principles in statute, but if we're unable to kind of reach common ground in terms of the beginning of a negotiation, i'm not necessarily hopeful, but i think it is worth exploring, i think it is worth discussing. i'm a little concerned about the litigation risks, not just on the title ii side, but on the forbearances side. so i think it's worth exploring, but i also think we ought to be direct with each other, about what's realistic, in terms of a legislative strategy or a litigation strategy. and i'm not sure at some point, we're not going to have to decide which it is and what's the most practical course of action. can you tell me, mr. wheeler, how you arrived at the forbearances? did you sort of start with the net neutrality principles and then forebear everything else, or how did you arrive at those

forbearance questions? >> thank you, senator. we started with back to 332 and senator markey. and those 19 that clearly have, experience has shown, are not necessary. and then we went through and said, what are other ones that in this situation are not applicable. and that got us a list of 27, up from the 19 of earlier. >> so what remains of the four principles of net neutrality that haven't been foreborn? >> i won't go through the list, but the highlights, the big ticket items. section 101 and 202, which is basically where this just and reasonable test resides. section 208, which is the consumer protection aspect. section 222, which is the privacy activities. section 254, which is universal service and that's probably the first hand.

>> is it fair to say this is unprecedented as far as the number of things that have been foreborn. has that been done before. >> it was done for section 332 and has stuck. >> and been successful. >> and has the commission in its history undone a forbearance? i think people are calling it unforebearing. but has the commission -- there's this concern that, well, you may have foreborn all of these provisions in the statute, but that doesn't prevent a future fcc from -- is there any evidence that a future fcc would do that in the future, based on past actions? >> that's the right question. here's the issue. so section 10 of the act instructs us how we forebear it. we must forebear if certain

things are met. if you were to go and reverse that, that would have to be an on the record, notice and comment proceeding that follows section 10 and says that, here is the record that builds to deforebear. so technically, you could. realistically, there's a lot -- >> you're actually on my next question now, which is, how procedurally and legally would you kind of do the evaluation and then on an operational level, how would you forebear. but in the fcc's history, has it taken to undo a forbearance? does it do that? >> not that i'm aware of, sir. and, again, what you would have too -- so, for instance, let's just hypothetically say, five years from now, somebody wants to come in and deforebear on rate regulations. there's going to be a serious test that has to be done to say, what is it that has changed, and

that, of course, will be an appeal decision itself. and it will be an open proceeding. and it will have everybody in the country involved in it. so i think, i think the ability to deforebear is going to be a high bar to hurdle. >> thank you, mr. chairman. >> thank you, senator schotts. senator cantwell? >> thank you, mr. chairman. and i am reminiscing of the time that we had a major discussion about use of just and reasonable and the end run of energy markets. and even though just and reasonable was in place, the majority of commissioners still had a long time, struggled with a long time about whether manipulated rates could before just and reasonable. so i would suggest that that interpretation of just and reasonable is probably going to be left up to the determination of whoever's in the majority of

the commission. so hopefully people will get some common ground on that and a framework. but thank you for your work. i'd like to follow up on senator fisher's question, as it related to the auction of spectrum, since, you know, people are saying, well, we want to get it right, but we also want to get it done. and when we're talking about a delay for a third time, i just want to make sure that we have all the tools and all the information we need now, resources to get us there, given that i think this is for our rural communities, something that we really need to pair with resources, so we can get robust broadband networks out there. so, i just want to go back over what we think -- you know, do we have any problems that are undiscovered here that we think there's going to cause us problems in actually getting this done? in the fall of 2015, starting the auction in 2016. >> it's never been tried.

>> it's never been what? >> it's never been tried. that's a huge problem, senator. we are -- you know, we are inventing from whole cloth. so, for instance, when i walked in the door, i said, wait a minute, we have to have a time-out here, because i come from a software background, like you, and there is -- i've never seen code work the first time, okay? and we didn't have an appropriate testing structure in place, and all of this sort of stuff. so we delayed six months, while we could put a red team in place, while we could do the kinds of things that normally get done. but having said that, i believe that we will be able to begin the auction in the first quarter of 2015 -- i'm sorry, 2016. and we are managing to that goal. we will be bringing forth to the

commission later this year, in ample time for the people who might be bidders, the final package of rules that bidders will be using. we are on road trips, which i guess i'm not supposed to call road trips, information sessions around the country, meeting with broadcasters and sitting down, helping them understand what the financial considerations that they want to keep in mind are. and we are -- we are managing this for a first quarter of 2016 auction. >> besides the uncertainty or trying it, are there any other obstacles that you see at this point? >> well, we have a lawsuit that we have to get through here. the nab and a broadcaster have filed, but i'm confident that we'll get on the other side of that and be able to move on. we have a situation where everybody, wlu start talking about spectrum, everybody wants a piece, or to keep their piece,

or to not change. we need to deal with that. the commissioner's incredibly valid point about a license spectrum. we need to make sure this unlicensed spectrum in here. at the same point in time, congress instructed us to use the spectrum that wireless microphones and others have been using. we've got to find homes for them. i mean, i believe this is all doable. i do not understand the challenge that we have now been at it for three years and i can see light at the end of the tunnel, and better than that, we are managing to that date. >> okay. i saw inclinations to speak, but i have a second. >> senator, if i could jump in, i think the biggest challenge we confront right now is the

complexity of the auction as it is currently structured. just to give you two examples of that, first, the dynamic reserve pricing proposal, which is on the table, it's exceedingly difficult for members of the commission, myself, to understand exactly how it would work in realtime. and when you're dealing with a broadcaster community that is unused to dealing with these kinds of auctions at all, it's going to be exceptionally difficult. and if we want to incentivize them to participate, this proposal essentially would undercut the amount of money that the market would determine they are eligible to get, by wireless carriers in the auction. the second example of complexity is the potential variability in the band plans. so you would have some situations in which some spectrum might be occupied by a wireless carrier, in an adjacent market, it might be occupied by a broadcaster. how those -- how that

interference will work is a very complicated,, and we have to get it right. we only have one shot. otherwise, you end up with. >> chairman wheeler, the fcc is an independent agency commission created and accountable to congress. correct? >> i kind of want to walk you through a timeline here. i really only need yes or no answers to confirm i have this right. january 14, 2014, the d.c. circuit struck down portions of the fcc's 2010 open internet order. correct? >> yes, sir. >> in that decision d.c. circuit provided the fcc with a road map to follow an order to craft net neutrality rules that it would uphold. correct? >> they said -- >> just -- >> no, but section 706 was a solution if you are not going to do title 2. the reason we were throwing out this decision, the court said, is because they did not use title 2. >> then on february 2014 you

announced your intent to file the road map the d.c. court laid out. >> correct. >> in april 2014 you circulated notice of proposed rule making that tentatively concluded the neutrality rules should be based on authority under rule 706. >> correct. >> that rule making was voted on in may 2014. >> yes. >> according to reports you were planning on holding a vote on net neutrality order in december 2014 based on section 706 or hybrid approach. correct? >> 706 or a hybrid approach? no. >> right. you did not -- >> no. >> -- announce your intention to hold a vote on -- >> yes. i did say we were trying to do things in december and what we were trying to manage to at that point in time was a title 2

section 706 approach. not an "or." >> on november 10, 2014, president obama announced his support for regulating the internet under title 2. >> correct. >> were you aware of that announcement before he made it? >> they came to see me november 6, i believe. >> so you were made aware of that a few days before that. >> yes, sir. >> ultimately you decided not to hold a vote on the net neutrality order in december. correct? >> that's correct. we couldn't get it done. >> yesterday you told the house oversight and government affairs committee you delayed the vote because you did not have the time to "whip the horses" to complete an order in time for the december 2014 open meeting. >> i think i used some metaphor like that. >> finally, the fcc voted to reclassify broadband services under title 2 on february 26, 2015. correct? >> correct. >> the next day on february 27th, the dnc sent an e-mail boasting that, "the fcc has approved president obama's

plan." were you aware of that? >> i saw it after it went out. >> now based on the actions of that timeline, do you think an objective observer taking a look at those actions would really view your actions as chairman of those -- of an independent chairman, of an independent agency? >> yes, sir. >> you don't think somebody would come to the conclusion you were really just carrying water for this administration? >> no, sir. i was looking at a title 2 and section 706 approach before the president filed his position and we came out with a title 2 section 706 approach. the president in his filing did not suggest we should cover interconnection. we covered interconnection. the president did not suggest the breadth of the kind of forbearance that we have talked about. and the president talked only in

terms of doing something with title 2. so i think that actually what we came out with is stronger, as well as more deregulatory than what the president filed with us in his -- >> commissioner, were you a little surprised about the about-face of chairman wheeler in respect to his order on internet? >> not sure if i was surprised but i was disappointed that the independence of the agency in my view had been compromised by the imposition of political considerations by the executive branch. >> can you describe or are you concerned about potential lawsuits under those rules and regulations that currently are going to be forborne? whatever that is. under this current rule making. >> absolutely. i think there are significant legal flaws in the order throughout and i detailed them in my dissent. with respect to forbearance alone, the fact the fcc crafted a novel and completely unprecedented competition analysis which is essentially we don't have to do one in order to forbear was unprecedented. the order repeatedly uses phrases "we forbear for now" was

unprecedented. i think it the jettisoning of a lot of forbearance precedents which at its core was unprecedented. i think a review in court will have a great deal of scrutiny to apply to some of the decisions with respect to forbearance. >> there's going to be a great deal of uncertainty in terms of investment and how people view is the internet over the next few years because of this ruling. >> absolutely. if i could elaborate a little bit, companies that are responsible for the largest capital expenditures in this industry have told us title 2 will impede investment. if i might quote from a letter we got on february 10th, title 2 regulation will undermine the business model that supports our network, raise our costs and hinder our ability to further deploy broadband. you might ask what corporate titan wrote that? it was 43 municipal broadband provided who told us that title 2 is a road map to a regulated monopoly. that's not something that creates incentives to invest and innovate.

i would suggest that's completely not the case. first of all the reason we refrain from rate regulation and the other title 2 regulations on mobile was because the fcc explicitly found that there was competition in the wireless marketplace so these regulations weren't necessary, market forces would protect the consumer. here in the net neutrality order the agency says specifically there is not a specific competition which is part of the reason why title 2 is necessary. similarly the argument is made, well, people are going to invest anyway. bottom line is broadband networks don't have to exist. what is remarkable is the fact that right now google fiber does not offer voice service. why? it would cost zero. they've already built the fiber. the reason they've said on the record is because there are title 2 regulations that apply

to voice. it strains credulity to think on one hand you can apply title 2 regulations that are even stronger than what the president suggested, but on the other hand revenues won't be affected. but on the ore hand in a few weeks we're going to increase the taxes. you have to pay the piper when it comes to title 2. the proof is going to be in the pudding in the months to come. >> i will say if it is not broke, don't fix it. i would say there is a lot of people having buyer's remorse on this rule making. >> thank you, senator johnson. >> thank you very much. commissioners and mr. chairman, thank you for your presence today. i look forward to this conversation. i have appreciated what i've heard so far. look forward to seeing at least some of you in if the appropriations proceeding. we'll see you again. i've met on one-on-one meetings with each of you other than commissioner o'reilly. i would welcome that at some point in time when it fits your

schedule, commissioner. i actually have enjoyed the conversations we've had and i appreciate the respectful manner in which those have occurred. let me ask about, as you would expect, my focus will be upon rural providers and consequences to rural america. first on net neutrality and then i will shift to the e rate issue. on net neutrality, one of the providers shared with me the regulatory burden they currently exist. that they have a calendar of things they do to comply with the regulations, three pages in front of me. the amount of time, they indicated that it would take -- first of all, i should tell you this is a less than 20-employee business, covers less than 1,000 square miles of service territory, has less than 2,000 customers and their calendar indicates that it would include 62 different federal filing

mandates that would require 1,490 man hours, person hours. and i'm worried that net neutrality, the order that the commission has entered will only increase that burden. and in the same way that i think mandating health insurance is only valuable if you can find a doctor. mandating network management rules does nothing to protect the person who has no access to broadband. and many of our conversations, commissioners, one-on-one has been about access to folks who live in rural places in the country. so let me ask, i'm going to ask commissioner pai this question. mr. commissioner, i am reluctant to ask you because i would lose all my time in your answer. commissioner pai, how does the net neutrality rules impact network providers? was the commission provided

evidence input before making. the decision related to net neutrality as to the cost of compliance and ultimately who pays the price of those regulations? >> thank you for your concern. i think that title 2 is when you have a devastating impact on the rural broadband customers. simple reason is that it is a challenging enough business case as it stands to build broadband networks in rural america given the sparse population, great distances. when you layer on top title 2 regulations, it would make it exceptionally more difficult for broadband companies to take the risks, deploy the capital to make that infrastructure work. wave wireless, which supplies broadband internet service to my own parents. as it is, it is tough for them to get a reasonable alternative when it comes to broadband. wave has said it is going to be challenging for them. they have to have people comply with these regulations, it won't be easy to deploy more

infrastructure in the field. the fcc neglected, unfortunately, the statements of the many, many companies that wrote to us and said broadband is -- or title 2 is a bad solution for these small rural broadband providers. we got a letter from 24 of the countries, smallest isps, all serve less than 1,000 customers. one ever them served four customers in canon falls, minnesota. because they have no budget line items for outside counsel. repeatedly we've heard from smaller providers title 2 will reduce their ability to compete. one of the great ironies to me in title 2 in this entire debate has been the key thing that people say i think -- or that they mean when they say net neutrality is that we want more competition, we want more broadband providers offering better choices, better prices at faster speeds. title 2 takes us exactly in the opposite direction.

heavy handed regulations affect negatively -- >> i want to make sure you don't take all my time either. >> i want to set a record for a 30-second response. the record and the information that we gathered in the record does not ignore the question you asked, as has been suggested. the ntca, the association that represents all of these small 20-employee kinds of companies, filed, again, obviously representing a consensus in their industry, saying they supported title 2 in this open internet. >> this is absolutely critical. they did not support -- what they supported with respect to title 2 is a last mile connectivity they already offer as a transmission service. they did not assert title 2 jurisdiction over

interconnection -- >> no, i don't think -- >> next time i'm going to ask commissioner o'reilly. then perhaps either commissioner rosenworcel and commissioner clyburn can respond. thank you for that answer. my time is up. we always say that before we ask the next question. we have a great appeal that's been on file for four years. we'd ask you to respond. it has not been responded to. and i would ask your commitment that you would get the details from us. >> i'm sorry, what is it -- there is an appeal? >> can ed. yes. on appeal. four years. for rates that were established -- they filed -- i'm sorry, they filed in 2011. it is a case dealing back to the funding of 2005. >> yes. >> so we'll follow up. mr. chairman, thank you very much.

i'll submit the rest of my questions for the record. >> thank you senator moran. senator cruz. >> thank you, mr. chairman. commissioners, thank you for being here. the internet has proven to be an incredible haven for innovation and for opportunity. and i believe the commission's order imposes a profound threat to continued innovation on the internet and in time will hurt small content providers and favor large corporations with influence in washington. i also believe the order is contrary to law. i'd like to ask you mr. chairman, initially, just a simple question. in the order, am i correct that what the commission has done is now to treat broadband providers as common carriers? >> yes, sir. >> how then, mr. chairman, does the commission justify that given that last year when the d.c. circuit struck down the commission's previous failed attempt at regulating the internet, the d.c. circuit said

on page 45 of the opinion, and i quote, we think it obvious that the commission would violate the communications act. were it to regulate broadband providers and common carriers. >> sir, i'd be happy to get a specific legal response for you on that. i think that what the court was saying was that the commission was imposing common carrier-like regulation without stepping up and saying you are a common carrier. that's what essentially that statement says, i believe. they were saying you're violating the communications act if you're doing these common carriage-like requirements without making a finding that in fact they are common carriers. >> let me ask -- >> -- was the gut of that.

>> the specific order was it subject to ordinary notice and comment, and specifically was the public able to look at details and comment on it before it was adopted? >> there was a full notice and comment proceeding and longer than average. >> let me ask that question again. was public able to read the specific details and comment on specific details of this order before it was adopted? >> the order was put out in keeping with the total process -- a propose dense -- >> mr. chairman, you're avoiding saying the word no -- >> because with due respect, sir -- and the o'reilly rule never disagree with me -- >> my question simply was the public able to read the order and comment on it before it was entered. the answer is no, correct? >> that's not the way the process works. >> i did not ask the way the process worked. i asked was the public able to read and comment on it before it was entered? that's either a yes or no, you could go and read it before it came into affect, or no, you could not.

>> the public never reads orders, sir. >> the answer is no. i would note that just a few weeks ago president obama's executive amnesty was enjoined by a federal court for violation of notice and comment. and i think the commission's action represents an abuse of its authority. let's shift though to the effect of this order. treating broadband providers as common carriers, putting them under title 2, treating them as public utilities subjects them to section 201. section 201 gives the commission the authority, according to section 201, all charges and practices shall be just and reasonable. is that correct? >> correct. >> that means -- i want to understand the effect of the commission's order. it is the commission's position that it has full legal authority from this day forward to regulate every charge and every practice of every broadband

provider to determine whether they are just and whether they are reasonable. >> we have said, sir, that we believe this should operate the same way that section 332 has and that that has not been the result. >> but mr. chairman, you seem to be misunderstanding my question. i understand that you're currently telling us you're going to forbear from using this authority. my question is to understand what legal authority the commission is claiming. >> 201 is the legal authority. we are using 201 and 202 in this order. >> so i am correct that it is the commission's position that it has the legal authority to regulate every single charge and every single practice of every broadband provider and to determine in the commission's own judgment whether those charges and those practices are just and reasonable. >> there has been removed from the item the procedures that the commission would use to do that as in tariffing, as in retail rate regulation, those tools -- >> you're not arguing that you lack the legal authority. you're saying right now you're

refraining from doing that. correct? >> no, sir. i'm arguing that the tools to make that happen -- tariffing ability, rate regulation ability -- have specifically been removed and that we expect that 201 will function as it has for the last 22 years in wireless. >> well, mr. chairman, would you support legislation from this committee to codify the forbearance you're suggesting explicitly prohibiting the increase of rates of broadband providers. would you support legislation making that explicit? >> i need to be real careful on that. i would be very happy to provide input to the committee. i want to be careful about saying i'm endorsing legislation or arguing against legislation or whatever. i think the point you raise, however, is that in any open internet rule or legislation, there should not be consumer rate regulation.

>> let me ask one final question. my time is expiring. but commission pai, would you share with this committee what the impact is likely to be of this order on consumers, the taxes and the impact on innovation and opportunity online. >> it is a terrific question, senator cruz. the impact is going to be substantial. first and foremost consumers broadband bills will go up. the door is opened to billions of dollars in new taxes through the universal service fund contribution. independent study have suggested it is going to be $11 billion each and every year. that assumes that the fcc doesn't increase the amount it promised to spend on some of these universal service fund programs. additionally funds for these fees will go up as a result of the increase in state and local taxes that broadband providers will have to pay as a result of reclassification. the fees are going to go up additionally because pole attachment rates are going to go up. right now a lot of broadband providers pay a lower rate. that will go up. that cost has to be born by someone.

it's going to be born by the consumers. that's just the bills. in terms of the actual service, in rural america it is going to be substantial. you've heard our exchange about how some of smaller fees in particular will have to suck up the costs or go out of business all together. some of the larger providers will have to include a line item. will the commission employ section 201 authority to second-guess the infrastructure for interconnection? the three routes that traffic has to go over could be second-guessed by the commission. all of these things now go through the fcc as gatekeeper. third, consumers are going to suffer as a result of the second-guessing the fcc will do through the internet conduct standard. we don't really know where this is going to go. the fcc is going to sit there as a referee to throw the flag. the problem is nobody even knows what the games is or what the rules are. i think when the fcc specifically tees up

pro-consumer things like t-mobile's music freedom which allows the free streaming of music content to your smartphone and says that may be an internet violation. ironically enough, some of the competitive upstarts will want to challenge the big boys will have to say, whoa, before we offer this, let's make sure we get an advisory opinion from the fcc as to the enforcement bureau. not the full commission but the enforcement bureau to make sure this is kosher. as a result of all of this, instead of the internet working to the benefit of consumers, it is going to be lawyers, bureaucrats and politicians who decide what kind of digital opportunity we will have in the future. other than that, it is okay. >> powerfully said. >> thank you, senator cruz. senator peters is back. >> thank you to each of the commissioners. this has been a very long afternoon for you. there is a few more questions

for you but i appreciate your service, your public service, your commitment to these issues. it is complicated an as we see can be contentious from time to time. thank you for your service. this goes primarily to commissioner rosenworcel because of your work in this area. i'll ask the chairman as well to comment on this. there is, without question, tremendous demand for wi-fi and devices using unlicensed spectrum right now. as a result, the upper 5 gigahertz band is being targeted for potential sharing, particularly the 75 megahertz and 5.9 gigahertz band for use in intelligence transportation systems, including vtov and vtoi. this points to the many years spectrum has been reserved without actually being used. i think this ignores millions of dollars that have been invested and thousands of dollars spent.

the reality is that these connective vehicles are being deployed today in pilot programs, on the streets of ann arbor, michigan, and the national highway traffic safety administration has taken action that will likely lead to a rule making this year to require nationwide deployment of vehicles using the v2v during the next few years. the agency has said the v2v and v2i -- i think this is incredible -- potential to mitigate or eliminate 80% of all accidents that occur right now with the non-impaired drivers. if we continue to focus on advanced intelligent transportation systems of vehicles and in a smarter infrastructure we can spur innovation, we'll be able to create jobs, we'll be able to discover new business models and opportunities that haven't been previously possible and we can save thousands of lives in the

process. i would contend that we should not do anything here in congress or at the fcc, for that matter, that would derail this incredible comment. i'd like your thoughts on this and hopefully today you might be willing to commit not to move forward on opening the 5.9 gigahertz band to wi-fi until it has been proven that it can be done without any harmful interference to these life-saving technologies with our vehicles. >> thank you, senator peters, for the question. as you undoubtedly know, the demand for our airwaves has grown exponentially over the last decade. and certainly that's true since 1999 when the spectrum was set aside for the kind of intelligent transportation systems you're describing. and i know that the development has been slow, but i also know a lot of resources have been poured into that effort. since 1999 when that spectrum was set aside, something else has happened. we've grown much, much better at managing interference in all

sorts of spectrum. it is my hope we can explore how this can be a shared spectrum for both unlicensed and its services but i take your point we absolutely cannot sacrifice safety in the process. >> i appreciate that and your concern to make sure that that's going to be at the top of your list. chairman wheeler, if you'd care to comment as well. >> i think commissioner rosenworcel is spot-on. the future is all about how can you share. the encouraging thing here is that intelligent transportation systems and wi-fi are not that dissimilar. and so i think that there is a way that technology can -- if you're essentially sending bits the same kind of way, there ought to be a way that you can figure it out. that's what we're encouraging. >> i appreciate that. mr. chairman, i yield back. >> senator rubio. >> thank you.

commissioner o'reilly, i want to begin with you. use of wireless broadband and internet connected devices has provided all sorts of economic growth and innovation that was previously, quite frankly, unimaginable. wireless traffic as we all know is projected to grow exponentially in the years ahead. because of this i introduced legislation to free up additional spectrum for commission use, both licensed and unlicensed. i strongly believe that we should be enacting policies that ensure that the united states continues to lead the world in wireless innovation and technology. unfortunately, it's my personal opinion -- i think those of others -- that the fcc net neutrality order is quite frankly the opposite of what we should be doing. i would be interested to hear you talk a little bit about the impact the order is going to have on wireless and wireless consumers who are interested in this topic and may not understand its true impacts on them. >> absolutely. thank you for your leadership on wireless issues.

i have to say i think the commission is backwards and has flipped in how it approaches wireless issues for purposes of whether wireless should be -- as actually offering broadband services, we say no. for purposes of applying title 2, we say yes. i think one is a violation of the statute. i think that's why we're most exposed to in a court proceeding. i think the statute is fairly clear on that. i've introduced the wi-fi innovation act with senator booker. i did so because of the potential for growth in wi-fi and the need for more unlicensed spectrum for wi-fi. i'm also hopeful we can make progress in the upper band. i'm concerned these have become mired in all sorts of technical arguments. can the fcc use its leadership to push the process ahead? >> thank you for your leadership on your legs. >> and the need for more unlicensed wifi applications. i'm glad they have made it more

available in the lower 5 band my question is what is the process and timing for bringing the additional bands into use. what is your plan to break that log jam. >> i can't make the commitment in a he asked for was that we not move forward on five gigahertz. we can do both in this band. i think it is necessary, and we articulated they're not too far apart and it is something we can do. it has not been bogged down. very technical reasons and they're not interested in sharing their bands.

>> it is becomeing an incubator, and at the a speech last year, you said -- not only am i concerned about the negative impact on investment here at home, but i'm also very concerned about the message this sends to other governments around the globe who do seek it. what are the international implications, the potential implications of fcc for title 2 to the internet. >> i think they're worrying and that was best expressed by the state department's own am becauseer bass door who say it

will be viewed by foreign countries as an excuse to regular content and infrastructure in a way not in line with our own. none the less the overall message sent by adopted hit two regulation is that the fcc or the u.s. government, wants to micro manage how the internet works. i think it is different for us to maintain wanting a free and open internet and you said it is broken the competition is insufficient, and that they will stand at the gate keeper. >> i agree. >> with respect i disagree. i met with foreign regulators on this topic.

this is saying that the internet is open. that everybody has the right to express themselves. i met two weeks ago with all of the european regulators. and they understand this for what it is. i met last week with the head of international telecommunications union. that is the body that comes up with this. this is not, you have to understand, this is not the regulation of the internet. this is making sure that the regulation is open. it is the names, routers this kind of activity tariffing and rating. when putin tries to shut down groups on facebook when china tries to shut down access on

google. turkey tries to shut down access to twitter that is violations of what we're talking about here because no party, government or private sector should act as a gate keeper to who gets on the internet. >> as you just said, you're implying this is no more regulation than the first amendment. the problem is putin doesn't have a first amendment. we're concerned about china, russia and others who already control the internet because they're not con trained by a first amendment. and so when you make the argument to them that, are for example as you made now, when we're not regulating content, for them it is literally a foreign concept. they don't have a first amendment or societal or governmental commitment to the notion of free speech. they see a government of the

united states involved in setting terms for how the internet can be provided and i think it gives them an excuse to say if your government can do it ours can too. >> i don't think it sets the rules and when i met with the secretary general sao, who is chinese and you need to understand this is, in your home country, when you're blocking, that is a violation of our open internet rules. that's what it is about, not the operation of the network. >> he probably informed you in their country he will set rules, he will remind you of their sovereignty and their notion of what is free speech and what should be allowed is very different. >> if i could add one critical point even at a level less profound than matters of free speech, let me give you a

example. the fcc tees up practices like sponsor data as being net neutrality violations. if it essentially gives consumers something for free that would violate net neutrality, now foreign countries are engaging that same practice. the same people that pushed us have called sponsor data a human rights violation. now we're seeing foreign companies doing the same thing banning sponsor data and other proconsumer type -- we can't act like what the fcc does in a vacuum when it is bad. but the message it sends when it is good is somehow going to be transmitted through the globe. you can't have it both ways. >> senator ayotte. >> thank you chairman and ranking member. appreciate it. >> commissioner pai.- shortly after the latest spectrum option you and i pend an op ed in the journal about the flaws in the program and

showed a egregious example where in the most recent auction that companies with billions of dollars in revenue were able to get taxpayer credits to purchase discounted spectrum. and since our op ed, it's been interesting to see that a wide variety of groups have come out to say this issue needs to be addressed by the fcc, including groups ranging from the naacp to americans for tax reform. can you update us on this program? and i hope that the commission has a whole will take a very thorough review of what happened here. because it can't have been what we intended with this so called designated entity program. because this isn't benefitting truly small or disadvantaged businesses. >> thank you senator for the question and for your

leadership. since we had a chance to collaborate we have seen a broad raising of concern across the country and across the political spectrum about this issue. senator mccaskill expressed concerns, representative palone on the house side as well. and aside from interest naacp and americans for tax reform, other groups have pointed out that this was not the way it was supposed to work. unfortunately i wish i had a better story to tell with respect to the facts. but since you and i worked together it's come to my attention that not only were there people who didn't participate in the auction at all, there are specific companies from nebraska to vermont who put in bids but were outbid by one or both of the entities run by dish who ultimately were denied or had to bid much more than than wanted. and part of the problem is these are facilitates based carriers. actual companies providing actual service to actual customers in places and instead

had to give away to the ash arbitrage in the auction. so that's why currently the fcc is undergoing the review of the auction. and petitions filed by competitors concerned. and i welcome the chairman when he said we want to make sure the integrity of the program remains in tact. it is important to have that further notice of proposed rule making where we make sure once and for all these loopholes are closed and corporate wmp ends. >> could i pick up on this. because we could make news. >> i would like to. >> commissioner pai and i are going to agree. there are people back here who are falling off their chairs at this moment. >> i'm glad we can agree on this. >> you know, i am against slick lawyers coming in and taking

advantage of a program that was designed for a specific audience and a specific purpose. i'm as opposed to that as i was when commissioner pai and i disagreed last year on the way the slick lawyers were trying to take advantage of our rules on broadcasting. we are going to fix this. these are rules that have been in place since the bush administration. as the commissioner said we've got a rule making under way on this. we are going to issue a new public notice on this to make sure that this specific issue is teed up. and we are going to make sure that this -- that designated entities have the opportunity to participate and not to have designated as period beards for people who shouldn't. >> and senator i want you to know that i've been pushing for change in this since 2010. it's been a constant refrain from me to ensure more opportunities in the space. as you know, as was said, we are reviewing those applications. no final -- nothing final has been said. people have an opportunity to

weigh in. >> great. thank you. important issue. but i can't leave without addressing the commissions recent order. i think it's only in washington ultimately that something as innovative has driven so much growth and new ideas as the internet where we would end up with an order that essentially applies 1930s style utility regulation and think that that may be the best way going forward to ensure that there's future innovation. and so i want to just share the concerns of so many of my colleagues that have been raised about the commission's order. and commissioner o'rielly, i want to ask you briefly about europe because europe isn't exactly known for its laissez-faire hands-off regulatory approach but as i understand the proposals the europeans are discussing appear to be much less stifling than the fcc's recent rules.

i mean, normally we're not looking to them as the model of where we want to be in terms of regulations. but can you help me understand as what i see some recent examples where in fact we could be disadvantaged to some of our foreign competitors. >> yes, senator i appreciate that. i just came back from barcelona as a number of my colleagues did and i had an opportunity to talk to a mub of people there as my colleagues did. and europeans particularly notice the decisions unlike the chairman's conversations, my conversations suggest they're very aware what we did and are willing to exploit it and take advantage of it and say if you're going to regulate we're going to go the opposite direction and we're willing to be less regulatory and try and drive traffic to their way, drive companies their way and let the united states suffer in the process. which i think is completely backwards. >> senator, i met with the european regulators and told them what we had done and what we hadn't done. and i came away with exactly 180

degrees different. and then i talked to the ceos of the major international wireless carriers. one of whom was then quoted in the press as saying yeah i think that this approach that america is taking is responsible and applicable. and you know what the key thing for all of them was? was what we did in terms of so-called specialized services. managed services. non-public internet services. and how we specifically said that isn't going to be covered. because the growth in the internet business -- verizon just had -- their cfo just had a statement about this at an investors conference. the growth in the internet business is going to be in specific services internet of things over-the-top services that are not public internet services and are specifically precluded from regulation in

this. that was the big thing that the europeans wanted to talk to me about because they had heard oh, you're going to cover it. i said no, you're not. and then i said oh, okay, then we're pretty -- praep copacetic. >> well, i know my time is up, but i'll do a follow-up question because there's a specific example i can think of where frankly already europeans are proposing things that are not as onerous as what was proposed overall by the commission. >> improving world call quality and reliability act with senator tester. i know problems with world call completion are of interest to many members of the commission and i welcome -- i thank you for that, and also members of the committee. i hope you'll consider co-sponsoring our bill which is going to directly assess one

of -- address one of the root causes of the problem, leased call routers. recently as you know you took enforcement action against verizon, major enforcement action for failure to investigate problems with calls not being completed to rural areas. we thank you for that. part of the settlement included a commitment to addressing the number of leased call routers verizon uses. i'd like to again thank you and particularly commissioner clyburn for the continued attention to this issue and this problem, which is now five years old. we still clearly have problems outside of verizon. so i will ask both chairman wheeler, commissioner clyburn. leased cost routers seem to be a sort of these completion proobz. do we need to know who they are and require them to follow minimum quality standards? and would you agree that we need to get to the source of the problem? and for my colleagues who aren't familiar with this it's what it sounds. it's actually calls being dropped at businesses and homes

for no reason and they're not getting the kind of service that they need. they're getting substandard service. so mr. chairman. >> first of all i think you've pinpointed something very important. the data on that we will finally start getting first of next month when the information -- when carriers are required to file with us. so we'll be able to say to you with statistical specificity what senator, i believe is the situation that you're attempting to solve and that you're moving this legislation is terrific and this is something we're also considering in our further notice on this topic. but i think you've identified a cause celebre. >> thank you very much. commissioner clyburn thank you for your leadership on this issue. >> thank you very much. one of the things that was

positive about the consent decree you that mentioned with verizon is now we're going to have workshops, it's going to be researched. in terms of the overall issue of course the chairman mentioned that april 1st the -- the retention requirements kick in. in august we'll have a clearer picture with reports being released. so i know right now one of the things you mentioned the least cost routers today. the rules don't apply to them today. but thank you very much for reinforcing an issue that we will continue to review. >> okay. very good. thank you, all of you. last congress i introduced the smartphone theft prevention act. as we all know, this is an unbelievable problem across the country with these smartphones being stolen and people getting beat up sometimes killed over cell phones. and the bill required smartphone manufacturers and wireless

carriers to install kill switches on all their smartphones so that consumers could wipe their information and lock the device if it was stolen. following this call to action the carrier signed a voluntary commitment to have this capability on their devices by the summer. additionally minnesota and california passed laws to require these consumer protections on all phones sold in their states. we've come a long way on the issue instead of pretending it's not happening or we can't do anything about it. but i think we need to keep on the pressure, and that's why i'm actually reintroducing the bill. chairman wheeler, are you committed to keep working with me to address smartphone theft and do you think there can be more that's done on the national level and any other commissioner that wants to chime in. >> yes, ma'am. and thank you for your leadership in coming down and helping us kick off the workshop that we had on this. let me tell you about some of the results of that. yes, you're right, the kill switch, the voluntary agreement, the kill switch. i've seen reports,

uncorroborated in some major cities where theft has gone down as a result of this. we're not supposed to break -- i'm not going to break our arms patting ourselves on the back but i think there are three things that are under way. one is that there needs to be a non-wipable, as in you can't wipe it out and substitute something else, unit identifier for each device. like a vehicle identification number on a car that can't go away. at our request the 3gpp, which is a standards body has said they will come out with a standard on that by the end of the year. step forward. we're only moving towards it. it doesn't solve. second issue is that there needs to be an on-device remote lock the ability to wipe, this sort of thing, the devices after july of this year, the devices that come into the market will have that capability.

the third component that we have to have is we have to have a good stolen phone database. there's currently one run by the gsm association, but it is well, if you'll participate in this and it's not quite user friendly. and it's not the -- and we need to work with them or with law enforcement to improve that. and we've been working with law enforcement to bring pressure on either one of those. but i think those are the three steps that we have to take. but you have clearly been a leader on this, and thank you. >> did you want to add anything? commissioner rosen wors'll. >> one in three robberies today involves the theft of a mobile device. and in some major metropolitan areas it's one in two robberies. and by any measure that's an epidemic. so i think it's vitally important that every consumer have access to the ability to remotely wipe their device and that should be on every device

free of cost and we should make sure that's available as soon as possible. >> thank you very much. >> senator wicker has returned. so senator wicker, senator sullivan, senator manchin. >> thank you very much. >> eight hearings in five days? >> five hearings in eight days. >> well, i've had four hearings in one day. i breathlessly rushed back in and thank you all for filibustering till i could get here. mr. pai, let me ask you. you know, sometimes we vigorously disagree with our colleagues. it's clear you