in storing. but an error that our colleagues on the other side are taking in describing the legislation as accomplishing two separate things with one bunch of money. and i heard another of my colleagues this morning on a cable television network making the statement that said we have extended the time for solvency of medicare, and we are also adding to our budget surplus with the legislation. as my colleagues will explain, once we very carefully read the actuary report, and then our colleagues talk with the director of the cbo, it became very clear that what had been represented in the past as achieving both of those objectives is in fact impossible. the chicken is cheap one but not both. and my colleagues will now explain why that is and why it

is a significant before we vote on this legislation. . those improvements would occur as a result of cutting benefits and increased medicate taxes. the improvement would not be matched by corresponding improvement.

they go on to say "the key point is the savings to the trust fund under the health care reform bill would received by the government only once so they cannot be set aside to pay for future medicare spending and at the same time, pay for a current spending on other parts of the legislation or other government programs." accounting ignores the burden that would be faced by the rest of the government leader in redeeming bonds held by the trust fund. we have a chart and i will show you essentially how this matter occurred and why it is so important. in essence, it is a $300 billion misrepresentation. that $300 billion converts a $132 billion dollar a list

surplus to a $170 billion dollar increase in the dead. -- $170 billion increase in the debt. that money would be used to fund health care reform. and what is missing in this understanding of the transaction is the u.s. treasury has to issue an iou. it is a bond, an actual bonn that evidences' a debt a debt t medicare.gov. as a constituent said, i have been paying this for 40 years.

this money is a debt to the government. cms, the medicare accountant, the issued a statement on december 10. it states that. he says -- this is the chief actuary. trust fund accounting considers the same lower expenditures and additional revenues as extending the exhaustion date. the new money and the reduction in expenditures will extend the life of medicare. in practice, the improved part a financing cannot be used to finance other spending alley. such as coverage expansion under the health care bill. and to extend the trust fund.

despite the appearances of this resolve from the respective accounting conventions. greg can explain this. no one knows this better than he. the cbo uses a unified budget. they simply say the money comes into the treasury and is spent here and they do not score this as a debt. when you listen to both their reports, they make clear it does increase the debt instead of a $130 billion increase, reduction of debt in america, the 10 year deficit would be increased by $170 billion under this plan. >> thank you very much and thank

you for explaining it. let me try to put it in simple terms. the seniors have been had and our kids will get the bill. that is what this comes down to. we're talking here about spending the same money twice in order to create a massive new entitlement that has nothing to do with seniors taking their money and spending it on this new entitlement and then climbing with a senior citizen'' program which is medicare is better off because of that. as jeff has pointed out, the actuary of the president and the cbo has said that is dishonest accounting. i want to read that language again. i have not heard this blunt a language on manipulation of numbers by congress ever. this is unusual to be this lawn. that games are being played around here. " to describe the amount of

improving the government's ability to pay future medicare benefits and financing new spending outside of medicare would essentially double count a large share of those savings and thus overstate the improvement in the government's fiscal position." they have been called on. the democratic leadership of the senate, the white house, if the house signs on to this bill, they have been called on it by the sea below -- the cbo. they are sticking it to the seniors and our kids will get a massive bill. the new entitlement that is being funded will not be able to be sustained. there is a great movie where they pull back the curtain and

there is a wizard of oz. the little guy running the machines. cbo pulled back the curtain and we have this guy running the machines. there is no fiscal responsibility. there is massive fiscal irresponsibility. >> before they take questions, why is this important? add to this afternoon we began a series of votes. they have been accelerated to the point where our colleagues are not going to understand or appreciate most of them that they have been found out on this. very few people will appreciate this disclosure reveals a massive hole in the argument they have been making. there will come down and vote and it will not be aware of this because of the schedule harry reid has set to have this done before christmas. the same thing that all laws have been saying is wrong with the press. we will find out other things that are wrong and that is why is important. -- it is important.

they could not support a bill that did not improve the deficit. this bill as both my colleagues have said, causes a greater debt burden. a greater deficit. it does not cause a surplus. it causes the deficit. you cannot count the same money twice. as a result, everyone of them, if they're honest, should vote no. some of them will not even realize the mistake they are making. we hope that by talking at this time of day to point that out to them, senator sessions was on the floor earlier making the point, so for all our colleagues that have made the commitment that they would not support a bill if added to the deficit, that is what they have done. >> we had a vote which would not have allowed this to happen. it was an amendment i offered. the only amendment that has been offered. we're not getting any amendments right now.

they suddenly shut the place down and would not allow any more amendments. it was the first and only amendment that had an enforcement mechanism in it that said you could not use medicare funds to create this new entitlement. it was voted down. if my amendment has passed and supported by the leadership and by senator sessions, then his language which cbo has pointed out is so duplicitous and fraudulent relative to the double spending of medicare would not have been enforceable. we would have had the bill be responsible in that one area. >> questions? >> [inaudible] the president does not think he will be able to sign this bill and it will not get to his desk before the state of the union

and that seems to be the plan before the democrats. >> where we doing it so fast? why are we out there -- are we not out there allowing the legislative process to work the way it is supposed to? the senate has become the urn and the hot coffee is being boiled and we have not been given the chance to review the process. the president said he will not sign this until the last week of january. let's come back next week after new year and take of the bill and have some amendments and correct this problem. so our seniors do not get stuck and our kids do not end up with all this debt. >> [inaudible] beyond this session and end of the conference negotiation? >> i think it is a potential

game changer. i do know a lot of our senate colleagues have said they expect this bill to be budget neutral or at least budget neutral and is not. that is not disputable. also, i do not know what the dynamic is in the house but they have such a major misrepresentation in the financial status of the bill, it should shake support over there. remember, there is an additional $250 billion in debt that has been moved out of this bill to protect it. that is the money that is necessary to fund the positions. it should have been in this bill. it is supposed to be part of it. because they did not have money to pay for it, they tried to move it once already by paying all that by more debt. so the idea that the bill is going to create a situation to reduce debt is just not true. >> thank you.

>> c-span christmas day, a look ahead to 2010 politics. buzz aldrin and fellow astronauts on the legacy of apollo 11 and a discussion on the role of muslims in the world. a former cia intelligence officer on strategy against afghanistan. remembering the lives of william f. buckley jr. and senator ted kennedy. >> next a discussion on a recent meeting of arab leaders in kuwait.

the speaker is the ceo of the national council on u.s. beer relations. this is over an hour and 20 minutes. >> good afternoon and welcome. i am james winship, vice president for programs and we are delighted to welcome you here on this afternoon when washington life is still suffering the consequences of a snow job. nothing disrupts the city like snow does and we appreciate the fact that all of you made the effort to come out this afternoon and brave the slush and uncertain fortunes of driving or mass transit in and out of the city. so, welcome. i would like to first thank our

hosts and would like to introduce russell smith who is special counsel for government relations here to welcome you and tell you a bebit more. >> welcome to you all this afternoon. we are pleased to be hosting this seminar and meeting. i think everyone here and most people in washington recognize there is no region that is more important for global development than the region we're going to talk about today. and no region presents more challenges on the economic side, the cultural side, and the strategic side than this region. no region presents greater opportunities for success if those challenges can be met. we are please as an

international law firm with headquarters in new york and an office in washington and offices in five european cities to lend our hospitality to this meeting and to this presentation. because it does promote cooperation and development and education between the region and the united states. this is especially true. the council with whom i have worked in the past and with whom i look forward to working in the future. it is my pleasure to welcome all of you and especially to welcome dr. anthony and to tell you all how much we look forward to hearing your remarks. thank you. >> you will find cards on which

you can jot down questions and we have young people who can let the cards. since we have a group of a size when we can take a minute to do this, we would like to go round the room and have each of you introduce yourselves and give us your affiliation. can we start right here? >> [inaudible] >> carl osgood. >> erica [inaudible] >> with the saudi press agency. >> library of congress. >> from iran embass [unintellig]

>> can we go across the back? >> [inaudible] with the order of st. john. >> [inaudible] >> david mack, elease institute. >> joint staff. >> [unintelligible] >> charles bruce, washington d.c. >> [unintelligible] >> patrick mancino. >> it gives me great pleasure to

introduce a founding president and ceo of the national council and u.s.-arab relations. a man who has devoted his life to this region, to promoting understanding between the united states and the arab world and to has a particular home intellectually and spiritually in the gulf and arabian peninsula. he is the only westerner who has actually been present at the creation and attended each of the ministerials of the council and he is back from kuwait where he attended that meeting last week. it is my great pleasure to introduce dr. anthony. >> thank you. thank you, russell smith, thank

you for allowing your facilities to be used for the occasion. thank you to the guests and the participants. there is as you can infer an area of expertise and diversity of specialization. [unintelligible] it is hardly a region that is synonymous with [unintelligible] this is one of the few places, it is the only place on the plan and that the united states along with its friends and allies have mobilized and poured more troops and expended more treasure and accounted more casualties, three times in the last three decades than any other place on earth. and so it is significant -- its significance is italicized from that perspective alone.

we're talking about eight countries, some of -- seven of them are arab and one is a persian, iran. the vast majority of the energy production and exports of the region come from the seven and not the one. this particular region is also one of the least well known among some americans of the nearly 20 centers for middle east studies in the united states. there is not a single course of the arabian peninsula in the gulf except at one university. that has been the situation for 40 years. there is a vast amount of chicken and egg aspect of it. most of the specialists on this region are from the u.s. government. either from diplomats and foreign service officers or intelligence activists and analysts as well as the armed services. in terms of the american private sector, the corporate world far

outpaces knowledge and understanding and meaningful information and insight as to how these polities work and how they do not work and what their needs and concerns and what are their interests and their objectives, what are their relations. there is a game of catch of being called -- catch up being played. with those who work every day in brain -- bahrain adn those in administering the defense cooperative agreements as well as an earlier, 10 years earlier access to facilities agreement between the u.s. and oman. there is no comparable agreement or access to facilities agreement with saudi arabia but here, the cautionary word is not to confuse a form with function.

though there is not something in the de jure realm, there is a longer engagement and intensity and extensive jeunesse of involvement in terms of geostrategic merelmilitary and strategic issues. the question of the day is with regard of where does the council fit in with this matrix of dynamics and issues and opportunities and challenges? why does it exist in the first place, given the sorry, sad wreckage and disappointing history of some in the previous pan-arab attempts at integration

and unity of one form or another. this one has already outlasted all of them save one. that being the league of arab states which had its protocols agreed to in alexandria in september 1944 and it came into existence in 1945, months before they -- the founding of the united nations. at the united nations conference founding in san francisco, it was mainly the americans to the host but at the same time, the most out of their depth. because of all the international and regional organizations of the last century, the one that was best known for which the united states conceived but did not join was the league of nations. so at san francisco it was americans going to the delegations of iraq and saudi arabia and egypt and syria to ask how they had gotten up and running their regional

organization. some see the gulf war cooperation council that came into being in 1981 as a detraction, a distraction from the league of arab states. in the early months and weeks of its existence, there was, admittedly, no small amount of animosity, jealousy, resentment, suspicion, distrust, and yet it is in keeping with the charter of league of arab states which does include individual efforts between two or more arab countries to form building blocks upon which larger platforms of integration, coronation, collaboration, and cooperation can be forged subsequently. it is also in keeping with the united nations which has a separate chapter dealing with the encouragement of regional organizations while the five permanent members of the human

security council have assured they can look out for their own interests and needs to protect their concerns. there is no comparable guarantee for the others, hence the encouragement of the establishment of regional organizations that can deal with issues, hopefully effectively, without having to refer them to the united nations security council. this one, when it came into existence, was seen by 90% of the foreign affairs specialists in washington as a security organization, as a defense organization. why? because the iran-iraq war had broken out and looked as though it was going to continue for a long time. that was pretty much the lands or the set of prism through which westerners and easterners and northerners and southerners perceived what was coming into being and how it came into being. there is some truth in that. the truth is linked to the

context. the context had to do with iraq and iran not only with what they were doing just then, which posed a threat of death on their doorstep, but what they have learned from both of them in 1976. most historians were not even able to recall that in oman in fall of 1976, they explored cooperation possibilities among eight bcgcc countries. oman has been ahead of the pack. on that particular occasion, what happened was iraq and iran played the roles of belize. -- of bullies. you could not get a word in edgewise if you were not an iranian or an iraqi.

each tried to outdo the other in terms of its perceived role as their rightful hegemon in the gulf and the rightful heir to western supremacy on military and geostrategic presences in the region. it what have come into existence anyway. there was already a train rolling down the track, but not one that was reported on that grabbed headlines. this was a functional train. as all of the gulf countries that were under the british tutelage attained their independence from 1961 through the next 10 years, when they were all free of british control of their foreign affairs and defense relations, they had entered into more than 110 bilateral agreements with each other on everything from trade and investment and technology,

cooperation and civil aviation and education, no one knew where the countries where -- companies were. there were no central archives. those who were into civil service and customs officials were already working on this side and meeting privately, usually in kuwait to find a way in which they could establish a regional organization for their economic, technical, and modernization and development objectives. the iran-iraq war;s's of brigham the pretext to proceed without any of them and many were furious that these six policies

that had been neglected and had been the least to develop had said: a margin of them in terms of an organization that had such great progress for integration. it was appropriate that it was established in of a dhabi -- abu dhabi. at the one in settee arabia, this was where three countries were jilted that wanted to be allowed to play a founding role in this organization. one was iraq, one was jordan, and the other was yemen. even though now with 29 years down the road, people continuously asked me and others why is yemen not a member? why is iran going to become a member? they settled this issue almost from the beginning when they claimed the phraseology as to what this was to be and what it

was not to be. it is an organization comprised of six member countries whose environmental and societal and linguistic and religious identity is beyond dispute. this is the key phrase, the share [unintelligible] in terms of government. iraq and iran had overthrown all of these kinds of hereditary monarchical dynastic regimes. this is why they were kept out from the beginning and what they have been kept out ever since and why they have very little to in the way of prospects of being invited to be members in the near term. we can come to this in the discussion period if you like. being present at the creation, the deliberations for the entire founding summit were on the bureaucratic and technical

issues. no one went anywhere near military or political issues. until the final session, when everyone was looking at their watches and wanting to get out of their, someone asked to speak. he said it is well and good to delivery these things but we will have ourselves to blame and our grandchildren will blame us if we do not build a fence around all that we have achieved in the past two decades and link that fence to economic and commercial cooperation to pay for the fans and to link them together. it bothered a lot of people that he took that stance but within five months, everyone was saying the same thing out of their mouths. this was not the first time that he stood alone and was visionary and took a strategic position

that the others ultimately came around to agreeing. it does have a defense aspect to it. on the other hand, it is off to the side. it is away from the headlights. it is away from the headlines. whereas the gcc, its foreign ministers meet four times a year and absences are not accepted. they have met 120 times to build up trust and comfort among themselves and diminish what otherwise would have been extensive his trust and mutual suspicion. the ministries of defense meet once a year. likewise the ministers of interior made once a year. they made off to the side in their meetings -- and the meetings are classified and deliberations are kept secret. this is their intent that, we are next door to two three months in the case of iraq's population being equal to all of

six of its combined and with iran's population three times of 6 of this combined and both of them opportunistic and in an expansionist mode. [unintelligible] wqas and -- was answered when people ask for ministers, why are you focusing on the economic? the answer was simple. people's material needs for uppermost. these were the last and least to develop and they were in the greatest of a hurry to catch. trying to represent people's needs through the consulting and consensual process, this is what we have focused on the economic to a greater degree, and secondly, because of the european union. this is a model. there is nothing in the u.s. or

elsewhere in the americas that we can see that we can learn from that we think is within our reach. with the european union has done and is doing, we think we can emulate and taylor and adapted to our cells. -- emily anemulate and tailor it and adapt it to ourselves. when it began it had a foundation on which to build. the steel and coal industry. it had infrastructure corp. amongst the founders. consider that the marshall plan had come into being in june of 19 -- 1947. all of them were the recipients of assistance from the united states to repair and restore as

quickly as possible there were damaged economies. ponder the implications of the fact that the north atlantic treaty organization had been established with the u.s. as a full-fledged member. guaranteeing the security of all of the member states. not one of these circumstances or factors or forces applied when the six came together. if you look at it as a glass half full and leaking, one can focus on how remarkable it is that it has succeeded in spite of not having those facilitating forces on one hand, and the fact they have had three major wars on their doorstep, one of them continuing as we speak to the present. what happens when a gcc meeting takes place? the first thing that happens is the review of everything from the previous summit.

the rulers made and the supreme council meets once a year and foreign ministers meet four times a year. the review all the economic and political, the military defense issues and report on what has been achieved and they get credit and thanks and credit where due and they halper -- highlight their reasons why they have to move goalposts down the road and who has to do what and when. they also turned to the region specific issues. not necessarily in the sequence or to the degree that we outsiders would think would be logical and appropriate. two issues are always addressed before any others. these are the two oldest. one is the uae's issue with iran in occupation, forcefully so of three of its islands. the second one, the unsettled

the outstanding issues between iraq and -- kuwait and iraq. these are the first to. in the manner of concentric circles, they focused on the members unsolved needs and branch out. in this case to iran and iraq in different ways in terms of the threat that each has seen and then yemen and then after that to the arab-israeli conflict and some of the issues pertaining to pakistan and afghanistan. that is the sequence and the priority they have focused on at that time. with regard to iraq, one would be surprised if they speak about iraq less at the summit's then

one would imagine or expect or belief. the reason has to do going back to 1976 and their memories of iraq's view towards all six of these countries. their forms of government, their lacking in agriculturally and industrial sectors, lacking in the energy and leadership of the baath party. so this suspicion about iraq's altman intentions, not just towards kuwait but the others is [unintelligible] and the same with iran. it has to do with march 1975. if i had to say one single agreement that is the strategic blow of all six of them, it is

the algiers accord of march 1975. this to place in the economic -- took place in the shadows of american power about doing the unthinkable, utilizing force and mobilizing and applying force to the oilfields and gas fields of the gulf because of the world economic situation and the oil embargo that had preceded it until march 1974. the first article of what they agreed to in algiers in 1975 was non-interference in one another's domestic affairs. if you can believe it, looking in the rearview mirror, the shah of iran and saddam hussein signed that agreement and the honored it. they held to it solidly for the first four years until khomeni returned to iran from paris in 1979 and broken from the first day and every day for the next

19 months before the iran-iraq war began. that principle is as valid now and there is no division among them that i could discern until today as it was reaffirmed on march 1991. perhaps coincidentally, but in a nice complementary way, the same evening that george h. w. bush spoke before a joint session of congress and called for a new world order, the six gcc countries and syria and egypt called for a new regional order. the one that had existed since camp david had been shattered with the iraqi invasion in kuwait. that is the same first principle in the damascus accord. the bottom line is not interference in iraq's affairs unless they open the door and leave them exposed and vulnerable at any point to iraq's interference in their

affairs. the same with regard to iran. if there is no discussion about iran's elections, no discussion about fraud or free or fair open or transparent processes, no discussion about, and john's prospects -- , didn't jo[uninte] to interfere in their societies to any greater degree than iran has over the last 30 years. with regard to yemen at this time, yes, they did address yemen. in a unanimous support for saudi arabia's position as well as the yemen government's position. going over and beyond much of what has passed for conventional wisdom or stablish thought or informed opinion regarding what

has been happening and has not been happening in yemen, you have something profoundly different and probably less than what the media has made out to be. the word crisis of our advisedly used -- are advisedly used. the crisis pales into insignificance by comparison and contrast to five previous crises that dimon has dealt with over 80 years. the first being from the late 1930's and 1940 when they had three years of drought. when the japanese invaded indonesia and they've tried of their remittances from indonesia to the people of south yemen, nothing has happened quite like that since or the 1962-6 1967

war or the war between 1964 and 1967 where british troops tightened the field. or fast forward to the civil war from april 1994 to july 1994, when the south seceded or tried to secede and every single gcc country back it. this one is no comparison to any of those five and the old-timers did this but newcomers are forgiven if they do not see things in terms of that kind of context or perspective. with regard to palestine, it supports the issues that most emotionally is the cause of pain in people's hearts. it is also the issue with regard to which the u.s. is judged

more in an indicted way than on any of the other issues outstanding in the region. it is the oldest issue. it is because it is seen as the largest issue, impacting so many of the other conflicts. it is because it is the most pervasive issue at the levels of use and to those who are literate and watch television and al-jazeera and are aware of what has happened and not happen to men for the people of palestine, especially as last year, some convened right when the operation was launched by there is release for 23 days in the gaza strip. commentary largely off to the sidelines about how was it that a country of 303 million, the u.s., cannot get basic humanitarian supplies into gaza with its 1.5 million people in a

stretch of land? no one has the answers for these but they make people uneasy and not having any easy answers for these, especially when people speak about the rule of law and establishment of respect for the rule of law and there are three of your people in gcc countries who have graduated from american universities, half in the humanities and the other half in the hard sciences. there are no americans who have graduated from the six gcc universities. there is an imbalance of empathy and appreciation by one for the situation of the other. in saudi arabia's cabinet, every day since 1975, there have been more american trained p.a.t. is in its cabinet than there have been ph days of any kind -- phd

.'s in its cabinet than there have been ph.d.'s of any kind. they do not see a comparable degree of empathy and understanding towards their options which are far fewer than ours, being a country of growing things and renewable things, we trade nin over 1000 categories of goods and services and they trade in seven. there is a massive imbalance in terms of resources and opportunities. more specifically, what did they agree to run this time? what did the push the envelope on this time? one was to deal with the issue of a monetary union.

the common currency in ways that perhaps amounted to spin or finesse, but at least it was an agreement that saudi arabia would be passed with dealing with a technical procedures and laws and policies, the administrative systems that would be required when and if a common currency comes in to pass. there were able to fly on the seriousness of this by comparing themselves with the european union which now has 29 members and only 17 of them having signed on to the hero. and countries like great britain and what have both, -- who have both. questions of his traditions and institutions are sometimes the

last and the hardest and the slowest things to die. there is comparable reservation on the part of some. oman has a similar degree of pride in its independence and national sovereignty and territorial integrity won alhart cost. oman has the most extensive direct experience with the british than any of the gcc countries. it had reluctance in principle. this is the degree to which the country's indebtedness can be an acceptable percentage of its gross national product. the european union countries focus on this as well. oman found this unacceptable, and curbing. being the last to develop of

the six, it recognizes it may have to borrow more than any of the others in order to catch up faster than they would otherwise be the case. the uae has also shown its reluctance, in part because it fancied as did bahrain and kuwait and saudi arabia that they would be the headquarters for this new monetary authority. not everyone can be a headquarters sas such. they are tighter than any three at the southern end of the gulf, not least because they have long been incorporated and collaborated on these kinds of prickly geopolitical issues. the uae and oman are themselves tied as candy. -- tight as can be.

electricity grid was agreed to but switched on. it has been switched on twice since last summer. this has been coming since 1986. 23 years it took to bring this product -- project to completion. having to do with no end of technical details, bidding,, canadian consulting firms judging the feasibility and the economic merits of its. finally it exists before -- for four of the gcc countries. they are two overland 400 megwawatawatt cables. there are two that go into bahrain. the central station of the three

relay stations are in saudi arabia. they did this so as to protect an image of being forward- looking and long term looking and infrastructure looking, trying to find additional ways to integrate themselves economically, try to work in advance of power outages and brownouts and shortages, trying to show they were willing to share what they had with each other, trying to reduce the economic ballet for having spare capacity because all six would have had to do that. whereas now they can reduce their spare capacity by 50% and a projected $4 billion in savings as a result of making this even though it has taken them that long. related to that was the agreement on a pan-gcc real way. it would go from kuwait to no. -- northern oman.

it will parallel the coast and the inland and therefore in eastern -- northeastern arabia all the way to oman. they are thinking in ways that i do not see or read or hear americans thinking, the terms of reviving railway use. this one has a long term objective of linking up with africa and the southwest and linking up with the eu through arab north africa. much of the inspiration is coming between -- from the talks between the chinese and russians where vladimir putin, the russian in railroad

transportation minister has met with his chinese counterparts, where the russians want to develop northeastern russia which is under tundra but rich and strategic minerals but russia does not have the financing and the capitalization of ability to underwrite projects. china is offering to finance it to with uncle sam's dollars. [unintelligible] lastly, it is a commitment to explore the possibilities of not repeating what they did with the joint command in the northwest part of saudi arabia but rather a rapid deployment force of their round with double headed

soldiers and sailors and their personnel in the six armed forces that will include a special operations component. theoretically and strategically to begin to match the special operations component that iran has. i will answer any questions an including the gcc countries to the best of my ability. [applause] >> dr. anthony, iran was included in last year's meetings

or invited but not this year. why? >> it was not included at last year's. it was included the year before last. the only two times iran has been included is when qatar was the host. they have an image of pushing the envelope and being innovative. it was qatar that extended the invitation. it has not been extended on any other occasion. >> how worthy gcc countries -- how are they pushing to be an honest broker and championing the cause of palestinians strong hold? >> i am not aware of efforts to

pressure the u.s.. their investments have in traditional and they have been conservative. largely they have been risk averse. this would apply to kuwait's seemingly more risky investments. someone can correct me on this who knows more than i. the investments in british petroleum and kuwait which used to be the gulf [unintelligible] even those were seen to be nontraditional and risk free in contrast to saudi arabia's which were more conservative and traditional. the total amount they have invested abroad is $1 trillion. half of that is in the u.s. there has been no economic pressure that comes to mind since march 19, 1974, which is when the last arab oil embargo was terminated.

there has been an interlocking of financial and economic an increasingly commercial linkages through a degree of interdependence and mutual be of benefit and reciprocity of reward that was probably not dreamed of two decades ago. as well as the number of american companies based in the gcc region have not doubled but increased by cells -- and themselves by 50%. they're up from 500 companies to 750 cos. at the corporate level and the inter-governmental level there is a greater degree of usness and similarity than there is the competition and adversarial relationship that was there before. notwithstanding, there is palpable pan-gcc concern about the way arabs and muslims are

treated in the u.s. they are cursed about and talked negatively about him by the pundits on talk shows, the existence of 400 american films, all of which that talk about arabs and muslims in an untrustworthy manner, they perceive their interests to be more with the u.s. amongst the great powers than any other collection of competing powers. at the present, for some time pass, and for the foreseeable future. if only because at the defense level, there is no comparable coalition or international concerted group of countries that one could imagine providing the requisite deterrence and defense capabilities until the situations in iraq and iran are more stable and secure and predictable than has been the case. >> let me pose a double

barrelled question following up on that. one question we had asked, what do the states want the u.s. to do vis-a-vis iran? do the have states differ among themselves and how to the communicate their views to the u.s. government? -- how do they communicate their views to the u.s. government? >> going back to the non- interference in the domestic affairs of other countries, the accent was on iran complying with a biting by all international instruments, treaties, and agreements to which it is signatory. . .

>> we do not see iran striking back at china, russia, the united states or the european union. we see ourselves as the easy targets. we are opposed to anything that would accentuate a scenario whereby we could be the victims of any use of armed forces by israel or the he added states --

or the united states. at least two foreign ministers share this with me. one said that we committed differently. that is because of where we sit in our own has starkly different strategic relationship with iran. oman has a different view of this. one needs to understand the reasons why someone's you is different. it sits directly across from the street from iran. on the iranian side, the skies screen with missile batteries. there are more exposed to iran and this geopolitical aspect than any other country there. secondly, oman is the beneficiary, 30 years ago, of the iran sending around 30,000 iranians to of one, never more

than 3000 at a time, to help quell what was arabia's longest civil insurrection in the past 100 years. there are no territorial disagreements between iran and oman. it least comparable to the claims of iran towards bahrain. comparable to the potential kemp -- potential claims to the offshore oil field of catarrh. comparable to iran these of the kuwait. -- vis-a-vis kuwait. it has to be seen as exceptional. oman is not interfering any

further within the gcc countries and the language they use in their communications. >> another question from the audience. please tell us about usgcc's decision about who is going to pay for it in finance it. >> that is a good question. like a number of -- like a number of other wishes and expectations, they exceed the near term achievements. at the end of the liberation of kuwait in 1991, one of the gcc countries proposed that there should be a pan- gcc force built on top of the one that already existed in northwest kuwait. i met with these proposals and asked why 100,000?

they said it was the same size as one of the iraqi republican guards. this would give them pause to threaten us. when they put it under the microscope, three countries said it is all we can do to build our national armed forces and posture and we are not doing that well. we're not doing that effectively or economically. to add another burden that simultaneously we try to build and train and equip a multi- national force is too much. we will build first in national defense establishment and from those, strengthen and think about having something more ambitious. on the rapid deployment force, beyond the rhetoric, because it is difficult in the short run to see where that is coming from,

some of th juae and saudi arabia have mounted training operations in the last decade. it takes a long time. you have to begin somewhere. >> you mentioned yemen's special relationship and continued exclusion from the gcc. could you elaborate on the agenda items on yemen? was a representative present and if so, what role the that rep playtex is there any movement on their -- what role did that rep play? >> is there any movement on their part? that is a good question. i did not see a representative from yemen. i have seen some previous ones.

i looked and asked and saw none and nobody said and there they are. the former prime minister of south yemen was supposed to have come but he was nowhere to be seen. the former president of south yemen is now in vienna. other representatives were not present. as to the kind of assistance, the reactions and responses by the gcc are the following. they were the core members at a donors' meeting in london where $4.30 billion was pledged to alleviate yemen's economic difficulties. that has yet to make its way through to the anend user.

there is a lack of transparency, too much corruption, or capital- intensive instead of labor- intensive. we want these to create jobs. there are several reasons why that has not come through. this last september, at one of the quarterly meetings, they committed $3.80 million -- $3.80 billion to damon. -- to examine. saudi arabia alone provides dollar billion per year to yemen. there has been a joint commission for some time begun under the chairmanship of the crown prince of saudi arabia. $1 billion per year has been pumped in there for quite some time. earlier, saudi arabia's 82 yen that has been recognized by the

imf and others -- saudi arabia's 8 has been recognized by the imf -- aid has been recognized by the imf. it came into existence on the ashes of these very kinds of regimes that have the inherent right of self protection uppermost on their minds. the reality of the demography, 27 million people, 130,000 villages of under 200 people in each. you have no school or roads or electric power. you have no sewage system, no clinic. at each of the meetings with the

country that has these kinds of needs, so dramatically in contrast to the others, it would distract, the lake, preclude easy consensus bridget delay, preclude easy consensus as such. did you has been to help yemen separately in a bilateral way. saudi arabia has been doing this -- but so has oakmont and the united arab emirates. -- but so has oman and the united arab a barrettes. -- united arab emirates. they gave thousands of yemenis citizenship. these additional ways and the building of a road that had to cross -- cost tens of millions

of dollars from the eastern most and most impoverished province was all undertaken by the sultan of oman. these different ways, they are now members of nine different committees. until about five years ago, there were only members of about two or three. damon is offering $2 million -- yemen is offering 2 million of its laborers for the knees. they're typically not well educated. they're not of the skills and experience that we need better more middle level and upper double people. does that give you a feel for where they're going? >> how does the road development

you describe to play against dubai as being a financial center? does this represent a shift to an alternative form of economic activity? >> thank you. i am not an engineer so invite anybody else to comment on this. i am not an economist, either. it is seen as an additive, not as a competitive. on the other hand, analytically, it is seen as competitive. faugh what i have to say here comes from -- what i have to say here comes from analysts and decision makers. both of them have told me when one city in oman is connected to this network and it is not at

this point feasible, we see ourselves losing up to 20% of what we have now. why? because traffic going into the gulf, the bulk of it is going to the markets in iran. they know every inch of the 550 mile coastline. it is a detour to go into the gulf. if you think of the east and west maritime routes heading west toward the suez canal and beyond to europe, it is one and half days of detour with the fuel and monetary savings and insurance, plus you have to go through a street where boards of london will take you to the cleaners. at least two or three days to offload, another day and a half back out just to get into regular shipping lanes.

this is the poorest imposition by far. when it began, all mom was locked down into its the real war -- oman was locked down into its guerrilla war. oman could not take advantage of the more favorable geographic position then. it remains to be seen how long to buy and hold that commanding lead. if we calculate, we will lose 20% when that happens. it will be so much more economical to unload and then by rail or by air ticket to beirut, athens, and places beyond.

let me go back to the human question. -- to the yemen question. their position is coupled with a prior statement about saudi arabia's rights to defend their territorial integrity, cultural integrity, and a wonder how you respond to some much of the western reporting and how the members of the gcc see the threat to both saudi arabia from the immediate disputes along the border with yemen and the broader question ticket so much more dramatic attention as to whether there is something approaching a proxy war with iran where eight shia threat is being possible. >> it is difficult to know because it is in one of the most

remote and is visited regions of the demon. -- of is a man. -- of yemen. it is one of the least accessible for foreign visitors to travel to. much of the information we are breeding may be skewed because it is coming from second hand or non empirically authenticated people on the ground. we know of one person that we work with who did make it to there. the aspects of it being a proxy war, i have yet to see the evidence. all of the saudi arabia as i have spoken with deny that. some of the yemenis imply that

or allow one to infer that. it does get your attention. but they make the claim or insinuate that iran is behind these rebels. i do not buy that myself. people in iran cheer when they hear that a group of yemeni rebels gave saudi arabia and a blow. that would hardly count as operational assistance or something that could be a deal maker or deal breaker. >> what is the future of alternative energy sources among the gcc countries? does the u.s. agreement set the stage for establishing a peaceful nuclear power generation regiment inside the

gcc and beyond? >> that is a great question. i would have overlooked addressing that. indeed it is being discussed in the following context -- the country focused on it more than any other is kuwait. that is for two reasons. when the disaster happened in the chernobyl, there was an international fund under un auspices established to help relocate the 200,000 people in that region who had been displaced for health reasons and had to be relocated elsewhere. kuwait was a major contributor to that fund. the fund managers and delegated kuwait to administer it. since 1986, kuwait has been into the nuclear issue. research through kuwait university and elsewhere has

come up with the equivalent of double-hulled vessels. after the spill of the exxon valdez, the notion that if the hull of tankers can have double once in the first one can take an accident like an iceberg or subterfuge of some kind, the ship would be fine. their view on this is that is worth looking at if you are concerned about the radiation and possible defects from a chernobyl-like disaster. kuwaitis have discussed this and they are the most alarmed and those meetings because there have been people from all monde and other places -- from beaumont and other places, as well. their research has led them to conclude that if there is any accidents at the plant closest

to the gulf and the one that the russians contract suppliers of the fuel, this would immediately have a contagion effect of psychological proportions that limited -- that are limited only by the imaginations of people not entering the gulf. because kuwait has no pipelines, oil or gas, they are totally dependent upon that 560 mile route to the exit of the gulf. the sea power plants shut down and desalination plants shut down. -- ac power plant shutdown and desalination plants shut down. uae's agreement is one model. kuwait is tinkering with another. kuwait's energy situation pales in contrast to saudi arabia's

because much of it is energy derivative of oil. oil is thicker and has more pollutants and sulfuric content is more damaging to the environment. in this age of green and leaving a clear environmental footprint, they are into this and serious about it. that is why kuwait is coming from there. they have been discussing using gas as opposed to continuing to rely on oil for energy needs. to prolong the oil and gas reserves, to have a cleaner fuel and one that would not be as damaging to the environment as saudi arabia. at the summit i went to in december of 2006, saudi arabia pushed through a resolution where all six would cooperate

with the international atomic energy agency in paris for peaceful nuclear development purposes. when we asked why in that way, the answer was clever. they said that if you live next door to a neighbor and the neighbor just bought a shotgun, what did you think your neighbor would think if you did not also buy one? the atmosphere receptivity to do something was as close as i have seen to the more hawkish element of the u.s. government seemingly intent on bringing iran down on this particular issue. meetings that some of you within in, you sat in on the same ones that i did. people said that there should be no enrichment allowed with iran. we are already past that.

we are also passed the mid- september deadline. you can see the several different ways of approaching the use of alternate energy fuels. in the area between kuwait and iran, it is believed there are vast gas deposits yet to be discovered. kuwait is leaning in that direction. >> there is a movement toward a common goal of currency representing a step towards moving the gulf currencies away from being pegged to the u.s. dollar. >> the short answer is no, and so is the long one. there is a context for this. four years ago at the summit,

inflation was rampant in the region. note gcc countries have less than 12% and inflation which is unusual for them. there was talk that this should be revisited. kuwait has been the most wise all along. all the others to nominate their currency to the american dollar or peg it to the american dollar, kuwait has a basket of currencies which per text itself on the dollar is up or down. if fluctuates. even though the american dollar is the biggest pig in that basket. the concessions, -- the consensus is that they will remained pegged to the dollar because of the $1 trillion to have invested abroad. most of the world's central banks hold large amounts of u.s.

treasury instruments in their preserves so they know -- in their reserves so they know that. over time, with education playing a role, it would possibly allow americans to expand their perception than just being gas stations. they're not just actors. they're not just people to be manipulated. we are people that deserve a seat at the table. there were able to push this point in the last year. -- they were able to push this point last year. they were in a way seeing what people could do to help them with this crisis. there has been a positive

response from kuwait and other countries on these things. they're hoping people will see them as financially supportive and and labeling of america's preeminent status and international financial institutions to continue. and this is what we bring to the table. america needs it. what percent is being asked -- what we resent is being asked to be there on the landing but not on the takeoff. we demand to be there on the takeoff, too. in september, they were. saudi arabia was a representative in the g-20. >> we are going to take two more questions. what is the gcc's stance on addressing these human rights issues which appear on american media?

why are the gcc countries purchasing large plots of farmland and africa? >> on the human rights issue, that is sensitive. it would be for any country when the concern is coming from the outside. it has gone to the point that at the last summit, they halted what had been negotiations since 1987. they tried to have a free-trade agreement. they started meeting annually in 1987. the stopped because they put no demands on the eu countries with regard to interfering in domestic affairs. eu countries did put demands on the gcc countries with regard to human rights and monitoring mechanisms, as well. the gcc countries projected both of those across the board. those were on the grounds of

reciprocal respect. that was frozen. in the interim, the have signed a free-trade agreement with the european free trade association in the last year and have also signed one with new zealand and singapore. there were no such talks with regard to north america to my knowledge. the second one was? purchasing of land in africa. that is a good one because some of you are old enough or done enough to remember the televised television debate between jimmy carter and gerald ford in 1975. [e7v that if the saudis never complain -- if they ever imposed a oil embargo on us again, what would you do?

they said there would put a food embargo on them. you could hear a pin drop. that is when they viewed food production as a strategic issue. this was when they brought in a whirl middle-class that was not there before. the became the world's seventh largest exporter of wheat inside of one ticket. they became famous for exporting strawberries to france in january and tulips to the netherlands. they did it to a huge -- they did it at a huge cost to their own natural water resources. they said there are going to stop that and are going to purchase all necessary food imports because of the strategic value of water. it is a gamble. they do not have the control over it and it is in another country. it is a gamble in terms of what

you do with the middle class of the hundreds of thousands of saudi arabian sea have created who works -- who work on these farms. they have the world's two largest dairy farms. one has 17,000 milking cows. the one next to it has 13,000. this could be a problem when it comes to implementation. it is not just gcc countries. other countries are investing in those countries in an effort to have food supplies closer and cheaper in terms of labor and the user cost. >> let me ask a third one that i hope will open up for your wrap up statements. what specific actions with the gcc states wish to see from the obama administration to begin

actualizing the promises of the president's cairo speech and other initiatives towards the arab and islamic world? >> the one that was implicitly directed in that area to end the siege of gossip -- the siege of gaza? this has been going on for 2.5 years. but a single dwelling that was bombed to smithereens has been bridget not a single dwelling that was bombed to smithereens has been rebuilt. they should at least get an exemption to american goods going into gaza. they have no answer for that. those who are graduates and political science and international relations are prone to say we understand that all politics are local and the

president came to the white house at a time severe national and international economic crisis. but he has to get america's economic house in order before he can do other things. the health-care issue in particular and jobs creation, they're willing to cut significant slack. at the same time, they think the israeli policies in the short term in the long term are self- defeating and that gaza has become an open air prison. it is not as the west bank people cannot live by bread alone, but people did not only died ones. they can die from this humiliation, this wound, this injury until the father or

mother says to the children, pack up, we are leaving. we can no longer take it. that happens in the west bank. these people become faceless statistics. they're not on anybody's radar screen. in gaza, you cannot even get out or in. the palestinian people are usually very resourceful and resilient. when allowed -- were they allowed to leave, many of them would. if there is no released or escape, you're building up a powder keg which is bound to explode repeatedly and you have nobody to blame but yourself. they fail to see why the u.s. at a minimum will not stand for this humanitarian issue, especially when the american school was bombed by the

israelis. we have a friend is at a un agency, they said they gave the court midst said it would not make a mistake. we took flak from both sides. -- gave the coordinate's so it would not be a mistake. >> we will wrap up today's presentation. any final word beyond that? i would like to to what you all for being here and ask you if you have not had the opportunity on the way and if you could lead a business card so that we can continue to inform you on the programming and let you know when our next activities will be scheduled. also to let you know that all of our activities, both those in the past and those upcoming are listed on our website.

particularly those of you who were interested in the human question, we have pulled transcription -- the yemen question, we have transcripts from our policymakers conference up on our website and information about our other programs. we also want to thank c-span for being here today to take this program. i am told it will be rebroadcast this evening at some point and perhaps in the wee small hours of the morning, as well. we hope that you might take a chance or let others know. a video of the conference in this presentation will be up on our website in short order. please allow us a bit of leeway

for the holiday season and the fact that our staff which is no more to be in the office then your staff. with that, holiday greetings to all and thank you for being here. if you have further questions, i am sure dr. anthony would be bored than happy to stay afterwards to speak with you. thank you, dr. anthony. [applause] >> and again, thank you. c-span, christmas day, a look ahead to 2010 politics. buzz aldrin and fellow astronauts on the legacy of apollo 11. a discussion on the role of islam in america. a former cia intelligence officer. starting at 8:00, remembering the lives of william f. buckley and senator ted kennedy.

the senate judiciary committee held a hearing to discuss rates phone companies charge for text messaging. witnesses include representatives of horizon and at&t and consumer representatives. herbert kohl chairs the consumer rights subcommittee. it is just under 90 minutes. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> good afternoon. this hearing will come to order. today, we will be examining the state of competition in the cell phone industry. the enormous growth in the use of cell phones means that maintaining competition in this industry is more important than ever. with more than 270 million subscribers, cell phones are a vital means of communications for the vast majority of americans. cell phones unable instantaneous

communications for millions wherever they are located, whether at work, away from home, and their car, or anywhere in between. many americans, over 20%, had discarded traditional phones and depend entirely on their cell phones. the ease and convenience in universal nature of cell phone service would not have been imaginable just a few decades ago. for many years as this industry developed, it was a success story. many rivals in the grated fresh competition. in recent years, the environment has changed. consolidation has left -- has left this industry highly concentrated. major carriers control over 90% of the market. two of them are at&t and verizon which have a market share of over 60%. price wars seem to be a thing of

the past. american consumers pay more for wireless phone service than most other developed nations, an average of $500 per year in the year 2007. nowhere is the change more noticeable and text message service is -- services. these messages have become enormously popular. in 2008, where the one trillion text messages were sent, more than triple the number of a few years ago. as popularity has grown, so have some of the charges. the price of sending and receiving a text message among the four largest cell phone carriers increased by 100% from 10 cents to 20 cents per se message. -- per message. within weeks, these prices

occurred. these happened despite the hype that the costs are minimal for the companies, estimated to be less than one penny per message. the phone companies asserted that they have not been coordinated in any respect. they point out that the majority of cell phone customers do not pay for text messages on a per message basis but instead by plans -- instead bye-bye plans -- buy plants. will consumers continued to see similar price increases? the text message price increases represent a warning sign in the

state of competition in the industry as a whole text the concentrated nation -- nature of today's industry shows little competition. smaller competitors research questions about practices that prevent them from being able to fairly compete. these range from exclusive deals that deny competitors access to the most in demand cell phones 2 limitations on the availability of new competitors to rome on another -- to roam on and others -- on another company's services. we urged the fcc to take all necessary action to remove each of these barriers of competition. removing these barriers will insure that the cell phone market is open to competition and prevent the large carriers from gaining a stranglehold on this market.

we also urged the justice department to investigate mergers and allegations of unfair practices. this comes at an important time for competition. we are looking for to the testimony of our panel of witnesses on this important topic. with respect to our panel, we will introduce our first witness. wayne watts is the senior executive vice president of at&t. he previously served as vice president and assistant counsel for a communications company and worked as an attorney at bell telephone company. he will be followed by randall milch. he currently serves as the executive vice president verizon. he has been there since 2000.

next is professor srinivasan keshov, a professor at the university of waterloo. he has focused his research on computing and wireless networks and mobile devices. he has received a number of awards for his publications. next, laurie itkin. she has served as the director of government affairs for cricket communications for the last nine years. prior to joining there, she managed government relations for sprint and served as an adviser to the governor of oregon. >> finally, joel kelsey. he is a policy advocate -- policy analyst. he worked as an outreach

director for the new york public interest research group. we thank you all for appearing. after each of you give your testimony, we will proceed to ask questions. will all rise and raise your right hands and repeat after me? do you affirmed the testimony you are about to give is the truth, the whole truth, nothing but the truth so help you god? >> thank you. >> good afternoon, chairman. thank you for the gracious introduction. i appreciate your opening comments. the subcommittee's concern about text messaging is based on an overly narrow focus on the trend of a single pricing option for text messaging services, paper used. ppu refers to the charge for

individual messages when customers purchase them individually. the current price is about 20 cents per message. that rate increase a little over one year ago, in march of 2008. it has been quite a while since those rates changed. the vast majority of at&t customers do not choose that pricing option. that does not apply to the overwhelming majority of messages. in fact, less than 1% of our postpaid text messaging volume is handled on a per message basis. instead, the vast majority of our customers take advantage of our package pricing plan, including those that provide a package of messages for a flat monthly rate. 99% of our messages are handled this way. these plans include 200 messages for $5, 1500 messages for $15,.

as a result in this, and the last two years, the price has fallen dramatically. in our average price per text messaging has dropped almost 70% in two years. the suggestion has been made that the price has gone up. at the same time, the volume of text messages had to buy at&t has grown exponentially. been processed for 0.5 billion text messages for the month.

in january of 2009, which processed a stunning 31.1 billion text messages. that is a nearly 600% increase in just two years and the volume of messages sent. among the reasons is the college dramatic drop in price and pay by the overwhelming majority of our -- is the overwhelmingly dramatic drop in price and pay by the overwhelming majority. overall rates, the rates charged for 99% of our customers, have dropped dramatically. the background here is very instructive. in making this package plans, we are delivering maximum choice and value to our customers. in our experience, the pricing option often results in large and unpredictable swings on a customer's total bill leading

to significant customer dissatisfaction and complaints. package plans are increasingly important to families who are budgeting their expenses. the ensure extremely low prices, choice, predictability, and easy to understand bills. it greatly improves the overall customer experience. for customers had voted with their pocketbooks. 99% of the text messages sent or received by at&t customers are billed under one of our package plans. it should come as no surprise that the price of text messages has fallen off given the dynamic and competitive nature of the wireless industry. more than 95% of the u.s. population gives in blocks with at least three competing wireless carriers. more than half of the population lives in blocks with

at least five carriers. for these reasons and many others, the fcc has confirmed time and again that the u.s. wireless markets is and will remain effectively competitive. a recent merrill lynch report showed that the u.s. enjoys these concentrated wireless industry of 26 major industrialized countries based on the index. finally, against this backdrop, i have to pause and put to rest the implication of the inquiry into this matter. that is whether or not wireless providers have somehow conspired to fix prices. as you know, a great deal of litigation has been filed as a result of these hearings and this particular issue. i want to make it perfectly clear that at&t sets the prices for all of its prices on a unilateral basis based on human now look -- based on independent analysis. there is no basis for an accusation that there has been any inappropriate or illegal

behavior as alleged in all of this pending lawsuits. there is simply none. i trust that this more complete picture puts to rest any concerns about a single pricing option and i look forward to your questions. thank you. >> thank you. mr. milch. >> good afternoon. it is a pleasure to appear before you on behalf of verizon wireless. we were brought to discuss a tiny segment of the burgeoning market. your letter of last year concerning pricing similarities and the so-called pay-as-you-go segment of the texting market which involves only 1% of all messages sent or received by our customers. we did not collude with competitors on setting prices for text messages. i believe all the evidence shows any suggestion like that to be baseless. the evidence amply confirms that

the u.s. wireless industry is robustly competitive in all aspects. the nature of this market makes any collusion and possible. all the 1% of the messages sent are on a pay-as-you-go basis. they on average cent receive only a small number of messages. in contrast to incidental text messages, text users with bundles average almost 1000 texts per month. because of this greatly increased usage, the overall price for text messaging has dropped precipitously. since then, we cut the average price by almost two-thirds to about 1 cent per message. secondly, i have provided some charts with my testimony.

those show the wide variation in pricing plans overall. pay-as-you-go pricing varies widely. they're charged differently depending on the plan. some prepaid customers pay 5 cents, up 20 cents, up 10 cents. i notice from the the testimony that they have a different plan. there is no suspicious coincidence in the timing for these price changes. the different carriers change their prices over a period of two years. in a competitive market, you would expect some competitive prices over time. the market evidence shows the fierce competition across the wireless market. the fcc reiterated that u.s.

customers are seeing low prices, new technology, improved service quality and choice among providers from all competition in the wireless marketplace. using the most recent information available, the fcc found that the avenue revenue per minute fell 67% in the last few years while usage has increased many times. american consumers fare far better than wireless customers across the globe. a recent study found that the average price for the u.s. is lower than most countries and we have the highest usage per month and we have the most competitive market and those 26 countries. i propose that americans pay more for wireless usage only in the sense that they have more to buy. all of this has been increased -- has come with increased customer service.

we have received the highest rating among all of the service providers. the rate for complaints for our customers has been about eight out of every 1 million customers. at the same time, the entire industry is doing better. the american consumer satisfaction index had a press release that said satisfaction for wireless customers reached a new all-time high. the entire industry continues to move into the right direction. the american wireless industry is and continues to be an american competitive success story. the wireless industry has been blessed by lightheaded regulation and i suggest that it is in the best interest of american competitiveness for it

to stay that way. thank you, very much. >> good afternoon. i am a professor of computer science at the university of waterloo in canada. my area of research is computer networking and more specifically, mobile and wireless networks. i have been studying this for the last five years. i was asked to give my opinion on two questions. what does it cost to a carrier to transfer a text message? second, or the recent price increases cost justified? based on an analysis that is detailed in my testimony, my answer is as false. first, i believe the cost to a carrier to transfer the text message is very unlikely to exceed 0.3 cetns.

i did not think the cost increase is justified. the average revenue a carrier makes on a text message much exceeds its cost. representatives from both companies indicated the average cost of a text message is around 1 cents. that is the maximum cost of the text message. i have come to the same conclusions using independent evidence. the second way to estimate the cost is to cost out each component of the underlying technology. to carry a text message requires many resources such as a wireless channel, a network backbone, storage systems and special control messages. each of these costs money.

i estimate the cost of each component. my analysis indicates that the two dominant costs for the billing system. i established that in one minute, it can carry either one voice call or a text messages. the cost of the wireless text message is about 0.1 cents. estimating the billing process, it should be at most the same of the cost to carry the call itself. as a conservative estimate, i say the cost of billing the text message is twice the cost of actually carrying it. that makes the cost about 0.3

cents. i should point out that i have tried to be conservative. to sum up the cost of the text message, it is certainly smaller than once and -- than 1 cent. it is likely to be smaller than 0.3 cents. i now turn my attention to the second question. for the recent price increases justified? i believe the only technical reason to raise the price per message is the amount of respect from used by the traffic being so great that it costs that much. this would dampen demand and reduce load. however, this world wide traffic of 3.5 trillion text messages carried in 2008 have gone to the radio spectrum available of just

200 cell phone towers. [applause] [inaudible] it is very unlikely the text message traffic is congested the network. the price increases cannot be justified. i have tried to answer the questions most -- posted to the best of my abilities. i would like to tiwa -- i would like to thank you for having me. >> thank you. >> thank you, mr. chairman. for the record, i am with cricket to indications.

we have been around for about 10 years. we have grown to become the seventh lodgers facilities-based carrier in the u.s. that means we have invested billions of dollars in building our own network. we currently have over 4 million subscribers in 32 states. cricket serves consumers who have been left behind by the larger carriers. our customers tend to be more ethnically diverse and more rigid and lower income customers. we pioneered the unlimited flat rate service with no long-term contract, no credit check, and most importantly, no or the termination fee pontefract our customers talk and text much more rigid -- our customers talk in text much more than other customers. i am also saying that we put

pricing pressure on carriers in every market we enter. next week, we will launch service in d.c. and baltimore. the subject of this hearing is text messaging. i think we can relate to the story of appearance shocked -- of a parent's shock as they see a $600 charge when their child has discovered text messaging and goes into a frenzy. we have also heard of consumers that are concerned that they're receiving unsolicited text messages called spam. ..

you stated that you were concerned regarding "consolidation and increase market power by the major carriers." the concern was market power and medicate carriers the ability to engage in anti-competitive practices. no wireless carrier has ubiquitous coverage. we have to provide seamless coverage to consumers. cricket's experience is that the rolling minutes is directly correlated to the size of market power. one anticompetitive practice is that one large carrier prohibits customers from roaming at all. with all the consolidations' such as it being purchased by for rising, creek as you are roaming partners available. in many cases, they are stranded

without service. how can that be allowed to happen and services available? i will close by saying that they are currently three proceedings on roaming pending at the sec. i will happily go into more detail in the q and a. it is the foundation for national competition. all consumers should have access to affordable and innovative options for service, such as that you rich services that cricket provides. thank you burda i will be happy to answer questions. >> thank you. >> thank you for the opportunity to testify before you. i plan to cover four areas. i would like to give the consumer perspective on text messaging. i will then talk about consolidating market structure. i like to cover some other limitations that we see

consumers facing in this market place. lastly, i will offer solutions that will introduce more competition to the marketplace and lower consumer prices every major carrier has of these doubled its price since 2005 from text messaging from 10 cents to 20 cents per message. these rising costs are not at all rebated to the price incurred by the carrier. text message files are small. it is negligible to the provider. it would take 600 text messages to equal one minute of voice. add 20 cents per text, that is $120 data equivalent of a one in a phone call. we believe the purpose of high individual text messaging is to frighten consumers into large monthly plants with more minutes or texts. if they go the allotted number of text, they are back to paying 20 cents per message.

no matter what the cost, the plans are protection money that consumers pay so they do not has to face high tax rates. this is not the bellwether of competitive markets. it seems to indicate pressures in the wireless world. the increases are occurring against the backdrop of a consolidated market structure. as we have heard, it represents 90% of the subscriber base. the two largest providers in the horizon have been able to capture much of the airwaves. these holdings combined with the ownership of the wireline allow the two top providers combined the on ramp to the internet. they hike of barriers to entry is in cause competitors exorbitant prices for internet prices.

consumers are paying the price. they pay more annually than most other developed nations. the $506 a year if you mentioned can be compared to the united kingdom at $374 for a different -- three and a $74. it is locking consumers in a competitor's up. consumers is limited access to cell phones because carriers demand cellphone makers to sign exclusive contracts. this has been multiplying affect of ltd., choices and barrier to entry to smaller competitors. senators kerry and klobuchar sent a letter to the sec addressing miss. -- addressing best.

-- this. they face high early termination fee. if the vote they bought is locked to the carrier, when they switch, they end up with an expansive brick in their hands. customers face prices for their data plan that seem far removed from any possible cost. it indicates an absence of provider rivalry. i will provide several examples in my written testimony. i ended up with a bill that was several thousand dollars more than expected. even when they do pay for their debt service, consumers are not getting people experience of the internet. wireless providers are blocking popular software applications like skype being accessible to consumers. as more are switching to wireless services, increasing

costs are reaching deeper into the pocketbooks of americans. more oversight is an excellent start. formal increase will determine whether intervention is necessary. regulators should take up several different efforts, for example opening a role mickle -- rule maker and begin a rule maker on data roaming. i look forward to any questions. >> both verizon and at&t have defended their text messaging

pricing increases. both companies make independent decisions in response to market decisions. neither company has made any effort to undercut the competitors on price. the review makes this very clear. why did neither at&t or verizon resist these price increases or at least raise the price increase by less than the other one in order to undercut the competition? that is what we always do in the marketplace, try to gain market share. that is the way businesses compete. particularly when the offer identical services. why did to go up the same amount? why did you not go up lessening competitor? >> there are a number of factors to the questions.

there was not a time in the price change. you constantly hear suggestions that it occurred simultaneously. that is not true. in looking at how the wireless world operate on a competitive standpoint, there are many places where each carrier paint it had to differentiate itself from its competitor prepare. company has all you can eat plan. that is fine. they made a business decision that is comfortable for them. we have looked at places or have chosen to compete. we want to make sure there is not a plan where we do not have a competitive price. for usage plans, they will pay a price per message. we have a competitive price. it is not undercut. we have focused our attention on places that really lose the needle.

less than 1% of the text messages were sent by customers on a per message basis. we focused our attention on the other 99% and made enormous strides to lower the prices and compete aggressively on all sides. that is where we have focused our efforts to differentiate ourselves. >> from our point of view, the decision that a customer makes to go with verizon or at&t or t mobil is a complex one. it involves a few variables. it is not involve the pay is to go text service. issues range from one phone you have, of various buoys plans, and that the plans, what kind of applications you can get. it seems to us that the issue of whether we would be

able to undercut at&t or t mobil or sprint or anyone else on the paper text part of our service and attract customers away from one of our competitors is very doubtful. the notion of competing on a series of price issues and differentiated service issues, phone issues, plan issues come i, is very alive and well. you should see all the various plans as they tried to compete. focusing on this part of the market, less than 1% of all text messages that are issued, and believing that this will drive the competitive needle, that was not our market judgement. half if we were to cut the price, we do not think we would attract anyone to our market. if you are a heavy text user, and they are not paying 20 cents

a text. they are paying a penny a text. if they are a light text user, why would they change carriers based upon the pay as you go text decks we do not believe it is a marketing matter. -- pay as you go text? we do not believe it is a marketing matter. >> back in october of 2006, us sprint raise per message text prices 10 cents to 15 cents. within months, verizon and at&t also raised their price for that amount. in october of 2007, sprint raised the per message price to 20 cents. by march of 2008, bryson and at&t match this price increase. you say it has nothing to do

with people subscribing to your service are not writing to your service. cricket does not charge anything. do you think that is a competitive enticement to customers? >> thank you. yes, we of pricing plans where incoming messages never have a charge to receive them. starting at a very low price and, you receive unlimited text messaging. we've had opportunities to be innovative with our pricing. in today's economy, that is important. >> you do not think she is right. she says price is an issue. you are saying, whether you charge 10 cents or 15 cents or 20 cents for a text message, the individual one is not a big deal. >> for our customers. >> that is what you are saying. it is hard to believe. if it is not a big issue, what

are you in business for? price is a part of your whole business that is how you get customers. if they had not gone up 20 cents, you would not have gone up 20 cents. that is the way business is. what we are suggesting is that there is a clear indication that on the surface that when one went up the next wind up. -- went up. it is clearly not to be doubted. >> i am sorry. was there a questionnaire that you like me to address?

if i might, there is implicit in this entire conversation that it to competitors charge the same price, they must be not competitive. there are a number of faults to that. you cannot draw that conclusion from a parallel prices. economists would say that it does not mean anything. the real world economy does not indicate that either. you can find businesses after businesses, particularly like ours that offer a broad range of services, features comic abilities, where you go into our pricing sheets and you will find hundreds of things for the prices that the charter different. would you find an example where it may be the same? of course you will. you will find that in every single business out there. we just did a quick check of places to confine the common price.

home depot charges the same price for a particular barbeque grill that lowe's does. does that indicate they conspired? of course the. the have thousands of other products and services. fauthey chose to charge the prie on the particular component. it does not charge anything other than that. the locker and champs charges same thing for a basketball. it is one thing the offer of the thousands of services. that is what we have here. we have an example we have to come back to you is using it. less than 1% of our text

messages are at this price. businesses are simply not going to spend enormous resources like we have today in an area where there is such a small amount of usage. we focus on many other things. that is what happened here. >> what is the percentage of your customer earns that use the individual text message? it is more than 1%, is in it? >> for verizon, yes, it is. more than 1%. about 26% of our customers in the use text messages at all. we do not put together something where they are paying for text messages if they do not want to use them. they do not need a bundle price. of the 74% and do, about 17%

total of all customers do incidental texting. >> our numbers are comparable. >> of like to call on the ranking member, senator orrin hatch >> this is an interesting subject. >> it is true, why do not we see higher prices and only one extremely small sector of the texting business? customers to pay for each specific test message -- that is

what you brought. shouldn't that make that less than 2%? is there really that much to be made in that subsection of the market? >> i think it is important to note that that is one example. it is similar to other services. pricing it high is a way to hurt consumers and the monthly plan that may result in more minutes in the consumer will use our need. they may buy a 200 plan and their back to paying 20 cents. for us, we are not alluding to this. we are saying to people do not need to sit in a rooming, but a

plan for consumers to see the same in the marketplace. consumers are being charged the maximum amount that they are willing to pay. rather than the lowest cost. >> what to be the respective companies profit margin? >> i do not have the exact number for that. you could assume that because 99% of text messages are on the rate plans, and a substantial portion of our profits and revenues come from the same percentage of usage. i cannot break this down like this. our networks are not constructed to provide a particular service.

i simply cannot break it down the way. i do not have that for you. >> the only statistics i have for you is the one that i recall that is not precise. the person that they get from the paper use is minuscule. it is in a similar percentage rate as customers. it is a small revenue. i do not have the park in margins broken out the same as mr. watts does. >> their statements are consistent -- are they consistent with your analysis? >> i am sorry. it did not apply to the profit margin. my analysis indicates the text

message -- the cost of carrying that is 1/3 of 1 cent, approximately 19.7 cents on the billion. . ppu prices -- >> puupu prices are going up. when you say market predict it suggest one company can dictate price. we do not have that ability. what you can see is that at&t competes with all the wireless carriers across a wide spectrum. we have different prices, different offerings to differentiate ourselves. with this case, it is an area

where we have not chosen to focus our attention. we are charging a rate that is a competitive price. no one has that inevitably lower price. they have a different marketing effort. that is great. that is a good business decision. >> you stated that verizon is attempting to steer its customers toward bundled plans. can one do this and it truly competitive market place? >> it has not. of course we believe we can do this. we believe that customers in bundled plans are far more satisfied, and they are far more predictable.

it is important for them we have much more satisfied customers. the question of whether we can offer our customers a bundle would lower prices would give them an opportunity. it seems to me that it is consistent with a competitive market. there is no aspect to offering a series of choices within their own plans, looking at the plant of our competitors, that suggests there is any market power in the text market overall, let alone a pay as you go market. i'm not sure that is a separate market that one has to be considered for whether there is undue power. there are billions and billions of text messages. this is a market where output has skyrocketed.

average prices have declined. those in of the markers of a non-competitive market. those are the markers in a competitive market. out it goes up and prices declined. >> rise in the steering them to bundled plans. i understand that these plans are very popular. they seem to offer a better value. >> americans pay more than consumers in many other developed nations th. they face very high switching costs.

we believe it is punitive in nature. their handsets are limited to the particular care that there any plan with. it is very hard for consumers to vote with their feet when they are shepherded into the longer term contracts. >> along a different line, hand sets and a firinformation they receive are complex. more than ever, and there was a launch a new cellular products and features. visual e-mail requires significant integration work between the head is set manufacturer and the wireless provider. are not as close of steep agreement in the best interest -- exclusivity agreement in the best interests of customers? >> they were justified, it would

of been early on. certainly now you see 87% of americans have cellphone plans. in a market where there is a sufficient demand, we do not believe expressivity is necessary for innovation pit. it is one of many ways to finance research and development. if you look at other markets like asia and europe were 85% or 90% of the headsets are sold apart from the wireless carriers, it offers a window into what a different world as possible. a.q. but that other markets here in the states, can set exclusivity the the that other markets like the internet still does not work exclusively with comcast.

the the price itself is divorced from the carrier. that represents more choice. it provides a lower cost. >> man had a moment to respond? -- may i have a moment to respond? he could not be more wrong. there are many reasons why hand said prices are -- had to set prices are what they are. frap it has an affect on the prices of the bone, the effect on the innovation that is endangered by its fifth the prices of bones in the united states are cheaper than anywhere in the world. carriers subsidize the prices. they subsidize the prices. or they have the ability to in her drive down the cost of the bones that they buy.

we have one of the more popular phones in the arena today. that is great for the american public. recently it was announced that apple would charge $99 for an iphone. that could not happen if a price is not subsidized by at&t. we would not be inclined to subsidize the price. we did not have the ability to recoup the price. other companies have exclusive arrangements for they did exactly the same thing. what it has done is hugely benefit the american public. they pay less for phones. on the innovation front, nobody had an idea about a touch screen technology and all the things the iphone did until it came out and until it was successful and what is happening in response? competition competition, competition. every phone manufacturer is

spending enormous amounts of money to create the iphone killer. if you go to the internet and into the phrase "iphone killer" you will find people trying to respond. that is the essence of competition in this country. >> i have a question for you. we will submit it in writing. i've taken more time than i should have. thank you for holding this hearing. i'm running back and forth to the confirmation hearing which is relevant here. my focus has been on the second part of the hearing that the chairman has set up.

my impression has been that the industry started out with little regulation. we a gun to a point that there are more than 270 million wireless subscribers. almost 87% of households have only a wireless. they are sending text messages at an amazingly high rate, more than one trillion messages lester. i think my colleagues have since some time of a project some kind of a text message. while this was occurring, there is a dramatic increase in prices of individual text messages we have other concerns. foi am sure we are going to be

reintroducing something like that. i have appreciated some of the changes that have been made with early termination fees pimp there had been some dramatic changes. it focuses on automatic pensions and a lack of information about service coverage. i can tell you that in rural parts of our country in minnesota, there are rural parts. there are major highways for the cell phone coverage still goes back. it is frustrating for people in my state, especially when they think they are getting a cell phone coverage that covers a

certain area. i think it hurts competition if people do not have information -- my feeling is that the judge have full information when they buy a cell phone and where the draft calls are, that is why we want to get a hand on the prole on that. i would like you to comment on that. i really think cricket is an example of what can happen and what services can be provided to consumers. we do a lot of things that you are trying to address. we won simplicity and predictability for our customers. they know what their monthly bill is going to be.

since the did not have an early termination fee, we have to earn our customers month after month after month. if they can always leave to a competitor. we are offering some the most affordable rates that congress and the sec in shares of some of the industry issues are there to promote competition today. i've discussed some of those in my opening statement. there are roaming loopholes the need to be built. if these issues are addressed, you will see more competition. >> you'd be able to better offer service in the rural areas? >> absolutely. there will be able to provide

seamless coverage for consumers. there will be competition everyday. >> oneself on will may be work in a certain area, some have three cell phones. >> there is some good news. you alluded to that earlier. service itself has increased. prices are going up. that is the top concern that consumers have. there are few market providers. i think it is important to look at this and the carriers to injury that stopped some of the smaller competitors are becoming bigger to provide service to the few places that do not have it. we see that with the in markets

reception for data and running. data is the service that will drive wireless communications for the next 10 years. some are getting charged that discriminatory rates under competitors. some really stops consumers from being able to choose a more rural or smaller provider. it not have the bones that consumers want. but a smaller provider cannot get the handsets, the cannot invest in the debt that infrastructure. >> we just sent a letter to the fcc asking them to expedite the handset aeschylus' ability. what do you see as this argument that was made by mr. what?

there is the innovation that at&t has develop. >> thank you for the letter. we support that action. on innovation, it is important to note that it is not the wireless provider but the device manufacturer that is the innovator. we have seen devices for services have been crippled as they have come over. there is evidence of phone manufacturers coming out in same we wanted to offer to consumers the we should roll those of. we had to guess they wanted to offer for free, but we riddle we cannot rule it out until the carrier's figure out a way to ask consumers to pay for it.

this week we will see the iphone 3gs. some are available in nearby but not the united states. i believe that innovation -- and set esses busy is just one way to finance research and development. more options should be developing -- available. >> they are going to release of the exclusivity over to a bare bones? will they reduce it? >> we offer that we would be willing to reduce the exclusivity to six months. >> wide those models? >> those are most popular funds. >> what you think is the average

life span of one of these phones? >> i'm not sure. at the many have series of innovations. the notion that getting rid of hand set exclusives as a mandatory aspect -- and of little have any affect on these issues. it will not put a single handset into the hands of another carrier. that carrier has to work with the device manufacturer to make sure that it works on the network. there is mutual development that goes on. with all due respect, he does not know what he is talking about. it is a cooperative venture.

if someone wanted the verizon experience with a certain fun, then went to a different carrier, the when i get it. my view is that europe has a lot of handsets compared to the united states. the u.k. has about 150. we have about six under. that is directly related to the innovation that is going on. in the view that there may be different way to fund innovation is historical. we have the evidence. we have years of innovation in handsets that has come about from a system where there are contracts between providers and device manufacturers that involves some amount of exclusivity. it rewards innovation by

providing a period of exclusive dealing. >> that is good. you are reducing the expressivity. . gradually, sometimes the market place does it may change. it focuses on price. it allows consumers to get things that a better price. for many customers, thus becoming their own phone. they get locked into these contracts. they tried to buy the best bones. and they figure out what they read this not cover the service area. all i'm trying to do is to get more competition in some of these areas.

i'm talking about areas that and have more dropped calls. maybe they have some service to you go one block over and they do not. >> my company, at&t, is particularly committed to the world market. we have demonstrated that in a number of ways. in the last years, we have had a number of transactions 3 have tried to go out in acquired different spectrum assets. we acquired dobson wireless two years ago. we have recently entered into a contract by number assets from verizon that they have to invest. one of the most common attributes of each of those three transactions is the

geographic. they serve would generally be described as rural. with taken that step and gone out and committed to spend billions of dollars so we can bring advanced features and capabilities the type of areas that you are talking about. we have a significant commitment to that. in addition, we are spending the capital budget this year between $70 billion and $18 billion in 2009. that is an enormous number. there are few companies that have that kind of investment in this environment. when we make the investment, the work is done by the largest unionized full-time work force in america today. we are not only investing in america, we are creating in maintaining good, solid, high

paid positions. you put all that together, and i believe the concerns we are addressing are being addressed head-on. >> thank you very much. >> we still have some challenges. i appreciate that and look forward to working with the as a look at reintroducing this legislation. >> senator klobuchar, thank you very much. >> twister is limited to 160 characters. [unintelligible]

>> we are able to a private firm. we have to recover all of the cost. there is no reason in a competitive market to believe anyone part-time the prices are going to come to call. we do not base our text message prices on that. where mindful of our costs. with respect to the analysis that it does not cost very much for network to do, i think they are too important ideas. the first is that began at the incremental costs, ignores the fact that you had to have the network in the first is. we have to make huge investments in computers to be

able to carry even the first text message. the text messages have to carry all of the shared in common costs. the second issue is that the question of cost is not relative. we are not sitting here in a regulated industry, nor should we become aware the question is, what is the cost for your product. that is not the way prices are set in a competitive industry. i believe that it is interesting but not relevant to the price. implicit in your question was some of the testimony that you have her. the increase in quantity or volume of text messages has not resulted in an increase of costs to the carrier.

with all due respect, the network he describes that can increase simultaneously, the capacity to handle trillions of minutes of voice traffic and simultaneously handle text messages and exists without additional cost would be a network that would be magical and the proportional. it does not exist. that network it is a myth. there are enormous costs incurred in building these networks. most importantly, what yet for that all the text messages to be carried on only 280 cell phones in the world, that to be great if the entire world lived on to the 80 cell phones. they do not. it takes 300,000 telephones.

why? that capacity has to be created. to create that capacity, you incur costs. it is flawed. i appreciate the opportunity to respond. >> i appreciate that. one of the purposes of the hearing is to come up with more vigorous competition in the industry. we want to protect consumers. we are not here to try to be distracted. we are trying to protect consumers. we assume that when you have a sufficient level of competition that results in better deals for consumers. i'm sure you can understand the premise of why we are here today. >> and consumer is charged to

send and receive a text message. when did this and to make consumers fall, their charge 20 cents -- once a text message is sent to the consumers bone, there charged 20 cents. you have the technology to allow them to decline a message. each you do, should they be allowed to decline a message and save the cost? >> let me go first. my answer is short. i do not know. i hate to say that to you. i didn't know the answer to that question. i will try to find out and get back to you. bu >> with the ability to provide our customer to have the ability to receive a note text message they can elect -- to received no text message. they can elect to receive no message. on a text by text message, i do

not know. >> i believe that the existing text messaging standard does not have a message that can be sent by the consumer to say declined. that is not the standard today as i know it. you could always have it to take care of. it can complicate matters enormously. i do not believe that is a way we would want to go. that is my answer. >> all right. didn't raising the price of text messaging had the intended affect of encouraging of pushing

consumers into the bucket plan because the individual tax message was going up and up? ellen to understand higher marketing plan works. the more it costs on an individual basis, the more likely it will affect it. >> i believe that is the case. >> for thank you. >> one way they restrict competition is by locking them into long contracts. the early termination fee is sometimes $250. what is your policy for pro rate

in the context of the fee is reduced to reflect the about the time remaining on the contract? you both the pro rated termination fees. they are inadequate in the sense that if an at&t customer canceled their plan only a month before the two-year contract is up, they still have to pay much more than a pro rated amount to terminate. do you understand that? >> it is not accurate. it would venture a year ago. it is not true today. we have changed the the process. it does decline of a monthly basis. if the kid to the point you described, he would pay basically 1/24 of a two-year contract. that is no longer the case. i can see that it was at one time. but i hope you are right. my information is that if they

want to terminate a month before it is $60. i could be wrong on that. >> i will certainly confirm that. my recollection is that be a change on a pro rated basis. i'll get back to buy their way. -- back to you either way. >> is anyone else have a comment? >> i would add that from a consumer perspective, it is a huge barrier. it starts of a such a high level. it is not seem to be linked to what the cost is to the carrier. after they have been with the carrier for 18 or 21 months and get paid back the boat, there is no reason that a consumer that was to switch providers and not been able to.

for >> i've is legit to state that the talk about public investment there -- i just wanted to state this. if we are putting people in jobs building networks. it is important that we are able to offer affordable prices and our plan despite the kind of investment that we are putting into the network. i think it is important that we have rallied policies -- roving policies where competitors can be successful in the future. >> i would like to table it to respond to my prior testimony. [unintelligible]

fox it has to pay for the upfront costs. i believe that is accurate. but this does not go into the issue of this. there need not be in the relationship of cost. my testimony is focused on the costs. i have no comment to make. rural areas always have a problem because the amount of revenue that can be derived per square inch in minnesota is not what it could be in manhattan. you have to do what is done by the congress in 1920.

[unintelligible] you have to put in obligation. that would be something that needs to be decided. thank you very much. cut>> i would reiterate that the wireless market is treating a success story. there has been a great amount of investment. there are hundreds of billions of dollars of investment. many jobs that have been created are out of the wireless industry. innovation has been startling.

if prices have gone down. i believe we have a situation that we ought to be careful. we are going to leave the record open for one week. >> they will focus on text messaging prices. we will closely follow these issues. i believe the justice department should be taking action to insure that undue barriers are removed. this subcommittee is interested in encouraging competition adopt