for creating an institution that has become central to helping shape the direction of public policy in this country. as we meet this morning, it has been just over a week since democrats and republicans came together to and the government shutdown and eliminate the risk of default was a rent to our country. this bipartisan action marked a turning point. our political leaders chose to come together for our country and our economy. we now have the opportunity to week's uild on last events. the stakes for america's workers s so high. if you think of where we were five years ago, we have come a long way. the economy was in free-fall,

and foreclose shures were mounting. when president came into office our economy was shrinking at an .3 annual rate. the american people fought their way back from the brink. cause of our nation's resill -- resilience, we have seen our deficit shrink. businesses have added more than two million jobs over the last year alone. manufacturing has expanded while to housing market continues improve. at the same time our deficits are half what they were a few years ago. even though progress has been made, our economy is not erforming at full steam. the pace of growth in hiring has ot been consistent enough, and -- the government shutdown and the debt ceiling impasse were

examples of that brinksmanship. a manufactured crisis, but a crisis nonetheless. even though we do not know the full exfent of the damage, we know it slowed economic growth and job creation in this quarter. what we should learn from this searing experience is that washington politics should not hurt workers and our economy nor be used for political leverage. it does not mean either side should abandon its beliefs, but we should be willing to find common ground to achieve solutions to our most pressing problems. with congressional leaders working together to build a budget, this is the moment to do that. as we move forward, we should make a pro-jobs, pro-growth agenda. we can take bipartisan action to replace sequestration, fix our broken immigration sfim, and pass a farm bill. we should pass a budget

agreement that promotes growth while maintaining fiscal discipline. we recognize we do not have a monopoly on good ideas and welcome thoughts from republicans and democrats. any bipartisan agreement should be commit today doing two things at once -- rebalancing fiscal savings to reduce our median and long-term deficits while making our -- taking steps to mike our economy more competitive. as we pursue a path, it is crucial we close wasteful tax loopholes, eliminate costs where it makes sense, and make targeted investments in a few key areas like manufacturing, infrastructure, and education. as we do that, we need to replace the harmful, across-the-board cuts with constant measures that reign in spending. these cuts were designed to be so mutually disagreeable, they would compel republicans and democrats alike to create sensible and balanced deficit reduction policies. it should be no surprise that a

policy never intended to go in effect is now producing results that raises many problems. sequestration--- fewer american jobs. . ng-term policies in addition to putting together a budget and replacing sequestration, congress needs to finish the job. bipartisan agreement has passed

he house of representatives. one bipartisan bill puts medicare on a more stable footing. another bipartisan bill is farm legislation. it is designed to protect america's farmers, ranchers, and provide a safety net for america's most vulnerable children. the farm bill creates an opportunity to create a bipartisan package that promotes economic growth and job creation while protecting the most vulnerable. it is time to get a bipartisan farm bill put into law. a comprehensive budget, a sensible alternative to se qufment estration amount to

powerful jobs in job plan. there is more to do to shift the economy into higher gear so it is growing faster. seeing as we can make progress by moving forward on things democrats and republicans have already come to work together on in the past. that means fixing our housing finance system, renewing our trade promotion authority, reforming our business tax code in conjunction with making courts epairs in many and pipelines. each of these will help create jobs and grow the economy. taken together, they will significantly reduce our budget deficit further. getting this done will require tough choices. it will make a big difference for our country. bipartisan is not a thing of the past. when we focus on what is the best int of our nation and not what divides us, we can still

find a pathway to progress. we will meet the great test before us and we will secure our economic future. and i thank you all for everything that you do to advance policy ideas that tackle the challenges that we face today. and as we look forward, trying to build a future of growth and shared prosperity. thank you very much. [applause] >> just hours after the japanese attack on pearl harbor and before her husband addressed the nation, first lady eleanor roosevelt was on the radio talking with america. >> good evening, ladies and gentlemen. i'm speaking to you tonight at a very serious moment in our history. the cabinet is convening, and the leaders in congress are meeting with the president. he state department and army

and navy officials have been with the president all afternoon. in fact, the japanese ambassador was talking to the president at the very time that japan's airships were bombing our citizens in hawaii and the philippines and sinking one of our transports loaded with lumber on its way to hawaii. by tomorrow morning the members of congress will have a full plan to be ready for action. in the meantime, we the people are already prepared for action. for months now the knowledge that something of this kind might happen has been hanging over our heads. yes, it seemed impossible to believe, impossible to drop the everyday things of life and feel there was only one thing which was important -- preparation to meet an enemy no matter where he struck. that is all over now, and there is no more uncertainty. we know what we have to face, and we know that we are ready to

face it. >> watch our program on eleanor oosevelt on our web site c-span.org/safety or seat it later today on c-span and we continue our series on first ladies live on monday as we look at bess truman. >> the house energy and commerce subcommittee held a hearing on the evolution of wireless networks and telecommunications laws. the hearing ran a little more han two hours. >> wired communications networks

have come a long way since the days of the telegraph or rotary phone. it is getting harder and harder to remember a time when if you wanted to reach out and touch someone, ma bell's twisted pair of copper wires was the only omings. today's consumers have many more options. cable, satellite, and even the telephone companies are offering americans connectivity to communicate with the world. as all of the services consumers have gron to love as stand-alone met works like voice and video are increasingly just data politics, completion between network providers has never been more vigorous, and over the top providers like skype, apple, apple's face time, netflix, and hulu are bringing competition to net flix' dollars. while they have gone through technological improvements, wireless communications networks have languished. this is because of a declining user base, high costs, and

regulatory mandates. they have conspired to make the economics of up grade un10able. today we stand on the cusp of the i.p. transition and the upgrade of networks to fiber. these transitions are a natural evolution. as technology advances, greater producting activity develops. while some of the costs of upgrid have changed, and wireless providers are branching out beyond their service roots, the problem of breaking up a monopoly remain. consumers have come to expect competition among providers and the innovative offers that result from that competition. the question we face today is this -- what's the appropriate role for the federal government in this transition? we should be looking not only on the theoretical impact of competition policies on the market as it exists today, but

also on the practical impact of the rules on an uncertain future. future technology should be able to do so -- those in the competitive industry should be able to look to the future with the certainty that they have the opportunity to serve their customers. and consumers should be able to embrace this without an interruption in the services they enjoy. we must strike the appropriate balance between consumers, promoting competition, and not slowing the pace of needed innovation. the net and wireless world have drifed without meafy regulation. do not want to stifle the growth of the internet by projecting it -- subting it to out-dated roles of the plain old telephone networks. our witnesses are here to help us doo just that. i thank the witnesses for their testimony, and now i would yield

to my colleague from texas, mr. arton. >> thank you for holding this hearing on wireless networks. i remember discussing how we could make the marketplace more competitive. at that time, at&t did basically have a monopoly, and we believed for creating the incumbent promotional exchange and then the competitive local exchange was a good solution to spur competition. that marketplace then and the marketplace today, mr. chairman, .s you know, are not the same i question whether we need the

title 2 protections that we put in place back in 1996. i think this hearing is a good strt to answering that hearing. >> thank you. i now recognize the gentleman from ohio for 42 seconds. >> thank you very much, mr. chairman. thank you very much for holding this hearing today. i appreciate our witnesses for being here today. within the last three decades we have entered a digital age of communications and witnessed multimodal competition in a dynamic ecosystem which is replacing the television and telephone network and in time will more reflect technology with internet-based telephone platforms. as we continue to see the convergence of our telecommunications marketplace, the future of regulation is a topic that must be ad drsed so it does not thwart future investment, invasion, or economic growth. we need to be sure that we reflect the consumer's ability to access the communications

services of their choice and safeguarding the reliability and curt of those services. i would ask to submit this chart, mr. chairman, for the record showing the declining view of houses with the l land-light services. i look forward to hearing from our witnesses today, and i yield back. >> with that objection, the chart you referenced will be submitted for the record. we now turn to my friend and olleague from california, miss eshoo. >> "promote competition and encourage the rapid deployment of new telecommunications technologies." in the years that have followed, hundreds of new entrants have emerged, and with their creativity andening newt -- ing

ofmente nuity, thousands of new jobs have been created. so so there have been a lot of good things that have come from that. as the title of today's hearing suggests, an evolution. an evolution in wireless networks is underway. a -- replacing a familiar service -- a phone call. companies have been making the transition to i.p. i think it is incumbent upon all of us here to decide why we would remove rules that have helped pave the way for greater competition and innovation in the marketplace. it is a worthy examination. changes in technology and infrastructure do not alter the national goals that have always guided our communications policies. s commissioner rosenwersel and public knowledge have both articulated, our conversation should begin by lig out the core

values or principles that will guide the transition to all i.p. voice networks. fundamentally, the f.c.c. must ensure universal service to all americans. the rule of the road for competition and as well as strong consumer protections and access to 911. consumers and businesses have to have confidence in the rely ability and functionality of these services, particularly during times of emergency. i'm sure it is an area we're going to hear about and concentrate on today. the reality is, consumers don't consider whether a phone call is delivered through a traditional switch network or via i.p. they just expect -- expect their phone calls to connect as it always has. we all support investments that enable companies to offer consumers new and innovative services and do so more efficiently and reliably.

changes in technology don't automatically -- don't automatically -- make markets more compet different. -- competitive. i look forward to witnesses' perspectives on how i.p. competition results in more competitive choices. finally it is important that the investment in -- to remember the investment in job creation does not come from just two or three companies but rather an eco-system that includes hundreds of communications companies both small, medium and large. earlier this year a study found that updated pro-competition policies which stimulate the hiring of up to 650,000 of new employees in the tell com sector and $184 billion of private funds into the u.s. telecommunications. the topic of today's hearings raises -- first of all, it is an important topic. it also raises important

questions that it is our responsibility to have clearly answered. as a migration to all i.p. networks continues, the testimony of our witnesses -- and we have a sterling panel here today, will help ensure that our laws and regulations to promote new investment, competition, and consumer choice. i'd like to ask unanimous consent, mr. chairman, that this letter from the competitive carrier association, reiterating the importance of long-standing text, neutral internet connection records be submitted for the record. >> yes. >> and i yield back the balance of my time. >> the chair recognizes the gentlelady from tennessee, plst ms. blackburn. >> thank you, mr. chairman. i want to thank you for holding this hearing. it is important, it is timely. we want to welcome our witnesses. thank you for king here. as you have heard each of us talk about, competition.

looking at how that has changed in the communications marketplace. l today we have that intermodal competition between the ilax, clex and cable, satellite. these are subject to different rules based on out-dated assumptions. i think it is not easy for the federal government here in d.c. to think about the treatment toward communications in today's marketplace. i do feel that it is our responsibility to plook at how we create the appropriate environment, put some regulatory certainty in place, and then encourage that private capital and investment and focus on creating jobs. there are three things that i want to drill down a little bit with you all. number one, is it fair to tell

someone who wants to invest in tomorrow's technology that they need to slow down in order to maintain an old network if they don't want to invest in anymore? number two, does it still make sense for the old rotary dial regulatory model -- and yes, some of us do remember that model -- to hold back the communications revolution that is before us now? number three, how can we make the transition to the internet protocol as seamless and dependable as possible? those are questions worthy of discussion. i thank you all for your time. at this time i will yield to any other member. i do not have anyone in the cue. anyone else on the republican side want to make any comments? if not, the gentlelady yields back. i now recognize the gentleman from california, mr. waxman, for five minutes. >> thank you very much, mr. chairman.

since the days of the black rotary phone, americans have been able to count on the phone network to call friends, family, conduct business, and reach emergency services when needed. today, thanks to innovation and competition, consumers can connect to the phone network in more ways than ever before. but when we pick up a wireless smart phone or dial a number over voice-over internet protocol service, few of us pause to consider the technology involved. we simply expect our phone calls to go through. the ongoing transition from traditional circuit switch network, internet protocol or i.p. is the technical backdrop for today's hearing. but our phone network is more than a system of wires, switches, and technical protocols. it is an essential part of the social and economic fabric of

the united states. as we d consider this next network evolution, we must continue to protect the core values that have guided our communications policy for nearly a century. many of today's witnesses have articulated some version of these values, and there is widespread agreement on these pribs principles. our commitment to universal service is a recognition that all of us benefit when everyone is connected. we protect competition because it is the most efficient way to generate new product and lower prices with the added benefits of limiting regulation. we have rules for consumer protection. because the marketplace needs oversight to ensure that services like 911 are provided even if the market is not yet demanding them. this is a mandate congress has entrusted to the f.c.c., and it does not change with new

generation of technology. i think we all recognize the transition to i.p. based networks is already happening. and this is a good thing. the transition means more investment and opportunities for economic growth and new services that can improve everything from health care delivery to energy efficiency. the challenge we face is how to manage this transition in a way that does not disrupt businesses and consumers that rely on traditional services today. i agree with mr. shiconi that we need the f.c.c. as an expert agency to help guide the evolution to an all i.p. network . i caution against using the ad vent of i.p. based services as a vehicle to try to undermine the s.c.c.'s authority to preserve competition and protect the public. whether addressing complaints

about rural completion or ensuring network reliability we need the ers, f.c.c. to address the impacts of the i.p. transition. a vibrant and vital f.c.c. is critical to ensuring that the transition ultimately achieves the goal we all share, which is a world class network that deliver greater benefits for consumers and our economy. i thank chairman walden for holding this important hearing and working with us to assemble a balanced panel. mr. chairman i would like to ask unanimous consent to enter into he record a paper by kevin roherbach entitled "no dial tone , the end of the public service network." >> it is admitted.

>> i yield tal -- tal of my time -- the balance of my time to the entleman from vermont. >> thank you. john has served on the economy on tems with the national association of rural utility commissioners. one of the things he's so good at is talking about the paket on rural areas of telecom policy. we started a rural caucus, as you know, to take a look at how the policies we have to implement are going to be affecting rural areas. there is no person with more experience and widser council than the person that we're going to hear from, john burke from the great town of castleton, vermont. thank you, john. >> thank you, mr. chairman, i yield back. >> the gentlemaneesees -- yields back the balance of his time.

we thank you all for your testimony. it is most enlightening, even if there is a little conflict among you, which is why you are all here. we start with the senior vice president of external and legislative affairs from at&t. mr. sucon nifment we thank you for being with us. we're still on an old wired copper network, so if you could turn on that microphone. [laughter] >> boy, that's embarrassing. charnle walden, ranking members of the subcommittee, we thank you for the opportunity to testify with you today, and thank you for holding this hearing. four years ago, as you know, the f.c.c. issued the broad band plan as connected by you. that plan included bringing all communications to all americans and we must have communications policies rooted in the future, not the past. i want to focus on four key points on this very important

i.p. transition. first, transition is happening today. and i think the chart you have up here demonstrates that. hat's over a 10-year period. >> is that chart for you to see or for us to see. >> i had hoped the committee would have it. >> we got it covered. go ahead. >> this is based on government data. it shows by the end of this year only 25% of americans will actually be taking advantage of the legacy wire line services. three-quarters of americans will have moved to alternatives. the national proud band plan recognizes that this i.p. transition is underway, it is happening today. i pause, and my fellow panelists recognize this as well. the communications marketplace has changed dramatically and so has my company in response to that.

oday we provide communications choices in a robust economy. consumers exercise their choices on a daily basis. they are abandoning the network system in droves. they are moving to i.p. offered by a host of different providers. in fact, it is sfimented that p.o.t.s., ingly call which is "plain old telephone service" would be confined to only 25% of u.s. households. in fact in florida, only about 15% of homes are still connected to the legacy wire line network today. second point, this transition to an all i.p. network is a good thing, and it should be embraced. this is a huge and crucial undertaking for our company. are replacing the network that served us us -- served us

well for 100 years and we are replacing this with networks we hope will serve us for the next 100 years. these are vital to maintaining global competitiveness. these networks don't happen by themselves. they have to be built. to built them, companies need the right incentives to invest. more important, companies must be able to retire old infrastructure in order to make the investments in new infrastructure, just like any other business would do. to do otherwise makes little sense and would impede what the network has d band made an imperative. we have time to do this right. the transition to i.p. networks will take place over the coarse of this decade, but we have to use that time wisely. the f.c.c.'s technical advisory committee suggested the old legacy networks be retired by 20115 and the f.c.c. should set a date for their retirement.

my company thinks it will take until 2020 to accomplish that and even then it will require a maximum effort on our part. in the meantime, we have asked the f.c.c. to conduct industry-wide trials. we have conducted 200-some wire centers. we feel trials are critical. as careful as our planning is, no one can anticipate every issue that may arise when we transition off the legacy wireline infrastructure. trials will help us learn while we still have a safety net in place. as we learn, all of us -- industry, government, customers and stakeholders, can then work together over the coming years to address any problems we find. this leads to my final point, which is the overall frame work of values and principles toll guide us to all i.p. networks. in that regard, our friends and colleagues in the public interest community have i think served us very well.

they have stressed this transition from the old to the new should consider things we have all come to see as fundamental -- universal connectivity, consumer protection, public safety, interconnection. know an all-i.p. world will not be a regulatory-free zone. nor are we seeking that. we do feel any regulation should ed in the problems of today, p the proms of a bygone era. these are now highly competitive markets. this is not the first times the u.s. has helped for a transition. we will need wise government licies, and the interests of consumers are pro-- protected as the interests of new technologies are deployed. >> thank you for your testimony,

mr. cicconi. we now go to the president of telnet worldwide. we are thankful you are here today to represent the industry and yourself. please turn on that microphone, pull it up close, and we look forward to your comments as well. >> chairman walden, chairman upton, ranking member eshoo and ranking member waxman. i am mark iannuzzi, the president of telnet worldwide. we are head quartered in troy, michigan. we are very privileged and proud to be the communications ckalamazoo and st. arper's. we have services in classic voice and advanced data and

networking services. in this increasingly connected world, we help unify and simplify all the ways that businesses communication and collaborate, providing them big business solutions to small businesses at prices they can fford. its d.n.a. of these companies is about entrepreneurs serving entrepreneurs. a little background about myself. i was born and raised in detroit. and rican engineer entrepreneur. i built telnet with my brothers 15 years ago from the dirt out of the basement of our home.

to this day, though, since that time, we have invested upward of over $100 million. we are proud to have created the first network in the state of michigan which integrates the vast majority of the state with a service area greater than at&t and frontier combined. one of the conversations that's indelible on me is a book report when i was in grade school and i did a book report on poverty. i asked him what is poverty? he said poverty is a person without choice. at 10 years old i didn't grasp what that was about. i always thought at 10 years old having a lot of money. it was his pride as an italian citizen to be part of this great land of opportunity that he had

choice for himself and our family. so with that as a back drop, i want to make it clear as we have these debates, i or the competitive community, we are not against at&t. we are not against the ilex. at&t is a proud mench company. we want all companies to do well. when they raise themselves, they raise the entire community. it is not about what we are against, it is about what we are for. we are for robust competition or merit over might. as much as things change in this technological age, some things never age. to bring about the greatest good for the widest array of people the world has ever seen. we are for the rule of law, which means trust. it means certainty in keeping our collective promises, including those to the capital markets which have invested themselves in our endeavors.

finally, we are for ensuring artificial barriers to progress. not only for us in the market today, but for those of us yet to be born that will take up the antle we have set forth. let's begin with the 1996 advance. the improvements to our capabilities today in terms of the capabilities, the competitive position, and the productivity in this country are mind-boggling. would like ent, i to thank you for forging a bipartisan team for this

landmark legislation which has revolutionized the industry of ommunications. to soul of that act was creating competition for other their es to create service options. ultimately, the baby bell bought ma bell. there are some that say there are technical limb tages in the act. i say to them and i say to you, the act is not and cannot be about technological limitations. it is about technology inspiration for a free flowing economy.

telmet understands small businesss. small businesses seek to be relevant in what they do. not necessarily experts in technology, small businesses cannot afford to go out and pay for the technology and sort out the alphabet soup of technology. rather it is their next door neighbor's nephew's cousin that tries to help figure out the things going on here. can mpetitive industry touch these small pizzes. we sit across the table. we examine their needs. we look at solutions and help them go from crawl, walk, to run. god bless them, but this is not the at&t -- this is not at&t's forte. our promise to our customer is to be the last service provider they ever need. we want them for life. to do this, we must

enfuture-proof their investments and deliver ongoing value. there are three things key to what this generation thinks about. building blocks, regardless of following. our network is the best in the world, but it is only as good as its weakest link, and that is he last might. it's important this these are interconnected and there are terms and conditions regardless of technology. third, we need to make sure that the business agreements and pricing between the dominant and competitive are adjudicated with the backstop of our local public utility commissions. , i will have to

ask you to wrap up. >> i came into this many business through trying to make things better. if i ever had any doubt that there was going to be a technological limitation in a tech business, that would have been i nonstarter. of the world may come and go, but what must never perish is we do not erect barriers which impoverish but we stay true to those competitive ingredients that promote prosperity for all. thank you for the opportunity to testify. >> thank you for your comments. we go now to harold feld. we welcome you back before our subcommittee, and we look forward to your summary of your testimony as well. >> thank you. thank you for inviting me to testify today. the transition of our wireline networks to internet based protocol services is a

tremendous opportunity for our nation. we must make sure that the transition results in an upgrade in technology without a downgrade in the services on which americans depend. we have used fundamental principles to l create a phone network that became the envy of the world. we are the country that built a phone to every farm. we have accomplished this by moving fundamental values with us as our networks evolve as we face challenges of implementing the next generation of communications technology. we mufert continue to leave no one behind. americans are used to relying on the phone network, they often don't even notice them. we many operate business as if we can always trust the phone networks will work. because always have. when someone calls a friend on another phone network, that call will go through regardless of

which carriers they suscribe to or where they live. in the rare instance when this breaks down, government authorities move swiftly to act as if our lives depended on it, because they do. every one of these benefits is the result of deliberate policy choices that serve specific basic policies. our policymakers value what public knowledge calls the five fundamental principles -- one, service to all americans, two, competition and interconnection, three, consumer protection, four, network relyability, and five, public safety. there are some who believe the i.p. transition should be a glidepath to interseed f.c.c. oversight. we have concrete examples that many of the technical services we take for granted are at risk in rural and not so rural areas and individuals in small businesses. one of the continuing problems is for rural residents to

receive calls. as i.p. members change technology, they sometimes trap calls in perpetual loop. in a world where we allow the marketplace to work, this doesn't get fixed. as one carrier told a complaining subscriber, due to living in a rural area, you will experience service issues. the f.c.c. will address this at an open meeting next monday, but in a world where they could only operate under unfair and deceptive practices, rural america would be out of luck. i.p. technology brings the potential for new services but it also brings the potential for new ways to crash the system. i.p. does not work with a lot of legacy equipment or services. it brings in all the issues of malware and cyber attacks. the department of defense and the federal aviation administration have filed with the f.c.c. to express concern

that the i.p. transition if not handled properly could interest fear -- interfere with vital government operation. we may need the f.c.c. to use its legacy of authority to solve these problems. rather than thinking of the f.c.c. as an obstacle that gets in the way, we should look at his as the many stopper of a train wreck. the question to answer at the end of the day should be does it work, not how many networks you -- did you kill? to everyone's surprise, public knowledge and at&t agree on a lot because we want the same thing -- a competitive, modern network for all americans. unfortunately, we still debate this as if we were for or against upgrading our phone system or even for or against at&t. this is absurd.

we want at&t and every other carrier to invest in its network. no one is seriously suggesting that at&t nor any other carrier should preserve copper to the end of time. while we were fiercely disagree on how to make this work, we all want to make this work and we know that the stakes are high. most importantly, we need to stop thinking of this as at&t's transition where at&t proposes something and everyone else reacts. we need to plan out a transition that reflects our values. this is the transition of the phone system of the united states of america on which 300 million people depend every single day. we need to recognize we all have a shared benefit from making this network reach everyone, and therefore a shared responsibility to make it work for everyone. thank you. >> thank you, mr. feld. maybe we can create a government website they could all work through and -- never mind. [laughter] >> just kidding. >> we all learn from our mistakes. >> yes, hopefully. >> we go now to mr. john burke.

we appreciate your participation. he's a board member and public service board of the state of vermont. mr. burke, we are delighted to have you here again. thanks for your testimony. please go ahead. >> thank you, mr. chairman, ranking member eshoo, and members of the smee. thank you for a-- of the subcommittee. thank you for allowing me to testify. in recent months the f.c.c. has greatly increased its interest action with the states -- interaction with the states. we have improved the task force. chairman cliborne is to be applauded for her leadership and her out reach. in my home state of vermont we face many challenges. very little fiber is being deployed to the homes, and many areas have no proud band access. there is limited competition, even in urban areas. wireless coverage leaves much to be decided, even when it exists,

and even in vermont, transition to the i.p. based voice network is occurring. until this latest evolution, networks are migrating away from circuit-switched voice and data services to i.p.-based services. during the transition, like previous ones, it is crucial for policymakers to focus on the right issues. no regulator or legg legislator should interconvenient -- intervene in the market. the mark should make choices. the reeven public service commissions and agencies like the f.c.c. were created and regulate remains the same. first we regulate where commigs ompetition is not adequately vigorous. second, we impose public nterest obligations. some oversight will always be

necessary to provide what the market will not, including prioritization of niversal action, and l 911 service. there are questions of why trials are needed now. at&t and other providers sfr no significant problems rolling out ip-paced services today. the transition is well unled way, and major reasons why issues remain is because the f.c.c. has focused on the wrong issues. the transition is not about regulation or deregulation. the f.c.c. has ample tools to eliminate unneeleded regulation. nor should the debate be technology focused. congress established a technology neutral frame work in the 196 act and implemented the core values of universal service and competition. the f.c.c. should just follow this frame work.

for over 10 years the agency has followed what congress has set out but not in compact terms. instead, the agency has been unable under democratic and republican chairman to provide needed services either as a tems -- telecommunications service or a communications service which has undermined the communications market. leaving this question unresolved has created the regulatory arbitrage that undermines carrier competition many and is the basis for the concerns mr. feld mentioned. it can provide protections despite voice services being the same from a consumer's point of view. the stake and industry stake holders continue toll waste money on proceedings that would

be unnecessary ifed f.c.c. acted. real interconnection trials will not necessarily help them clarify the statchtri basis. the clarification begins and ends with an interpretation of the statute. there is no question that the interconnection is technically feasible. at&t and verizon manage that on a daily basis. rather than inventing new legal theories with no statchtri support specifically to avoid classifying voice telephony as the f.c.c. did in the 2003 order, the f.c.c. should just classify the services. oversight of voice services has nothing to do with either the internet or hearing arrangements. verizon and at&t assure customers that their voice services are not internet services on their web sites daily. along toc.c. continues

consider technology trials, congress should encourage the agency to first seek the best of a fact-bationed recommendation from an adequately funded group., state u.s. joint this can only work with state involvement. in conclusion, while technologies change, the expectations of consumers do not. consumers expect the same level of service and protections they have become acustomed to, and it is up to us all to ensure those expectations continue to be met. thank you for your attention, and i look forward to your questions. >> thank you very much, mr. burke. we appreciate your council today. we go to mr. randolph may. it is good to have you back. we look forward to your comments as well. >> chairman walden, ranking member eshoo, and distinguished members of the committee, thank you for inviting me to testify,

and president of free state foundation, an bipartisan think tank that focuses its work primarily in the communications policy area. i have been involved for 35 years in communications policies in various compafts, including having served as associate general council at the f.c.c. i appreciated the funt to testify in july before this committee regarding f.c.c. process reform. that hearing was very important. frankly, the topic at this hearing may be even more important as the transition away from narrow band communications services to narrow braupped band services continues, the question confronting policymakers is this -- will the existing public utility style frame work that still largely governs communication service providers

be replaced by a free market oriented pair dime that accelerates broad band transition or instead will the regulatory frame work be an impedestrian iment to progress. the answer has important impolitics for the nation's conomic and and well being because there is widespread disagreement in i.p. services which is leading to dramatic marketplace changes will be completed at some point. thrm is widespread agreement that completion of the transition is a positive thing. i.t. based services provide consumers with more functionalities and less costly ways than do copper based t.d.m. services. there is no doubt the digital revolution has -- that the

provision of voice, high speed, data and and video services. whether they offer these services over wire line, digital, cable, fiber or whatever technology. the relative point is not that all the services are perfectly substituteable or that they meet every consumer's desire at all times. the relevant point for policymakers is that for an increasingly large number of consumers, these various competitors provide a choice of service providers offering a choice of attractive service options. note that i said you above the i.p. traps igs. it almost certainly will be completed at some point in time. but the f.c.c.'s actions and likely congress', too, will

reflect the timing of the completion, and whether the regulatory regime that emergeds is a proper one going forward. my testimony flanse explains why in order to benefit consumers and in order tom promote networks and new innovation, the regulatory framework, which is based on assumptions of a monopolistic marketplace that no lodger exists should be replaced in a timely fashion by free margaret oriented bottle. requiring telecompanies to maintain their tedium past when it is economically vieable drains resources from i.p. networks. economists agree that burdening any service provider regardless of the platform used with unnecessary costly regulation does deter investment and innovation. so in the i.p. world, the

f.c.c.'s regulatory innovation should be tied closely to finding some narcotic failure and consumer harm. the f.c.c. may well possess the authority to implement most of the regulatory changes necessary to facilitate completion of the digital transition. while at the same time implementing safeguarded and on version service interests which i recognize are important interests to be safeguarded. to the extent such authority either is lacking or the f.c.c. fails to prorm exercise such authority in a timely fashion, then congress should be ready to step in. for example a bill, hr-2649 which requires the f.c.c. to presume forebearns release should be grand granted absence evidence presented to the contrary would be a useful tool to enable the agency to act more

quickly, especially if fore bareans relief sl made vainl to all entities subject to the committee's jurisdiction, as i think it should be. in any event, aside from any near-term legislation to require that benefits from the digital revolution are fully realized, ultimately congress should adopt a comprehensive overhaul of the current communications act along the lines of the digital age communications act model which i have long advocated and which i escribe in my defendant. finally, mr. chairman, i mentioned i served as sorkt general council in the f.c.c. that was in the late 1970's and early 1980's under the carter administration. at that time, regulation of the various transportation markets was largely eliminated. this deregulation initiated by

president carter's administration was accomplished on a mostly bipartisan basis, and the congress and the agencies coop rated productively. e agencies initially emhad deregulation while congress engaged in oversight. congress legislated to put in place the regulatory many regimes that rely for the most part on marketplace competition rather than regulation to protect consumers. i believe that a similar opportunity for positive change now exists. thank you for inviting me to testify today. i will be pleased to answer your questions. >> thank you, mr. may, and thank you for your in depth testimony, which we all have. mr. iannuzzi you said when people replace t.d.e. with ip

technology, competitive carriers will lose access to the last-mile connections that have enabled them to push deployment to american businesses. that's kind of the crux that is kind of the crux of the argument you represent today, correct, that if they abandon -- if at&t or other companies abandon their copper networks, then you are not going to have the ability to get to that last mile, correct? >> mr. iannuzzi. correct. >> mr. walden. >> mr. cicconi, from your perspective, what does that mean in terms of -- is that accurate? will you -- will at&t and other companies still make last-mile connection available? and then i want to go to > mr. may on this as well. and again, hit that microphone button, if you would. >> mr. cicconi. short answer is of course we would make them available, and there is nothing we have proposed that would take that away. >> mr. walden. under the same interconnection, reasonable rates, terms and conditions? >> mr. cicconi. i think if we are talking about copper loops, you

know, there is nothing in our proposal that would change the treatment of that as a "uni." >> i think when you are talking about, you know, ethernet, for example, the fcc has concluded the ethernet is a competitive service. so i think if we are rolling out ethernet services in replacement for tdm facilities -- you know, and to give you the sense of that, a tdm facility is not classed as a broadband-level facility by the fcc currently. so for placing tdm with a broadband facility, for example, and backhaul to a cell tower, you know, i think the fcc has concluded ethernet is, in fact, very competitive. and i think, you know -- in fact, i think sprint cto just stated recently that for the same price he pays for a t-1 to a cell tower, he can get 20 times the capacity by running ethernet to the same cell tower. and so -- so, obviously, if it is a competitive market, we wouldn't -- we wouldn't feel that regulation, per se, is needed in that area in order to provide an alternative capacity.

>> all right. mr. burke, what is your reaction to all of that? >> well, i think that one of the things you look at when you look at the potential for interconnection is that there are supposed to be agreements. the idea is that they are supposed to agree. that doesn't necessarily mean that all the players have an equal bargaining power. it doesn't always work that way. if that is the case, it may well be necessary for somebody to take a look at those agreements. and the 1996 act clearly said, and wisely so, in my estimation, the states can look at that and arbitrate that. and it also defined the service to include advanced services. so 1996 actually had -- in my estimation, had it right and gave a methodology so you would be able to handle arbitration of these issues if, in fact, >> mr. cicconi and mark couldn't agree. and i think that is another point that exists in the state'' position here and what they

would have to do in this brave new world moving forward. mr. may, from your perspective? >> thank you, mr. chairman. i think part of the premise of your question was based on the continuation of offering of copper-based loops from >> mr. iannuzzi. >> well, and just the ability, regardless of the underlying infrastructure, to have a competitive marketplace for these alternative competitors. >> you know, there is a transition going on, which is why you called the hearing. >> mr. walden. you know, from my perspective, over time, as i said in my oral testimony, it is important that we not require the maintenance by regulatory fiat of older technologies that are less efficient and more costly. so eventually -- i am not in

favor of requiring at&t or anyone else to maintain in existence a technology in a competitive environment that we are moving to that is not efficient. but i want to say one other thing, if i could. mr. iannuzzi's testimony, he is talking both about the ability to access facilities of others and to use those last-mile facilities, and he is also talking about interconnection of facilities. and as we talk about this today, those are really -- they are actually two different things. in 251 and 252, without getting too technical, they involve both of those things. and, from my perspective, in terms of where public policy wants to go, i am much -- i am more receptive to arguments that have some regulatory backstop for interconnection, saying, you know, i have to interconnect my mr. burke's

network. than i am about regulation which continues to require that if i build a facility, that i have to provide access under regulated terms and prices, you know, ad infinitum for someone else to use those facilities. and the simple reason, and this is important, i think, to understand, is when you -- when you require that type of sharing of facilities and access that he talks about, and he -- he does say he has some facilities of his own, but -- when you do that, it discourages either him from building his own facilities, or it discourages me, if i am the one that has to provide access, from actually investing more to build more facilities. >> my time has expired. and i now turn to the gentlelady from california ms. eshoo for 5 minutes. >> thank you, mr. chairman.

and thank you to all the witnesses. we will start over here with the italian part of the table, who don't agree with each other despite their shared background ethnically. mr. cicconi, you stated in your testimony that modern ip networks are both more dynamic and cost-efficient than the tdm- based voice telephone networks that we have depended on over the last century. how does a new network technology change the state of competition? because i think that that really goes to the heart of a lot of what we are talking about here and some of the testimony that we have heard from others. in your view, shouldn't the -- the rules to preserve and promote competition be technology neutral? i mean, i have always favored technology being neutral in

whatever legislation we do. it has always been something that i thought was like a hot stove; don't go and touch 54 it. it. it should be neutral. >> well, first of all, i don't think the telecom act itself makes the rules technology neutral. it put most of those rules in title 2, which is entitled common carriage, and it doesn't apply to our wireless service. in fact, you have an expressed provision in title 3 that it can't be applied to wireless service. it doesn't apply to cable. it applies uniquely to the wireline tdm services provided by a legacy wireline carrier. so they are not technology neutral in that sense. they are uniquely imposed on this part of the business. and as you saw from the chart earlier, it is a declining part of the business. at the current time at&t has fewer than 14 million customers using traditional wireline services. by contrast, the number four

wireless carrier has double that. so i would argue that today these services are competitive, congresswoman, and that you all when you wrote the act -- or rewrote the act -- in 1996 i think did something fairly unique. i think you recognized in there that there were major transformations that were underway and that i think augured well for competition, and you gave the fcc some fairly unique powers there -- >> so are you agreeing that the rules going forward should promote competition, but you don't agree they should be technology neutral? >> i certainly would argue that it is an appropriate mission for the fcc to continue doing, but i would disagree that all the rules that were needed in 1996 and 14 -- >> we are not in my office. thank you. mr. iannuzzi, you gave great

testimony. i loved what you said. and it is uncommon for people to come here and speak about what their father said, how that remained with you, what you do, what you are for. it is not what you are against, but where you want to go and why. and i just think you gave terrific testimony. without a regulatory backstop, what incentive do you think that the largest incumbent providers have to reach a commercial interconnection agreement with you? >> thank you very much, congresswoman, for your kind remarks. >> turn the microphone on so everybody can hear you say, thank you for your kind words, congresswoman. >> when i got my clec license they asked me three questions. one was do you have the technical acumen, do you have the financial wherewithal, do

you have the business know-how. i would have flunked that test if i was going to go into a business to compete against an 800 pound gorilla without some type of firewall, some type of framework that allowed a competitive marketplace to exist. because our ability to go and negotiate a commercial agreement, the incentives, just economics concepts here, the economic incentives of the incumbent provider, they control the connectivity to the customer. it is in their interest not to provide connectivity to other people because they would like to keep that customer. so without that firewall there to make sure that we did have fair and equitable access to the customer, the business case would fall. it would just not be there. >> thank you very much. i think i am out of time.

i will submit the rest of my questions for the record. thank you. mr. barton for 5 minutes. >> thank you, mr. chairman. last weekend i finally got to go home to texas after the government shutdown. and i hadn't been there. it is the first time in the 29 years i have been in the congress that i had spent two consecutive weekends in washington, d.c. so obviously i was glad to get home. and when i got home i walked into my house and decided to make a phone call and i didn't have a dial tone. and the phone was provided by at&t, a legacy carrier. so i got the phonebook out and i went through the protocol on page 9, you know, dial 1-0 and we will be happy to help you, and said, now, if the problem is

on your phone in the house, it is 99 bucks. if it is not, we will come out and fix it for free. so, anyway, i went through that and i finally self-reported a problem and i did all the things you are supposed to do, and they called back and said we will be out tomorrow by 8 p.m. well, the next day by 8 p.m. they weren't out. so i picked up my cell phone, which was provided by verizon, and called and hit ooo and i finally got a sweet lady in houston, texas, and i said my phone is not working in my home and i still haven't got the serviceman, and she agreed with me and she said, we will be here tomorrow. and, by golly, they were, and they fixed it. boom. and the guy could not have been nicer.

could not have been nicer. but the moral of that story is i had to use a wireless provider to get my hard line phone fixed. in 1996 clecs, they were competitive, and we wanted the clecs to compete with the ilecs, the incumbents. now, since 1996 my congressional district has changed four times, but we are still operating under rules that we put in place for an old system. and it is time, just like our congressional districts change every 10 years -- in the case of texas we changed 2 times in addition to those 10-year changes -- we really need to relook at this. and i love at&t and i love verizon and i love the clecs and all the independents out there, but what i really love is consumer choice and market efficiency and competition that

works. cicconi, who mr. i have known since way back when, even before i was a congressman i knew jim, would the group that you represent guarantee access if we did away with some of the regulatory protections under title 2? >> well, first, congressman, i am sorry for your service problems. >> well, we have had rain problems. but i think you made an important point, and that is there are alternatives out there and wireless has become an alternative for wireline phone service, and there are many, many competitive carriers offering wireless services. cable offers phone service today, i am not sure in your area or not. but there are an array of choices out there. and so i think that consumers

have those choices today. now, is it a legitimate function of government to ensure that everybody is connected and has the ability to communicate? absolutely. our company has always stood behind the principle of universal service, and i think that is an important function of the government, to ensure that the choices are there and that they are available to all americans. >> well, to the average consumer, a consumer doesn't care whether they are serviced by an ilec or a clec. what they want is service. what they want is something that works, that is efficient, and that is cost competitive. so our job on the committee is not to protect an existing market segment. our job is to do the very best we can to give our consumers choices. and i want the clecs to stay in business. i am not anti-clec. what we passed in 1996, it might have worked for 1996, but that

world doesn't exist today, so let's figure out what exists today and in the future and go that way. and with that, mr. chairman, thank you for the hearing and i yield back. the gentleman yields back. we turn now to the gentleman from california, >> mr. waxman. >> thank you, mr. chairman. based on some of the testimony we heard today, one might think that we are evaluating a new network being built across the country, an ip network that runs on fiber lines and wireless airwaves. others suggest that this is no new network, but that new electronics that have been added to the copper and fiber infrastructure that has been transporting voice and data throughout the country for years. why are these distinctions important? if what we really care about are basic values like protecting consumers and competition, universal service and public safety, why does it matter what kind of infrastructure

communications runs over? mr. feld, it is my understanding that google is currently planning to offer extremely fast internet access over new fiber networks being deployed in three communities. although consumers can sign up for video service to complement their internet access service, google is not offering a voice product. google has not been shy about stating that it is not offering voice at least in part due to the complex rules associated with providing telephone service. what do you think of google's argument that a company like google be saddled with regulations if it decided to add voice to its video and broadband offering? >> i think that there are a couple of points that need to be very clear. first is that when google talks about the regulations that they found too burdensome, they are

not talking about the 251/252 kind of regulations that have been the focus of the debate here. they are talking about the things that we all agree ought to stay in system, like 1, like consumer protection and privacy protections, all of these things that we have said, yes, that is very important. >> well, what are they talking about? give me examples of what they are concerned about? >> well, it is expensive to maintain the 1 system. it is expensive to contribute to the universal service fund system to ensure that all americans are connected. now, we believe that it is very important to maintain these things. we believe that it is very important. google likes to collect the information of the people who use its services. they aggregate it. they have one level of privacy protection for that. their business model is based on a couple of different things. in the phone world we treat this very differently and you cannot treat phone call information the same way that you would treat a facebook status update, that people hold that very closely.

and i understand for google to say we don't want to get into that business. but if we were to say, well, okay, we want to encourage google to get into this business so we want to eliminate these kind of vital consumer protections, i think that would be a very grave mistake. >> so even if they choose not to offer telephone service, that doesn't lead you to the conclusion that we ought to eliminate the rules for all telephone services. oh, not at all. and, in fact, i would point out any business looking to enter a market figures out what the tradeoff is and what their business model is. we have a thing that is very valuable in a network that goes everywhere and uses telephone numbers. and i will point out that when we have companies that are voice providers, pure voice providers that want to use those telephone numbers, we impose certain obligations on them already, and businesses make the evaluation of whether the benefits of getting into that business are worth the expense. that is their decision for themselves. now, for the rest of public policy and for everybody else,

given the importance and complexity of transitioning voice services to an all-ip network, wouldn't it make sense to have a trial overseen by the fcc to help collect data based on real world experience and challenges? this past may the fcc issued a public notice seeking comment on trials related to the ip transition. then chairman julius genachowski stated at the time, quote, "trials are a smart approach that the fcc has deployed before." in the public notice the fcc invited carriers interested in pursuing a geographic trial, like at&t, and they proposed to submit a more detailed, comprehensive plan, including the design of the trial, that data that would be collected, the rules that would need to be waived, and the role of the states and the tribes. it seems to me that the fcc is approaching this issue methodically and thoughtfully. so let me ask in the short time i have left to anybody on the

panel that wants to jump in on this, do you believe that the fcc is moving ahead in a diligent and responsible manner in exploring potential trials on the ip transition? and if you don't, what would you do differently? >> i would say that, yes, i think the fcc is behaving exactly appropriately. they have invited further comment. i think that we cannot treat conversion of an entire wire center as something -- >> let me hear if there is somebody with a contrary position? >> i don't think i would be directly contrary. but i think there are a couple fundamental points here. when the fcc put out its additional questions, i think we all recognized that the fcc was going through the leadership change from the former chairman to a chairman not yet confirmed by the senate, and i don't think, honestly, chairman waxman, they were prepared yet to answer the question. but i don't think they should be

leaving open the question of whether we should have trials. i think when we filed the petition almost a year ago we asked them to actually set up the trials. this isn't an at&t project. as somebody said earlier, it involves government, it involves the entire industry, and it involves consumers and stakeholders, and it shouldn't be up to at&t to come up with the plan. we actually proposed industry- wide trials to the fcc that the fcc would actually help put together in a collaborative way working with everybody. and so i think they have at least to this point punted on that decision. i don't think not having trials is an acceptable answer because i think it would in essence be the government saying, we are not going to plan for this. and when you did the dtv transition -- >> your point is the trials are not methodical and they are not fully thought through? >> the fcc actually planned the dtv transition, conducted the

trials, learned from them, and it went fairly smoothly, and i think that is what needs to happen here and that is what i still am very hopeful will happen. >> it is up to the chairman if you want to let anybody else respond. >> may i comment please? with all due respect, the concept of a trial, in my opinion, is a boondoggle. the reason behind it is that we do ip all over the place today in interior of networks and how we connect with other cooperative parties. we have got smart people. we know how to do this stuff right now. we are losing ground in terms -- do you want to try to make the revolution of ip even more profound? then let's get going with it. are there things that we have to attend to, to tweak stuff? sure. but in terms of the mechanics of it, it is making it sound like water is hard, if you want to make it seem complicated. you could take anything and make it sound more difficult. it is done today all over the place. >> we are going to have to move on. >> thank you, mr. chairman.

again, thanks very much for holding the hearing today. and thanks to everyone who is testifying today. we really appreciated hearing your testimony. if i could start with >> mr. cicconi, if i may. as the gentleman from vermont mentioned, he and i have worked on different issues, especially concerning rural call completion. it is big for both of us. and i have a very unique district. i go from urban to suburban to very rural. and one of of the things that -- i have met with a lot of my rural telecoms out there, is that they have had problems with dropped calls. this is a serious issue for folks out there, because again if you have family members that are elderly and you are trying to call them and all of a sudden they are not picking up that phone, then your next recourse is you call the local law enforcement or the fire department, hey, can you go out and check on a family member. in the same way it really hits small businesses or any businesses out in these areas, because again i have a lot of

businesses that are located way out and all of a sudden if all of their calls are getting dropped, if somebody can't make that call they lose business and pretty soon they are out of business. so as we are looking at what is happening out there, as the networks, especially the rural providers, transition to ip, how do you think this will affect the call completions in the future? >> i am not aware that at&t itself has a rural call completion problem, but i am very aware that there is a problem there. the fcc has a proceeding underway right now to try to deal with it and to deal with it in a way that applies across all technologies and across all providers, and that is the way it should be. and i think it is an example of what an appropriate role of government should be. >> mr. latta. but do you think as we go forward with the ip, especially the rural providers, do you think it will help them to make sure that they don't have the dropped calls in the future? >> i would be hopeful.

but, again, i think that is one of the reasons you have trials, to test these things, make sure they work properly, make sure the replacement technologies are just as reliable as the others. we can't go out and convert a wire center today from tdm to ip without permission from the fcc. so while a lot of ip investment is going on, we can't do the fundamental investment. there are 20,000 wire centers in the country that have to be converted to ip and not a single one of them can be converted without permission from the fcc today. so that is why we need the trials, to take two of those wire centers, it is all we have proposed out of 20,000 nationally, conduct the trials and see if we can accomplish this without the kind of problems that you have experienced in the rural areas and ensure, frankly, that the replacement services and technologies are actually better and don't have those issues. >> thank you.

>> mr. may, in reviewing your testimony, in your section number three it says, "ultimately, congress needs to replace the current communications act with a new digital age communications act," and you state that "because of the extent of the dramatic marketplace changes wrought by the ip transition that has already been described, it seems to me that congress ultimately needs to comprehensively overhaul the communications act by adopting a new free market- oriented model that breaks thoroughly with the past." could you elaborate on that, please? >> yes. thank you, congressman latta. one of the reasons why ultimately congress should pass a new act, it really goes to a lot of the discussion we have had today back and forth talking about technology, whether policies are technology neutral or not and how that relates to competition. the reality is the current act

is not technology neutral really at its core. we talk so much, those who are in this area talk about the smokestack or stovepipe regime, because in essence the act establishes different types of regulation based on different types of technical or functional constructs, and that is not the most efficient or most sound way for regulation to go forward. so what should happen really in the future is competition is obviously important, as mrs. eshoo has talked about. we all want competition. but what we want to have really is an environment, and in fact the digital revolution is enabling more competition. that is why we have these, that we have cable and wireless and fiber and all of these things

are part of the digital revolution. but ultimately in a new act what we would like to have in my view would be a standard that ties the regulatory activity of the agency closely to an analysis of the competitive marketplace, and then only if there is a market failure or consumer harm, and i recognize if there is consumer harm there is a place for regulation. i am not advocating no regulation. but we need in a new act to tie regulatory activity much more closely to an analysis of the marketplace. and that really gets away from all this discussion about this technology and that technology and that type of thing. but the fact that technology is changing and it enables competition, that is a reason for policy changes.

it is not a reason to do nothing. >> mr. chairman, my time has expired and i yield back. >> we turn now to the gentleman from pennsylvania, >> mr. doyle, for 5 minutes. >> thank you, mr. chairman. mr. chairman, this morning i read in the newspaper that at&t recently notified many of its special access customers that it will eliminate certain long-term discount price plans, effectively increasing rates by as much as 24 percent. competitive carriers argue that they have no alternatives to gain last mile access to business customers and must simply accept the higher prices. mr. chairman, i would like to ask unanimous consent to place a copy of that article that appeared in the wall street journal this morning and a copy of the ex parte filing that several companies made to the fcc in regard to those rate hikes. >> without objection. >> thank you. let me ask mr. feld and mr.

iannuzzi, how can at&t institute up to 24 percent price increases if these markets are competitive? and do you find fault in claims by some that competition today eliminates the need for a regulatory backstop, particularly in light of at&t's action to effectively raise special access prices? >> sure. only a dominant market player can go and raise prices ad hoc and to that level of magnitude. it was quite shocking to see that take place where those network elements are very vital to run the connectivity within our network. so if there was true ability to shop and pick, then they would be foreclosing those sales and those revenue streams. and at&t is in the business to make profit, and to then just raise prices, if the market was working and there is an equal service, you would go pick the next lowest provider, provided they had equivalent capabilities. >> i would add that we often

have a confusion between the underlying infrastructure and the things that ride on top of the underlying infrastructure. and we look at the number of wireless carriers, the number of carriers that offer service through that underlying infrastructure, and looking at just the surface of that we say, wow, there is a lot of competition. but when you actually get below the surface to the infrastructure on which all of that competition rides, you have still the same kind of network problems, still the same kind of infrastructure monopolies that you have to worry about. so i think that what we have seen in special access -- and this is not a new problem, this has been going on for many years is that there was a lot of hope and anticipation when we set up criteria about how we were going to tell whether there was competition. some of that did not happen, but also the criteria were, frankly, too optimistic and did not take into account the difference between people offering retail

service or people offering different kinds of commercial service and the critical infrastructure that you have to get to in order to reach the customers to offer that. >> mr. cicconi, would you like to respond. >> first of all, let's be clear. when we are talking about the special access facilities mentioned here, we are not talking about services that are broadband. the fcc has not classed these services as broadband. the wall street journal article that we are not offering service contracts out 5 and 7 years is because we plan as part of the ip transition, the reason we are here today, to be replacing these old facilities with modern broadband fiber-based facilities, including ethernets. so naturally we don't want to be offering long-term contracts on a facility if we are going to be replacing it with an alternative facility. there is a proceeding underway on special access currently at the fcc that is designed to

gather facts on what alternative facilities are available for other providers like telnet to use. we think that the data the fcc collects from all providers, including cable, is going to show that there are ample alternative facilities there. and one of the alternatives, by the way, is for a clec to build its own facilities. we right now have a project underway, and hopefully within 2 years we will have run fiber to 1 million businesses in our 22- state footprint. and i think any other carrier out there is free to do the same thing. >> mr. cicconi, listen, i understand that you are transitioning and that it probably makes sense that you are not going to do 7-year contracts. i think the concern is not so much that you are discontinuing the long-term contracts, but that you are raising the rates, you are not passing down the discounts. and if this were truly a competitive market, i don't know how you could get away with doing that.

>> mr. doyle, i have to go back and check on the rates. but i don't think we have raised prices. i think we have eliminated some rate plans. but i don't think prices have gone up. >> let me just -- well, mr. chairman, i see my time has expired. i will just wait for another time. thank you. >> the gentleman yields back. and at this time the chair would recognize the gentlelady from tennessee, the vice chair of the full committee, mrs. blackburn. mrs. blackburn. >> and i want to go back tomr. waxman's question, talking about the peering agreements. mr. may, let me come to you, and then mr. feld, i am going to want to hear from you. do you think the fcc should do a pilot project and test some of the ip networks to figure out how to make the transition easier for consumers, for businesses? where are you on a pilot project?

>> i am in favor of one, but i have to say i probably don't need to be as delicate as >> mr. mr. cicconi may need to be. i think the fcc has been a little slow, i would say, in getting these trials off the ground, so i would like to see them move quickly. and i think they would yield useful information. but i don't want to see them used -- over a long time of watching the fcc, sometimes i know when you start things like this they can be used in ways that delay ultimately the ultimate decision making. that shouldn't be allowed to happen with these projects. you started out by mentioning the interconnection, i think, in the ip transition. and i just want to say, and i said this in my testimony with regard to ip-to-ip interconnection, i don't think that -- and i am just assuming

we will have the trial or not -- but ultimately i don't think the fcc should presume that it is going to regulate these interconnection agreements in the same way that it did in the tdm world. it is likely that there won't be many interconnection problems. that hasn't been the case with pure ip-to-ip connection. thus far they have been very rare that there have been disputes. they have ultimately have been worked out really in a voluntary marketplace way. so my counsel would be for the fcc to just presume that it is not going to intervene, that we watch the situation. if it does turn out that there is a real problem with interconnection, i said in my testimony that there could be a regulatory backstop.

but it shouldn't look anything like the current 251/252 process that basically really resembles more of a public utility style regulatory regime. it should be a dispute resolution process that ultimately depends on mediation, and perhaps ultimately baseball- style arbitration or something like that. >> mr. feld, anything? >> first, we support having well-constructed trials. i do think that the fcc has been behaving responsibly, however. what at&t has put in so far is much more akin to a phase-in or a beta test, which you get to at the end, rather than time- delineated trials with suitable safeguards, which are really where we are now. we saw what happened when you tried to flip a wire center on fire island this summer, and i am very glad to hear at&t say we don't want to do a flash cut like that.

the issue here is, as the fcc properly said in its proper notice, is that while the trial is voluntary for the carrier, it is not voluntary for the customers. and the other point i would make is that in a network if something goes really wrong and the wire center starts to go down, it can take down other portions of the network with it. so we believe in being cautious, but we think that, as with any other kind of trial, there needs to be appropriate safeties in place and that those need to be described and settled before we initiate any trials rather than after we get into it. >> all right. thanks. i am going to yield my time back, mr. chairman. >> the gentlelady yields back. and at this time the chair recognizes the chairman emeritus . >> mr. chairman, i thank you for your courtesy and i commend you

for this hearing. i also wish to express my thanks to mr. welch for his courtesy to me. thank you. i would like to begin by welcoming a fellow citizen of michigan, >> mr. mark iannuzzi, this morning. his company, telnet worldwide, offers valuable services to the businesses of michigan. at issue this morning is the transition to ip-based communications networks. as some of our witnesses have noticed, this transition is already underway and has the potential to confer significant economic and technological benefits on our people. but we need to learn more about what that transition means for the future of communications in this industry and particularly as to how it will affect the consumers. incumbent carriers make the very valid point that they are required to maintain tdm networks at great cost despite the fact that only 30 percent of all americans used ilec switched networks in 2012. it is my view that the billions

spent to maintain legacy networks can be be more efficiently based and invested in ip-based networks that will be the backbone of the 21st century telecommunications. this part will help advance the goals of the 2010 national broadband plan. with that said, i understand that at&t has petitioned the federal communications commission for forbearance from certain regulations in order to establish two geographically limited ip-based test projects. i think there is real value in this approach. it will provide an invaluable case study to consumers, businesses, policymakers, and to the government about what the transition to ip-based networks will entail. i encourage the commission to

work with at&t to set these projects in motion, making certain that there are mechanisms in place for monitoring and effectively resolving consumer complaints. in addition to the lessons that we can learn from at&t's potential trial projects, i suggest that policymakers also keep in mind several fundamental principles when considering the role of government vis-à-vis ip- based communications. as public knowledge has wisely suggested, our focus should be on ensuring universal connectivity, interconnection and competition, consumer protection, network reliability, and public safety. those are very important principles to be kept in mind as we go forward. i firmly believe that there still exists a need for certain ex-ante obligations because the

communications act's purpose is to make available insofar as possible to all -- and i emphasize all people of the united states -- the benefits of our communications system. that presumption and that comment is as valid today as it was years ago. mr. chairman, i thank you for your courtesy. i am yielding back a minute and 24 seconds. i will be happy to yield to the gentlelady. >> can i just pursue this issue of the trial? it seems to me that there is kind of a chicken-and-egg thing going on between the fcc -- maybe it is because we don't have a full commission yet -- but it seems to me the following. and i could be wrong, so, jim, you just jump in and tell me if you think i am wrong.

you will do that anyway. but anyway, you want the trials, you want the fcc to approve, give you the green light to go ahead with a trial. it seems to me that the fcc is saying we will do a trial but we want the following things in it, and there is not an agreement. does that look anything like how you see reality? because time is going on. >> right. >> and i think what mr. dingell said is it is just on the mark. we need to get going. >> i honestly think it may just be a function of our timing on this, as one chairman is on his way out and another chairman isn't yet in there. the questions actually issued were fairly recent, i mean, and they waited until 6 months after we filed the petition to actually ask the questions. and, frankly, i mean, like a lot

of you, i have been around the town a while and i took the questions as a way of the fcc saying we are not ready to answer this yet. but i do take comfort in the fact that we have democratic and republican commissioners both on the fcc who have said, yes, we should have trials. mr. pai said that, commissioner rosenworcel has said that, categorically go forward. the principal author of the national broadband plan, blair levin, has said, absolutely, he would have said yes to the trials on day one. i think the key, congresswoman, is this isn't about us exclusively, it is industry-wide and it is nationwide. and i for one have been reluctant to put in the fcc a, quote/unquote, at&t plan for conducting the trials. i think it is really the job of the fcc to work with all of industry and all stakeholders and, frankly, state-level government as well to design those trials, much like was done

during the dtv, and i am pretty confident that once chairman wheeler gets there that that is what will happen. >> thank you. >> the gentlelady yields back her time to the gentleman whose time has expired. and the chair now recognizes the mr. shimkus, for 5 minutes. >> thank you, mr. chairman. great hearing. i have learned a lot. and i love trying to stay as long as i can because you really do hear the point- counterpoint. but you never miss the opportunity to hear a member bring up a personal story. mr. cicconi, i am sure your staff prepared you for that personal story, and if they didn't then you might need to look for other staff members. > but let me address, and i always get concerned when i

mr. waxman every now and then. i have to check the data file on that. but i do agree we need to move on a test. we just need to move forward. and to his comments on google, they are probably out here or they are listening, i would encourage them to come in, because my guess it is 251/252, is why they are not into voice. that is what my guess is. now, if you have talked to them, mr. feld, and they have given you that data. but i think there is interconnection issues. it is very informative that they are not doing that, and i think that is a lesson we should learn and find out. so having said that, just a blanket statement, and i know the fcc is looking into this, these dropped calls in rural areas are an issue. and that talks about a backstop. i mean, that also reinforces an issue of having some type of backstop. so i want to raise that. but to mr. feld and mr. cicconi, public safety is a big issue for all of us here. anna and i work very closely on this.

in this move, how do you envision public safety being positively, or maybe -- hopefully not negative we won't accept a negative, obviously, response on public safety. so how do we deal with that? why don't we start with mr. cicconi and then we will go to mr. feld. >> to sound like it is circular reasoning here, but i think this is one of the reasons we need to have the trials out there. we are fairly confident that we can design these systems in a way that takes account of public safety. moreover, we fully accept that they have to work well for public safety. you simply can't have a new technology deployed where 1 -- 911 doesn't work or other public safety features don't work. so i think we all recognize this is imperative, and i think we need to stress test it to ensure that it does work and that we can transition it accordingly. but i think we all accept the

obligation has to be there and we simply can't replace the old technology with new technology unless 991 works. >> thank you. >> two things. one, planning precedes trials rather than trials preceding planning. and the thing that has been troubling to me is i get that we will need to have some information that we will gather in the trials, that is the point of doing trials, but before we say let's throw a switch and see what happens to public safety on this stuff, i want to know what the recovery mechanisms are, i want them to have limited tests first before you move on to full tests. the other important factor is we need to start thinking of how we make a more robust public safety system in our competitive and differently enabled technology universe. there is virtue in redundancy. so maybe we don't have to put everything on every network the same way if we have ways in which the networks will work

together that are for public safety. we have seen some things coming out the hurricane sandy hearings that the fcc has been conducting where we have seen how different technologies have different strengths and weaknesses and have responded in a different way. and i think that one of the exciting advantages of the ip transition is that it allows us to start thinking about how to take advantage of the structures of the internet which rely on redundancy and flexibility for stability rather than requiring 59 liability from every single network that is participating. the last thing i will just mention is we do have to be wary of new issues that are coming up. i mentioned in my testimony the problem of swatting, which is caller id spoofing, which allows people as a joke to send swat teams to other people's houses. that is not a particularly funny joke. and while obviously these are challenges that need to be resolved, we need to be accumulating this checklist of what needs to

work as we move forward. >> yeah, and let me finish on this. i have been really involved with trying to raise this issue with the fcc with the convergence of technology and i have given up. i don't think we will ever change the fcc and the bureaus that it has. the last thing, the question is, mr. iannuzzi, have you seen in the business sector the cutting of the cord from landline to cell for the business community as we have seen in residential services? >> mr. congressman, an excellent question. in the business community it is a distinctly landline-oriented business. while mobile phones are part of the workforce for the common employee, the way that businesses communicate and collaborate is inherently a landline type of function. it is because there is group capabilities going on. you are continually interacting with a wide variety of locations perhaps, and so forth, which is not conducive to how cellular technology has been deployed, which is more about the

individual and how that connects together. if i may on your very important item here about security and public safety, the competitive energies already have migrated for the most part to ip-based 1 service. it is a far superior solution than currently the legacy tdm one. why? because when we are trying to get our customers' calls to an emergency authority, the ip network allows us to make sure that if there is any bottleneck to get to the public safety point, we have alternate routes to alternate safety points to get to them or answer it even through our own operators to make sure that we connect the dots. furthermore, we have added in cool technology where if somebody picks up the phone and they dial 911, we not only send the call to the public safety organization, but we can then send it to the building supervisor, the provost of the

university, or if you are a residential user you could go to you are out at the show and somebody calls 1 from your home, we will sent it to your cell phone so that you know that 1 call was made from your home. so we have already made that move. and this thing about the ip-to- ip interconnection, yes, do you have to do things in a measured fashion? certainly. but when it comes to network center connecting and peering at the ip basis, that is different than how you are talking to the end user, and that ip-to-ip interconnection goes on right now. >> thank you very much. the gentleman's time has expired. and the chair now recognizes the gentleman from vermont, >> mr. welch, for 5 minutes. >> thank you very much, mr. chairman. thank you for being here. your testimony mentions a few carriers in vermont are investing in fiber, and my question is what policy decisions would change carrier incentives to invest in rural areas and are there regulations that are imposing unnecessary costs that are hindering any of that investment? >> mr. burke.

thank you for the question, congressman. i think that it is a very tricky question when you get to how do we move out into a better business plan in more rural areas. i mean, dollars are dollars. and i guess to call on a predecessor of my own, i will go back to my grandfather. he was a dairy farmer, and i can remember when i was little he said, you know why this stool has three legs, johnny? and i said, no, sir, i don't. he said, because if it had two it would just fall over. and i think that is actually what we may be dealing with here. i think we actually have a potential as we move forward into an ip world, and we are moving there, to be able to do it in a better and more focused way if in fact we use a stool with three legs; the federal leg that obviously is your

responsibility and the fcc's; industry's leg and how we get out there to make ubiquity part of the process here, because if it is not ubiquitous it doesn't really work the way we want it to work; and last but not least is the states' responsibility and the states' ability, be it with their own usf funds to help manage to get this stuff out there, or be it their policies to help make the move-out for industry itself more seamless, easier, and more attractive to their business plan. the states are a vital part of this. and without three legs to that stool, i am not so sure that it has got any chance of succeeding. >> thank you. just quickly, what actions are required by the fcc in order to ensure that competition will continue and actually thrive in an all-ip world? i would appreciate it if it was

quick and abc, because i don't have that much time. >> well, i think you have competition today, mr. welch, and i think as the fcc moves forward with the ip transition it certainly ought to take a look at what regulations are needed going forward to help preserve the competition that is there today. i would certainly grant that. but i would also suggest that on a going-forward basis that it would be a mistake to assume that the problems of the present and the future are necessarily the same as they were in 1996 or 1934. so i think the notion of taking legacy rules and applying them to new technology is something the national broadband plan actually spoke to, and it talked about how applying legacy rules could actually retard the investments that were necessary and could have unintended consequences of siphoning investments away from the new technologies that were

needed. so i think that would be our main concern, is that we not overcorrect here and assume there are problems until we actually know what those problems are. >> thank you. mr. iannuzzi? >> it is very simple. in terms of the fcc, we just need the clarity that removes, that if there is any technological implication in the way the act works, it is technically neutral. communication systems are by their design technical, so if there is not technical advancements, then what were we trying to do in terms of trying to get where we are at, if we weren't trying to make things better, faster, cheaper, smarter. so my point here is that the key thing to ensure competition is to eviscerate. take out the eraser on the spot that we have the technology underpinning to the act, because it was about creating competition. it was a framework to correct a market-based structure so that we could compete.

>> thank you very much. mr. burke, we have got a real epidemic of rural call completion, and as far as my constituents and the people you serve as well, our concern, fixing that problem, can't come fast enough. how can ip transition help to address the issue of incomplete calls, particularly in rural areas? >> well, i think that obviously you have to take a look as you move forward here with where the problems lie. and if you take a look at what we will see i think in call completion, the order comes out next monday, i believe, is the date that the fcc is actually going to issue it. the fact of the matter is that call completion is probably a methodology that grew from terminating access charges, and as least-cost routers sensed heavy terminating access charges, they decided that they would not complete the call. least-cost routers are innovation, too, and we can't

get carried away with innovation. certainly it has given us a lot of good things, but i suspect the idle innovator like the idle hands can be the devil's work thing, too, when it wants to be, and in fact that may have been the case here. how we go forward is to try to make sure that there is a regulatory touch as well that keeps an eye on moving forward in this transition. >> mr. cicconi hasn't said that that isn't the right idea. i would point out, too, that with call completion, that began, and the answer to that began through the states. when the problems occurred, i know that you got them, congressman. you said that you did, and i believe that you did. but the fact of the matter is most of the time your public service commission or your ag's office probably got them first as people became unhappy with what they were getting and what they weren't getting in rural america. and hopefully keeping those regulations in place will allow for consumers to get the kind of protection that they have learned to expect in their old

network as we move through to a new one. >> my time has expired. i yield back. thank you. >> thank you very much. the gentleman yields back. and the chair now recognizes the gentleman from louisiana, >> mr. i appreciate you having this hearing and i want to thank all the witnesses are coming. and your respects and on the -- your perspective on the changes in technology and the things that people are able to do now. we have this transition and a protocol. couples know that, you have the .pgrade to fiber optics it gives consumers more options. the investment sector with it, i know your company and other incumbents are investing billions of dollars to help build up a new networks