wednesday morning at 8:00 eastern during washington journal when we'll announce the grand prize winner, our first place winners and the fan favorites selected by the public. watch live on c-span and cspan.org. >> federal communications commission chair tom wheeler and the rest of the commissioners were on capitol hill for a senate commerce committee hearing. they answered questions on the spectrum auction and broadband access in rural areas. this is just under two hours and 45 minutes. >> welcome to today's hearing on oversight of the federal communications commission. during our oversight hearing last march, i expressed my amazement that an agency as important as the federal communications commission has not been reauthorized by congress in 25 years, making it the oldest expired authorization within the commerce committee's expansive jurisdiction. reversing a quarter century of

legislative inertia takes time, but together we're beginning to make progress. for example, this hearing marks the first time in a century the full fcc has reported to this committee. before was the examination of fcc consolidating reporting act which would make marketplace examinations less burdensome on the agency, as well as more informative to congress. reauthorizing the fcc is our duty. it's time for this committee to get back to regularly authorizing the commissions ha part of its normal course of business. and to that end in the next few days i will introduce the fcc reauthorization act of 2016. it's my intent to mark up the bill in the coming weeks. we have before us a very familiar face, jessica

rosenworcel, i support your confirmation. was pleased to process your confirmation before the committee this last year. last year's oversight committee. the record-setting also authorized the innovative and incentive auction scheduled to begin next month. the fcc is charged with a balanced commission. reallocate the spectrum voluntary relingish wished by tv stations and two, protect both the tv stations that continue to operate following the auction and their viewers. congress provided nearly $2 billion to reimburse stations for us to relocate during the post auction repack and the fcc has established a time line to complete the repacking process. concerns have been raised,

however, the reimbursement funds and time allotted for the repacking may be inadequate. i'm hopeful that will not be the case. nevertheless, these concerns will receive the close attention of this committee. i know my colleagues and i all wish to see a successful auction and successful repacking process. while local prod broadcast tv remains an important popular medium, the broader market continues to dramatically change and grow. in fact, the video services market is one of the most dynamic segments of the communication space. it's driving tremendous innovation, dynamic experimentation in video distribution business models and growing broadband data consumption by consumers. it is not a coincidence that the parts of the video market seeing the most innovation are also the least regulated. amidst this increasingly competitive video reality, the fcc recently proposed a partisan rule making to have the government somehow better produce results than the astonishing and consumer empowering disruption already happened.

ranking member nelson sent chairman wheeler a letter. i agree with chairman nelson's sentiment that advances abound in the competitive video nah gags device market and that section 6 629 should always be implemented with an eye towards what's actually happening in the mark marketplace. i want to further echo senator nelson's warning to the commission, section 629 does not contemplate imposing regulations by which third parties gain by their own commercial advantage alter, add to or interfere with the programming provided by content providers. again, that's from senator nelson's letter. the bottom line is that today's video market is increasingly competitive and traditional pay tv subscribers are rapidly finding new, more user friendly and less expensive ways to receive the tv service they purchase on devices, including some made by the largest companies on the planet. finally, i would like to address

the issue of stand-alone broadcast support for small rural carriers. because of flawed universal service fund rules, these providers lose all support for serves household that chooses to subscribe to broadband. last march, all five of you commissioners made commits to me and this committee to fix the counterproductive loophole by the end of 2015. it's my understanding that an item is currently on circulation at the commission that would fix the stand alone broadband problem and which reflects a negotiated compromise and some other complex reforms that have been linked to this simple objective. while the 2015 deadline for stand-alone broadband has recently passed, i'm glad the extra time appears to have given a chance for rural providers to assess the impact of those complex reform proposals on their businesses and on the rural broadband customers that they serve. i look forward to seeing the full ploon, assessing its impact on south dakotians and continuing to provide oversight

of the fcc's implementation of reforms as dharm of this committee. in the meantime, i would like to thank all of you for your commitment to fantastic the stand-alone broadband issue for rural consumers across the nation. i would like to say a word regarding the report issued by chairman johnson. among other things, the report finds that the fcc, and i quote, failed to live up to standards of transparency, end quote. i want to thank chairman johnson and his staff for their work on this report. and i hope the commission, rather than resorting to a defensive posture will look for ways to demonstrate the kind of transparency expected of our independent agency ps . today's hearing provides one opportunity to do just that. and so i look forward to hearing your testimony and appreciate very much having all our commissioners here before us today and look forward to having an opportunity to ask you questions at a later date. now i turn to senator nelson for

his opening statement. >> thank you, mr. chairman, i return the compliments to you in the way that the two of us have worked together in a bipartisan way on a number of thorny issues, trying to boil them down to a common approach. and i am encouraged is that we will continue in the committee, thanks to yours and your staff's approach to leadership. on behalf of senator mccaskill, which we all know is going through a difficult time i want to ask that her letter to the commissioners and then their responses when they submit them be submitted into the record and entered into the record as a part of today's hearing. >> without objection. and i would also say to my

colleague from florida that i think all of us on this committee express our thoughts and prayers to our colleague, who is a very active and respected member of this committee and hope and pray for a quick recovery. >> thank you, mr. chairman. and this is significant, because it's been over a year since all five commissioners have appeared before this committee and a lot has happened in the interim. now, i appreciate what you said about commissioner rosenworcel's renomination own and the confirmation that we attempt to get as soon as possible. and i want to recall for the record that at the end of the 113th congress we had -- now, this is december of 2014, we had

one republican fcc commissioner, mike o'reilly, who is here, awaiting confirmation. the democrats agreed to confirm commissioner o'rielly's nomination without pairing him with any other nominee in exchange for a promise that republicans would confirm democrat jessica rosenworcel quickly in the new congress. senator mcconnell promised senator reid, and i am getting this straight from senator harry reid, and promised then chairman jay rockefeller that they had move the rosenworcel nomination without delay in the new congress if the democrats in the

last congress, that is in 2014, agreed to move commissioners o'rielly's nomination. commissioner rosenworcel's nomination is now on the executive calendar. i know, chairman, that you are working with leader mcconnell to make this happen. we don't want to lose her leadership and thoughtful approach to the crucial issues, but mr. chairman, this has been now over a year. as promised, it didn't happen in the first year of the new congress, last year, 2015. here we are in the second year of the new congress. finally she's on the calendar. i hope we will move to fulfill the promise that was made in order to confirm commissioner o'rielly. and i want to thank all of the

commissioners for appearing today. as our nation grows ever more internet enabled, more connected and more mobile, this fcc's role becomes ever more critical. you are the expert agency that congress created over all the things communications. you have a statutory mandate to protect consumers, promote competition, ensure universal service, preserve public safety, and as technology transitions, these core directives do not necessarily follow. and so that's where you come in. in terms of protecting consumers, i want you to call your attention to the ongoing

problem of spoofing. last week, senator fisher and i introduced the spoofing prevention act of 2016, designed to update the law and provide the fcc with more enforcement tools to combat these abusive phone scams. americans lose millions of dollars each year to these scams. and that's especially true of vulnerable senior citizens. we must protect the public from these scammers, and i hope the committee can act swiftly on senator fisher's and my legislation. and in the meantime, in the meantime, i expect the sec to do everything it can you should current law to skop these scammers. now, with regard to promoting

competition, there's been intense interest in the past few weeks on your recent set top box proposal. i resist statutory to promote competition and choice and how consumers access their pay public television programming. but it's essential that any new fcc rules in this area must not harm the production and distribution of video content and my letter to the chairman said just that. the fcc, too, has worked hard to keep the u.s. competitive in our national spectrum policy. in a matter of weeks, the commission will launch the first voluntary spectrum incentive auction. the agency deserves much praise for getting us to this point.

at the same time, many of us have heard concerns about what may happen after the auction during any repacking of of tv stations. we continue to watch the fcc work as low asly to make sure that tv viewers are not d disenfranchised at the end of this important process. the nation is once again on the verge of wireless revolution and the work on a new spectrum frontier for such services is vital to american leadership in this area. tomorrow, this committee will take up the act that chairman thune and i have referenced.

that bill is designed to help move the ball forward on 5g. and with regard to universal service, as important as it is to promote cutting edge communication technologies, it is equally important that all americans have access to these networks. i know that the fcc has been spending significant time considering reforms to the lifeline program. i want to make it it fairly obvious that we must have a life lean program that helps low income americans obtain access to broadband in order for them to participate in today's digital economy. failing to do so risks exacerbating the digital divide. with regard to public safety, a call to 911 remains the most

ever call any one of us will ever make. i hope all of you will keep that in mine and i look forward to your testimony. >> thank you, shart nelson. we'll start on my right and your left with the chairman of the commission. so chairman wheeler, if you want to go first and we'll just work down from there. >> i know it's hard to enforce the time line. there are some on the panel who have been on this side. and you know how nice and how much the staff would appreciate it. i know you have written statements that we will certainly include in the record. mr. chairman? >> thank you very much, members of the committee. i know discussing the matters of importance that you have identified as well as others. i will heed youred admonition a

be brief. four quick topics. first, as has been referenced, we're only 26 days away from the world's first incentive auction. next week we will have a workshop for broadcasters desiring to participate so that they can work through their processes and begin to understand even more with we will release the forward auction participants. the third week, we will have practice sessions after we have printed to the participating broadcasters their own security token. so they can actually practice and stress the system. and the flag falls in three weeks and five days, but who's counting. secondly, i have just returned with my colleagues, from the mobile world congress, the big gathering of the mobile industry in barcelona where the buzz was

all about 5g. commissioner rosenworcel made comments about 5g. your mobile now legislation is an important part, as you both have referenced. but i want to make sure that everybody understands. there's a difference between the way we approach 5 dps g spectrum and the rest of the world. we will allocate 5 g spectrum faster than any nation on the planet. we will bring that proceeding to closure this summer. we will then get out of the way. we will let innovation and competition reign. now, i've been approached by various other governments saying you need to wait until there are

standards. it's not our philosophy to engage in such industrial policy. we are world leaders in 4g because of the fact that we made spectrum available and let competition and innovation reign. and i believe that's the same strategy that will bring us to world leadership in 5g. thirdly, the last time we were together, mr. chairman, you referenced this, we pledged greater return carrier reform and broadband support to unserved areas before the end of the year. as you said, we met the goal but not the calendar. thank you for your understand g understanding. it was a complex issue, but thanks to the work of the commissioners o'reilly and clyburn, we had a bipart stan plan, not only negotiationed

with our office, which was an undertaking in and of itself, but also negotiated with the major associations of the parties involved with increase the complexity. commissioner o'reilly dove into the specifics of the issue of the kind of bringing people together attitude that in finding solutions made them such an effective member of the staff of this body. commissioner clyburn who had over a decade of experience dealing firsthand with this issue at the state level brought that kind of expertise and experience and helped us through that process. nor did associations get everything they want. but we have a solid bipartisan reform and broadband funding for

unserved areas in particular that will serve the test of time. lastly, and this is not last in priorities, just last on the list. public safety is embodied by 911 is dangerously close to a crisis as the digital world passes it by. the 21st century life-saving is being blocked by 20th century technology. we at the fcc have done all within our pow er to move to th next generation 911 capabilities of digital ahead. we've been pushing for text to 911 deployment. we've improved network resilien resiliency, and we just completed a year-long process where we brought all the experts from around the country to spend a year developing a plan for

just what does it take to get to the next generation 911. we have submitted that task force plan to this committee. congress holds the key to whether there would be a next generation 911, and we look forward to working with you in achieving that goal. >> thank you, commissioner. >> thank you, chairman thune, ranking member nelson and the members of the committee. thank you for the opportunity to appear before you today. this is my fourth time this congress, but who's counting. as my colleague mentioned, last week i had the privilege of speaking at the mobile world congress in barcelona. it's a global gathering to discuss wireless technology. and the good news is that the united states leads the world in the current generation of wireless technology known as 4g.

we had 1/3 of its 4g deployment. but what i learned in barcelona is we have work to maintain our leadership role. now the good news is that wireless policy is front and center. this month at the fcc, we will begin this world's first spectrum incentive auction. this week in front of this committee, you will consider mobile now legislation to advance our nation's leadership in wireless policy. i will discuss three aspects of spectrum policy. first, the future of spectrum policy requires at looking at millimeter wave spectruspectrum. today, the bulk of our wireless networks are built at 3 gigahertz or below. but in the future, we are going to have to bust through that 3 gigahertz ceiling and look at

airways north of 20 gigahertz. we have to look at infinity and beyond. now, the signals at these high frequencies do not go far. we are going to be able to have wireless networks. there are 10 to 100 times faster than what we have today. the race to 5g, our counterparts in europe and asia are already making head way. so it's imperative that fcc complete its outstanding millimeter wave rule making and get it done this year. second, the future of policy requires not just more license peck strumm, but also more unsilenced spectrum. in short, we need more wifi.

unsilenced peck strumm demock a tiezs internet access, enand contributes $140 billion to the u.s. economy every year. it's good stuff. so when any effort to increase the license spectrum pipeline, we need to explore unlicense pd .call it the wifi dividend. thanks to the encouragement of this committee, we have a smart framework for testing this band for unsilenced use while also protecting automobile stafty. we need to work with our colleagues at the department of transportation and the department of commerce and get this testing under way. the future of spectrum policy requires that we focus on the ground as much as on the skies. spectrum gets all the glory.

but the unsung hero of the wireless revolution is infrastructure, because no amount of spectrum will lead to better wireless service without good infrastructure on the ground. that means we need dig once policies. we need smarter practices for deployment on our federal lands. and we need updated policies for the deployment of small cells, which are going to be critical for next generation 5g networks. if we do these three things we will produce wireless across the count country. we have problems to solve, resources than constrained and communities that need help navigating what is possible in the digital age. we are on the cusp of cars that drive themselves, commute times that can be put, emergency

services that are more effective and health care that's more personalized and communities with more capability across the board because they are more connected. it's already happening. the city of chicago is deploying wire lessless censors to help s problems before they occur. with childhood asthma, flash flooding and street congestion. wifi has been made available on its school buss to help bridge the homework gap and help students who lack the connectivity they need to do basic school work. these efforts are exciting and they can be bigger and bolder if we have forward-thinking steps with spectrum policy. and if we take them right now. thank you.

>> thank you for holdlinging this hearing. >> first, ensuring direct access to 911 is important, both to me and to members of this committee. last month, senators fisher and cornyn cruz and schotz provided a new act. i commend them for their leadership. a woman's 9-year-old daughter tried calling 911 four times as she was trained to do. but those calls never went do because the hotel's phone system required her first to dial a 9 before 911. when i first learned about this sad case two years ago, i started an inquiry into the

status of 911 dialing and to date, we have made progress across this country in fixing the problem. when we started, for example, no major hotel company required franchiseees to permit direct 911 dialing. today, nearly every major chain does. but the job isn't done, a enthat's what the act is needed. it would require that all multiline telephone systems sold, leased or installed in the united states allow direct 911 dialing as the default setting. i hope this bill becomes law soon. second, i want to turn to the threat peas posed by inmates contraband cell phones. that threat has only grown worst of late. contraband cell phones are flooding into nation jails and prisons. inmates are using them to order hits, to run drug operations, arrange gang activity and

victimize members of the public. i heard about these disturbing developments firsthand last october when i visited a maximum security prison in jackson, georgia. we need to act. in 2009, this committee helped law enforcement combat a serious threat. in 2013, the fcc picked up the baton with a notice of proposed rule making. in it, the agency teed up technological solutions and remember toir reforms. we now need to follow through. and to help do that, i announced earlier this week i would hold a field hearing on contraband cell phone in south carolina on april 6. i hope this event will reboot the conversation and build a foundation for a robust fcc response. third, i want to thank the committee in its leadership for identifying and drawing attention to the 5 gigahertz band i deally suited for

unlicensed use. four years ago, the spectrum act called on the fcc to begin the process of opening up this band and the fcc did that in 2013. since then, there are up to 195 megahertz of gigahertz spectrum the fcc could open up for use. putting this spectrum to use could open up a new world of wifi. the fcc needs to get this done. but progress hasn't been fast enough. both qualcomm through its rechannelization approach, and cisco through its detect and avoid proposal have identified paths forward. and i hope that we get this proceeding across the finish line and soon for the benefit of american consumers. fourth and finally, i want to commend chairman thune and ranking member nelson for the introduction of the mobile now act, and for the spirit and bipartisanship which they showed

in engaging in that measure. in particular, i want to commend them for calling on the fcc to move forward on opening up wave bands for multimedia use. companies are new investing heavily on technologies that rely on spectrums above 24 gigahertz as part of their work on 5g technologies. we should aid those effort with rules that will allow 5g to develop in the united states as quickly as technology and consumer demand will allow. on that score, there is plenty of work to do. the fcc recently adopted a notice of proposed rule making, addressing some bands above 24 gigaher gigahertz, but we left 12,500 megahertz of spectrum on the cutting room floor. i called on the agency to focus on those bands as well, so i'm glad this committee, too, is looking to move more massive swaths of voice spectrum into the commercial marketplace. chairman thune, ranking member nelson, members of this committee, thank you once again for holding this hearing. i look forward to answering your questions and to continue to labor alongside you on these

critical matters. >> thank you, commissioner pi. commissioner o'reilly. >> thank you. to realize private sector deployments, it is paramount that additional silence and where appropriate unsilenced bands be made available in both traditional sub 6 gigahertz frequencies and higher bands, including those above 24 gigaher gigahertz. the u.s. is currently the world leader in 4g wireless communications because our nation's wireless providers endeavored to meet insatiable consumer demand for data services and recognize the economic value of doing so. any unnecessary delay risks another nation setting the terms of the next 15 years of wireless communications, something we shouldn't -- we should make sure does not happen. along the same lines, i find it

necessary to express my concerns with the outcomes of the world conference. the failure to study 28 gigahertz, a favored highly band for 5g in thest and other leading technology countries means the u.s. will move forward, bypassing itu and undermining its future. it will slow down 5g and broadband deployment. let me suggest a few ways in which burdens can be used for small cell and tower sighting. first, the commission must follow through on its commitment to expand the relief provided for small cell installations. in addition, despite the best effort op congress, localities are still blocking far too many facilities citing attempts. some options to deal with this include ending repettive permit

requirements when multiple small cells are cited in close vicinity, and preventing permits from being denied. for larger towers, co-location plub promoted. by resolving the decades old problem of twilight towers will also promote co-location. changing topicings. congress should be mindful to expand its regulatory commission including to cover noncommunication companies like edge providers. these decisions often impact entities that are not familiar with the commission's activities and potentially subject them to yet another regulatory body or conflicting set of rules. the commission's creative license in regard to statutory communication is beyond measure. the fcc has set aside the intent of congress, deals struck at the time, reaches of its own

precedent and sometimes even the english language to reinterpret a statute. all in the pursuit of a particular outcome. innovation is being put through the unnecessary ringer which threatens american economic outlook, employment and innovation. i would also like to bring your attention three issues where change in law could be beneficent. they should go by the fund. second the area of pirate radio could help give the commission more enforcement tools and better focus its efforts. finally, to highlight shortcomi shortcomings, i want to say there are no updates on our end. thank you for your time and i'm ready to answer any questions you may have.

>> chairman thune, ranking member nelson, members of the committee, good morning. it is a privilege for me to appear before you. today i would like to center my testimony on two congressional directors relating to universal service and diversity. i took seriously my kmim to you, chairman thune, to modernize a universal service support program for rate of return carriers and top penalizing carriers whose customers migrate to broadband-only lines. this collaborative process has resulted in reforms that are a win-win for rural customers and those who contribute to the universal service fund. i joined them, i'm thankful to say. we presented a frame work for consideration that should modernize the program in a manner that is simple, rewards efficiency and sets forth a path to ensure we connect and serve

households and this aggregates support in areas served by an unsubsidized competitor. but as laudable as this proposal is, the fcc still must address the lack of broadband access on tribal lands and the gaps that remain in mobile broadband coverage throughout this nation. millions of americans are stuck in the digital darkness. they lack the technological infrastructure needed to improve their lives, particularly when it comes to health care. life saving and life changing technologies, like the one i witnessed in rural mississippi that manages the care of patients with chronic diabetes are only possible if broadband is both available and affordable. allow me to boldly say this morning, completely overhaul the federal lifeline program. we could never forget that

section 254 of the communications act places equal weight on the needs of low income consumers as it does for those living in rural areas when it comes to access to advanced services. so let us roll up our sleeves, refrain from dwelling on what may be wrong and start working on fixing and finding solutions to address whatever is deficient in lifeline so that low income americans once and for all may have access to those life changing opportunities has unleashed for the rest of us. section 257 of communications act tasks the commission with identifying and eliminating market entry barriers and promoting the purposes of favoring diversity of media voices, vigorous economic competition, technological advancement and promotion of public interest convenience and necessity.

it is difficult to receive fair or reasonable contract terms. the model has been prohibited or inhibited because program distribution, it's often restricted via contract. for every independent programmer that reaches an agreement with an mvpd, there are countless others who cannot even get a simple telephone call returned. so i want my fellow commissioners to join me in voting an independent program inquiry during our february meeting which will launch discussions about what role if any the commission should play in addressing obstacles that may be preventing greater access by consumers to independent and

diverse programming. members of the committee, i am truly grateful for the opportunity to speak with you today and look forward to answering any questions you have. thank you. >> thank you. i thank all of you for sharing your thoughts about the priorities of the commission and the things we should be focused on up here in the congress as well. chairman wheeler, next january there's going to be a new president of the united states. your term doesn't technically expire until january 1 of 2018. fcc chairman, traditionally resign from the fcc when a new president is inauguratinged. and that enables the newly elected president to nominate a chairman to lead the fcc who is from the same party as the new president. so my question, you probably figure out where i'm going with this. do you intend to respect that tradition and resign from the fcc when the new president takes

office, unless explicitly asked to stay on? >> thank you, mr. chairman. oh, turn it on. it's a ways off. i understand precedent. i understand expectations, i also understand that 10 or 11 months is a long time. so it's probably not the wisest thing in the world to do to make some kind of ironclad commitment, but i understand the point you're making. >> and you understand the tradition? >> i understand. >> with regard to that. chairman wheeler, it's my understanding that commission rules prohibit the disclosure of nonpublic information to any person outside the commission except as authorized with the chairman. these rules limit the ability of commissioners and the fcc employees to discuss certain nonpublic matters with outside stakeholders making the

chairman's waiver authority a potentially valuable tool when dealing with outside interests. chairman wheeler, yes or no, will you provide to the committee any written exceptions that you signed while serving as chairman of the commission? >> yes, sir. >> thank you. >> commissioner o'reilly, you have rewrently wren about your concern that, and i quote, the application of this rule and current commission serves as a roadblock to effective public participation and thely damages the fcc's credentialn't as an agency, end quote. would you like to expand? >> yes. i'll make two points. one is i think it inhibits my ability to talk to outside parties who come in to see me. they'll suggest certain ideas, ways to change things and i can't correct them in terms of anything they may be mistaken about. they may have some information, they may be missing other parts. it's hard to have a full dialogue own how to make a best idea. i can test out ideas that i have before these parties. it inhibits my ability. i think that the rule as being applied is discriminatory. the rest of my colleagues don't

have the advantages the chairman has and that they have used at the time. there's a number of things that have happened, the disclosure of nonpublic information that we're not able to take advantage of. i think fair application of the rule will make more sense. >> i'll direct this to all the commissioners. and it deals with section 629, which i referenced in my opening remarks. provides the fcc with awe authority regarding pay set top boxes. it's aimed at actual physical equipment, which is obvious when one considers the legislative history, the plain language of the statute and the consumer experience as it was 20 years ago when the provision was added to the law. so the question is, if a pay tv service is offered in a manner that requires no set top box -- in other words no physical equipment or desies is needed to access the programming, does section 629 remain either necessary for or applicable to that pay tv service?

chairman, you want to lead off? >> mr. chairman, everything in the world is going software. the networks themselves used to be run by hardware and are now run by software. that doesn't mean we don't have jurisdiction over those kinds of activities. i think the statute talks about equipment device and devices, and that, you know n a software world, you can not consider the kind of functionality that the statute talks and not consider software. >> the chairman's point is fundamentally correct that so many functions that took place over hardware are now taking place over software.

i think what's also fundamental is congress wanted to make sure this market was competitive. whether we're dealing with hardware or software, i think we want to find a way to make that happen. >> mr. chairman, i think this question raises the basic approach that commissioner o'rielly is concerned about. this agency is taking laws written a quarter of a century ago. instead of doubling down on 1990s-era technology, we should encourage efforts to migrate to an apps based economy. instead of spending a couple ofz hundreds on a box and $15, you could spend $0 to $5 on an app which would allow any device to a tablet or smart phone to affect the same functions. >> short answer no and i'm happy to expand on that. i agree with my colleagues with the elimination of boxes going forward. >> i agree the current construct

may on its surface seem limiting, but what we have the capacity to do, and i trust that we will continue to have the flexibility to do, is look through and recognize that the words may be different, the application and the functionality i believe we should look through current lenses and apply and interpret the framework which has either worked well or needs room for improvement in order to really interpret, again, through today's lens how we approach the directive that you have given us to ensure a competitive marketplace when it comes to what we now refer to as a set top box. >> just one quick sort of yes or no question for all five commissioners. then i'll ask at some point maybe in a later round to follow up. zo you agree that a consistent legislative reauthorization process would produce a more responsible and productive relationship between the fcc and the congress?

>> it is your right to write the rules, sir? >> i assume that's a yes? >> yes. >> yes. >> i defer to congress on that. >> i also defer to congress. >> if there's a specific provision you suggest the committee include in an fcc reauthorization bill, i hope you'll feel free to follow up after the hearing with any suggestions that you might have about that. it's something i think would be useful in making a relationship between the congress and fcc more product trusted and more understood for sure. >> we don't want to threaten the vibrant market for video programming. so mr. chairman, how do you respond to the concerns that i raised about the impact your proposal could have on existing

copyright and contract provisions nor video content? does the fcc -- do your proposal s impact third parties, whether they'll be able to alter or add to programming? >> thank you. i think there are probably several responses to that. wirch r one, that which the operator puts out should remain sacrosanct and untouched and nothing in our proposal creates an opportunity for that to happen. because copyright law remains in place, because the language that we used actual ly was lifted frm

the cable card language now being used by able companies in their cable card and has proved sufficient to protect against that. and thirdly, we actually asked in paragraph 80, i think, in the notice, but if you think that's not good enough, tell us what would make it good enough, because it's not our goal to cause harm. >> okay, let's go to spoofing. chairman, i laid out what's happening. citizens are really getting taken. and they're losing thousands of dollars. the sad cases are someone's life savings because a particularly vulnerable senior citizen has been fooled by the number that's

calling. mr. chairman, many of the provision provisions in our bill recommended to congress in the fcc in 2011, i know you're going to agree that it's important for congress to give you the tools necessary to combat the sophisticated spoofing examed -- scams. commissioner rosenworcel, i appreciate your attention to phone scams. what has the fcc learned from its inquiries into the phone scams? do you agree that more needs to be done to inform consumers about their options for voiding or stopping these scams? >> yes. senator, thank you for the question. we've got bad actors, scammers and fraudsters right now who

spoof telephone numbers to defraud consumers and try to wrongfully obtain something of value from them. we've got to put a stop to it. i know you are responsible for the truth in caller i.d. act about five years ago, and that has been a helpful source of authority for the s.e.c. but what we found in the intervening years is that fraud has moved offshore. it's now coming from international locations. it's also migrated to texting. and so what i appreciate about your new legislation is that you're giving us the jurisdiction to resolve those problems and try to get these bad actors out of the business of spoofing once and for all. >> senators klobuchar and blount have joined -- >> can i pile on? i may be the only member on this panel who's actually been victimized by this. i came home a couple of weeks ago and my wife says to me, the

irs is calling and saying we owe them money. this was news to me. >> you didn't fall for it, did you? >> i said, boy, they called the wrong number because i'm the chairman of the fcc. so we got the information and we took it to our enforcement bureau. and they started drilling down. and guess what. this was a u.s. number but it was coming from abroad and we couldn't get to it. so believe me, we understand and are with you on this. >> by the way, the do not call list, it doesn't work. [ laughter ] . i mean, it's gotten so bad, i don't want a land line. and now i'm getting the calls i don't want on a cell phone. i hope y'all will look at that.

i've run out of time. i'll wait for a second round. >> are you tired of hearing from those presidential campaigns in florida? >> as a matter of fact, that's right. and i was wondering when you were asking the chairman the other minute about what he intends to do in the future, you mean you don't think that president trump would renominate him? >> means he won't be running democrats for trump in florida i assume. >> you gave the shortest answer concerning section 629. i'll ask you to expand. because we have the benefit here of someone who's been on both sides of this dais on this issue. you were a staffer here during the consideration of the 1996 telecommunication act. can you tell us what you believe congress intended when it drafted the language 20 years ago, and do you believe the

fcc's proposal aligns with congressional intent? >> thank you, senator. there are a few of us in a number of different roles that are still involved from the '96 act. having worked for then chairman tom bliley, who was the author of this provision, i can tell you that i had an opportunity. i was in every meeting we had on the telecom act relating to his work and this was one of his priorities. his intention of that provision was to make the availability of set-top boxes or navigation devices in retail establishments. and on behalf of a particular retailer at the time it no longer exists. circuit city. you may have heard of it. it's the previous best buy of the world. it no longer exists. and the issue has somewhat moved on in the time. so my argument is, and i made this point when this issue was adopted, is that the provision itself is looking at a previous time when set-top boxes were on the hardware side of the equation. we didn't contemplate at the time that it was going to -- application world in 1994, 1995.

you also have to keep in mind the context. i made this point in my statement. you have to look at the context of the deal that was struck. we had to work with then speaker gingrich, who was representing on behalf of his constituents huntington atlanta from georgia. we also had to work with senator coverdale who also represented scientific atlanta. in terms of the scope of what we were able to achieve in that provision. and i don't believe when you look at the text of the language, when it talks about boxes, interactive communications equipment, and other equipment that it gets to the application side, that it gets to an application-only world that senator thune talked about in his question. i think it is overbroad and penalizing going forward. >> now, commissioner pai seems to suggest that a $5 or $10 app would suffice and make this proposed rule change irrelevant. do you agree with him? >> i do. i'm not even sure it's a $5 or

$10. i have 20 video apps on my phone that exist today, and i can get them directly from the program or i can get them directly from my cable provider. and so those apps are free. and i watch programming on my phone, on my tablet, and i can watch it on my tv through those applications without having to have a set-top box. >> in terms of helping the consumer, it just seems to me there is a question of who is being helped by this rule. commissioner pai, senator nelson seems to make a pretty good point about his concerns. chairman wheeler says you've got nothing to worry about. so what do you say to that? help us out. >> senator, thank you for the question. i think while everybody agrees this programming stream should remain sacrosanct, to borrow the chairman's phrasing, unfortunately nothing in the document actually protects it. and so we asked repeatedly, for example, of interested parties

before our vote would the programming stream remain intact, would a third party set-top box manufacturer, for instance, be able to extract ads that were in the programming stream and insert their own? and/or insert their own ads layered on top of it. we were told, well, no, we're going to rely on market forces to govern that. but i think as ranking member nelson adequately pointed out the copyright and all these other intellectual property issues involve very delicate contractual and other arrangements that are going to be disrupted. and i think that's part of the reason why we heard from an incredible panoply of programmers, especially minority programmers who told us we don't want this kind of disruption because it's ultimately going to decrease the amount of compensation and protection we have for our intellectual property. >> thank you, sir. commissioner clyburn, thank you for your interest in rural america. and on this panel we have senators from states with significant rural population. mississippi, south dakota,

missouri, nebraska, kansas, nevada, colorado, and on and on. thank you for coming to sunflower county, mississippi. >> absolutely. >> and you're going to be back in mississippi soon. >> yes, sir. >> and i hope we can visit at that time. you and i discussed this earlier. i think you'll acknowledge the incredible benefit to public health of the mobility fund. and making sure that we continue to connect wireless-only households. educational benefits. it seems to me the fcc must do no harm to existing coverage in rural states when considering future changes in the usf support for wireless. what do you say to that? >> from a number of degrees i

agree with you. i have been speaking for a number of years about the fcc establishing a permanent mobility fund. you and i both know when we travel and are down from jackson rueville which i did take that drive that there are spots on the road where we have absolutely no coverage. we feel extremely vulnerable. the citizens that live outside of those zones are extremely vulnerable, particularly those who are wireless-only consumers. they deserve connectivity. so i look forward to continuing to work with you to see that we have the resources in place to target universal service funding to those areas where it is absent, to reform the universal service program, the lifeline program tone sure those who do not have connectivity -- there are 5 million people in this

nation without any phone service. we need to address them. i look forward to continuing to work with you coming outside of jackson and -- i'm spending more time in mississippi than south carolina, incidentally another rural state. and looking forward to working with you to truly connect particularly those unhealthy donut holes where there is no connectivity whatsoever. >> thank you, ma'am. >> thank you, senator whicker. senator schots. >> i want to thank them for their expertise. we don't always agree on every particular action you take but i think we agree on the general objectives of the fcc. one area we've been able to achieve is some pretty good bipartisan agreement is with respect to policy. senator moran and i have been working together with the chairman and the ranking member on an amendment that chairman thune and ranking member nelson's mobile now bill to make sure that more unlicensed spectrum is available in the future. i think we need a clear plan to

support continued innovation in the unlicensed band because it's become an affordable way for people from all walks of life to get online and a way for carriers to off-load traffic. our experience with wi-fi is the best example of the opportunity ahead and i believe if we want to continue to empower consumers and provide entrepreneurs the space to innovate we've got to focus on wi-fi. commissioner rosenworcel, thank you for your leadership not just on 5g but on the wi-fi dividend. what i'd like you to do is just flesh out why you think this is so important and what you think the unique policy challenges are in the context of the communications act and also the fcc's authorities. >> well, thank you, senator schatz, and thank you for your work on behalf of unlicensed spectrum policy because good spectrum policy requires both licensed and unlicensed spectrum. there's no better evidence of that than taking a look at wi-fi. it has democratized internet

access. it's created a space for permissionless innovation, which is vital for the internet of things. and it's also how so many of our carriers manage their license networks because they off-load their traffic onto that. on top of that it's an economic boon. $140 million of activity every year. the traditionally unlicensed spectrum has kind of been an afterthought. it was reserved for scraps of spectrum we didn't know what to do with. and the truth is we actually need an unlicensed plan that involves low-band, mid-band and high-band spectrum. it shouldn't be an afterthought. it should be front and center in our spectrum policy. >> can you talk about the mechanics of why it's so difficult to have a plan? i think it's important for the public to understand that the financial incentives are just not there when you're talking about the auctions because this is really a commons. >> you're absolutely right. as you know, the congressional budget office combs through legislation and on spectrum policy it always delivers high

marks when we sell spectrum at auction. but it delivers low marks if we reserve it for unlicensed or wi-fi activity. which is a shame because of the broader economic benefit of having unlicensed around. i think that is dated, it misses the mark and short chaise our wireless future. >> thank you, commissioner. chairman wheeler, i wanted to talk to you about the zero rating programs. and i know that you specifically sort of held harmless those programs in the open internet order. but i'm personally struggling with my view on this. i think some of the members of the committee are likewise -- there are obviously great opportunities for consumers to provide additional access to the internet. on the other hand it's not at all clear to me that some of the programs are all that different from that which is prohibited in the open internet order. so i'd like you to kind of flesh

out first of all what your overarching thinking is regarding this and then how the commission goes ahead and evaluates the plans that are being provide d by individual companies. >> thank you, senator. i would just take one exception. i'm not sure we held harmless in the open internet order. what we did in the open internet order was to specifically say that this is something that should not be decided here in the open internet order because, as you point out, can you make the case that it is helpful because in some cases it increases choice and lowers cost? yes. can you make the case that in some instances it is harmful because it is used as a tool against competition and a tool to operate against other folks? yes. so the question becomes how do you make those kind of judgments?

and that's the power of the regulatory agility that is in the open internet order. so what we have been doing is collecting information and going through a process right now in which we are developing the data points necessary to reach the kind of conclusions that you are specifically talking about here. and the staff is far down the path on this. as you indicate, this is not a light lift. but this is something that we are undertaking. >> well, i'll finish this with the indulgence of the chairman. this is i think squarely the jurisdiction of the expert agency, but i think the policy makers have to think through the balancing act going forward because i think zero rating programs are going to be coming fast and furious and some of them are going to be right on that edge of at least violating

the spirit of the open internet order. some of them are going to be great and easy to approve. there are going to be some policy questions that percolate up to the committee. thank you. >> thank you, senator schatz. i have senator blunt who's left us. so senator mark will be followed by senator ayotte. >> thank you, mr. chairman, very much. coming back to the set-top box, i'm very familiar with this provision. chairman bliley and i are the co-authors of that provision in 1996. by the way, i'm also the author of the do not call list. [ laughter ] and it's just as relevant today as it was a quarter of a century ago. and we do want that obviously to be updated and enforced diligently as possible. i obviously had many, many, many conversations with tom bliley on what our legislative intent was.

and i know what we wanted to do. we want to just break down this monopoly that existed that forced consumers to purchase -- not purchase actually. to rent a set-top box from the company. and the reason that we were both concerned with it was that we had just finished the process of preventing consumers to purchase phones. for 75 years americans had been forced to rent a phone, a black rotary-dialed phone from the phone company. it's a good business model. three bucks a month. 12 months a year for 50 years. that's what our mothers and fathers had to do. it's a good business model. if you can make someone rent something and pay you $1,800 to rent this at that time hunk of junk. because companies were ready to mf on and innovate. new companies. so we had to break it down so

that you didn't have to rent anymore. so along comes the cable industry and adopts the same model, that the consumer is forced to rent a set-top box. they can't go out and get a different box from an innovative company. that's what tom bliley and i wanted to see accomplished. and where are we 20 years later? here's where we are. 99% of all americans are still renting a set-top box. that's not innovation. 99%. what's the average per family? $232 per year. to the cable companies. to the satellite companies. to rent the box. so we haven't seen any innovation. we haven't seen any breakthroughs. we're still waiting for the revolution where you can go down to the store or download the app that allows you to have a new

way of accessing this information in the modern era. that's what it was all about. so for the purposes of this discussion net neutrality is to content what this set-top box rule is to ensuring the devices, the access points allow for the consumer to control, the consumer to decide. that's pretty much what this whole debate is about. and so mr. chairman, how closely can we analogize this revolution to the set-top -- to the black rotary dial phone revolution in terms of our need to open up innovation so the consumer has more choices? >> thank you, chairman. i think -- senator.

i think the analogy is spot on. and here's the fascinating thing about it. the cable industry was for it before they were against it. they filed with us in 2010 saying that they wanted exactly the kind of things that we're talking about here now. and today, however, everybody is inventing all of these imaginary horribles. the most interesting thing to me, and i pointed it out to senator nelson, i mean, we stole the language from the cable card license agreement because that's been working and we put it in the item but it was now announced to us that that language which has been working for the last several decades is now a complete and total

failure. and one can only scratch their head and say there must be a bigger agenda being played here than the facts. >> can i just say? we're still in the set-top box era. comcast, just one company, a great company, by the way, but comcast is installing 40,000 set-top boxes a day in america. a day. we're in the set-top box era. there's 99% control by these companies. and to pretend otherwise is to ignore the real-life experience of every single american who has that clicker with that set-top box in front of them. and they would like another choice if we can provide it for them. they might stick with the incumbent. but i'll tell you one thing, the incumbent's going to start to innovate real fast with regard to what that box can do because there's nothing like darwinian paranoia-inducing competition to spur innovation that makes consumers feel good and lowers the price to they have to pay to

rent the box if that's what they continue to do. thanks so much for your great work. thank you so much, mr. chairman. >> thank you, senator markey. senator ayotte. >> thank you, chairman. i want to thank all the commissioners for being here. i wanted to ask commissioner rosenworcel, this is an issue that i've raised i think repeatedly before the commission when you've come before the senate committee. that is the universal service fund issue. i appreciate some of the reforms you've made on the distribution side. and obviously there are some additional issues that have been raised here today with the chairman that i hope are also addressed on the distribution side. my state again, i urge you all if you would like to take a nice trip through new hampshire and to the same -- have the same experience in many rural parts of new hampshire commissioner clyburn where there is not coverage. this is very important. but we're 50th in terms of support under the universal

service fund. we are a net donor where my constituents are paying $37 million in a year. and they're getting back $50 million in return. it's a very bad deal for my constituents given that we have real needs in my state, in very important parts of my state, that it would help the economic development and well-being of my constituents. so i wanted to ask you, i know as the chair of the federal state joint board commissioner you have really said i'm going to wait on what you might do on contribution reform based on what the court does on the open internet order. and i'm trying to understand why we have to wait because you know, recently the congress again, this time permanently, enacted the internet tax freedom act, which would say i think very, very clearly where policy makers are on both sides of the

aisle on this issue, that we should take -- we should ensure you aren't taxed when you have access to the internet. we want to make sure everyone has access. and that's obviously the goal of the universal fund itself. so i would ask you, commissioner, why do we have to wait for the open internet order to make reforms to the contribution side? especially when congress has so clearly spoken, most recently with a permanent extension of the internet tax freedom act. because my constituents are tired of waiting for contribution reform and they're spending -- they're putting a lot of money into this and we're urb not getting the value back from the fund. >> thank you, senator. and you're right. we have talked about this extensively. i want to start by saying i'm a new englander. that's where i grew up. so i know exactly what you speak of in terms of the inability to get service in parts of new hampshire and northern new

hampshire in particular. >> that's right. >> that's familiar to me. and to the extent that you're saying that we are not acting, i just want you to know that we're actually working. we're working extensively behind the scenes. just two weeks ago i met in washington with my colleagues from the joint board all across the country, florida, washington state, michigan, and state staff who are from other locations. and we talked extensively about new models for moving forward. because our existing universal service program which supports communications in so much of rural america is right now dependent on an assessment on old-fashioned long-distance service, which we all know does not represent the future of communications. and if we want to make sure that we get high-speed broadband everywhere, including places in new hampshire, we know we're going to have to update the way that we collect that. and we are working behind the scenes now combing over models and trying to understand the impact on consumers and businesses if changes are made.

>> the thing i would like to understand, and i'd also like commissioner pai to jump in because i know he's expressed some opinions on this as well. why does the open internet order jeopardize the potential to do contribution reform, and what risk are we with this open internet order that in fact it could end up with a universal service tax on internet services which presumably would be contradictory to the policy which is very strongly bipartisan as reflected in itfa, that we don't want to tax access to the internet. if you could both comment on that, i'd appreciate it. >> i want to be clear. i agree with that policy. we're not looking to change it. we're just looking to modernize the system. to the extent that we're talking about why this court case matters, it's just fundamentally statutory. under section 254-d of the communications act, the collection obligation is on telecommunication services. and so we need to make sure that that definition is a stable one so that we assess ways to move

forward. and we're looking at a variety of ways. numbers-based contributions. expanding the contribution base with traditional telephony. we're looking at a connections-based system. in other words, we're looking at models with our state colleagues from all across the country right now with the goal of making sure that rural communications stay strong. >> i would like to have commissioner pai with the chairman's latitude also comment on this issue. >> thank you, senator. i'll try to be brief. i have concerns both on timing and substance. in terms of timing when the fcc adopt the open internet order on february 26th, 2015 the joint board was slated to give us a recommendation on contributions reform in april of 2015. if you look buried in footnote 1471 of the 317-page order, we say we anticipate a short extension of the joint board's deadline would be appropriate. we are now almost a year after -- over a year after the open internet order. we still have no recommendation. now, i think that it's pretty clear that a broadband internet access tax would be pretty unpopular, especially in light

of the bipartisan chorus as you pointed out that state and local governments should not be able to tax the same. and i think it's remarkable that in light of the fact that the fcc has declined to refrain from o'posing these regulations on all these other areas, all these other title 2 regulations, that this one, politically salient one is being put off for a later time. and i think that it's also telling that the agency's already spending money in anticipation of getting a greater amount of revenue from the universal service fund. for example, we boosted the erate budget by $1.5 billion a year. last year. by all blths next month we're going to expand the lifeline program to broadband without any meaningful budget or cap. that money is already being spent. and it has to come from somewhere. i would respectfully submit to you that ultimately it is going to be in the form of a broadband tax. every one of your constituents is going to have to pay more for internet access to fund the frc spend obligations it's already made through the universal service fund. both in terms of timing and substance i believe that we should be straightforward with the american people and decline

this opportunity to impose a broadband tax. >> i hope we would. my constituents are not going to want to pay that tax. and i don't think there's support for that tax. i hope that we would clearly take that off the table. >> thank you, senator ayotte. i have senator booker, senator fisher and followed by senator moran. >> sorry, chairman. i'd just like commissioner wheeler, would you just respond to that? the expenses and tax issue. because i think it's important to hear your thoughts. >> the challenge that commissioner rosenworcel and her team are facing is that there is a diminishing amount of services, money on which a fixed amount of overhead is being charged. that means that it has to continually d lly go up now. sometimes we sit around and our colleagues complain oh, my

goodness, the universal service fund has gone up, look at the percent that it is today. well, the math says it has to. and if it doesn't, you won't be able to fund buildout in rural areas. you won't be able to fund schools and making sure they're connected. you won't be able to make sure that everybody has access. this is a pressing problem. this is a complex problem. and the thing that was really interested about commissioner rosenworcel's response, i'm sitting there saying boy, is the right person on point on this. she talked about multiple solutions, not just the one you keep hearing about it. >> i really want to talk about leading the globe in innovation. very grateful for senator ayotte. very grateful to senator fisher and senator schatz in leading some of the innovation work we're doing about the internet of things.

really very excited about the fact that we are now looking at making sure we're focused on unlicensed. in fact, i definitely wanted to follow up, which i don't think we're going to have time, about the progress of testing the five gigaherz section. but just while we're there i just really want to jump into the issue of lifeline because it's something that i think is extraordinarily important and i'd like to be able to submit for the record without objection from the chairman when he comes back is a letter that was signed by broadband group of bod band providers, public interest groups, really public-private groups talking about the urgencies of the digital divide in our country. and it's amazing to see it signed by everybody from comcast and at&t to the national hiss payne media coalition. it's pretty extraordinary. so just to stick with this for a second because when it comes to the lifeline program i just want to know are we getting a good return on our investment?

what is economic and social justifications for modernizing this program? really and the urgency to cover broadband. commissioner rosenworcel, would you comment on that for me? >> absolutely. listen, today it is absolutely necessary to have access to broadband, to have a fair shot at prosperity in the digital age. and we have too many households that do not have access. that's important for emergency services, for health care, for getting and keeping a job. and what's especially important to me, it's really critical for homework. we have 5 million households in this country with school-age kids who can't do their homework because they don't have broadband access. that's a homework gap that we can help use the lifeline program to bridge and i think we should be doing it without any delay. >> mr. clyburn, would you like to add to this if possible? >> this is a 30-year-old program that in the beginning really

worked hard and was successful in connecting the last few million people who could not afford access to a voice-only product. we do not live in a voice-only world. the individuals that need this the most have cut the traditional cord and have moved on to mobile or wireless spectrum. we need to modernize. we need to throw away the old and come up with a new construct. one that recognizes and addresses the needs of today. a program that is fiscally sound with all of the protocols in place to ensure that once and for all one of the vulnerabilities we have are addressed, that the provider is no longer the one who is greenlighting individuals -- the consumers who are certified or justified to be on the fund. we need to get rid of as many

vulnerabilities as we can in order to serve those who are vulnerable. we are poised to do that by the end of this month. and i'm looking forward to continued feedback and a successful program that will properly serve those who are on the wrong side of the opportunity divide. >> real quick i was going to talk about innovation. >> i apologize for that. >> no worries. but for the ten seconds i have left could you talk about -- we've made a lot of progress on the inmate calling -- with you now we're seeing some threats where the next frontier is these video conference calls. you're doing some really good work on that. can you use my last second to talk about that? >> we put forward a further notice that will look at what's called a video -- a visitation model that many facilities have gone to. there are lots of people who cannot visit in person their loved one. they're going to a video model. we have heard reports that this is financially taxing on them. so we're going to look at that to see if this regime is as broken as the one in which we

have already -- >> thank you, commissioner. i wanted to submit this to the record earlier. >> without objection. thank you, senator booker. >> thank you. >> senator fisher. >> thank you, mr. chairman. chairman wheeler, as you know, this past december a group of seven senators and myself, we wrote to you expressing our concerns about the fcc's recent actions in the area of municipal broadband, and i believe broadband services should be able to all americans no matter where they live in rural or urban areas alike. and i'm concerned that the fcc seems to be picking winners and losers in the market. and that municipal broadband networks that you are encouraging run the risk of overbuilding private sector networks and taking those limited universal service funds away from companies that really do rely on them to provide that broadband to rural america. recognizing this in nebraska we did pass a law that prohibits

municipalities from providing broadband or telecommunication services. so mr. chairman, in your response to our letter you said that the commission has not authorized sending municipal broadband providers to receive real world broadband experiment support at this time. it's interesting that you say that. given that last month the fcc's wireline competition bureau released an order that removed the electric power board of chattanooga from further participation in the real world broadband experience program. the very municipal broadband provider for whom the fcc recently pre-empted tennessee's state law. in that order the bureau said that the electric power board had been provisionally selected to receive $710,000 in rural broadband experiments funding. public notices from last year suggest that they are not the only ones.

so mr. chairman, has the fcc authorized municipal broadband providers to receive funding through the rural broadband experience program whether provisionally or not and if so how much money? >> thank you, senator. i recall the letter and specifically doing the research behind it. i'll be happy to submit for the record the details if there have been developments since then. i don't know off the top of my head. >> so you don't know if the fcc has authorized that funding for municipal broadband priefrtsovi through that rural fund? >> i'm sorry. through the -- >> you don't know if the fcc has authorized municipal broadband providers to receive funding through that fund? >> well, i just heard you say that that was done in chattanooga. it was a bureau-level decision. and i was either not aware or have forgotten. >> okay.

if you could get back to us on that, i would appreciate it. >> yes, ma'am. >> i think there's obviously? questions out there. thank you, sir. commissioner pai. earlier in your career you spent time working as an attorney with the department of justice. and as i'm sure you know the states of north carolina and tennessee have filed legal challenges to the fcc's i call it a troubling order, pre-empting laws in those states that do restrict the abilities of municipalities to provide the broadband services. and you probably know that the department of justice has declined to defend the fcc's order in court. can you tell me how rare an action that this is, and doesn't it suggest that the fcc overstepped its legal authority by pre-empting these state laws? >> thank you for the question, senator. i think indeed it is exceptionally rare for the department of justice not to take the position of one of the agencies that it is charged

typically in defending in court. i think it speaks to the fact this particular order had significant legal vunlts which is what i focused on in my own dissent because i believe under the constitution and the laws of the united states and supreme court precedents like nixon versus missouri municipal league it's pretty clear the agency confined the requisite clear statement from congress to support the pre-emption of state laws such as nebraska's. >> i would hope this committee would take note of that and possibly look at legislation that will help the fcc in recognizing state laws in the future when we have these issues come up. also, mr. chairman, i am concerned about what will happen to low-power television stations in nebraska after this year's broadcast incentive auction in nebraska. we have a population of less than 2 million people, and many of those folks live in rural areas where it's not possible to receive a signal from those

full-power stations in the state. we have a number of low-power television stations, and they are valuable for ensuring that nebraskans, especially those who would normally receive their broadcast content from iowa or south dakota, that they can receive that local content. not that we have anything against south dakota, mr. chairman. of course not. you have consistently declined to say whether low-power television stations will be able to keep their spectrum after this incentive auction. can you assure me that every reasonable effort will be made to find a channel for those low-power television stations so that they do not have to go off the air, they are providing a very worthwhile and valuable service. >> yes, ma'am. as you know, the statute does not establish any proprietary for low power stations.

we're trying to work our way through that. i think there's two things to bear in mind. one is we don't know, we'll start knowing in 26 days but we don't know right now what the spectrum layout is going to look like afterwards. what we have done is to say to the low purchaower companies we help you after the auction if there is a situation we will help you find a new channel. we will help you share because the beauty of digital is you're not into channel sharing. and you could maybe even get a little upgrade by sharing with a class a, which gives you a little more oomph in your market. so yes, ma'am, we are -- we have laid out a plan to do that as soon as we know what the landscape looks like. >> well, i really appreciate it. and if i can help in any way with that, i would like to because as people live around any border of their state it is

difficult to be able to get that local news and i think that is very, very important. and as we address that need of these orphan counties out there i think these low-powered stations really could be an answer for that. so i thank you. >> thank you, senator fisher. senator moran followed by senator johnson. >> mr. chairman, thank you. incidentally, the senator from nebraska, i grew up with nebraska on the border, television and radio. and it wasn't that detrimental. >> i know. >> i had to watch the royals. >> well, we saw the broncos. mr. chairman and commissioners, thank you very much for your presence here. let me start with the spectrum conversation. i'll forgo kind of my editorial comments and see if i can get directly to this question and a few more on some other topics. when do you anticipate -- this is for you, chairman wheeler. when do you anticipate that the spectrum frontiers proceeding will be complete? >> this summer. >> and do you anticipate that

that completion of the spectrum will lead to an auction in '17 or is that too early? >> i don't know the answer to that, sir. one of the things that has yet to be worked out and we're working through to get to that summer schedule is how do you deal with existing incumbents and how do you deal with it -- so i can't answer that question because we're not -- >> so the consequences of this auction will determine the nature or the necessary steps in following auctions, you'll learn something from -- >> no, sir. what i'm saying is that we got the 600 megahertz auction, which will begin later this month, and then insofar as the 5g spectrum, the millimeter wave band spectrum that commissioner rosenworcel talked about, we are in the process of working through how you deal with sharing with folks who are incumbents there. that will deal to the kind of

resolution that we need to authorize use which we will do this summer. >> not an auction issue, it's a technology -- >> technology. and that then will lead to the question of how do you dispose of that spectrum. >> okay. given the nature of high-band spectrum, it seems to me we're not only going to need more spectrum but we're going to need the support of infrastructure in its deployment at higher frequencies. are you on track to complete the small cell proceedings before the end of the year? >> yes, sir. >> let me turn to the issue of the impending auction. one of the concerns i have is that -- my assumption is that the spectrum crunch is the greatest in the urban areas, and my concern is what does that mean to rural areas? and so we have the $175 billion cap. we have the 39-month time frame.

what's the plan for clearing that spectrum as compared to rural versus urban? is there a distinction? and the reason i ask the question is i want to make certain that we're not -- rural is not at the end of the line when it comes to reimbursement or at the end of the line when it comes to trying to find a contractor to build the power. >> that's a great question. the reality of when you go and run this spectrum auction is that auction is a daisy chain. or that spectrum is a daisy chain. and how you set up spectrum in chicago affects what happens in kansas, for instance. and so they are all interconnected. which means that there is not one higher-ranking spectrum than other. if you haven't got it right in one area, it daisy chains up and screws up chicago. so the answer to your question

is we have to solve it on a broad base. >> so i should not have the concerns that rural will take a back seat while spectrum is utilized someplace else and then we have problems with accessing the fund or enough time to get towers built? >> because of this daisy chain issue, if you can't clear it in kansas you may not be able to clear it in chicago. >> so if there was a bias it's technically incapable of being -- >> yes, sir. >> -- accomplished. good. and maybe this is to commissioner o'rielly or to you, chairman wheeler. on the issue of rural broadband. chairman wheeler, you and i had this conversation when you came seeking a conversation regarding your nomination and kochlation. >> yes, sir. >> and you have been -- you and the commission have been attempting to reform the order of now several years ago in

regard to an issue that is very important to me and to kansans. the universal service fund is important to us, as you would guess. and my questions as you make usf reforms to that reimbursement model, can you provide me an update first for when the carriers will see an actual order, and secondly, can you assure me that there will be enough support not only to recover the cost of providing the service but the significant previous investment that many carriers have made, rural utility services loans, private loans, i've expressed this concern for a long time, that the r.u.s. and fcc seem to be at incompatible places in which your orders suggest to me that there may be a federal agency that will be owed significant amounts of money from companies

who are no longer able to pak the payments. their payments and their debt service ability was determined at a time in which the universal service fund is different than it's going to be under your order. >> so thank you very much, senator. first point is i hope we will have this bipartisan product voted on soon. there are three votes for it today. that triggers what's called a must vote which ends sometime later this month. we are very sensitive to the issue that you raised. and this is something we talked a lot about with the various industry groups and believe that we will not cross that threshold. however -- and i don't, mike, mean to throw this to you in terms of now you get a question like this. but i really want to emphasize

how this was a bipartisan effort and i shouldn't be the only one speaking on behalf of it. sfwli appreciate the opportunity. i should say i'm limited in what i can say since it's an item before us. i would be happy to change those rules as i mentioned earlier. >> i take back my time. but to your point we did spend extensive time to ensure a number of things that go into the item that my colleagues are considering will have transition periods. we also think the changes that are being asked of legacy carriers in terms of buildout and things that will improve the experience for americans will not have a buyer effect on their business plans or the loans they've taken out. we also have made clear, and i promised that if there are specific issues to any carrier that i'm willing and ready to deal with any kuip of situation brought to my attention. that while we want to build a strong foundation it is not cement. so we will not consider if there are adverse impacts -- >> there's a case by case

opportunity. >> to be sensitive to that if the facts that are presented before us are such that we carry, it it would be dramatically impacted he, we would want to be sensitive to that. >> thank you, senator moran. senator johnson. >> since he brought up sports broadcasting i'm sure the chairman would agree with me that every american ought to be able to have access to watching packer games. i appreciate -- >> [ inaudible ]. >> you're probably not going to agree with me there are way too many people in wisconsin in the western part of the state wearing packer uniforms on game night. i just want to ask the chairman i sent you a letter making sure you expeditiously review any petition by a wisconsin broadcaster to allow those games be broadcast over satellite. and i hope a broadcaster actually does so. >> i'm sorry. i was coughing. >> just want to make sure the fcc expeditiously hopefully grants the petition of a

wisconsin broadcaster to run packer games over satellite. >> we're following through and looking at each of those. and i understand as -- >> just a simple yes would be -- >> yes. >> appreciate it. >> i don't get to talk about ohio state? >> i'm really concerned. and the chairman is concerned about packer games. chairman wheeler, you are a chairman of an independent agency. the fcc is supposed to be an independent agency, correct? >> yes. >> a creation of congress, correct? >> excuse me. yes, sir. >> have you had a chance to read the report we issued out of my committee on homeland security government affairs regulating the internet, called the white house bowled over fcc independence? >> no, sir. but i have read summaries of it. >> okay. there are a number of troubling findings. i'd like to ask a couple questions. first of all, you were aware that you had legal advisers in the fcc that are very troubled about the thin record to support

the fcc rulemaking potentially in violation of the administrative procedures act? were you aware that within fcc you were concerned about the thin record? >> boy, i hope so. i hope the lawyers are constantly second-guessing each other and me. >> but you were aware of that -- >> we were having believe me some debate and discussion at that point. >> so there were polls for public notice and actually written up but you did not go forward with the public notice to actually beef up that public record? >> no -- >> can you describe why that notice wasn't issued? >> no. thank you, senator. i think what we did was we hit pause and i publicly announced that we were hitting pause for the purpose of enriching the record and that -- i think i said at that point in time we know the big dogs are going to sue on this and we want to make

sure that we've got is dotted and ts crossed. >> another concern was really the circumvention by the fcc of the ex parte communication requirement. in a 1992 office of legal counsel opinion, obviously concerned about the independence of the agency and they write "white house staff members should avoid even the mere appearance of interest or influence. and the easiest way to do so is to avoid discussing matters pending before the regulatory agencies." there were a number of meetings that we uncovered in our investigation, e-mails going back and forth between yourself and members of the white house, where clearly this open internet ruling was being discussed and yet there was never a record made of those ex parte communications. i find that very troubling. >> thank you, senator. knowing this was in your report, i did go check the rules.

and the rules say, quote, that the only time you need ex parte is when there is substantial significance and it is clearly intended to affect the ultimate decision. and that applies to both communications with the white house and communications with congress. >> you go down the timeline, in terms of the path you were going down in terms of the open internet ruling and president obama coming out with his statement and the fcc turning on a dime. i would say those discussions were pretty significant. >> so the president -- ex parte, though. right? i just want to make sure we get the record straight. that an ex parte was filed by the administration. >> on one of those but -- >> on -- >> they were otherwise -- read the report. i was actually shocked at the chairman's statement during -- the opening statement. that the fcc was going to get out of the way and let innovation and competition reign. commissioner pai, do you think

regulating the internet under title 2 is getting out of the sxwa letting innovation or competition -- can you describe what's been happening in terms of innovation investment in broadband and internet after this ruling? >> thank you for the question, senator. i do not think it is getting out of the way of innovation and investment and the agency itself didn't think that until november 10th of 2014. i think what we've seen in 2015 is the fact that among both major wireline broadband providers and small providers that investment in innovation is slowing. and for example, we've heard from a number of small wireless isps, one of whom testified to congress just last month, that she is shelving plans to upgrade her network in rural arkansas to serve her customers precisely because of the uncertainty and the burden posed by these regulations. among major providers we have seen the first ever decline in broadband wireline investment in the internet age outside of the tech bubble bursting in 2001 and the great recession in 2008.

now, i think that it's telling that some of these major companies are now spending billions of dollars on companies like aol or even putting their investments abroad. that's because presumably they think the return on the investment is now greater in areas outside of the broadband infrastructure. and that's an unfortunate thing for the american consumer. >> possibly with a little more public notice, a more robust record, maybe we would not have gone down this what i think very harmful path. >> the internal documents in your report prove that. if you look at the report, e-mail after e-mail suggests the fcc career staff, and i once was one of them, said we do not believe there's adequate notice for these separate areas. nine separate aspects of the plan were thought to be lacking in terms of the public input. >> with all due respect to my colleague, what he has just portrayed as facts are not. investment is up. and i can quote you from the statements that the companies themselves make when they are reporting to wall street because i have it here. fiber is up 13% over last year.

usage of the internet is up. and that has driven what you want to be up, which is increased revenue per subscriber for the internet companies. in the last year since the open internet order took place. i would just suggest -- >> but you're not -- >> -- they're not necessarily factual. >> you're not challenging his assertion there were nine aspects of this rule making that had a thin record. your own staff said that. >> i'm challenging his assertion about the effects. and i'm saying insofar as the record is concerned we worked with the staff and the job of the staff is constantly to say hey, there are issues you need to address. and one of the reasons that i pushed pause was to make sure we addressed all the issues. >> senator -- mr. chairman, can commissioner pai respond? it's telling that on one hand we're saying that all this investment is up, infrastructure is booming, yet on the other

hand just one month ago the chairman and a majority of the commission said broadband is not being reasonably and timely deployed pursuant to section 706. which is it? is the broadband infrastructure broken or is it not? i would submit to you part of the reason why it is not, part of the reason why i agreed with the chairman and my colleagues that broadband is not being reasonably deployed in a timely way is precisely because the fcc's policies have failed. this administration's policies on broadband have failed. and that's part of the reason why we see this decline in broadband infrastructure investment. there's a reason why google, for example, has a greater market capitalization than every cable company in the united states combined. it's just no accident that the regulatory infrastructure we have built is now depressing broadband investment. >> we are not seeing a decline in broadband infrastructure investment. you can say it and say it and say it, but it doesn't make it a fact. >> the facts speak for themselves. i'd not 457y to submit the sworn

affidavits of numerous isps for the record. >> i'd be happy to submit the information that the companies provide under penalty of s.e.c. to their investors about their investments. >> striking what ceos with pending mergers will say about the fcc's top priorities. >> i'm talking about at&t and comcast and companies like that. >> who are typically repeat players before an agency that regulates them highly. >> thank you, mr. chairman. >> no, this is good stuff, senator jackson. appreciate it. >> happy to oblige. >> let's bring it back to the green bay packers. >> i think i've done my work here. >> we have next up senator gardner. >> thank you, mr. chairman. thank you to the witnesses. and if this was on denver tv i'd love for the four corners to -- >> there you go. >> got that one in. and thank you for -- >> orange. >> orange, that's right. the federal government owns an extremely high valuable

spectrum -- a lot of extremely high value spectrum but many of us who have no idea what the exact commercial value of that spectrum is today. some spectrum currently owned by the federal government may not be useful to them but could be useful to the commercial market. unfortunately we don't know the economic opportunity cost of that spectrum until it's valued by somebody. commissioner o'rielly would you be in support of the ftia in consultation with the fcc and omb helping to determine annual economic opportunity cost for spectrum in the government's possession follow that up with finding the dollar value of spectrum if it were to be used for commercial purposes? >> so some of that would require congressional changes in law. i would leave that to your capable skills. but in terms of the theory and the concepts i would. i have advocated to not only determine the opportunity costs but we actually ought to put it onto the budget of the agencies not on the private sector but the agencies themselves so they have opportunity cost, both the carrot and the stick. my colleagues have been full of good ideas on the carrot side. i want to be on the stick side as well.

i think you need both parts to make it effective. >> commissioner pai. >> i agree completely with commissioner o'reel reorrin that. >> i along with senator mark warner of virginia earlier introduced a bill in virginia that would create a 16-member commission to stud yit encryption issue. many complex issues confronting our country today when it comes to encryption namely how do we ensure our citizens' privacy is protected while ensuring we don't create a safe harbor for terrorists and bad actors to communicate with one another. do you believe this is an area where we need to get bright minds together from law enforcement and the private sector to discuss how we move forward with encryption and technology and all the concerns that come along with it? >> yes. i think it's a smart way forward. >> thank you. chairman wheeler? >> yes, sir. yes, sir. >> thank you. chairman wheeler, as you know, failed retransmission consent negotiations have resulted in temporary blackouts, negatively impacting television viewers across the country. the fcc has undertaken a review of the totality of circumstances test for retransmission consent negotiations after congress directed your agency to do so in

the 2014 stellar legislation. with the hope that we can reduce the amount of such blackouts. can you provide the committee today with any indication of when the fcc plans to complete the current totality of circumstances proceedings? >> thank you, senator. we're on course and speed to maintain -- to achieve the date that you established in the legislation. >> very good. when it comes to additional spectrum and spectrum pipeline issues, the last auction scheduled obviously is this year. and we all know it's not going to produce enough spectrum availability that will satisfy consumer needs. in fact, industry has said that mobile data traffic will be over 600 times greater next year than it was just ten years ago. further, we are moving toward a 5g world we've talked about today where we'll be able to do things we never thought would have the possibility of to do with speeds we noefr thought imaginable. we'll be enhancing the way kids learn simplified financial transactions taking telehealth to the next level but we need more spectrum to achieve 24 and

i think we're all hoping the fcc moves forward in a positive direction. my questions are these. commissioner o'rielly, what else can we be doing in congress to free up more commercial spectrum? you've talked about some of the ideas but if you'd like to outline some more how do we create incentives for the federal government to give up their unuse the spectrum? and i talked about not only opportunity costs but putting the burden on the budget as well. there are a number of things we have to do. we have to work smarter and get a better response from the federal government agencies. i know it's been difficult to deal with. i've spent 20 years working with them. it is a tough slog. but we need to have better direction from them. part of the difficulty is that ntaa itself represents the agencies and not necessarily the best interests of spectrum policy and i think we ought to work at changing that as well. and in terms of things that would help on federal lands i know there's a number of things that the committee is considering on citing facilities on federal lands i think would

be extremely helpful. >> very good. i know senator klobuchar and senator dayns are working on as i am as well a sponsor of the one dig bill. after yesterday's super tuesday results we may just want to have it called the keep digging bill. i don't know. >> can i add one thing? one dig, one climb, one siting. that's what we need. okay? so that it's not just you don't dig up the streets a lot but you need to climb the pole once and you need to have siting on this antenna once. and all those put together are things that -- i think we're all in violent agreement on here but could use -- definitely use some legislative help. >> i dig it. so that's good. all right. and i want to thank the broadcasters for working hard to find a solution to some of the problems we've had in southwestern colorado, the four corners. i know they've been working hard to find a solution to la plata, montezuma counties, thish of whether or not southwestern colorado can receive colorado

broadcasters. the two counties did get the broncos this year, which is incredibly important this season. but they did not have access to colorado weather or news. and we've got to fix that. i know the fcc's adopted rules to allow counties to petition the fcc for state signals, and i thank you for that. but what more can you be doing tone suring all coloradans get colorado broadcasts? >> you're addressing that to me? >> yes, please. >> moving with dispatch. we were frequently up here and commissioner rosenworcel was a champion on this issue. we were frequently up here saying wait a minute, there's a hole in the law, you fix the hole in the law, you passed the ball to us to keep the football analogy going. you passed the ball to us. it's up to us to move with dispatch. >> anybody else like to comment on that, feel free. >> i might be the only person here who's been to la plata and montezuma -- >> thank you for that. >> i'm just going to point that out. i've spoken to people there who said in 15 years they never saw the governor of their state on their television one time. >> they may regret that if it

changes. i don't know. >> i think the point stands that they deserve to have access to local news, colorado football games. and generally feel like they're part of the state. and so we should work with this market modification process you that made available to us in the stellar reauthorization act to try to make that happen. >> and thank you. and thank you for being there as well. anybody else? i know i'm out of time, mr. chairman. thank you. >> all right. thanks, senator gardner. senator danes and then senator peters. >> thank you, mr. chairman. and thank you for being here today. it's exciting to hear you all talk about the new technologies and how the u.s. can truly remain a leader in innovation. i know we chatted a little bit about overbuilding, about efficiencies and so forth. and thanks for the support too on the dig once amendment. it's a step forward. and chairman wheeler, your enhancement to that we ought to be looking at as well to expand that. chairman wheeler, you've often talked about the need nike sure the universal service programs are well managed and they're efficient.

i certainly agree. the commission awarding money to areas that already have access to fibers. significantly upgrade speeds in urban areas. certainly for many of us who are looking and representing rural areas we are underserved. can you really say that is an efficient use of universal service funds and should the commission be focusing on areas that have no connectivity like many areas in montana and for members here on this committee? >> no and yes. so no, it is not a efficient use of funds to subsidize competition. and that's not something that should be going on. can we do something about it? yes. and i believe we are. now, just one of the issues that i know you and i have talked about and other members of the committee is the mobility fund. and we're going to come out with a new proposal for how we fill -- what did you call those? the high-fat donut holes or --

>> unhealthy. >> the unhealthy donut holes. but we've got to do that in a way that does not subsidize the donut where there is competition. because we've got for instance at least four licensees who are not covering that donut hole. we want to make sure we pay -- we support one of them, one, to fill the hole. but not to take that money and compete with the others around. and that's going to be an art form. but that's something we're hard at work at. >> i want to -- and that play's important for rural states where we're dependent on our small businesses, truly the backbone -- i have that experience myself. my software business is in montana. a lot of the commission's recent proposals from net neutrality rules to the set-top box proposal seem to disproportionately impact small businesses who do not have hallways full of compliance

staff. in fact, i hear more than anything else from small business owners about the compliance burdens that they routinely face. and i want to thank, by the way, four of the commissioners here who've been to montana i think in the last six months. i think we can put you on the payroll for the montana chamber of commerce. you get the quality of life draw and how it's an important part of how we can drive this economy. commissioner o'rielly, you visited montana and you had the opportunity to see firsthand how small business owners contribute to the state. many of these businesses only have a handful of employees, do not have armies of lawyers to wade through the thousands of pages of regulations. do you agree it's reasonable to exempt small businesses from some of these regulatory burdens such as enhanced transparency rules? >> absolutely. and i know you have legislation on this front. i know there's legislation considered in the house on this front. my colleague and i commissioner pai have articulated a viewpoint this should have been addressed by the commission.

it wasn't. in our opinion this should be something we can do and legislation would adequately address p. >> commissioner pai, is that common sense, to -- can we stratify that th to a certain degree? it's an overused term in d.c. about one size doesn't always fit all. but i think that makes sense for these small businesses.