and wireless broadband sectors are critically important to our economy and our global competitiveness. look forward on implementing the law and unleashing technology opportunities for our economy and the american people. thank you. >> thank you. chairman genachokski i want to compliment you 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. thank you chairman emerson and ranking member serrano. i'd like to focus on three matters currently before the commission. number one implementing the new spectrum incentive auction law the chairman outlined. number two, adopting universal service contribution reform. and number three exampling the

complexities and burdens are proposed rules govern earning the maintenance of political advertising files by tv broadcasters. lastly i'd like to address the specter 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 american consumers. as a result of the law, the fcc will create and conduct the most complicated spectrum auctions in history. or auction. meanwhile, a debate continues over whether or how the fcc should shape the outcome of this process. history has proven that regulators attempts to over-engineer 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. furthermore, 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 am confident that the fcc can get it right this time if it avoids regulatory hubris. second is the need to fix the taxing side of our universal fund subsidy. 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 who since retired and commission deserve a lot of credit for it. thus far, the commission has only addressed some of the spending side of the equation. perhaps more urgent is the need to fix the taxing side of the ledger. in other words, how to we pay for all this? 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 unstainable. 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. now, transparency is a laudable public policy goal, especially in the context of political spending. furse per more, providing broadcasters with more cost effective means to comply with rules is a noble endeavor. congress should be aware that the proposed rules create many factual and legal 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, third party groups, super pacs and such. unlike other parts of politics inspection files the contents of

the political file do not speak to whether a broadcaster is serving its local community of license. the political file is a tool instead for examining campaign spending rather than broadcaster behavior. congress should be aware that this requirement could be experiencing -- at the fcc. in october of last year the commission proposed to reverse its 2007 position regarding political file mandates with li evidence that candidates, their representatives or members of local communities served by broadcasters had been unable to access the arequirne at the be outweighing the costs. in fact the evidence before the commission indicates that the proposed new rules could cost the tv industry $15 million to up front expenses to upload existing paper files to a new government website while also forcing each station to incur upwards of $140,000 per year in recurring 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 duplicative to fec rules violate the paperwork reduction act? and number three, among many others and there are more in my written testimony, where are the em kuwaiting in singling out tv broadcasters for such disclosure requirements when political campaigns spend a plethora of money on 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 for better average. 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. one of many outlets. finally, all of us should be concerned with a well-organized international effort to give an arm of the united nations known as the international te 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 thanks, commissioner mcdowell. it's nice to have you here, 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. and i'm -- i'm curious, chairman genachowski, where in your governing stats does it say that the fcc is has responsibility or the authority for campaign finance issues. i'm kind of 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 effect for a long time and the statue orders the fcc to carry out those provisions. but if i could, 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 all of that information from physical public files to digital. it's a proceeding that's open now. we're looking carefully at the record, and all of the issues that have been raised will be

taken care of. >> so tell us what information is available in the political files? in other words, i mean, i know that i personally do not have to go to a tv station that i can get this information instantaneously as my campaign, all of our campaigns do today. so consequently, i'm curious as to why we're doing this, but what is it in the political file that you all tell us all of the pieces of that? aga again -- >> again, 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 public file are actually prescribed by statute. the date and time of ads, the purchaser. the rates. it's listed in statute. >> right. >> they're in 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. because, for example, our media buyers gave us all of that information in the last campaign instantaneo instantaneously. we knew within 10 or 15 minutes. i assure 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. in other words, let's just say it says, emerson for congress made this buy. then i can certainly go on to the f.a.c. online and find out who all of my contributors are. i'm just -- i'm confused by whether is there a problem? that exists out there that we're trying to correct? >> 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 as public trustees to maintain certain information available for ern in the public. for anyone citizen, for anyone to have access to it. >> right. >> the question in this proceeding is, whether in the 21st century a disclosure obligation that's fulfilled by a filing cabinet alone makes sense or whether common sense says, if broadcasters are required to disclose everything shouldn't that be online? most obligations of broadcasters have to disclose -- in fact, in general at the fcc increasingly interactions are digital not paper whether it's applications, consumer complaints, license information. the suggestion in the report that came out 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 obligations as -- at all to make information public, shouldn't that be online? if it should, why should we exempt any particular category? now, again, there have been questions raised in the record, and we'll look at all of 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? plasm? platform? >> 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 this in a database. put it that way. they keep electronic files as opposed to paper in filing cabinets? >> well, the only way that i'm aware that broadcasters make this information available to the public now is in filing -- 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 whether common sense circumstances 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. eliminate a step, 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 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? why in 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. but i'm still kind of perplexed as to why we -- i mean -- why this is such a priority. >> well, good question. first two key points to emphasis as proposed by the fcc the word

immediately implies a realtime online posting and also proprietary 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. and as you pointed out, this is an election law issue regarding 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 for them to do. the political file component of it, because

of the implication that this would be realtime updating. some estimates, $140,000 per year per tv broadcaster. and keep in mind, thoeft 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 sort of entitled to the cheapest rate. and that become as competitive issue. so one of the potential unintended consequences actually 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-feingold 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 inquiring 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 very carefully and deliberately. and, also, maybe generally speaking as policymakers, we should be asking if we want transparency in campaign spending shouldn't we turn the microscope around off of tv broadcasters and look at the campaigns or the political committees that are spending the money, and where is that money going? that way you have a more comprehensive view. i'm not advocating that one way or the other, but 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 broadcasters 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 are forced to do this, then i assume that you would then move to require them to move 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 ads and 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 digital. so the commission isn't looking at new requirements -- new disclosure requirements. expanding 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 quickly. 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, should we exempt any category like political ads from the general trend toward using digital for greater transparency? >> so basically you're going to require broadcasters to not only

digtize political ads but all -- advertisement -- any buy that's made? >> no, no, no, no. the statute applies to political ads -- >> i understand that. but if you're in fact so big and intent on digit -- digitalizing i can't say that word -- 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. >> okay. 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 ne. but they're the ones coming to the commission saying this must might be unduly burdensome with the requirements posted 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 expensive.

keep in mind that there is legislation that was voted ou 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. >> yeah. and we'll pursue that at some other point, because sometimes i wonder how the cost benefit analyses are actually performed, if you will. but i've taken way, way more than my five minutes. and so -- joe -- i know. it's just i wanted to finish this. so, thanks. >> no, thank you, and i understand, because i had no intention to discuss this subject, but it has become an interesting subject and i think it's important as we look at it to remember a couple of things. first of all, broadcasters complaining. i don't know in the history of this country there's of been a business person who gladly was told to do something and said, great. i want to do that. most people will tell you it

cost money to do that, and they can't do it until they're told to do it, and in another way. secondly, i don't know that what kellogg's has to say about granola or vice versa has any bearing on who the next president of the united states will be, who will be elected to congress, and 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 very happy on all sides 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. >> go ahead. >> but to me, what the chairman has said and mr. mcdowell, the commissioner harks 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 take all information and put it online. that's just the world we live in now, otherwise i wouldn't have had to have spent all this money on an ipad that i paid for myself. just so i can watch baseball, too. the other thing, too, is, that there is this desire not to tell. somehow it bothers people it bothers a lot of people in this country that you should know i'm a great congressman or that i'm not a great congressman. i think we should know. >> i would ask you to yield one second to say that all of that information is available online through the federal election commission. >> right. but these are commercials put on a tv station.

these are commercials also put eventually on a radio station. there is a role as mandated by congress and a role just mandated by the circumstances. this is using our airwaves. and our airwaves belong to the public. and who's paying to say that that guy should not be elected and that he wants -- was a member of a group that he shouldn't have been a member of, whatever, we should know who's paying for that. so i don't have a problem with that kind of disclosure. we disclose a lot personally. we need to do more of that. but that's just my two cents. now, republican-type question, since somebody might say that i asked a democrat-type question or made a comment. as you well know, this administration has instructed independent agencies to examine and eliminate such as the fcc to examine and eliminate unnecessary regulations.

how is this effort going at the fcc? commissioner mcdowell, do you see an uptick in the effort given your history at the fcc? >> we've taken our obligation to review unnecessary rules for elimination very seriously. it was something i talked about on my very first day as chairman as soon as the president issued an executive order asking the independent agencies to join the other agencies in doing reviews of rules. we said, one, we're already doing it and we'll continue to do it. we've eliminated over 200 unnecessary regulations. we've eliminated five data collection obligations. we've identified another dozen data collection oxes for elimination. and we'll continue to do that. we run a regular process to identify outdated