns are entitled to the cheapest rate. this becomes a competitive issue. one of the potential unintended consequences could end up being price signaling among broadcasters in a particular market regarding what the lowest rate should be. as you pointed out buyers sort of know what the lowest rates are anyway. but having it out there in realtime could cause some unintended consequences as well. so i think, you know, we need to sort through a lot of these. the chairman is right in that there is as part of the bipartisan campaign reform act also known as mccain-fine gold of 2002, the fcc is charted with

requiring broadcasters to keep political files with this information. including by the way if a campaign committee calls the station inkriering about ads not just if there was a buy event. that's important, but broadcasters are coming to us not campaigns. it's important for us to ask what is the cost benefit analysis here and to weigh that carefully and deliberately. and as policymakers we should be asking if we want transparency in campaign spending shouldn't beturn the microscope around off of tv broadcasters and look at the campaigns or the political committees spending the money and where is that money going and that would give a more comprehensive view. i'm not advocating that one way or the other. i'm saying the fcc is not necessarily the best agency to do that especially when we're just focussing on the narrow

issue of tv broad casters and no other media. >> so i guess then this begs the question if in fact, let's say hypothetically that this rule goes forward and broadcasters of course do this, then i assume this you would then move to require them to do this for all advertising. so in other words let's say you've got kellogg's and general mills. and the kellogg's folks have tv -- a tv buy and then general mills wants to make sure that on its tv buy it gets the same information. would that be the next step here? would you -- i don't know why you have to do it just for political as not all advertising. if you want people to be digital then they've got to be digital for everything not just for political ads? >> that wouldn't be the next step. in fact, the political file isn't the goal here. there are existing obligations on broadcasters that are part of their long standing requirements as public trustees. and the question is as with

everything else that's happening in paper just common sense say it's time to move from paper to eightal. so the commission isn't looking at new requirements -- new disclosure requirements. but rather moving from paper to digital. in fact, giving broadcasters the option to eliminate paper disclosures and move to digital. if i could comment on the proprietary point. it flows from that as well. we are not proposing to require any disclosures of information that already isn't disclosed publicly. the issue is simply should we move from paper to digital? if we do. political ads from the egory general trend toward using digital for greater transparency. >> so basically you're going to require broadcasters to not only digtize political ads but all --

any buy that's made? >> no. the statute applies to political ads -- >> i understand that. but if you're in fact so big and intent on digit -- digitalizing the political ads then why -- wouldn't you digitize all media buys? >> it's not in the statute it's not in your rules. it's not something that's been raised. it's not something that we're looking at. the question is that the commission is considering. again we have a record before us. there have been a number of legitimate issues raised and the staff is looking at all of those. but the general question is once there are disclosure obligations, should they move from paper to digital as across the board we're moving from paper to digital. >> i understand what you're saying, it still doesn't -- doesn't compute to me. do you have -- have you all done

a cost benefit analysis on this -- on determining how much this would cost? >> the record and response to our notice contains a good deal of information on cost and benefits. we'll certainly look at the cost and benefits before doing anything. that would be part of the analysis. i think an important part of the analysis. kbl commissioner mcdowell, do you have anything else to add. >> just to underscore for broadcasters it is they who have come to us. it is they who came to us for 2007 portion when we wanted certain parts of the public inspection file to be put online. but they're the ones coming to the commission saying this must be undually burdensome with the requirements posted in realtime. it means hiring one or more people to staff that and post these things in realtime. for a small broadcasters especially in smaller markets or larger markets that's very es expensive. keep in mind that there is legislation that was voted out of the house that would require the fcc to conduct appropriate

cost benefit analysis when adopting new rules that are real and not cursory. that might be something to think about in this context as well. >> we'll pursue that at some other point. sometimes i wonder how the cost benefits are actually performed. but i've taken way, way more than my five minutes. . >> i think it's important as we look at it to remember a couple of thins. broadcasters complaining. i don't know in the history of this country there's ever been a business person who was gladly told to do something and said great. most people will tell you it

costs money to do that and they can't do it until they're told to do it in another way. secondly, i don't know what kellogg's has to say about granola or vice versa has any bearing on who the next president of who the united states will be. who will be elected to congress. i think we have to understand that at the bottom of this issue is the fact that some folks in the political arena and therefore people associated with them have been for the last few years very happy and i must say on all sides very happy with the fact that they don't have to disclose as much as some people would like them to disclose as to who's paying for these ads and who's behind it. it's okay to talk about the fcc mandating. it's okay to talk about unfunded mandate. it's good to talk about everything else. but i think we can't kid ourselves in understanding there is a bottom line issue here. that is the understanding by some folks that this information

should not be available. now to me -- will you yield? >> sure. >> but to me, what the chairman has said and the miss mcdowell the commissioner has not spoken against is that everybody is putting information online why not this information also. it costs congress money more than it used to spend to go online and put this information forward of what we do. it's costing them right now to broadcast this online, this hearing. but that's important. i'm sure it cost the supreme court to put all their findings online. it will cost the census bureau, that great story i read today about the 1940 census coming out and it will be online soon and after that you'll be able to trace it by name as to what happened after the great depression and the migration of african-americans from the south

to the north and in my case from puerto rico and other places to new york. just this information that is being put out that is necessary it cost money. so i think on one hand we should understand that there is a need to get information and put it doip line. that's can just the world we live in now otherwise i wouldn't have spent all this money on an ipad that i paid for myself. this way i can watch baseball, too. the other thing, too is that but there is this desire not to tell. somehow it bothers people it bothers a lot of people in this country who should know that i'm saying i'm a great kmab or not a great congressman. we should know. >> all of that information is available online through the federal election commission. >> right. but these are commercials put on a tv station. these