>> thank you, mr. deess dee diaz-balart. >> appreciate your service to our country and a chance to have a conversation this afternoon as we look at what our budget priorities are, how we move forward. certainly this committee and this congress continues to be focused on job creation, economic growth, reducing and bringing our federal expenditures in line with our available revenue. i'm sure you share those goals. so i appreciate your comments this morning. one of the questions that mr. diaz-balart was asking was related to light squared and i don't know that's been discussed today. kind of just hearkens back to last year dealing with this issue. many of us were getting concern, complaints from various industry ace cross the country from federal agencies, even, that the progression of light squared would have an affect on gps. i think we're all familiar how that has progressed.

and we move forward in the appropriations committee, myself and congressman -- one of ply colleagues and i move forward with usaustria and i move forwa with an amendment to instruct the fcc to tighten u its process on light square, hit some benchmarks to assure congress that light square is not going to violate existing gps spectrum and part of the problem is, like myself and other garmin and companies that rely on the certainties in these markets before they invest and grow technology it can scare off potential job growth and potential investment. first of all, my understanding is that in the president's budget this yeeshgs the same language placed in the committee last year. and my questions are, one, where are we going with light square in particular? what's the latest? two, how do we avoid getting back into the situation again where there is this concern

across the spectrum, no pun intended, the folks who are terned about this? how do we avoid getting back to this position again with assuredly there will be other companies in the future who want to expand and grow jobs which is what we want them to do, but how do we do it in a way that doesn't offend the gps situation you vaurd in talready have in t and the investment flmade there? >> the goal in that proceeding, there are really two fundamental rules. one free up more spectrum for mobile broadband because we do have a significant capacity challenge that has the risk of retraining growth and private investment and mobile, and the second was deregulatory. the then spectrum had an old regulation on it.

prohibiting ter rinteresttural use and the connection with that was to remove that barrier to ter resttural mobile burial. in the start if doing so would lead to legitimate interference issues we would take those into account. as you saw from the actions we are taking those into account. it's an open proceeding still. so we're continuing to analyze the record, but we were very clear from the start of it that we would have to address that. there's a larger issue that i do look forward to working with you, all the members of the committee, there's no reason it shouldn't be a bipartisan issue, which is, how do we make sure that we can remove barriers to spectrum use and that the incentives are in place to avoid interference, being caused by devices being interfered by

spectrums outside their lanes? and this particular proceeding revealed that that is a real issue. it could get in the way of unleashing the full opportunities are investment, innovation and tresstural intervention and to your question, learning what we've learned from this, how do we make sure that we can move across the board to the flexible use that commissioner mcdowell and i both agree should be the norm for spectrum policy? get rid of regulations that limit use, but also have ince e incentives to make sure that we don't wake up and say, oh there are interference issues here that prevent us from deregulating. >> well, the number one rule in spectrum policy is to prevent harmful interference and beyond that i have advocated flexible issuances.

sometimes certain frequencies should be used for narrow specific purposes. by the time that's actually adopted and investors invest and engineers build out, networks, then the market has passed that idea by, and then you have to go back to the fcc with another rulemaking which can take years to change what the next micromanagement might be from the government. so i think it's best to have flexible uses. you know, as far as the light squared issue itself goes that did not rise to the level of an fcc vote of the commissioners, what we call the eighth floor at the fcc, but of the commissioners. that was handled by the bureau in the chairman's office. any detailed question i would defer to. >> they i just think it's useful to keep that relevant as we discuss how we're going forward. i think there were a lot of fears whether they were going to come true or not, those fears in themselves i think have an impact on investment decisions that other companies make. as we go forward there be companies making investments currently today in gps

technology that may have an impact on future decisions and future lane issues that, boy, a long-term guidance a long-term vision might avoid some of these problems down the road. there's a general concern we get tlag they were unsure whether the fcc would assure the world that light squared or other companies are competing for that spectrum would have zero impact or such a negligible non-impact. that seems like something that should never be in doubt. it seemed like the effort we were taking should already be in the prime directive of what you're utilizing to make this determination already. i don't know how we got to that situation, and the premise that maybe the fcc would approve it even though it would impact gps, but that was the belief in a lot of -- i know you're still going through, but that was the belief that that would occur. so whatever we can do to, i guess, reassure those companies that are currently invested in gps, that we won't, the technology would not affect

their lane would be useful and helpful going forward. i also want to ask just briefly about broadband fiber, and just as it pertains to partnerships of public/private usage, it's my understanding some of the federally funded broadband project, not all of the fiber is utilized. what is the mind-set on firing, releasing, selling excess fiber? >> excess fiber of got supported fiber? i'm not sure -- >> right. government supported fiber. to what extent do we have government supported fiber? all private sector or do we have public/private sectors? >> maybe we can follow-up afterwards, not sure i completely understand it, but overwhelmingly, broadband in the u.s. is private sector funded and built in the universal

service context there's support for private companies so that rural america can get broadba broadband -- there may be some local municipal broadband networks, but perhaps i should offertory follow-up with you to understand the question. >> that would be fine. the final question i had for this round deals with airplane communication, and i know some of this really has to deal with the faa, but we con stactly d l deal -- constantly deal with constituents and folks represented to just travel, commune dhags occurs on airplanes and eve be the most recent, alec baldwin situation, the plane was taking off, playing games. this was in the news a lot fop what extent the fcc engaged in the ability for telecommunication devices to be utilized on airplanes and what's the opinion related to the restrictions that current oye occur on airlines today? >> i saw today a report that the faa is taking a fresh look at its rules regarding ipads and other devices, and exploring the

possibility that it might adjust its rules to accommodate the new kinds of devices, the way people use that. i would encourage that, and some of the traditional concerns about -- peel taople talking on phones on planes may not apply to kindles and other uses and i would encourage the faa to look at that and to ensure that it's doing as little as necessary to protect public safety. >> one more, actually, madam chairman, related to mobile dtv. i have sprint based in my district. i know both of you have been strong advocates for offering wireless spectrum to meet the demand for wireless broadband. another way for consumers to action video, access local news and information especially in times of emergency. what steps has the fcc taken to

ensure mobile dtv will flourish and not negatively impact in the upcoming broadcast spectrum? >> well, we've made it clear that it's flexibility that br d broadcasters have to launch dtv on what they have shouldn't and won't be affected by the prusz a process and repacking nep have ability to launch it. i encourage the market and space. the market will decide whether or not it's -- it's something that will work, but that's an area where there's no reason for the fcc to discourage innovation. just the opposite. and i think we've given those assurances to broadcasters. >> appreciate it. thank you, mr. chairman. thank you, madam chair. >> you are welcome. first let me ask you, chairman jankowski. could you smitt subm

submit to us the 200 regulations you eliminated? that would be really lhelpful t have and we can use it to coerce others to follow suit. let me ask you about the university service fund, because i think it was saturday afternoon i was meeting with some constituents who are a little mom and pop cable company. and the contribution rate for the universal service fund has doubled over the last ten years or so. which obviously has led to an increase in fees to consumers. have you all done anything to address that particular piece of our fees and -- the like? >> the contribution factor reform is something that staff is working on, that we expect to move forward with with the fcc in the near future. on the other side of it, the lifeflight reform and we worked together to limit the growth of

those funds, because on an aggregate basis, that sets the fees that are collected from consumers. the contribution proceeding will look at the allegation of those fees. basically who pays it in. the most important thing on the, ensuring that the aggregate level of burden on consumers is minimized were issues that we addressed in the proceedings that set the outflows. so we do have to address contributions, because the world has changed, and the ways that that money is collected needs to be looked at very carefully. but i do want to emphasize that the putting the programs under budget, setting savings targets, et cetera. has already put in place an assurance that the aggregate burden on consumers will be within the limits we denidentif.

>> so tell me how the new connect america fund will impact rural areas. >> well, it will efficiently disburse funds to local communications providers to build out broadband in their areas. over the years, a whole series of inefficiencies, waste, developed in the program, it would have been hard to say that the money that the program was distributing was going to its intended purpose, and it's intended purpose was traditional television service. not bod r broadband. it was modernize from telephone to broadband. eliminate waste and efficiency and ensure accountability so any money going into the program gets spent on meeting the goals of the connect america fund. getting broadband to rural

america i. had another meeting earlier in the week with a small telecom as well. i should probably call it cable company. because there is a difference. and in so --and so they are really worried that the new changes to the connect america fund are going to put them out of business. so how am i supposed to respond to those concerns? >> well, we're listening to those concerns very carefully as we implement the program. the easiest with to make sure that there are no -- effects at all would be, would have been to not constrain the size of the fund and to allow the increase in the burden on consumers to go up, and we agreed on a bipartisan basis at the dma commission that that wasn't the right answer. we needed to make the program efficient, accountable, and that's what we've done. we've established a waiver and

other processes so as we go forward, we can hear the concerns from companies. and take them into account. and i mention one other thing. the core principle of our reforms was not to have a flash cut, but to look at transition periods. and so the various accountability enhancing, efficiency enforcing measures that we adopted, generally speaking will roll in over the next few years because we all wanted to make sure that companies would have time top adjust. >> are you available at 3:45 tomorrow? i have another constituent coming to talk about this, and i think i have another -- that would allow me to go to my -- can you do a lot more to help her than i can. >> it may be that they're coming to us after you or before you. but our doors are open, and getting the input directly and the data and the information from companies that are affected is very important to us. >> i appreciate that,

commissioner mcdowell. can you explain for the committee your thoughts on universal service fund reform? you know what i read of what you said is that you agreed with some. you had concerns about the other, some other parts and then disagreed with the other. so if you wouldn't mind, explaining to all of us here your specific -- thoughts. >> one of the concerns is that we have not yet addressed the taxing side of universal reform. that's how you pay for all this. there are four funds, spend money, under the universal sfgs umbrella and we've gotten to most of those. reforming the spending side but haven't gotten to the contribution or taxing side. so the chairman and i here talk about this on a regular basis. it's my hope we can launch another notice of those rulemaking as quickly as possible, and conclude it this year. we need to expand the, and broaden the base of contributor,

and low are the contribution factor. make it sort of a flatter tax. of sorts. right now we're taking a lot from a shrinking pool of revenue. and we do need to brought broaden that bait and redubase sooner we can get on with that the better. there is an automatic tax increase. not a hidden tax. it shows up in consumers' phone bills but all that inexplicable language regarding sec fees taxes and funds and things and it's grown from about 5.5% in 1998 to 18% today. and that is a huge spike just in the past couple of years especially. in part because of increased spending, but also because ever the shrinking pool. so that the less of the tax base you have, the higher of rate is going to be. so it needs to be fixed, and fixed urgently. and my concern is it being an election year, maybe it won't get done as quickly as we would

like. that's why i'm keeping the pressurer on and the chairman han been keeping the pressure on. then on the spending side i just addressed an association this morning actually of rural phone companies, and we talked a lot about this area. so for a lot of the rural phone companies -- >> you got have the meeting with them, not -- not the chairman, because i'm sure my folks were there. excuse me for interrupting. >> yes. 600 of them all at once from all 50 states i believe or most of the 50 states, anyway. and a very honest, open discussion. i know what they're concerns are. some of these rules start to go into effect july 1st but it of the rules don't phase in tore for a period of nine years and also have a steady income stream of $2 billion, which was where it was before, for rural carriers. the commission will look at this again in 2017. so five years from now, but that is important. on the other side, some of them

did express their concern to me that there are certain loans from the federal government, for instance, through the department of agriculture, or even some other things. where they are are concerned about being able to repay those loans. those monies borrowed for fiber deployment and other such things in rural america. if that is indeed the case, there's a lot of anxiety, uncertainty what the actual repeaty will be, the executive branch has an obligation to look at working out those loans if need be. we also did establish a waiver process. it's very frugal. being of scottish dissent i liked that very descent i liked that very much. because of the reform they can file a waiver with the fcc where they have to open their books in detailed fashion to know exactly what's going on with the money but they can get a waiver. so we will learn a lot should that happen. the commission is going to learn a lot about what might be

happening as a direct result, but i had an opportunity to bend the growth curve of an entitlement and i took that opportunity. >> well, that's great. we all need to do the same on lots of different entitlements, and thanks for that explanation. yeah, there are some issues with the rural utility service and some of the loans and some of them being called in in spite of the fact that companies haven't yet utilized all the funds, and so -- we'll have to deal with that with rural development and usda, but thank you very much. >> thank you. >> mr. chairman, we're very aware that you prepared the fiscal 2013 budget in advance of recent congressional action on voluntary incentive auctions, which will greatly affect the future of spectrum availability. these will be the most complex the fcc conducted to date.

please update us on the agency's plan for these auctions as it stands now understanding that things will change as we move forward. we won't press you for a figure today, but i imagine there will be additional administrative costs associated with these auctions. can you comment on that? >> well, the auctions will be, present and opportunity to deliver a great return for the american economy and the american people. raise billions of dollars for the treasury, for the spectrum, for ipads and other mobile devices. it also willi isbe incredibly complex. the two sided auction congress authorize, this will be the first of its kind. it will require a great deal of hard work, engineering work, economist work, and we're privileged to have that responsibility. the staff is now analyzing the statutes, developing an

implementation plan, determining what effect it will have and more importantly, what needs to be done to maximize the benefits to the public, to our treasury, to the economy. there's a good track record in delivering a major return on investment, and we'd like to make sure that the challenges ahead, that we don't shortchange the american public, because we don't bring the right engineering and economic resources to bear. >> now, you tell us that you're at the lowest staffing level in ten years. so in view of these responsibilities, what can you tell us about the present level of staff and taking on what you need to do now? >> you know, i'm completely in favor of having a lean, highly talented team taking on these issues, and have no interest in looking to hire people we don't

need. i am concerned in general about the engineering and economics resources at the fcc. whether it's interference issues like we were talking about before. the complexity of auctions. there's a basic level of talent that the fcc needs to sustain over time in order to realize these benefits for the american public. so -- our goal is to do the most we can with the fewest resources and the fewest people. as i said, i am -- we have a lot of work to do to make sure that we continue to bring in great engineers, great economists, great lawyers to meet the opportunities of mobile and broadband. >> right. now, we know that a feature of the, an important aspect of this speck trouble auction is set aside for first responders. now, everyone here is concerned with that, but if you come from

new york city, that's still an issue that is with us every day. in terms of what happened september 11th. how will that go? how successful do you think you'll be at being able to deal with that issue? i suspect -- sorry for interrupting you. i suspect that that's an issue that will have bipartisan support. people say, make sure that you're doing the right thing in that department. >> it's an extremely important issue. the 9/11 commission recommended too many years ago that we have an interoperable, mobile broadband network for first responders. it's a very important thing that congress has now moved forward on that. a great deal of the responsibility for imp mchbting that lies with ntia, the, there are pieces we will work on at the fcc. we have a public safety and homeland security bureau that's very focused on it. making sure that we harness modern communications for our first responders.

with a mobile broadband public safety network, with next generation 911. with outbound mobile alerts so that they were reach people. these are very high priorities, and in each case they present some very challenging issues to work through. >> all right. well, we -- we wish you the best bay it's going to be a challenge and one everybody will be looking at. there's a question i've asked the last couple of years. every agency in this company that's come before us. it's of special interest to me. what about the territories? as you know, the territories are always an after thought in congress, in corporate america, and everywhere else and in fact, if were you to ask americans, are the folks who live in the territories american citizens? we may be shocked at how many, shocked at how many americans do not know that we're talking about american citizens because they don't live in a state.

it got so bad that a couple years ago at an sec hearing i wanted to -- i was told that satellite radio was not available in puerto rico. i asked why. someone sitting right there, i hope it wasn't you. no, it wasn't you. said, the satellite doesn't reach there. and i said, it's a satellite. so i suggested they borrow one from the cia which can reach anywhere in the world. so now they have satellite radio. what are you hearing from the territories? what issues do they have that may be different than folks in the 50 states? or in the continental states as some people call them, and what is still missing to bring about the quality under the umbrella of the fcc? >> i would say the issue we most hear is the same issue we hear from rural america. which is, ensuring adequate broadband infrastructure and broadband adoption. and so whether it's the

universal service fund or other policies and programs that we have, we certainly look at the territories, the issues the territories have, to the extent that there are unique issues, of course, we take those into account, but many of the issues are similar and hopefully that will help accelerate solutions across the board. >> well, and i must say to both you and mr. mcdowell, and you can comment on this, if you wish, also, please that if you think it's rough for the, for rural areas, and this is not a political statement. moment of the rural areas, all of them, have two senators and a couple of congressmen, or at least one, to call the fcc. the territories is a whole different situation. they're treated equally only by the military, and that's both a positive and i'm speaking that in the positive term, for their service. so i just want you to always

stay on top of that, as we will on this subcommittee, and i know that chairwoman shares that thought with me. >> so thank you for the opportunity to speak. so we do keep them in mind, the territories. in fact, just last october i had a terrific conversation with the governor of puerto rico about our universal service reform and they need to make sure that puerto rico all of its unique circumstances were taken into consideration. so whether it's going to be upcoming spectrum auctions or other things regarding injecting more spectrum enhancement to consumers or broadband consumer as the chairman said, we do take them into account very seriously and do all that we can. a lot of them have unique circumstances and we try to incorporate that into our policies. >> i thank you for that and ip think it's important to all, madam chair,en aware of what's happening in the territories and what they're thinking as a certain presidential candidate fout out this weekend in puerto rico. >> indeed. >> thank you.

mr. womack? >> a couple of follow-up questions. not near at understanding or forgiving for what my league mr. diaz-balart brought to the attention of this panel here just a few minutes ago in regard to the number of employees that are now receiving in excess of $150,000 annually in earnings. now, he went through the full list. i'm just going to -- i'm going take 2008 and 2009 and just set them side by side, because i can't imagine an explanation that can justify this. that in 2008 there were 46. and in 2009 there were 431. i mean, those numbers, i cannot wrap my head around a one-year growth pattern, unless magically