on the assumption there's not enough competition and one of the responsibilities of the fcc is to develop a competition study. you and i talked about the need to get that out so that we could have a good information as decision makers here, but do we have a competitive market or don't we? i think all the evidence is that we do, and the fcc is long overdue in giving us the information we need to make good decisions and for you to make good decisions, because most of the regulations and what i consider arbitrary and unpredictable rule making is coming from the assumption that there's not enough competition, not enough choices and it's the job of government to come in and protect the consumers. i think it's a government function and we need to get that from now. thank you very much for your service and i yield back. >> thank you all very much for being here and i -- as you always know, i always like to invite you, especially the new

members as now members, to come up to alaska to give you a sense of rural and where even though 90% of to the country has wireless and the competition, we're not in that equation totally yet. but thank you for the work you've done. let me -- mr. chairman, you know i would be parochial for a moment, but that's who i represent is alaska. let me give you an example. we're dealing with an issue now, adak, let me give you a comparison, adak is like if you were in -- a 12-00 mile distance. one of the rules or at least the efforts of the national broad band plan was no flash cuts. we'll here's what adak is dealing with, it's a small community, 130 folks, they went from december 2011, resource of

usf funds, to january 12. 84% reduction, just like that, this country will be out of business by the end of this year. and the process, many of you heard my complaints and concerns about the waiver process. now this group represents 130 customers. this is waiver one that they have to fill out and this is waiver 2. it's very expensive and very hard to do. and somehow, you know, i recognize the one size can't fit all and you have been very good at the commission, trying to figure out alaska and hawaii, and i appreciate that, this is the worry that we just -- i'm giving you my flash point. we need some ability, because at the end of the year, they will not be able to pay their rus loans and they will be out, out of business. they're the only land line and wireless provider in the whole area.

that's it. in the sense of what's going to happen. so, is there a way, and i euuse this as an example, small carriers under 50,000 lines, and i imagine it's very under. to help get some relief on the fee structure and the cost. this is less than $100,000. as you know, these are all lawyers, and as you know, as you're all lawyers, it's not cheap to go to an -- a very timely response, because their clock is ticking. >> mr. chairman, i begin with you, you guys have done an excellent job in working with us in alaska because it's so different. i mean when we say rural, it is rural. extreme rural and all of you have been here and seen what i am talking about. so help us walk through this and ensure that a place like adak

can survive where most of their work is now in wireless. this is what they want to provide, as they meet the goal of broad band. >> this is my example. because it's a crisis for them. >> the general challenge we face is we inherited a program with very little accountability, where recipients in general have control of the funding spigot and fiscal responsibility is a challenge and converting the program from one with insufficient accountability to one where the money that consumers are paying in, every dollar is going out in a way that makes sense is a challenge. we're in the first round of implementation and we understand that implementation and we understand that for some of the companies it's a particular challenge. we take the waiver process seriously, we'll continue to look for ways to streamline it and improve it, so we can move from the program we have, which everyone agreed didn't work, to one that efficiently achieves

our collective goals of assuring universal broadband. >> is there a way, especially for very small carriers is there a way to help give relief so it's a streamlined process? i'm not a lawyer, i can't tell you what streamlined looks like. this seems excessive for a simple obvious issue that's about to happen. >> we will continue to look for a streamlined way to run the process. there are many companies receiving taxpayer dollars. we have to get the money going into the fund protected. also not completing a possible situation for companies coming in. some of what the companyies are

doing now to help us assure we have an accountable program we won't have to do it more than once. >> i have several other questions, broader and i'll submit them for the record. i appreciate keeping you to your requirement of five minutes total. >> mr. boezman. >> thank you and a special election for our two new members. senator jankowski. we recently sent you a letter, businesses large and small need to be able to plan for the future. there are many concerns, especially for the rural providers that they lack the necessary data to move forward. i welcome your comments regarding that. we also invited you to send a staffer to ago arc, and i i

think that the many in rural america feel like they're being left out of the process. arkansas is much like west virginia. so again i would also ask you to do that. can you comment a little bit about that. as we move forward? >> sure. first of all it would be my second trip to arkansas, i learned a lot on my first trip and i recognize the challenges in rural arkansas when it comes to broadband. those challenges are all over the country and we have 18 million americans who have no broadband infrastructure. the program we inherited was sending more money than it should to certain areas, funding four or five providers in a single area, or funding one company when there was an unsubsidized competitor. there were forms that we put in place are designed to cut those back and then finally move forward with funding broadband

for unserved americans in places like arkansas. the focus is on achieving these goals for rural america, the purpose of universal service, doing it in a way that's consistent with fiscal responsibility and we're in some ways the hardest part of implementation, will continue to work together as a group to get the balance right so we get broadband to people who don't have it, who with deserve it, that we don't waste money, we are cognizant of business realities for companies that are receiving funds for the program, and deal with those companies in a fair reasonable phased in way. >> very good, thank you. any any of you can jump if on this one, one the things we're hearing a lot about are the misuse of the lifeline program. and the marketing is very, very aggressive now. many americans are concerned about the misuse, possible fraud

and abuse of the lifeline program. it's like seeing the wheelchair ad on television, you know, where you contact us and you'll get this free. what that does also is, it really -- it's one of those things that destroys trust in our institutions. so can you comment on reforms? i know you're actively working to do that. what do we need to do to fix the program? >> we share those concerns, the commission adopted some strong reforms to address waste, fraud and abuse in the program, tackling, for example duplicative recipients when there's only supposed to be one per home. tackling the situation when people who aren't entitled to get the benefit get the benefit. there is a problem with sleazy, unscrupulous people who try to take advantage of the program and people. we're increasing our enforcement

efforts, i can't speak about specific investigations that we have ongoing, but companies out there that are taking advantage of this program, we will come after. >> that's good to know. >> we talked about spectrum a little bit. what short term solutions are out there for spectrum needs that can be utilized while we do the longer term solutions such as incentive auctions and things like that are implemented. what's on the short term? >> license is a real opportunity we're seeing wi-fi taking more and more of the load, not knowing where it would lead a couple decades ago. we're seeing advances in technology, in infrastructure, smaller cells being rolled out, more efficient networks. there is near term spectrum that we can auction off if we all work together. we're working closely with ntia,

the 1755 spectrum, we need to accelerate those efforts, move quickly, there are several pieces of spectrum that are identified in the legislation with deadlines for auctioning them. when we aurks them, we make sure we're auctioning them in ways that are best for the public. >> thank you senator boezman. senator blunt. >> on the reform of the universal service fee what are you doing to deal with the issue of an unsubsidized competitor? how are you defining unserved and underserved and trying to be fair as you look at the unserved

community and then look at the partially served community. some thought on that would be helpful? >> well, getting broadband to unserved americans is goal, along with fiscal responsibility. and tackling those areas where the fund is supporting one company where there's an unsubsidized competitor, we agree that needs to be phased out. what if there's partial overlap, those are issues that we will work through as we implement it, broadband to unserved americans, fiscal responsibility pep and c cogny sans -- we have near term reliances that we have to take into account. >> and is the additional use this fund have any impact on those small telephone companies that are 60 or so percent.

we have one or two that may be as high as 90% are depend independent on the help from the u usf? spend more of this on broadband. does that mean you have less available to spend on traditional phone service? or how is that impacted? >> no, because the networks are the same. many of the companies in this particular category. most of the issues come from a subset of rural providers, and that's the ones that are under a rate of return regime. guaranteed 11.25% return. most companies don't operate that way, and in fact most unserved rural americans live in areas served by companies that are called police cap carriers, we do want to make sure that as we put in place these reforms that we're sensitive to the unique needs of some of the smallest companies that are under rate of return.

but we also have an obligation to the consumers putting money into the fund getting that balance right is what we're focused on doing together. it's not easies but that's our goal and our focus. >> on spectrum sale, are you having any luck with companies -- do you need some companies to relinquish areas of the spectrum they have? and are you having any luck getting them to do that? >> well, with respect i agree with my colleague. we need the federal government in some cases to relinquish spectrum that they have, or to move more quickly to share spectrum. that's the single most promising area to free up a substantial amount of spectrum along with the incentive auction provisions that the committee and congress adopted recently. >> do you have any ideas how that sharing might work? or how the government community could give up total control of parts of spectrum in a way that would be mutually beneficial or

at least beneficial to the use of spectrum? >> yes, sir, first of all, the federal government alone probably occupies about 60% of the useable spectrum. that's just the federal government. that tells you a lot right there, spectrum sharing is an ill defined term. it can mean a lot of different things, one question i could have is, if a private sector user is not going to have priority, should the government want to break into its channels. if a private sector user is using their device and all of a sudden the call is dropped because the government needs to use it, what is the value of that to the marketplace? probably minimal. it's along the lines of the rights of an unlicensed user, if you don't have priority if you think of your walkie-talkie or baby monitor. usually got cut off by the stronger person or your neighbor. that's not an idea situation if that's what we mean by spectrum smaering. the use of the unlicensed tv light spaces is a form of

sharing. using scraps in between channels. there are a lot of different ways we can approach the sharing concept, i don't think it's a cure all. i think the executive branch needs to look a lot harder at what kind of spectrum they need to relinquish for auction, and they need to do it yesterday. >> thanks, senator blunt. now senator lautenberg. >> thanks, mr. chairman. chairman janikowski. if we look at today's "new york times" it talks about the hacking case, and the head of the rupert murdoch british newspaper empire was formally charged on tuesday, along with their husband or for perverting

the course of justice if the phone hacking situation that's going on. and i'm looking into that, because it bolsters the case that i want to make with you. there is evidence that news corporation has been volled in a broad range of misconduct reaching the highest levels of the new york based company, and involving acts in the u.k. and the u.s. now, if we look at the list here and we see these are senior people from the company from newscorp they applied for license in 2007. despite this long list, the fcc is not announced any plans for proactive investigation into whether or not newscorp holds

the broadcast license in the u.s. and i address this to each one of you. what does it take for the fcc to begin an investigation. >> obviously we have important responsibilities under the law, we have serious issues that we see in the u.k., these matters may come before the fcc, i think it would be appropriate for us to prejudgment is. >> we with don't comment as other agencies of agency don't comment on the status of investigations. we have important responsibilities that we will take seriously, it's important we not prejudge it. >> that would be very good. take seriously. >> doesn't that suggest we ought to be looking at them to see

what effect that has. it's been a long time. it's my understanding that the fcc is looking into allegatios s of renewing wwor in new jersey. mr. mcdowell do you have a point of view here on when we ought to get started on looking at this? >> i think the chairman has stated it quite eloquentlies that -- >> i heard it. >> i agree with what the chairman said. >> we have a process in place. a petitioner has a right to file before us, when they do, we'll take all those matters seriously, and review in a timely manner.

>> the communications app speaks in terms of technical and broadcast for license es. the commissioner should monitor the situation. >> at the risk of going last, i will associate myself with my colleagues. and commit to you, i will state for the record carefully and support it for redaction. >> i think some action here is absolutely required. and we ought to get going on this. new jersey where one of the stations exists, would be the fourth largest media market in the country. and here these people have a license and they're fiddling around with this, charges are flying in all over. and i think while we're not -- there's not enough evidence for us to make a decision, certainly we ought to be looking at this

and saying, well, isn't it time for you to step up and declare yourself or take that license and say the patience of the country has long run out, we're going to award the license to a deserving party? many americans aren't able to get broadband service because they live in areas where companies won't make it available or simply can't afford it. yet 19 states currently restrict local government's ability for broadband. states are passing laws to prevent municipal broadband. >> we've seen some terrific examples of municipal innovation around broadband. my own view is that those should be encouraged. we look forward to working with the committee on addressing obstacles and barriers to that.

>> so thank you, senator lautenberg. i hate to do this, but we really have a number of people who are -- >> thanks, mr. chairman. >> senator rubio. >> i'll be brief, because i have two questions i want to get in. commissioner mcdonnell, you wrote a piece for the wall street journ ap will i think you were talking about the international telecommunication union. can you give us a brief update as to where we stand on that issue? what role the commissioner will play in that regard? >> the commissioner plays a supporting role as a technical adviser to the state department. i understand through both private and public information thatted state department will be announcing ahead of the u.s. delegation, ahead of the negotiator sometime next month. this comes at a crucial time as some very crucial meetings are

going to take place internationally later in june. it's really of utmost importance that the united states cultivate allies throughout the world. especially the developing world which could be devastated by international regulation of governance. >> does the commission anticipate putting out recommendations to the state department as to what our position should be? what we should be advocating for or against? in terms of having the agenda for the summit. >> i've been encouraged by my administration statements on this particular issue. there was a blog posting a couple weeks ago, by the white house and state department and commerce department jointly. that's a very good sign. and as far as i know, the sec is on board with that. >> i want to raise it, anyone can comment on it. we spoke about this briefly when

we first met. the 2010 706 section report found that 4 million puerto ricans had no broadband access, which is one sixth of all americans identified. 70% of puerto rico was still unserved. my understanding is the national broadband plan does not factor in puerto rico as if it's not part of the united states. and it explicitly excludes puerto rico. where do we stand on this issue? i think it's of critical importance. you may be able to update us son that? >> it is an important issue much puerto rico is very much a part of our plans, and we have our goal of reaching unserved americans with broadband, puerto rico is very much a part of that. the funds have to come from somewhere, which is why the more support we can get from the committee on a bipartisan basis to bring savings out of the

program, the stronger and faster -- the stronger we'll be, and the faster we'll be able to move. there's good news in puerto rico. mobile connectivity has increased rapidly, also supported by government programs, you're right, there is an issue with people in puerto rico unserved by broadband. >> i look at this in terms of process, especially from a mobile perspective as a down payment. we made a commitment to work within a certain budgetary framework, and, of course, that means the types of engagement or restrictions that we speak of today. my office -- we take a lot of meetings from those who care and represent those persons in that territory, and a lack of connectivity. we have friends on the islands who deserve the same type of engagement as we have, and so

hopefully again, the savings that are being -- may have time to speak more about, will be able to again connect those on that -- in that area. >> is the mobile capacity expansion, does it -- is it at par with the rest of the -- the national level or is it at -- in essence, where the demand going is the mobile route, because of the broadband route? you talked about the rapid growth in mobile connectivity, is that based on demand? that's what's available so it's growing faster than the national around? >> i think that's part of it, there's no question the rate of increase has been fast. i don't remember the level of mobile penetration as compared to other states, but we can get that to you. >> the last point, just to go back to, i think it's important. a lot of people are not aware of what the itu is, the implications it can have in the 21st century, especially with

some countries that are engaging in this regard. in china, we've seen recently. they're not bastions of internet freedom. any place that bans certain terms from search should not be an internation wall framework. i hope we'll continue to stay engaged and involved. i hope the committee will keep a close eye on that as well. >> they're serious issues. the proposals are just a bad idea, they're bad for the global economy. they're bad for freedom and democracy around the world, and across the administration, we're committed to opposing those strongly. >> thank you for your resolution too, senator. >> than you. >> thank you, senator rubio. >> i'm going to call now on senator toomey, senator globuchar and senator cantwell should she return. >> thank you, mr. chairman.

i'd like to thank all the commissioners as well for being here today. ed first question that might go to the chairman for this. the passage of the internet order doesn't rest on title 22 of the communications act at all, right? >> correct. >> if the court strikes down the validity of this order, do you support reclassifying broadband as a telecommunications service under that app, under title two? >>ed framework with we've adopted is working. it's widely supported. i hope the court doesn't strike it down, if it does, i hope congress will fill the gap immediately and make it clear we have the authority. this is a case where through a lot of hard work, we were able

to take a big radioactive dispute, increase certainty and pregiktability and create a climate and it's important that continue. >> i know that's your view, you know that's not shared universally here to say the least. neither of us knows what the court is going to do. there's a distinct possibility they could strike this down. my question for you is, do you believe -- do you intend, would you support reclassifying broadband to have it considered under title ii? >> the title ii approach is not the best idea, i believe we have title i authority. and i'm optimistic the court will uphold that, and we can look forward in the direction we're on. >> commissioner mcdonald, do you have an opinion on this manner? >> i think the title ii docket ought to be closed. the implications of having it