can send her to you. you can do a lot more to help her than i can. >> it may be they're coming to us after you or before you. our doors are open but getting the input directly is very important to us. >> i appreciate that. commissioner mcdowell, can you explain for the committee your thoughts on universal service fund reform. what i read of what you said was that you agreed with some, you had concerns about some other parts and then you disagreed with the other. so if you wouldn't mind explaining to all of us here your specific -- >> sure. one of the concerns is we have not yet addressed the taxing side of universal reform. there are four funds where we spend money under the sufficient but we haven't gotten to the contribution or taxing side.

it my hope that we launch another rule making as quickly as possible and exclude it this year. we need to make it sort of -- right now we're taking a lot from a sh ricking of revenue. so the sooner we can get on with that, the better. there is sort of automatic phone increase, it's all that inexplicable at the end of your phone bill. it's grown from about 5 1/2% to 18% today. it's in part because of increased spending but also

because of the shrinking pool. so the lest of a tax base you have, the hi going to be. so it needs to be fixed very 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 sorm of keeping the pressure on. >> then on the sbending side i veshted -- >> so you got to have the meeting with them -- not the chairman because i'm sure my folks were there. >> yes, 600 of them all at once from all 50 states, i believe, or most of the 50 states anyway. a very honest, open discussion. i know what their concerns are. some of these rules start to go in or a heady coin om stream of

$2 billion which is where it was before for rural carriers. the commission will look at this given in 2017. but that is important. on the other side, some did express their concern to me there are certain loans from the federal government, for instance, through the department of agriculture or other things where they're concerned about being able to repay those monies borrowed for fiber deployment and other such things in rural america. i know there's a lot anxiety now because there's a little uncertainty. i think the executive branch has an obligation to work out those loans. if in there there experiencing

undo you hardship where they have to open. did the commission might be learning a lot of what's going to happen as oo direct result. i had the opportunity to bend the curve as an opportunitiment and i took that opportunity. >> that's great. we all knew to do the thaj. some are those -- we'll have to deal with that in terms of world development. mr. serrano? >> mr. chairman, we're very

aware you prepared the fiscal 2013 budget in advance of recent action on voluntary auctions. these will be the most complex auctions the fcc has conducted to date. please update us for the agency's plans for these auctions, understanding things will change as we move forward. we won't press up for a figure today but i debt you there be. can you comment on that? >> well, the auctions will be an opportunity to deliver a great return for the commit and. it also will be incredibly complex. the two-sided okay shun, it will require a great deal of hard

working engineering work, commit work and we're privileged to have that responsibility. the staff is now analyzing the statute, developing an implement ago plan, determining what effect it will have and most importantly, developing a view on what needs to be done to max mied the benefit into we like to make sure that the challenges ahead that we don't short chang the person public because we don't bring the right economic and engineering resources to bear. >> now, you tell us that you're at the lowest staffing level in tn years. so if 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 businessic level of talent the fcc needs to sustain overtime in order to realize these benefits for the american public. our goal is to do the most we can with the fewest resources and fewest people. as i said, i am -- we have a of work to do to make sure that we continue to bring in great engineers, great economists,

great lawyers. >> now, we know that a feature, an important aspect of this new spectrum auction is the. if you work to together city. >> how how will that go? how successful do you think you'll be to deal with that issue. i'm sorry i'm interrupting you. i suspect that will be an issue that has bipartisan support. >> it's an extremely important issue. the 9/11 commission recommended too many years ago we have an operable network for first responders. it's very important now congress has moved forward on that. a great deal of responsibility for implementing that lies with

ntia. there are pieces that 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 general respecters, with communication with 911 and community alert. >> we wish you the best. that's going to be a challenge and one everybody will be looking at. there's a question i asked to every agency that's of special interest to me. what about the territories?

the territories -- if you are to ask the are the folks who live in the territories american citizens, we would have been shocked by that people don't know they're not an american citizen. i was told that satellite -- somebody said sitting right there "the at that time light -- so now they have satellite radio. what are the difference in the continental state and what is still missing to bring about equality under the um brel laugh the fcc? >> i would say the issue we most

hear is the same issue we hear from rural america, which is ensuring adequate broadbalanced infrastructure and broadband adoption. so whether it's the universal service fund or other policies and programs that we have, we certainly look at the territories, the issues that the territories have. to the extent there are unique issues, of course we take those into account. but many of the issues are similar and hopefully that will accept accelerate solutions across the board. >> and i must say to both you and mr. mcdon't then, you can comment on this if you wish also, please, that you if think it's rough for rural areas and this is not a pliz call, me staying in. the territories is a whole

different situation. they're treated you wahlly. that's both a miss tiff. i'm speaking it in the positive turn for their service. so i just want you to always stay on top of it. >> mr. mcdowell? >> thank you for the opportunity to speak. we do keep them in mind, the territories. last october i had a terrific conversation with the governor of puerto rico and the need to make sure that all of its unique circumstances were taken into consideration. whether it's going to be upcome being speck truck object shuns or other things injecting more spectrum into the hands of consumers or broadband. we have unique circumstances and we do try to incorporate that into our policies.

>> i thank you for that. it think it's always aware to be important what they're thinking as a certain presidential candidate found out this weekend in puerto rico. >> indeed. mr. womack? >> i'm not going to be near as understanding and forgiving for what my colleague mr. diaz-balart brought to the attention of this panel 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 going to 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 hundreds of those workers were making $149,000 a year and then got a couple of thousand dollars raises and took them over that threshold. so what i'm specifically asking is not necessarily an explanation today because they their may not be one that can be supported better by what research might be able to uncover but i sit in hearings with the national nuclear hearing administration and health institutes and other very, very high level, high energy, high competency level bureaucracies in this government, and i would be shocked if they all came with this kind of a appreciated

number between 2008 and 2009. so i give you a chance to comment about that significant jump in one year but i do for the record would like to see the justification and where we are headed on this glide path. >> we'll certainly provide you more detailed explanation. i understand from my staff in that preerd from '08 to '09, a certain class on the pay scale went from just under 140 to my job as -- >> surely you, mr. chairman and the commissioner here would

agree that on paper in front of the discerning public out here, that is an astonishing jump in one year. >> i'd like to understand the numbers better myself. again, it's possible that the pay scale went, this is what i understand, from just under 150 to over 150 in that year. but we'll work with you and the committee to provide the underlying factual ima risk of headed and some satisfied with that pick response that a member of the you you have to agree with look at that discrepancy, 46 in 2008, 431 in twin. unless there is a general support argument like you've indicated that a chang in the pay scale, which goes back to what what i said a minute ago, if hundreds of those people were all of a dud went from 148,500 or even 145 to except of 100over

sniet. if that's not what we get back, would you agree that's a hard number to justify? >> i agree that number needs to be understood. but in any event we will provide that information to you and the committee and understand it. >> thank you. i promised a broadband question. i'm going to make this a soft ball, generalized kind of question. i represent an area in arkansas that is very cosmopolitan, along the interstate 540 corridor and home to some great companies in america, but i also represent an area of arkansas that is very rural. i mean very rural. so rural that i've got areas in my district that probably don't get the grand ol' opry till

tuesday. it's that rural. assure -- i'll have to explain that to my colleague from kansas. assure me and help me assure rural america that given the tremendous pressure on our public schools, in distance learning programs, health care, in the enormous impact that broadband is having on the delivery of health care services and the whole plethora of other issues impacted, i would even go so far as to argue that in some cases adequate broadband is as important if not more important than highways were once upon a time in our nation's history. so assure me help assure rural america that we're going to do what it takes to get broadband services of sufficient band width to the people that need

it. >> i come fleetplecompletely ag drove our effort to modernize the service fund. we made the decision driven by fiscal responsibility to fund the connect america fund out of savings from the program. and to respond to some of the concerns from other parts of rural america, phase in some of the steps we took to increase efficiency and account. it lab step-by sproses to get broadband to yurl america. i've argued the return on our investment of a one-time capital influs into the service fund

would have a very significant payoff. it would allow us to deployment turning the dial on the other side so fast that we hear more complaints and concerns from that side. it was in our national broadband plan, that suggestion, and i look forward to working on that with you because i think it would have a very positive payoff in terms of increased economic activity in the rural america as well as improvements to education and health care. >> commissioner, last question is for you. last month, there was an op-ed that you wrote in "the wall street journal" on the internet and it was largely about the united nations potentially having more significant authority over the internet. can you -- this issue hasn't received a great deal of attention. i was hoping you could discuss for this panel just briefly what's happening in this arena. >> this is a very real problem, and for the past several years actually there have been a group of countries throughout the world that have been pushing for

international regulation of the internet. it sounds crazy but it actually happens to be true, unfortunately. in years past, the united states or the uk and other allies have been able to use parliamentary maneuvers to table some of these actions. but this coming december in dubai, there will be a treaty negotiation or renegotiation. so back in 1988, well, most of the countries in the world got together and negotiated a treaty that set up the trend for the internet to be not regulated by governments but to be regulated from the bottom up in what we call the multi stakeholder model, which is the private sector, academics, non-profits and such with engineers and academics and user groups and all sorts of folks to come and make the sort of bottomup rules for how the internet works and how it's going to grow and thrive and succeed. but in the past couple of years

in particular, there's a bit of a gathering storm of some countries, perhaps led by russia and china, vladimir putin himself i quote him in that op-ed has said, and this is pretty much a direct quote, he wants international control of the internet through -- through the international telecommunication union, the itu, which is an arm of the u.n. based in geneva, and it does a lot of good things. it helps negotiate and manage international telecome's traffic but it's been relegated to telecommunications but not internet governance. so everything from cybersecurity and privacy to domain name administration to engineering, which is currently administered by the internet engineering task force, a nongovernmental group and other aspects of, technical aspects of internet governance through the internet society,

again another nongovernmental group, as well as the arrangements of the long haul internet backbone where there are private lit negotiated swapping agreements between backbone providers all of that. all of that to be subsumed through the itu and to give it jurisdiction over that. among many others. so, it's a real concern. the obama administration and i and others are all in agreement on this. there seems to be bipartisan support in this country but it's becoming a bit of an issue of the developed world versus the developing world, and actually, the irony is that should a treaty go the distance and actually become effective, it would actually undermine economic and political progress in the developing world, the developed nations hopefully our own would opt out of such a treaty but in the rest of the world, that might not be the case. they see an opportunity to

charge some websites or application providers, let's say a google or facebook or whomever to charge them on a per click basis and vin that money flow to sometimes state-owned telephone companies in their country. so there are a lot of issues there and i don't want top of the blather on, but it is a very real concern and we should be working hard to make sure it doesn't happen. i'm quite concerned about it because it just doesn't take place in december. there are meetings throughout the globe between now and december where positions across the globe will start to harden. i do want to the thank chairman genachowski for voicing his opinion as well. >> >> preserving it internet freedom globally is of vital importance, important to the american economy, it's important to the global economy, it's important to the economy of developing countries and it's important to freedom everywhere. and it is important that we work together on countering proposals

that some countries have made that would not be consistent with internet freedom and that would have the opposite effect of that claim. so it's very important topic. and it's important that we all work together to preserve free flow of data and internet freedom globally. >> i want to thank both of you gentlemen personally for your service to our country and being at this hearing today and answering these questions. thank you so much. i yield back. >> i think we all echo what he has said about thanking you both for your service. let me just very briefly go back to what mr. womack just said about the salaries. you're right. there may be a very good explanation for it if there's a whole category of individuals that went up. however when you look at the change between 2009 and 2010, there's a rather large increase. i'm sure there was an explanation. what gives me a little bit of

reason to pause is the fact that -- and by the way, is i for one have no problem if you need qualified people and you have to pay them well, if that's the policy, i don't have a problem with that but we should know that's the case if that is the policy. if it isn't the policy, then, again, why are these numbers taking place. that obviously has to be answered. i know you will. but in kind of a almost a technical question,s in several places in your budget request, you indicate that you expect to keep 1917 employees, keeping it flat. and then i believe the request is $245.9 million to fund that staffing level. in other places there seems to be an indication that fcc expects to maintain only 1776 employees. what is the actual number? >> the number is the lower number. the flexibility is requested so

that we can continue to look at more efficiency in the overall budget, by, for example, moving from contractors to ftes. we don't have any specific plans on the table, but if it would save the government money by doing something in-house instead of contracting it out, we should look at that as part of it. but the number in our planning is the lower number, which. >> 1700. >> the 1777. >> what would the actual amount be, however, if you're requesting the funding for 1776 versus 1917, what are we talking about money wise? some skeptics is might say that sounds like a slush fund, you're asking fundsing for 1917 employees. about what's the difference in the money? >> if i may, it's the opposite. we're asking funding for the 1776. if within that funding.

>> you want the flexibility of being able to get to 1900 within the funding of 1700? >> exactly right. >> and could you give meet number, the difference if it was 1900 and what -- because you're saying you might be able to save money. >> in the past, we've reduced the number of contractors at the fcc fairly significantly over the years. ity think in general, it's a better model, either you need someone or you don't. there are some circumstances and the auctions may be an example where for a limited period of time, contracting with an expert makes sense. >> okay. >> but for tasks that are basic recurring tasks, as a general rule, it's probably more efficient to do it in house. we don't have any specific plans to do that, but the team that developed the budget did that with that in mind. >> thank you. >> i just have one more question and then i'll submit a couple for the record. okay? >> please, without objection. >> mr. chairman, one of the

fcc's on going goals is to increase broadband adoption. since this is a long-term goal and applications on the internet seem to be consuming more and more bandwidth as people move from just checking their e-mail and reading news to playing games and watching more things online, how do you define broadband and thus your definition change as people need faster speeds to fully use the internet? >>. >> so overtime, i expect that our basic definition of broadband will go up. i would note without being too theoretical that the challenge of universal broadband is different and harder than the challenges of universal telephone or universal electricity because telephone and electricity were bine narey. either you had a dial tone or you didn't, either you had electricity or you didn't. broadband is different where as you point out you could have different speeds. in some ways it's the first time the country is wrestling with these issues of how