15 to 20 meg services. adequate for video streaming. it will be priced like a land line service, not like a traditional wire service. we think this transaction gives us the opportunity to do some things exciting for rural america. >> at this time i recognize the full committee chairman, mr. conyers, for questions. >> thank you, sir. i wanted to ask -- >> ranking member. sorry. >> former chairman. >> the gentleman has good vision. >> maybe future chairman. >> you can leave it like that. that's all right. i just wanted to ask mr.

bergmaier to comment about anything he's heard during the questioning period so far with our two distinguished witnesses. >> yes. thank you. i think when it comes to the investment promises that at&t's making, i would urge the subcommittee to basically put them in context. i think a lot of at&t's numbers consist of upgrades, adding a fixed wireless product to a fixed wireless coverage area. that might be some amount of investment, but it is less than an initial buildout. i think it's important to put it in context that way and also put it into the context of at&t's existing upgrade plans. at&t already has a fairly ambitious buildout plan that has something called project v.i.p. which talks about a lot of the new buildout and coverage that at&t plans to do. at&t has an initiative where it wants to upgrade a number of cities to gigabit wired

broadband, however, it's not exactly clear the scope of at&t's existing plans. we know that they're ambitious based on at&t's statements but it's hard to quantify them, therefore, it's difficult to compare any new commitments that they may be making today to those existing plans. and when it comes to broadband coverage, i would like to make the point that broadband is growing. if you have it in 2006 you would hope they would meet any commitment and continue to upgrade that service as the definition of broadband continues to be reworked by the fcc and by policy makers. that's my concern. it's not enough to meet a certain commitment and then stay there but we expect a continuing level of investment. >> do you generally agree with

those comments? >> no, sir, i do not generally agree with the commitments. the commitments i've made, i think they're generally well-documented. we've laid them out that we will build broadband to 57 million homes, that we will expand our video to 8 million footprints and we will pass 1 million business locations with fiber and that we will pass 300 million people with our broadband -- mobile broadband lte service. those are all documented. they are all in the public record. they are in our financial filings. we are fulfilling those. the commitments that we have made, the 15 million new or enhanced broadbands are all on top of that commitment that's already out in the public domain. all of that is incremental. the capital requirements to do that, i mean, just 2 million households with fiber to the home is a significant capital investment. the 13 million fixed wireless local loops, that's a massive geography that we're talking about passing. while it may be incremental to

some investment that's already there, for a company that's investing $21 billion a year, that's a significant amount we're taking out of that. >> okay. well, now, do we have a consensus here, mr.bergmayer, of his rebuttal? does that work out with you? >> i understand that at&t has a very ambitious buildout plan but, i mean, some of the numbers in question that are supposedly in at&t's public filings somewhere are redacted and confidential in the fcc filings so i haven't looked at them. so it is difficult for me to see how the numbers are simultaneously public and redacted. my overall point, however, is to put at&t's incremental promises in context of its existing buildout plan and for the committee to really question how merger specific these promises are or rather as happened in the t-mobile merger whether at&t already has buildout plans and they're simply restating them for the

purpose of getting a merger approv approved. >> how would allowing this transaction to go forward affect downward pricing on cable products? >> that's interesting. you heard mike describe the process by which he has the services. it's a bundled broadband and satellite tv service. you put the two together. you have a lot of customer efficiencies that come as a result of that. it's cheaper. the customer experience is better. we had an economist study this, it's in our filing with the fcc, did a very detailed econometric model. he said even before the merger synergies, the cost synergies were incorporated, it would have a downward price bias and a cable price.

>> let me get a response in from mr. liberman before we close out. >> thank you. mr. stevenson and mr. white are very polished about talking about the benefits that will come to this deal, the commitments that they're willing to make. we haven't heard them talk about the concerns that they're -- that the programming, particularly the regional sportsnet works that are owned by directv are not subject to any arbitration conditions and that they will have an incentive ability to increase the prices for that programming for smaller cable operators. if they're going to be making public interest commitments, it would be nice to hear them talk about a commitment to address that problem as well. >> thank you. the gentleman's distinguished ranking member time has expired. >> thank you. >> the chair recognizes himself for his questions. i want to go back to something that's just off a little bit of my other questions. statements to mr. white. i want it to come from my friend in georgia. i want to make it clear, directv will not be forced to unionize,

correct? forced to unionize? >> no, sir. we leave it up to the employees to make that decision. >> this will be a request for them to vote to join the union or will it be a required vote for them? >> the union has to go in and solicit and see if they can hold a vote. >> okay. that's all right. mr. liberman, as you may know, i have previously expressed concerns of the comcast and time warner on small businesses to advertise on cable television. when the subcommittee held a meeting, could you give me your view and especially any difference in the impact of the comcast time warner versus the at&t/direct of proposed merger? >> we are concerned that comcast time warner cable would be able to exclude mvpds, their agents and advertisers from regional advertising interconnect. while this would not be the case with at&t directv which do not

control an advertising interconnect. >> i always like to open it up. mr. white, would you like to talk about that? >> yes. two comments. on the advertising, we're quite a bit of a different advertising model. we're less than 1%. i think it will open up opportunities for small businesses to advertise and as it relates to the regional sportsnet works, we have three of them, one in denver, one in seattle, one in pittsburgh. at&t doesn't even have a footprint in those three states so it doesn't have any impact on those regional sportsnet works. we are subject to the program access requirements of the fcc. >> i believe the vigorous competition helps consumers get a good deal no matter where it may be. the competitive market is the choice for consumers who supplies the good services. both at&t says this merger will increase competition. competition isn't the end, it should be a mechanism by which consumers realize actual benefits.

i would like to open this question and say can you say with certainty or at least as possible in a business world that this merger will or will not result in more choice and lower cost to consumers both in the short term and the long term and to what extent? it's often portrayed this is what will happen. the reality is life changes, hearings are over, spotlights are off and this doesn't happen. i would like to hear each of you as best as you can, concise as you can answer that question. >> i'll take the broadband -- the paid tv side, randall can talk to the broadband benefits. from a customer standpoint we believe in choice. we sell a pure play offering. it's going to be like vanilla, chocolate, and strawberry. we'll have the pure play, the bundle together with the at&t capability particularly with the 15 million homes they're going to build out which will be a new benefit for consumers. in terms of the overall value to consumers, those bundles are not very competitively priced. when you make one company as our

modeling shows you'll see a better value bundle offering to those customers. >> just a quick question. full disclosure for folks like me who have direct and have at&t for two different services. will that now bundle -- is that going to become a bundle opportunity for us or are we stuck within the packages that we currently have. >> congressman, that will be your choice. we believe in choice. i think the way we built our business, it's up to the customer to decide so we're going to give that choice. as i said, you can choose a, b, or c or you can stay where you are. >> mr. stephenson. >> there's another facet. when you ask about consumer benefits, the over the top model is evolving very, very quickly. we also have 100 million wireless subscribers at at&t who are demanding access to the types of content that mike has on the directv product. one thing you should expect to see is begin to integrate those offerings and begin to deliver that content seemlessly across

the mobile devices. accelerate the o.t.t. model. the second is in terms of consumer benefits, the 15 million broadband homes passed is a significant consumer benefit that would not happen except for this. obviously the pricing implications, i won't go into the econometric model, but it's compelling what happens to pricing not just with us but across the industry as a result of this trend. >> i may have made a freudian slip. i would assume the other two disagree with that. because of time, i do want to go back to this issue. the chairman brought it up. it is an issue for me. it is not just me. there are other members. mr. white, i've had conversations with your folks. i want to continue to make this. i'm going to continue to harp on this until we get this fixed, be both with the broadcasters. this is some i am not going to

let it go. when i get on something i don't leave it until i get an answer. at this point i would encourage that. my time is expired. we'll go to the gentleman from new york. mr. jeffries. >> thank you, mr. chair. let me thank the witnesses for your testimony here today. there's been some discussion about the work force transition. i want to go over some of that ground again. mr. stephenson, at&t has the largest unionized work force in the country, correct? >> full-time union, correct. >> i condemn you for that and demonstrating that you've been able to be an incredibly successful company with that work force composition. your employees are represented by the communication workers of america, is that correct? >> that's correct. >> mr. white, what is the percentage of unionization of your work force at directv? >> at directv we have outsourced

partners. in terms of directv, it's de minim minimis. some of our installers in the northeast are union. >> have there been efforts to unionize the work force in the past? >> i think we've had a vote in one geography in california, yes. >> and what was the outcome of that result? >> that result was in favor of unionizing. we've had some questions from our standpoint they're going through the commission by challenging that but, i mean, we're waiting for the ruling from the nlrb, i believe. >> thank you. mr. stephenson, in terms of legacy directv employees, i believe you said they will have an opportunity to join cua, is that correct. >> we have a process of open cart neutrality. >> the potential will be through neutrality in terms of car check. >> yeah. we have a long track record in this regard. when we bought at&t wireless,

for example, we opened up the work force to car check. the union came in and held a vote and across many of the locations they voted to join or to become part of the collective bargaining process. some places not. we leave that up to the employees to make that decision. >> now you expect the merger to create jobs, mr. white and mr. stephenson, you testified in that regard? >> yes, we are enthusiastic. we're investing to build out 15 million jobs in broadband. those are hard hat jobs. >> so both in terms of the ambitious capital buildout program and i gather as a result of the complimentary nature of the company there doesn't seem to be much disagreement about that. there's an expectation that you would create jobs now. mr. bergmayer, is there a reason for you to disagree with that assertion? >> i think it's usually the case that in mergers there are job

redundancies. it's not the focus of my concern here today. i'm focused more on the consumer side. >> okay. now, mr. stephenson, in terms of the potential creation of jobs, is there a specific regional distribution that you would anticipate would receive any job growth more so than other parts of the country? >> the places that come to mind first are the 2 million homes that we're passing with our gigabit technology. really high speed broadband capability. that involves taking fiber all the way to the home, putting electronics in the field. that's a very significant build. that will be within what i will call our old traditional franchise land line territory. so the 22 states where we operate today. the rural broadband build, which is the wireless deployment, will hit 48 states and so that's going to be a fairly broad based

deployment, and in our company jobs align with capital. i mean, they're perfectly correlated. as you invest, you hire more people. i don't want to mislead. there will be places where there are redundancies in jobs but we do have a very good track record on how to address those situations and we use very extensively attrition and i feel good about our track record in that regard. >> now you don't currently offer video services in the new york city market, is that right? >> in what market? >> in the new york city market. >> we offer wireless services in the new york -- and large corporate businesses we offer service to. >> but not video, is that right? >> not video, not today. >> okay. now, mr. white, directv does offer video in the new york city market, is that right? >> we do. >> and how do you expect the potentially merged entity, at&t/directv to impact the nature of the services that would be offered by a combined

company? >> i think in -- in urban markets like new york there wouldn't be any change, frankly, in general in terms of a paid tv standpoint. we'll continue to compete hard for customers in those gee okay gra physician. i would say we'll have a chance to bundle with the wireless side. that's something different that we haven't done before. >> so there's no current bundle -- >> no. >> -- offered in the new york city market? >> we might with verizon and with slower speed internet service. not with higher speed. fios is very competitive in new york. >> thank you. i yield back. >> thank you, mr. jeffries. at this time i recognize the gentleman from texas, mr. farenthold. he's the vice chairman of the subcommittee. >> thank you. i'd like to follow up with you, mr. white, on a question that mr. collins asked about local broadcasters. as satellite technology is

adopted in homes, how does the local car dealer reach that market outside of the local broadcast station that you carry? car dealer or whomever can go to a cable company and buy some of the local avails. with satellite, it doesn't. i would assume u-verse had a chance to buy local ads on cable. if you didn't, you have you had have. >> yes, you're absolutely right. u-verse because it's local does have local advertising. as far as directv is concerned, the nature of the satellites in the sky is national so our advertising business grew up as a national business competing with the large media companies who are much larger than we are. more recently we've got a new technology that's enabling us to do some targeted advertising. we've done a joint venture with dish for political advertising. this is a new technology leveraging the internet, which is enabling us to target homes

and we're hopeful to be able to grow the local advertising, but historically i think $70 million of our 600 in advertising is local advertising. it's very small. >> you may actually have a technology that's helping local broadcasters here rather than potentially hurting them. i wanted to talk now, mr. stevens, a little bit about your fiber buildout. common sense to me dictates that if you have -- the driving force behind broadband right now is video. if you've got a cheap way to deliver video, there's a discouragement of rolling out your fiber network. i read an article in "the dallas morning news" about how you're actually still rolling it out because you're competing with google fiber. so how are we going to see the rollout of fiber affected in

markets that google isn't entering yet? when is it going to filter down to the, you know, mid-size cities and then eventually to the smaller towns? >> that's one of the i guess interesting things about this transacti transaction. i've referenced it a couple of times now. our video service whether it's over our fiber or fiber to the node technology, we lose money on the video service because 60 cents of every dollar goes to the programmers. combining with directv and creating the opportunity to make our programming costs look like directv's programming costs makes our fiber-based tv product profitable. once the tv product becomes profitable, it fundamentally changes the economics of a fiber build. so when we state in the -- when we announce the deal that we're going to expand our fiber to the home footprint by 2 million homes, it's because of the economics of a more profitable

video product. in your district, corpus christi, 60,000 homes will get fiber to the home as a result of this transaction. victoria county, out around that area, it's a fairly significant number will get fixed wireless local loop broadband coverage where they don't have anything today. it changes the economics. it makes a fiber deployment more compelling, not less compelling. >> all right. so you're willing to tell me under oath here that this isn't going to slow down your fiber deployment? >> this will what? i'm sorry. >> not slow down your fiber deployment. >> this will cause us to do more fiber deployment. >> all right. you talk about lowering programming costs and the buying power you get with this merger. i see how that's a competitive advantage. what about making space available for new coming, new television networks. you see a new growing market in spanish language networks, you

see a growing network in sports, in news for these sort of things. what's going to happen with respect to, god for bid don't get re-elected next year and decide to start blake tv? >> well, as you can imagine, congressman, we get requests for new channels all the time. i think right now we're considering 50. i don't have satellite capacity for 50 but we do have two new satellites going up over the next year. we have a process internally where a couple of times a year i sit down, what are all the requests? we have 152 independent channels. we welcome that as an important part of our diversity of offerings. i would expect with our new satellite capacity and with things like the gigabit to the home where you can do affordably -- you can do video that we would have more diversity of independent channels. >> thank you very much. i see my time has expired. >> thank you. at this time mr. cicilline is

recognized for five minutes. >> thank you. i'd like to started with mr. stephenson. mr. bergmayer has said they've failed to see any public interest benefits and he argues that the buildup that you're speaking about of 15 million customers, is in fact enhancements rather than buildouts and may have been part of your capital investment anyway. it's something that's not reflected in your public filings and aren't really specific to this merger. can you speak of that? can you tell us of that 15 million how many are enhancements that have existing service, how many are buildout for new customers. is it, in fact, something you plan to do anyway is specific to this merger? could you respond to that? >> yeah, i'll be glad to. i went through earlier specifically what commitments we

have made and they're in our public financial filings where we've committed fiber, where we've committed i.p. broadband for 57 million homes. 300 million people are covered with lte. all of that is just kind of baseline. we make those commitments and we're finishing that. the 15 million broadband enhancements or additions are all incremental with that. the 15 million are split. 13 million is a technology that we're very enthusiastic about. it's called fixed wire local loop. very interesting. what it is, it's taking advantage of areas where we have significant spectrum and it tends to be rural america. in fact, it's almost rural america. we have 20 megahertz and using wireless to deliver 15 to 20 megabit service to those homes. to mr.berg -- mr. bergmayer's

point, we have to put up a lot of equipment. there are 2 million homes where it's called enhanced but what we're doing is deploying fiber to the home. literally going out and digging up the streets and putting fiber in the home. that's a significant incremental commitment to what we've already said. >> thank you. several have rizzsed issues with respect to net neutrality and should -- should part of the remedy to address some of the issues that have been raised with the transaction include extension of net neutrality to wireless? should we do that as part of this process or should it be done, i should say? >> we've been very, i believe, constructive in the net neutrality debate. rules that went in in 2010, we worked extensively with the fcc to design those rules and make sure it accomplished what the tech industry needed, the content people and all. and we think those rules landed at the right place. those rules were very cautious

to tread into the wireless area because wireless networks are not like fixed line networks. we have limited spectrum that this congress is working aggressively to deal with. when you have limited spectrum and limited capacity doing things where it con strains what you can do to deliver traffic can be very hazardous, if you will, to service quality in general so we felt we ought to walk very cautiously and be very, very delicate in how we deal with the wireless situation. >> mr. white, could you talk to me a little bit about what directv is either committed to doing or what will be part of the terms of this merger agreement to ensure that smaller independent channels will be paid a fair rate given that directv already is the second largest video distributor and will presumably only have its market position enhanced as a result of this merger? what commitments have you made or what terms will be part of this merger agreement that would protect that?

>> so i don't think we've yet put in anything specific to the merger agreement. clearly every distributor of video right now is struggling with rising content costs which are 60% of our costs and they're growing at far in excess of consumer incomes, high single digits, 8 to 10% a year, which has put tremendous pressure on the business and our need to raise consumer's prices. i would say certainly that colors how we look at all negotiations with -- big and small. by the way, we've taken on the big guys. i think we've probably been a leader in the industry in battling to keep costs lower. it's a tough battle. but as it relates to independent channels, we have both our public interest obligations that we continue to live with. 4% of our channels would be pios. we have i think 26 of those. we have 152 independent channels and in today's world with over the top as an option as well

with broadband, we can put things up as an application just like we've done with pandora and youtube so we can expand even beyond that and would certainly look to it if consumers want it. >> if i could ask the final two witnesses if they would submit written answers to this question. if there are things you suggest we could do that would allay some of the concerns you both have raised short of an outright opposition to the merger but actions we could take as a congress that will respond to some of the very important issues you raise, if you could answer that in writing i would be grateful. i yield back, mr. chairman. >> thank you, mr. cicilline. at this time i recognize mr. issa. >> thank you, very much. as a chairman next door i'm used to going first so all the material is mine. when you get down this far usually most of the good questions have about asked and this is no exception but i just want to run a concept by you because i serve on this committee. i also am a member of the energy

and commerce committee that often looks at the other side of your issue in the fcc. so when i say, for example, comcast, time warner, nbc. at&t/directv. verizon/fox. dish network/cbs. sprint, t-mobile, a.b.c. and google and everyone else, are we looking at a future which in order to be competitive companies have to find these partnerships, these allies, these mergers in order to create real viable competitors, in this case at&t/directv to those other hypothetical and not so hypothetical names that i mentioned? mr. stephenson, mr. white? >> certainly for anyone distributing the paid television piece, i'll let randall speak to the broadband aspect, but i think there's a story there as

well, when 60% of your costs are the content that you distribute. we're just a distributor and seven companies control 75% of our content costs. we're already in the world of dealing with big scale providers of content, like they're tough negotiations, big and small. in our case we've had our battles with big ones on behalf of our customers. so i think as a reality to do the kind of investments that we're talking about in broadband, i think mr. bergmayer referred to it, to me the exciting thing is not just the commitments that we're making today, but the fact of at&t having a profit annual video business will support them to continue to invest in increasing speeds in broadband which we know that's where the future is going for the long term. >> randall? >> yeah. i don't know where future industry moves, go, and what consolidation transpires. this one, mike and i, we view this as very different.

this is not comcast/time warner. this is not two cable companies getting together. >> you don't have a major content element? we have some of the other names and hypothetical names i mentioned do have and that's why i asked the question that way. >> so you're exactly right because this one is just -- we're putting his tv product with our broadband and wireless product and creating a unique value proposition in the marketplace but there is not a content play per se in this transaction. >> mr. bergmayer, in your opening statement you were very concerned but i would presume you would have been equally or more concerned when major cable companies and content providers joined, right? >> yes, sir. >> okay. mr. liberman, same thing? >> yes, there's definitely concern. i just want to say it's not only content providers merging with distributors, it's also just distributors getting larger. when they get larger, they get more influence over programmers. that drives programmers to want

to get larger as well. as a small provider it doesn't have the financial resources to get larger themselves. they suffer. if they want to have a market that's dominated by larger players where consumers in rural areas don't have options, then that may be the market that we're about to look at. >> well, this is the reason that i started this way. on this side of raburn office building, we deal in the antitrust question but antitrust since the dawn of antitrust since teddy roosevelt has been about recognizing that companies naturally compete if not for a trust situation that gives them an unfair advantage. do you all agree to that, that that's really what antitrust is about, is maintaining the opportunity for real competition? so now i go back to my basic question which is not just for your merger but in my mind for how this deals with, if you

will, the promoting of competition? in fact, do we not have a problem that if we do not create certain large entities that can deliver product and compete to my household to make sure that i have multiple choices to my household wherever i live that, in fact, we will not have competition either for delivery of content or quite frankly we have a problem with delivery of content being at a good value. isn't that true? >> one thing is certainly true, and i think this merger creates a greater opportunity for us to combine with at&t's broadband capability. i mean, for us, every satellite costs $400 million on its wireless business randall is spending 10, 15 billion, $20 billion a year in capital spending. it's expensive to rewire america, and that's kind of what we're about collectively and that's how we compete. >> thank you. mr. chairman, fortunately viasat is in my congressional district.

the launches tend to cost a similar amount. >> they do. >> although space x is reducing the cost but those satellites are transmitting so many more channels and so much more band width that i'm confident that competition from space becomes one of the competitions that hopefully this committee will realize needs to be viable to maintain an antitrust environment. i thank you and yield back. >> would the gentleman yield? >> i yield such time as -- >> i'll yield 15 seconds. >> yeah. i just want to make a statement about government investment in infrastructure. the space program, hundreds of millions of dollars that the government through taxpayer money spent to prepare to turn that industry over to the private sector of which mr. issa is so proud and justifiably i think is a tribute to government

spending, and with that i will yield back. >> thank you. mr. holding? gentleman from north carolina is recognized. >> thank you. the folks i represent in north carolina want to know in real terms what it means to them, the merger. we've had lots of good conversation in this hearing and so i'd like for you all to succinctly boil it down and answer this question. three years from now what are the top two things that you think that my constituents who are your customers will appreciate or dislike about this merger? and i'll ask mr. stevenson, mr. white and then i'll ask mr. bergmayer, mr. liberman. i'll ask you. two things you think my constituents will appreciate in three years' time? >> 15 million more rural americans will have internet service that don't have high

speed internet today and i think up to 70 million homes in america out of 115 million will have a much better bundle offer to compete with the cable companies. >> mr. stephenson. >> as that plays out. there will be downward pricing pressure in this industry as we become a viable competitor, as our programming costs begin to climb at a lower rate we think is beneficial to consumers from a pricing standpoint. we think also more broadband is very, very good for the over the top content distribution models so more broadband will help accelerate the over the top models and bring more choice for customers on content. >> mr. liberman, maybe the top two things they will not appreciate in three years? >> yes. i think that the rising prices that they will see, that their service providers who are not directv have to pay for directv programming, and i think number two, concern that they would

have is just the increasing pressures, the decreasing competition that smaller providers can provide as a result of the increasing consolidation that's happening in the marketplace, not only due to at&t/directv but also comcast time warner cable. >> mr. bergmayer. >> as a resident i would be concerned if i could only get wireless or i had the same fiber options that other people can have in densely populated areas. i agree over the top video is a great benefit. i think what they want is a great choice of over the top video providers. i would hope in the future customers aren't driven to using one or another over the top video provider. for example, if at&t operates its own over the top video service that it does not discriminate and exempts only its own services from data caps

but not those of its competitors. >> thank you. mr. chairman, i yield back. >> thank you, mr. holding. at this time we'll recognize the gentleman from missouri, mr. smith, five minutes. >> thank you, mr. chairman. thank you for holding this committee. my first question is for mr. white. mr. white, the american cable association states that reductions in programming costs that at&t and directv may receive as a result of the proposed merger which may lead to higher programming costs for their members. how do you respond to that? >> first of all, the reduction in programming costs that we referred to is a reduction in the costs that currently at&t pays. we didn't make any assumptions that directv's costs would go down necessarily, but it's all related to the cost of content that at&t pays today. our belief is as we look at that

frankly all of us battle in these negotiations everyday. the cable operators do as we do as distributors and there's a significant amount of leverage, but i -- it's hard for me to see in a world where there's over $40 billion of affiliate fees that our billion dollars in savings out of the 40 would make that much difference over time to what they would charge the small operators. >> so do you think this merger will increase the cost of your competitors by any means? >> that's got nothing to do with our thinking on it. this all has to do with the capability to service the 75 million customers that leave at&t because they can't get a bundle right now. i don't accept that at all. furthermore, i think our -- some of our smaller operators, you've got to remember in a local market they are very, very powerful in terms of their coverage and they negotiate very tough and i don't expect them to

want to see their prices increase any higher than they already are. >> thank you. mr. stephenson, i have a very rural congressional district in southeast missouri. it's an unserved population. at&t and many other wire line providers as well as cable operators have made significant investments to reach my constituents, many of whom struggle to get dialup. can you explain how this transaction will result in increased broadband services for rural communities like mine? >> yeah. in fact, i'm looking at a list here. missouri. the fixed wireless local loop that this transaction will accommodate. again, we have a profitable tv product that we now pair with a broadband technology and it makes the economics for deploying broadband look really attractive. we're going to use a wireless technology which will give 15 to 20 megabits. in missouri, that's 340,000

households we pass. this one we're most enthusiastic about. we've been looking at this trying to get the economics to work. it works when you put a profitable video product which directv brings to bear with this. that's what missouri should see. >> thank you. you know, representing a very rural congressional district with your statements there i want to point out that the only way that i can get internet service at my house, which is 13 miles from rowling, missouri, a community of 25,000 people, is through wireless or satellite. so that's -- that's extremely important for rural america. mr. lieberman, larger size competitors typically have an advantage relative to their small rivals as a result of the economies of scale. smaller sized competitors can outperform their large rivals on service and product quality.

what other competitive advantages, aside from size, will the combined entity of at&t and directv have? >> thank you. as you know, consumers do benefit from having independent distributors in the economy. these are often in areas where larger players do not want to invest and they do not want to serve. with regards to your question, first and foremost i can't discount the importance of just being large when you're negotiating for programming costs. even at&t/directv have said that 60% of their costs go to programming. that's to deliver their video service. that's the same for smaller operators as well. i think being large have other advantages of just having more financial resources, whether or not it's marketing to your

customers for instance. these things give great advantages to directv in a lot of their competition with smaller operators. >> will the aca members that are present throughout my district, will they be able to compete with the combined entity of at&t and directv on the basis of better service and higher product quality? >> they will compete. they will do what they can to overcome the significant disadvantage that they face in paying programming fees that are significantly higher than directv but that competitive ability is getting more and more difficult overtime. if your customers enjoy having a competitive choice between two satellite providers and a local cable operator, then i think we need to look at the rules in the market that are driving the consolidation to ensure that consumers can continue to benefit from that in the future. >> thank you, mr. chairman. >> thank you. we're going to have a second

round for members who are here if they desire. so, mr. smith, if you want a second round, you can. mr. johnson, do you have any follow-up questions? i'll go and then you if you have any. let me start with, mr mr. bergmayer, mr. stephenson sort of mentioned net neutrality and that they were committed to the fcc's -- some of their guidance. i'm not sure what the fcc's position on net neutrality is. it seems to me they're backing away from what was originally conceived as net neutrality. >> as i understand it, at&t has committed to follow the 2010 open rules. they were partly vacated by the dc circuit but part of a merger condition at&t may promise to abide by those rules even if they're no longer enforced for some of the industry. i think there's a question about

the extent of protection they offer to wireless users. for example, while they offer less than wire line broadband users, they don't provide no protection. one of the areas where they offer protection is for services that the provider themselves offers. there are some cases where you can't discriminate against competing services. now if at&t does offer a new over the top video service, those provisions of those rules might kick in where previously at&t did not offer such a video service so they might not. that is sort of an interesting point with the 2010 rules. >> i think most americans, most members of congress are very concerned. you know, the internet has sort of been a gateway, not a gatekeeper to the broadband providers. i know as a telephone company you have -- you are subject as a

common carrier but -- and, you know, we've seen reports of fast lane, slow lane. if there's a reason not to have that, it's just concerning. >> well, i mean, we're working. public knowledge is working at the fcc now for strong net neutrality rules that would apply to the entire industry, not just one company. i question whether it makes sense to have rules that apply to one company, not the other. i presume if we succeed in our efforts to get rules that are better than the 2010 rules that are in place, if they go beyond the 2010 rules, but if they don't go as far we would hold them to it. >> i know there's some discussion about what is a common carrier because i won't get into all of that.

i think it's something the committee ought to look at. mr. lieberman, discriminatory pricing obviously is a concern. we want to preserve the competition we have and you've talked about a differential of 30% in your testimony. you said the proposed transaction will increase directv affiliate programmers incentive to charge higher prices to at&t directv rivals. then you say regulators should adopt a remedy to eliminate the ability of directv affiliated programmers to charge higher prices to at&t directv rivals. i think the same thing would apply to comcast, nbc, and you know obviously others. it wouldn't be just directv. but would you -- and i know there was some arbitration that

expired. directv had to submit to arbitration. i think comcast still does. i think you said in your statement that you didn't feel like that was sufficient. you want to comment further on that or on discriminatory pricing? >> yeah. let me start with i think the issue that's most directly tied to the at&t directv deal which is their -- which is directv's incentive to charge its rivals higher prices for its programming which will get greater as a result of this deal. currently there isn't enough protections to avoid that problem. i think mr. white has explained that the program access rules are subject to small -- to them currently, however, those rules themselves are not enough. m en directv has suggested in access rules already exist, that there should be heightened protections and has argued tore arbitration conditions. fcc has argued for that. so directv is part of a 2008

merger had arbitration conditions opposed to them. baseball style conditions coming up with fair market value for the programming. that has expired and what -- and we believe that a similar condition should be adopted to address that harm, however, the one that was previously adopted had some flaws. it remained too expensive for smaller operators to use so if you have a remedy that's too expensive for a cable operator with 1,000 subscribers to use, you pretty much have no remedy. so we need to relook at this type of remedy, put some modifications to it to make sure it works for all providers that need it. >> just to eliminate the ability altogether? >> excuse me? >> just to eliminate the ability altogether? >> we should eliminate the incentive to increase the price for the rivals more than the price they would charge to non-rivals. >> fine.

and i think y'all support creation of a fee category include dbs? >> yes. >> and also at&t has so it will be interesting as you go forward there. let me close by saying what most -- some members of congress, i guess, this is the most frequent question i was asked. and i don't think anyone's asked this. one of the principal components of the proposed@/directv merger is directv's continuing a relationship with the nfl. what can you share with us regarding that relationship and your customers' ability to continue to get the package which they very much value. >> well, thank you for the question, congressman. as you can imagine, nfl content, all of our customers are very excited about each year when we kick off the new season. we've had a long standing -- actually, a 20-year relationship this year with the nfl. we very much value that

relationship. our relationship is excellent. our current deal was a multiyear deal. expires at the end of this coming season. so we are in active discussions with the nfl about renewing our affordable rates. and as a result of this program, nearly 1.2 million americans have joined the program. 86% of whom now use the internet

daily. 21,000 which are in my home state of georgia, and with just over 17,000 families in the city of atlanta alone. will at&t commit to a similar program to advance the public interest through affordable broadband access and digital learning -- excuse me -- digital literacy training? >> i'm not intimately familiar with it, congressman. but i will commit to you, we will look at it. i think it's probably in not only our -- the communities we serve's interest, something like that, but probably in our own self-interest. we are doing a lot in terms of nano degrees. trying to help with low cost education for people to get degrees that would equip them to do things in the digital world, and we're very, very excited about it. we also have made a number of investments to ensure that we can address that end of the market and ensure that these -- the customers at that end of the

market are getting really robust broadband capabilities. our experience in terms of getting good penetration of broadband into lower income communities is not the access to broadband. it's the access to computers. and what is happening, and it's happening at a very quick pace, are these devices. these are very low cost computers that are wirelessly connected and getting really low cost for people in lower income communities to gain access to the internet and the digital economy. and so we are focused in this. but i'll be glad to look at the areas you addressed and evaluate it. >> thank you. as part of its rollout of a fiber network in kansas city, google includes a free monthly service with basic internet service if consumers pay a one-time construction fee to connect their home to the network. does at&t offer a similar service for its fiber networks?

>> what we have done, google did some very creative things in kansas city. and i take my hat off to them. they then modified their approach and took it to austin. and the -- what they received in terms of permitting to build out a fiber network in austin from the municipalities was very interesting. and, in fact, as soon as they announced it, we told the austin community, if you'll make the same concessions to us, we will build a fiber network as well. we launched our fiber network back in november. google has yet to launch theirs in austin. but it's a good indication of competition and the robustness of fiber deployment in these communities. and different business models that are emerging like the one you mentioned in kansas city, a different one in austin. we've announced one in north carolina as well. >> okay. what other outreach programs does at&t offer to unconnected homes, specifically those in low income neighborhoods and in rural areas?

>> you said what programs? >> yes. what outreach programs does at&t offer to unconnected homes, specifically those in low income neighborhoods or rural areas? >> i apologize. i don't know off the top of my head. but we can get that to you. >> okay. >> you know, you -- they do have at&t aspire. which i think is a very valuable program. it may not get the broadband, but it certainly keeps students from dropping out of school. that's a very large program. when they don't drop out of school, they get a good job. and they have the ability to use -- >> there are multiple hundred million dollar commitment to the high school dropout crisis. focused particularly on hispanic, african-americans and native americans. the dropout crisis was epidemic. we've made a major commitment to address this. moved the needle in a lot of areas. that has continued. >> wasn't that $300 million?

>> first one was 200. second one was 250, i think. >> that's commendable. but in terms of outreach to enable families, low income and also rural folks of what the opportunities are in terms of your -- what you offer and how it can benefit the people. so in terms of just outreach. not so much the programming itself. but what do you do in order to make people aware of the benefits of internet connection and -- and the other services that you provide? >> it's a good challenge. like i said, i can't give you specifics on what we're doing there. if nothing, i'll let you know and we'll take it under consideration what we can do, do

better. >> thank you. >> of course, that is -- aspire is an outreach program. >> yeah. >> our biggest problem in education, our dropout rate. >> yeah. you should be commended for that. >> one of you are biggest issues as a company -- >> i know you all are -- it is a tremendous program. >> you all agree? okay. all right. yes, sir? >> i was going to say, one of our biggest issues as a company over the next six years is access to what i would call computer and digital literate employees. we're going to need a significant number of them. and we are doing a lot of creative things. not the least of which is we are fully funding for any of our employees that can qualify a masters in computer science at georgia tech university, purely online. it's been certified by the governor and by the board of regents as a fully accredited degree. and at&t is committing to pay anybody who can qualify and make

it through that -- into that program. those who can't qualify to get into it, we're bringing it inhouse and we'll do at&t certifications to begin to build these skill sets for people. >> okay. well, that's great. digital literacy training, do you have any programs that enable those without that skill to learn about it and take advantage of it? any programs that you might have. >> yeah. so we have a number of digital lit eracy programs. in fact, the aspire program that the chairman referenced, we've actually done some things with the aspire program where we've invested in companies who do digital literacy training and do things in schools to develop digital curriculum and so forth. so we've made some investments

in these areas. that continues to be a focus of ours. i will be glad to give you a full detailed listing of all the efforts we have going on in that area. >> okay. that would be great. and i just look forward to you all thinking outside of the box and coming up with some new, attractive ways of making your services available to those who cannot afford it or who just simply do not know about it. and those -- you've already covered the fact that those without access, you're going to take care of that. there's that other, more softer component of it also. thank you. i yield back. >> i thank the gentleman. this concludes today's hearing. i thank all of our witnesses for attending and answering our questions. i thought you all gave excellent testimony. without objection, all the members will have five legislative days to submit

additional questions for witnesses or additional materials for the record. this hearing is adjourned. and now you can go over to the senate and answer their questions. live now to capitol hill as the house financial services committee is convening a hearing this morning on the export-import bank. its current authorization expires in september. business and financial officials will discuss what the export-import bank does as well as its compliance with requirements made as a part of the last reauthorization that happened back in 2012. congressman jeb hensarling of texas chairs this financial services committee. california's maxine waters is ranking member. live coverage here on c-span 3 should start momentarily.

once again, we're live on capitol hill. the house financial services committee convening a hearing on the reauthorization of the export-import bank authorization expires in september. politico has a story on the

ex-imbank and its uncertain future. on tuesday house speaker john boehner declined to say whether he thinks the export-import bank should be authorized, throwing into jeopardy a program seen as key to american businesses after majority leader-elect kevin mccarthy of california said bluntly sunday that he thought the private sector should absorb the bank's function. across the capitol, the article goes on to say senate majority leader measure mcconnell said while he hadn't decided if he'll support it, here's urging renewal of the program to come to the senate floor before its september expiration. the committee will come to order. without objection, the chair is authorized to declare a recess of the committee at any time. the chair is entitled to examining the reauthorization of the export-import bank. corporate necessity or corporate welfare. i now recognize myself for six minutes to give an opening

statement. today we'll examine the obama administration's request to reauthorize the export-import bank. first, we should examine where the money comes from to finance ex-im. whose money is it? well, obviously it is taxpayers' money. the cashier at the corner grocery store. it's the cop on the beat, your children's teachers, the small business owner struggling to keep the doors open in a tough economy. where does the money go? it goes to foreign countries and foreign companies in the way of direct loans and credit guarantees. the taxpayer money goes overseas to china and russia. nations that openly challenge our economic and security interest. taxpayer money goes to oil rich countries like saudi arabia, the united arab em rats. the taxpayer money even goes to countries with a demonstrated history of atrocious human rights abuses like the congo and the sudan. so who benefits?

overwhelmingly and indisputably, it's some of the largest, richest, most politically connected corporations in the world. like boeing, general electric, bechtle and caterpillar. in fact, in 2013 over half of ex-im's financing went to a handful of fortune 500 companies. and big wall street banks apparently benefit as well. as reported in the press recently, one former jp morgan and citigroup banker said of ex-im's credit guarantees, quote, it's free money, unquote. so if you're a politically connected bank or company that benefits from ex-im, no doubt you would like it to continue. after all, it's a sweetheart deal for you. taxpayers shoulder the risk. you get the reward. if you work at a small business or another american company competing in the global marketplace, it's unfair. ex-im effectively taxes you while subsidizing your foreign competitors. now, we hear a lot from powerful

voices on k street and wall street about the bank. but we also should listen carefully to some voices from main street. like hal richards of terl, texas, in my district. quote, as a small business owner who exports, i think it's outrageous that my own government puts my business and other small businesses at a competitive disadvantage through the export-import bank. how is that fair? now, ex-im tells us sending taxpayer money to foreign interest supports jobs for americans. but the government's chief auditor reported that programs like ex-im, quote, largely shift production among sectors within the economy rather than raise the overall level of employment in the economy, unquote. delta air lines, whose ceo will testify shortly, points out that ex-im's loans to foreign airlines have killed as many as 7,500 domestic airline jobs because the bank will subsidize delta's foreign competitors. caterpillar was a recent

beneficiary of ex-im's taxpayer financing that went to an iron ore mining project controlled by australia's richest citizen. an american iron ore company called cliff's natural resources said it will no longer be able to effectively compete with its australian competitors due to the subsidy, and they are now having to cut employees' hours. another american competitor feeling the sting of ex-im is valero energy in my native texas. ex-im is lending $641 million to a turkish company to build a new petroleum refinery. valero's ceo stated ex-im's -- professor dond budrou of george mason university summed it up neatly, quote, at best the ex-im bank creates jobs in export industries by destroys jobs in nonexport industries. the bank tells us it's essential to u.s. exports.

but over 98% of all u.s. exports occur without risking taxpayer dollars. again, over 98%. most of the others who take advantage of ex-im, certainly they could do it without taxpayer support. even boeing, the bank's biggest beneficiary, has admitted it doesn't really need ex-im and could, quote, arrange alternative financing, unquote, without it. now, the bank has also told us it doesn't cost taxpayers a dime. the congressional budget office respectfully disagrees. it tells us if the bank were to use fair value accounting, the accepted accounting method for almost every bank, private company in america, ex-im's ledger would actually show a net loss to taxpayers in the neighborhood of $200 million a year. that's the difference between washington accounting and main street accounting. perhaps what is most disturbing about the ex-im bank is its ideological and crony-based lending practices. it has a green energy quota.

it permits no assistance for coal projects. it is a mandate to specifically support exports going to subsahara africa. last year more than 60% of ex-im's financing benefited just ten mega corporations that clearly have a strong political and lobbying presence in this town. recently a spanish multinational corporation received a $33 million ex-im loan, while former energy secretary bill richardson simultaneously sat on its advisory board and ex-im's as well. ex-im guaranteed $10 million in loans to benefit the politically favored solyndra which clearly did not favor taxpayers. and just yesterday, just yesterday we woke up to the report in the "wall street journal," quote, the u.s. export-import bank has suspended or removed four officials in recent months amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies.

ex-im may not just be guilty of cronyism. it may be guilt of corruption as well. now, i will admit, republicans may disagree on whether ex-im should be reformed or allowed to expire. and i certainly hope that this hearing will help eliminate -- will help illuminate, rather, that decision. but we are united in leavie in that we cannot rethorize the status quo and we are also united in believing that the smarter and fairer way to promote american exports is by fundamental tax reform, strong trade agreements, a regulatory freeze with the exception of health and safety and greater american energy independence with projects like the keystone pipeline. i now recognize the ranking member for 5 1/2 minutes. >> thank you, mr. chairman. i'd like to thank you for finally holding this hearing on the reauthorization of the

export-import bank. even though it comes less than three months before its charter expires. it's been over a year since this committee even discussed the bank at a subcommittee hearing to assess its progress on reforms. but let's be serious. this hearing is not going to be a forthright discussion on the merits of the bank. mr. chairman, we know your position on the bank. we know you have made ending the bank your top priority, regardless if it's at the expense of thousands of american companies trying to compete against businesses in china, russia, korea and countries across europe, all of which have their own version of the ex-imbank. i'm dismayed to say that the republican leader-elect, kevin mccarthy, has also changed his view on the export-import bank. i'm saddened that he has followed the lead of the extremists in an effort to show his tea party credentials.

at one point, programs like the ex-im bank were so apolitical that they did not even require a vote. now, policies that create thousands of jobs and increase american competitiveness are under constant attack. i'm becoming more and more concerned that the republican party's willingness to work together onni issues like flood insurance, tria and the export-import bank has fallen victim to fringe elements who put their -- over the business owners and broader economy. as the extremists celebrate, i have to admit, i mourn it as a loss for our country. our new reality is government shutdowns and debt ceiling crises. it's constant uncertainty. it's not knowing whether the government is going to help pick up the pieces after a major flood or terrorist attack. it's about telling businesses,

large and small, you're on your own. so go up against competitors who are backed by global superpowers. and, now, they have set their sights on, quote, exiting the export-import bank, an entity that creates or sustains hundreds of thousands of jobs. and over the past five years, has supported $233 billion in u.s. exports. i'd like to take a minute to thank representatives denny heck and william lacy clay who have just yesterday introduce add clean ex-im reauthorization bill with 200 democratic co-sponsors. mr. chairman, i'm not an expert at whipping votes, but if you add these co-sponsors to the 14 republicans who recently signed a letter in support of ex-im's renewal, i believe you have a majority of the house in support of extending the bank's charter for the long term. opponents of the bank like to

use the term crony capitalism. well, over the past few weeks, we have been working hard to learn more about the so-called crony capitalists that have been supported by the bank. their stories have been astounding. mr. chairman, did you know there are 12 exporters in your district that, i guess, are crony capitalists? and 11 of them are small businesses. over the course of this hearing, democratic members of this committee will share with you the truth about these hard working americans, not cronies, that are assisted by the bank. there are companies like space x, an ambitious and revolutionary firm based in hawthorn, california, in my district that designs, manufactures and launches rockets. it's the first private company to build, launch and dock spacecraft at the international space station. and it's a company that has been strongly supported by the

majority leader-elect, kevin mccarthy. who went so far as to call its founder, elon musk, the wright brothers of the next generation. in just a few short years, the ex-im bank has authorized close to $900 million in support of exports from space x, creating thousands of quality, high-tech jobs across california and in the united states. i wonder, when m when mr. mccar decided he could no longer support his friend, elon musk, or support the bank that keeps space x innovating and competing, despite the fact he's identified himself as a big supporter of space x. i, too, believe in space x because i know the pain in my district that has been felt over the years after losing our manufacturing base. supporting companies like space x is critical. because they're bringing manufacturing jobs backed. and they ensure the united

states remain a world leader in the manufacturing economy of the future. so i thank you, mr. chairman. i look forward to this hearing. and i yield back the balance of my time. >> chair thousand recognizes the gentle lady from west virginia, ms. cap doe, chairman of the financial institution subcommittee for two minutes. >> thank you, mr. chairman. thank you for holding today's hearing. for the last two years the export-import bank has joined the obama administration's assault on our nation's coal industry. in december of 2013 the bank imposed guidance that would prevent the financing of coal-fired power plants in all but the world's poorest countries. this guidance dwibed with the epa's proposed regulations to ban domestic coal-fired power plants will ir rev ka bli hinder the development of new coal clean technologies. this is another of the administration's attempt to pick winners and losers in our economy. i can no longer support the authorization of the ex-im bank. i've expressed my concerns to the bank to no avail.

in a letter and meeting with chairman hockburg i dus cussed my opposition to this guidance. i've been absolutely clear it is inappropriate to use the bank's financing mechanisms to drive an ideological agenda rather than promote u.s. exports. the administration's policies come at a time when we should be ensuring the united states is leading the world in developing new coal plant technologies. we won't see carbon capture and s sequestration developed by u.s. countries if we choke off the market for coal technology. the ex-im's guidance is bad for the nation's economy, bad for the development of future tech nolls and bad for the environment. for these reasons, i do not support the extense of this charter. i yield back. >> gentle lady yields back. the chair now recognizes the gentleman from california, mr. sherman, for two minutes. >> mr. chairman, a point of order. we had those clocks going for the national debt. they're going too slowly. you're proposing to eliminate the ex-im bank which will add billions of dollars to our

national debt. and you've been unwilling, unless you change your mind, to join with me in taxing increase measures that would replace that revenue. the -- now, whenever somebody wants to inkroo es the national debt, they always say change the accounting system. the ex-im bank would be costing us money if we used fairytale value accounting. i don't think we should. the fact is, we should use gap, not gop accounting. g-a-a-p. not g-o-p accounting. what is the underlying theory of fair value accounting? not that we look at the profits and losses of the ex-im bank properly accounting for the r k risks they take, but we look at what their cost would be if they weren't the ex-im bank but at a higher cost of funds. that's like saying pizza hut is overreporting its income because they report accurately the cost they pay to the bank for the money they borrow, not the

higher amount they would pay if they were jack's pete izzeria instead. the fact that pizza hut has a lower cost of funds doesn't mean they should report higher interest costs and report a loss, but that's what you do under fairytale value accounting. also, i'm in on foreign affairs. i sit there while republicans say that democrats might support unilateral disarmament. that we would give up our arms and then go into the arms limitation talks asking others to follow our -- our lead. that's what we're doing here. germany has an export credit authority that's three times as large. they have total exports three times as large per capita. and they run a trade surplus. and we would go into negotiations with germany giving up the ex-im bank. why don't we -- >> time of the gentleman has expire e

expired. the chair now recognizes the gentleman from new jersey, mr. garrett, for two minutes. >> first of all, thank you, mr. chairman for holding this hear. thank you also, mr. chairman, for all of your efforts on fostering not only this area, but also in general economic growth and job creation in this country, including manufacturing. as the ranking member has bemoaneded the fact that she has lost it in her district, i just note that the chairman is encouraging economic growth and manufacturing, but not on the backs of the american taxpayer. thank you also, mr. chairman, for holding this hearing in a very timely manner as well. thank you to the panels. you know, panels, i was struck by an article in the front page of the "wall street journal." it was entitled "officials at ex-im bank faces probes." what i found especially interesting and concerning in this article, notwithstanding the fact that four bank employees have been suspended or removed for allegations of kickbacks, was a statement of the agency spokesman that,

quote, the export-import bank takes seriously its commitment to taxpayers and its mission to support u.s. jobs. really? to begin with, i would question the bank's seriousness to taxpayers. in this committee we learned of allegations of potential criminal conduct simply by reading the front page of the "wall street journal." i guess the so-called serious commitment to taxpayers did not reach the level of requisite seriousness that would result in congress being notified of various serious allegations like this. while we need to be certain we have the facts and assured that this committee does not jump to proverbial conclusions, i do find it curious that these examples of employee misconduct were withheld against the backdrop of this debate over the future as well as the well funded lobbying campaign to ensure the bank's continued existence. if tree these allegations would go to the hort of the concern about this bank. its lending and of the special interest of multibillion dollar

corporations. i only need to look at lobby disclosures from our biggest corporations. you get something that looks a lot like crony capitalism. with that, i yield back. >> chair now recognizes the gentle lady from new york, ms. mccarthy, for a minute and a half. >> thank you, mr. chairman. and i appreciate this hearing. i'm a little confused on what i'm hearing. this is about jobs. and i can talk about my district. i work my district. i try to bring certainly businesses into my district. and i know in the last several years, i have been able to help my small businesses $86 million, just into my district alone. a lot more jobs added over the last seven years. that's what our job is. to make sure that we can bring jobs home. as the ranking member had mentioned, mr. hensarling, who unfortunately didn't bring a lot of money into his district, but maybe he didn't work the

district. i don't know. and mr. mccarthy, who always supported the ex-im bank did have over $69 million that came into his district. this is about jobs. my colleagues on the other side keep saying, we're going to do jobs. we're going to do jobs. where are they? people seem to have a very short memory. when we went through the great crisis, nobody went after the banks. nobody went after the insurance companies. when we look at the exbank and we hear my colleagues talking about that they found four employees. can i remind everybody? yes they found foreign employees. they did an investigation. they let them go. that's the way the system works. anybody that understands any business, there are always going to be people that are going to try to break the system. if we brought this bill up on to the house floor, we would get it passed. so stop with this. let's do jobs --

>> time of the gentle lady has expired. the chair now recognizes the gentleman from illinois, mr. holtgren, for one minute. >> thank you, mr. chairman. i want to take a hard look at the current structure of the export-import bank. protecting taxpayer dollars by keeping government out of tasks that the private sector can perform itself is central to a nation based on free enterprise. an estimated 760 jobs in the 14th district alone rely on the bank to ensure their export reach their customers. a company in geneva, illinois, asked me to support the bank. another company has jobs dependent on the bank. we can't overlook the 29 smaller production suppliers who fulfill boeing orders in my district. since 2007, the bank has supported almost $6 billion in illinois exports from 301 exporters, including 204 small businesses. an outright elimination leaves u.s. jobs in peril. we must ask the hard questions.

do we know the job impact of eliminating the bank without a proper glide path in place? have we addressed the worldwide subsidies offered by our competitors through grade agreements? can we put a reform plan on the table to ensure a more limited scope for the bank? i'm committed to working together to put a viable alternative forward. i yield back. >> time of the gentleman is expired. the chair now recognizes the gentle lady from arizona, ms. cinema, for one minute. >> and of the export-import bank, because helping arizona businesses expant their manufacturing capacity and exports ability creates jobs and grows our economy. export-import bank fills gaps in private financing stepping up where the private sector can't or won't. last year fred hockburg visited. from fiscal year '07 to '14 the agency reported $176 million in exports from companies in my district. one of those companies, mar tek

ink was reluctant to sell equipment to customers in asia. they were concerned once the equipment left their building there was no guarantee they'd be paid. the bank issued an insurance policy so maritek could have sales and guarantee they get paid. thanks to the bank they now export to companies in asia, europe and the americas. allowing the bank's current charter to expire would threaten the competitiveness of these and many other arizona businesses. that's why a co-sponsor of legislation to extend the bank's authorization and will continue to work to reauthorize this important investment in american jobs. >> chair you recognizes the gentleman from georgia, mr. westmoreland, for one minute. >> thank you, mr. chairman. the problem with the export-import bank is the entire mission and structure. simply the export/import bank is designed to advantage one of u.s. industries at the expense of another. even if congress directed the

bank to make changes as it did in 2012, we have seen that this masive bureaucracy will not lead to even modest reforms. people talk about the cost of jobs that would be lost if it's not reauthorizized. how about the new jobs and the more capital for growth created by findly being competitive with foreign competitors? the bank has shown it is not able to conduct mandated economic impact analysis, and the bank regularly employees fuzzy math and accounting. congressman date t-- quite simpy have failed to follow this mandate. i'm happy to join the chairman and the new majority leader in this effort. i yield back the balance of my time. >> chair now recognizes the gentlemen from missouri, mr. clay, the ranking member of the monetary policy subcommittee for one minute. >> mr. chairman, the mission of the ex-im bank is to support

american jobs by facilitating the export of u.s. goods and services. the ex-im bank does not compete with private sector lenders, but provides export financing that fills gaps in trade financing. the bank assumes credit and country risk that the private sector is unable or unwilling to accept. the ex-im bank helps to level playing field for u.s. exporters by matching the financing that other governments provide to their exporters. you know, refusing to reauthorize ex-im bank would reduce the number of ecas from 60 to 59. hurting only u.s. exporters and workers that they employ. my my home state of missouri, the ex-im bank supported one big -- 339 million of exports

from a district that i represent. mr. chairman, those are american jobs. >> time. time of the gentleman has expired. the chair you recognizes the jeman from washington, mr. heck, for one minute. >> thank you, mr. chair. just because somebody says something that's untrue over and over and over again doesn't make it one wit less untrue. let's start this hearing with the truth. here's the truth. the ex-im creates jobs. 205,000 last year. here's the truth. the ex-im supports small businesses. 90% of its transaction go to small businesses. in an appalling lack of understanding of how the private sector works, even large corporations are dependent on small businesses. the greatest plane manufacturer in the world is dependent upon 15,000 suppliers, 6,600 of which are small businesses. who would be put at risk by your position. here's the truth. there are no tax dollars involved. and subsidizing the ex-im.

the ex-im transferred over a billion dollars to the treasure iry. where's the proof the treasury ever transferred anything to the ex-im. finally, here's the truth. if we abandon ex-im, we'll engage in unilateral disarmament. unilateral disarmament. every other nation in the world has an export credit authority. don't render the united states the only one without one. >> time of the gentleman has expired. we will now turn to our first panel of witnesses. and to introduce our first witness, i will yield to the gentleman from georgia, mr. westmoreland. >> thank you, mr. chairman. it's my pleasure to introduce richard anderson, chief executive officer of delta air lines. richard has been the ceo of delta since 2007. and has more than 25 years in the aviation industry. as you probably know, delta air lines is one, if not the largest, employer in my district. and across georgia. delta has been placed at a

competitive disadvantage by the actions of the export-import bank. and the time has come to level the playing field. welcome to you and the members of the delta family team that's with you. i look forward to your testimony. >>. >> our next panelist, dr. ver neek hua j is a fellow research center at the mercatus center at the george mason university where her primary interest include the u.s. economy, federal budget and various financial issues. captain lee moak is the president of the airline pilots association which represents almost 50,000 professional airline pilots in the u.s. and canada. before becoming an airline pilot captain moak served as a marine corps fighter pilot. last but not least, steven willburn is the chief executive

offer of firm green, a newport beach based energy company that participates in injure chul vir aspects of the green energy business. before we proceed, mr. wilburn, we have one clerical matter to clean up with you. we received two different copies of your testimony. one 6:00 last night. in that testimony, in that verse, when describing why your commercial bank officer could not provide financing to a brazilian company, you said, quote, simply out of the question given the new t.a.r.p. regulations and the then new dodd/frank legislation. a couple hours later from the democratic staff, we received a new copy of your testimony that struck that language and included the reason, quote, reluctance of banks to support

small business exports, unquote. to ensure for the record we have the correct copy of your written testimony, which did you intend? the one we received from you at 6:00, or the one we received from the democratic staff at 8:00? i'm sorry. could you hit the button there. just for the record, we just need -- which testimony is it your intention to include? >> my intention is to provide an accurate written statement. i was flying from california on an airplane wi-fi trying to respond to your staff. and i was working, realtime editing. the last version -- >> the last version is the one you intend? >> that is my official written statement. >> okay. thank you. thank you, sir. that's what we needed to know. without objection, each of your written statements will be made a part of the record after your oral remarks. not unlike a traffic light, if you are new to this, there is a green light, yellow light, red light system. the yellow light will tell you

there's one minute remaining. the red means that it is time to wrap up so we can move on to the next witness. mr. anderson, you are now recognized for your testimony. >> well, thank you. thank you very much for having me here today. just as a private citizen, it is a privilege to be in the halls of congress and have the opportunity, regardless of what the issue is, to participate in the process. second, it's a real privilege here to be here on behalf of the 80,000 people that i serve at delta air lines and the 165 million passengers that the delta family serves around the world with over 6,000 flights a day. i would note that we're one of the largest operators of boeing airplanes and ge engines in the world. we currently have 100 boeing airplanes on order with ge engines, and we're paying cash for them. and there are not many airlines

in the world that buy 100 boeing airplanes and pay cash for them. so let's make sure we put our discussions here in context. i was pleased to hear that we're talking about jobs. because i have about 100 delta employees here with me that have my back today. they're the pilots and the flight attendants that provide the best airline service in the world. and i'm here to talk about their jobs. because the ex-im bank takes their jobs. and if that's really what we're serious about, we should be serious about reforming the bank. you tried to reform the bank in a bipartisan way the last time, and your reforms were ignored. and it's our jobs that are at risk. and i have a slide up here. the ex-im bank finances the wealthiest, most profitable airlines in the world with huge amounts of our treasury dollars.

and you can see on this slide, we have an example of an ex-im bank financing that was just done and a market based financing that was just done. and those financing numbers show you that a very wealthy airline that goes in the private market on a regular basis to finance airplanes gets over the life of the airplane about a $20 million advantage. and these airlines are also owned by governments and deeply subsidized by their own government in addition to being deeply subsidized by our government. our focus here today is on a narrow issue. i -- i am pleased to hear the job growth. my business depends upon job growth. we have no objection to anything that anybody does in the halls of congress on a -- on either side of the aisle that grows

jobs in this country. my business, our business, the delta family serves people that work at all the great companies in the united states. but we shouldn't have a government policy that sacrifices the jobs of hard working people at the delta family in order to subsidize the wealthiest, most credit worthy airlines in the world. i was the chairman, elected the chairman of the international air transport association by the ceos of all the airlines of the world. and in the course of doing that, i've had many conversations with the ceos of the most profitable airlines in the world. and they tell many e, look with don't really need the ex-im bank financing but it's so cheap i might as well take it. >> this is effectively a free airplane every eighth airplane. all i want is in a level playing field. the story as delta air lines is a great american story. we're now the most successful,

profitable airline in the world. but we have to compete against deeply subsidized government airlines that are in turn deeply subsidized by our government. and the prime example is air india. a government owned, government subsidized airline that grodrovs out of the marketplace with a billion dollars of ex-im bank financing. that cost about 1,000 jobs. so when we talk about creating jobs, why didn't we navigate a policy. and our objection is a narrow objection. it is wide body financing for credit worthy, state-owned an state-subsidized airlines. we have no objection in aenarro bodies. we have no objections in small business. our focus is on the policy function of where u.s. jobs are destroyed by the bank. so if we're serious about creating jobs, this bank needs to be reformed. i yield my time.

>> dr. de rugy, you are now recognize ed for your testimony >> thank you, mr. chairman. ranking member, member of this committee, it's a pleasure to be here today. we don't agree on much in washington. but i think we can all agree that the federal government shouldn't be sending our limited resources to the wealthiest and most politically connected corporation. and, yet, that's what the ex-im bank does. some say that there are good reason for doing this. they say that the ex-im bank promoting export, supporting job, return money to treasury and helps taxpayers. none of these argument withstands scrutiny as my written testimony has shown. and i will briefly address in my statement today. however, my main focus will be on groups who are affected by x m activity that have gone ignoreded. these people don't have connection in washington. they don't have access to press

offices and lobbyists. but they matter, too. it is difficult, but extremely important, that we consider the unseen cost of political privilege. whatever form it takes, whether it's market distortions, job losses, potential destroyed or higher prices. so let's start. first, the bank claims it is essential to promote u.s. export. economists disagree. we have long known that export subsidy schemes like ex-im do not meaningfully improve national export. and, in fact, the data proved this point. ex-im backs less than 2% of u.s. exports. ex-im likes to tout subsidized firms' successes. but they do not consider the unseen cost imposed on everyone else involved with the other 98% of -- on subsidized export. in these cases, it is the firm's

own government, not foreign government that puts them at a competitive disadvantage. for instance, ex-im harmed these firms' export opportunity by making it harder for unsubsidized buyer to secure their own financing. that's because ex-im gives lender an insintive to shift resources away from unsubsidized project towards subsidized p proje proje project, regardless of the merit of the business. these capital market distortion have ripple effect. subsidize project, attract more private capital, while other worthy projects are being overlooked. the subsidized get richer and the unsubsidized get poorer or, worse, get out of business. unfortunately, we'll never see the businesses that could have been. perhaps they would have been better, more profitable, more

responsible than the well connected subsidized businesses. second, the bank claims to support 205,000 jobs in 2013. this number, however, should be taken with a grain of salt. since gao has criticized the bank's job calculation methodology for failing to consider how many jobs would have been created without ex-im. among other flaws. but even if we accept the bank's questionable jobs claim, that means that it only support 1.8% of all export related jobs in 2013. the bank doesn't promote jobs. as much as it promotes job. for favored company at the expense of everyone else. the other 98.2% of unsubsidized export jobs are placed at a competitive disadvantage by ex-im. p unsubdy sized employer may not expand hiring. they may not increase wages.

and they may even have to fire employees because they face competition from subsidized project. third, the bank claims that it benefits taxpayer. a recent cbo report debunks claim of future x m profitability. ex-im is projected to yield losses for taxpayer over the next decade. but taxpayers are unseen victims in other ways. the ex-im bank transfer risk away from lenders and towards every single u.s. taxpayer that you represent. this creates what economists call moral hazard. since well connected lender like citi bank and jp morgan, they're also no risk when a company defaults. they have very less incentive to apply transaction oversight. they collect high fees on billion dollar loans in good

times. but normal tax paying americans pick up the tab in bad times. everyone in this room knows who will benefit if the bank is reauthorized. because the beneficiaries are few enough in number that they can effectively organize and are wealthy enough to apply significant political pressure. but what about the forgotten firms, workers, taxpayers and consumers whose voice are so easily drowned out by the corporate beneficiary of government privilege. they should not matter less than boeing, ge and caterpillar. this is your opportunity. thank you. >> captain -- captain moak, you are now recognized for your testimony. >> mr. chairman, ranking member waters and members -- >> i'm sorry, captain. could you move that microphone a little closer to you, please? >> yes, sir. >> thank you. >> mr. chairman, again, ranking member waters and members of the committee i'm captain lee moak. i'm the president of the airline

pilots association. and it's an honor to represent our more than 51,000 pilots. as a labor leader, i believe that airline employees should work with their companies to better our industry. out put's goal is to make the pie bigger rather than focusing on getting a bigger share. ensuring our company's ability to compete is essential in safeguarding u.s. jobs and our national economy. i don't believe in subsidies. if we're going to grow our economy it must be based on fair competition. fair competition is good, and on a level playing field. i'm here to tell you u.s. airlines can compete w( anyone in the world. however, we compete in a global economic environment. and it's one thing to compete with foreign airlines that are subsidized by their government. and i know i can't do anything about them. but it's an entirely different matter to compete with foreign

airlines that are subsidized by our government. we need to do something about that. this is where the export-import bank comes in. i don't take issue with the historic mission of the bank. but the bank has lost its way. today, the bank is being used to provide subsidies to foreign companies. companies that don't need the financing, but use the advantage to undercut u.s. companies. recently, the house of representatives voted unanimously to require the u.s. d.o.t. to simply follow the law when it considers foreign air carrier applications. why does this matter? because norwegian air shuttle is attempting to subvert u.s. law and international policy to establish a flag of convenience operation. norwegian has also applied for ex-im bank financing that it does not need and that will hand it an unfair economic advantage that threatens u.s. airlines,

u.s. jobs, the u.s. economy, and i'm going to tell you, u.s. national interests. we thank this committee for recognizing that unfair business practices such as nai should be rejected. international flying is crucial for u.s. airlines. tens of thousands of flight crews at the three largest u.s. carriers fly international operations. so our jobs are directly at risk from this competitive and inappropriate imbalance. since the united states first implemented its open skies policy, the u.s. share of international wide body fleet has dropped from 45% to 17%, and the share is now forecast to be at 5% by 2025. and if that doesn't concern you, well -- well, that should concern you. and the threat affects airports such as los angeles.

los angeles international. where in 2013, american, delta and united flew only about 16% of the total international jobs and mainline carriers are in jeopardy. so so are jobs at the small regional airports that are u.s. destinations for many of these international passengers. in 2013, the xm bank approved $7.9 billion in financing for u.s.-made aircraft that will be operated by our foreign competitors. xm financing is not available a. and a subsidy to routes that are, have been and could be served by u.s. airlines.

as a result, u.s. airlines have been forced to withdraw from or not be in key international routes. one example mentioned earlier is air india, use the airplanes, they flooded the u.s. market. in 2008, this forced capacity forced american airlines out of the mumbai route and u.s. jobs that we lost, directly the result of actions by the xm bank. in 2012, the reauthorization congress rightly directed the treasury department to negotiate with the european union to end wide-body aircraft financing. alpa encourages this committee to seek a full accounting of that effort. i'm going to say because i can go on and on. thank you, and i'm looking forward to all of your questions. every one of them. thanks a lot. >> mr. wilburn, you're now

recognized for your testimony. >> thank you chairman hensarling, ranking members watters and members of this committee for allowing me the great honor to be here. mr. chairman, i do apologize, i'm a disabled veteran and i have posttraumatic stress disorder, i'm using it as an excuse, but i don't have a staff to write my reports or anything, my written statement. so when i got that e-mail from one of your staff members that said i had to have the statement right away. i was real life on an airplane coming from california. i don't want to take up more than my time than that. hopefully, no one influenced my statement. no one will ever influence my statement, i guarantee you that, sir. with that, said -- [ applause ] and i wasn't looking for that, but thank you. my name is steven wilburn and

i'm the ceo of firm green. i'm married to margaret wilburn, proud father of five children, nine grandchildren, and one great granddaughter. i won't bother with their names right now because it would take up too much of my time. but i love them. i work hard for them. i built this business for my family first and my employees second. my employees are treated like family. we're a small company. i want to put a face on small business today, if i can, okay? it's an awesome burden because there's thousands of small businesses throughout. i don't have the authority to speak for all of them. i connell give you my story. and sir, thank you for your service. i started pursuing the firmgreen ten years ago. i'm a firm believer of the lord my god and serving as a marine in vietnam, i fight for free

rights, free trade and limited government. i did not understand nor do i understand the rabid anti-government end that seems to be motivates the current tax on the export-import bank. working to accomplish things for the greater good that could not be done by individuals alone. in combat, i could not have survived without my fellow marines. we cooperate. that's the way i thought we acted in america. i firmly believe that export-import -- excuse me, i firmly believe that the xm bank delivers an enormous value to mainstream america and allows me to grow without borders. we're not limited to domestic markets. we dare to reach out to the world's markets. for example, my award-winning bio gas project in brazil, my client asked me how we intended to present our eca finance proposal for the project.

i was embarrassed i had to ask him what he meant. they laughed that meant the export credit agency, your xm bank. that's how i was introduced to the concept of xm bank support but i was competing with linde corporation, multibillion dollar companies, much more prepared for that type of discussion and finance plan than me. but my clients went positive-to-the export-import bank my clients went through a rigorous underwriting, and thankfully, they were approved for the financing that i could not obtain through my private bank. at that time, it was wells fargo. and they just basically told me it did meet the underwriting criteria. well, i'm going to deviate from my prepared remarks a bit more. and just say due to the air of uncertainty swirling around the

reauthorization, in large part, i think by harmful words uttered by the bank's opponents in an orchestrated nonprecedented public spirit campaign i feel i lost a valuable contract in the philippines. words do have consequences. especially when they're uttered by people in power and position. i'm a small man. i can combat the machines that are out there saying what they're saying. i'm not a crony capitalist. i don't receive any welfare, corporate welfare, whatever you want to call it. we work hard. as a result of losing the memorandum of understanding because the korean bank came in with my korean competitor who had lost to me and basically came up and said, the bank's not going to be reauthorized. he's not going to get the deal. now my employees, including miss

dean, we're scrambling, please, words have consequences, be careful. i yield back the balance of my time. >> thank you. >> if the gentleman needs extra time, i would request the same time that was alotted to miss de rugy when he went over her five minutes. do you need extra time? >> not at this time. hopefully, i'll have adequate time in my answers. thank you so much. >> thank you. >> the chair yield to himself five minutes for questions. first, mr. wilburn, thank you very much for the service to your country as i think captain moch moak as well. i used to be prior to coming to congress an officer in the green energy company itself. i don't know about your particular company but it's a subject i'm highly interested in. but, mr. wilburn, i'll still a little curious. i understand that you were on a flight, i guess, when you were

sending your testimony. but i guess my first question is, was it -- simply a clerical mistake, or did you change your mind on whether or not t.a.r.p. regulations in dodd/frank played a role in failing to finance the brazilian company that sought your product? so is it a clerical error, or did you change your mind about including that in your testimony? >> no, it's not a clerical error. i didn't have all the facts. you'll see the rest of my written statement, i think it speaks to some of those issues surrounding what you're -- >> okay. mr. wilburn, you heard the testimony of others on this panel. and so you were very passionate with your testimony, but frankly, so was captain moak and mr. anderson as well.

i've spoken to people, particularly those, for example, at cliff's natural resources who said, you know, they're having to cut hours for, you know, working people, single parents. and so i guess my question is one of fairness, perhaps xm -- i have no doubt it helps your business but do you acknowledge it can hurt other businesses? >> i can't speak to hurting other businesses directly. unless i have more specific example, mr. chairman. but i can say this, that it's not intent to harm anyone. but if i don't compete through the export-import bank, i know who's going to be harmed. because my competitors in foreign countries financed by their banks will get those deals. and i believe the same would happen to the aircraft industry if boeing doesn't sell those aircraft i think -- >> let me then ask you this

question. fairness is a very subjective term. i understand that. >> right. >> but we seem to have a federal policy that says, you know, if you create a product, and you want to sell it to foreigners, if you want to sell it to the chinese, the federal government will step in and subsidize you. but if you want to sell your product to hard-working americans, then, no. no subsidies for you. and so, i'm thinking about, you know, small businesses, my own district, a nexus personnel business, services in mesquite. the owner said my mother and father opened up the business they used their 401(k), other resources to pay for rent. we had to go to auctions to buy office furniture. you know, small businesses like ours quote/unquote can't rely on the government. again, i guess by