testing one two one two testing subcommittee will come to order good morning to everyone and thank you for your attendance today this morning our hearing focuses on the universal service high cost and the reforms to it that are proposed in a legislative discussion drafted that is now before us having affordable telephone rates for all americans as essential to our national well being at a time when electronic commerce and communications are central national economic performance keeping all americans connected should be a priority for rural and metropolitan residents alike while the universal service support is largely targeted to the rural areas where costs are high because of terrain low population density and the long distances the communications lines have to traverse the benefits of having everyone connected flowed to urban and rural areas alike and i hope that members will not lose sight of that reality as we consider the reforms that are needed to ensure the sustainability of the universal service fund it's now under  tremendous pressure and a comprehensive reform is clearly called for and i think it's urgently needed new technologies and business models that make local and long distance telephone traffic essential indistinguishable are combining to diminish the long distance revenues that are relied upon to support universal service since the universal service long distance surcharge is being imposed on a declining revenue base the surcharge rates are rapidly rising today the contribution rate is twelve percent of long distance revenues and in january that contribution rate is set to rise to a record breaking fourteen point two percent and unless we an act comprehensive reforms further escalation will continue after that the status quo is simply not acceptable and sustainable new controls must be placed on costs so that the level of universal service support can be contained the bill before us caps the high cost fund it requires competitive bidding for the provision of support to wireless carriers it imposes rigorous auditing and reporting requirements on the carriers that receive support we also expanded the contribution base to intrastate services and to all the entities that provide a connection to the network as a means of relieving pressure on the declining revenue a long distance base these changes on both the contribution and the expenditure side should produce a sustainable universal service fund the bipartisan discussion draft of that we now have before us circulated with our colleague from nebraska mr terry and  results from almost four years of consultations that mr terry and i have undertaken with literally dozens of stakeholders having competing interests with respect to universal service sought and now we have achieved consensus among these parties that have competing views with regard to universal service our draft to bridges the divide on universal service issues between the large witnesses this morning stakeholders on both sides of this classic divide are now united in their support for the bill before us the draft makes a broad range of other changes such as qualif broadband as an eligible subject for universal service expenditures for the first time other elements in our measure include a better targeting of support to high cost areas by switching from state wide to wire center averaging fixing the phantom traffic problem by requiring carriers to pass through call of dental find information eliminating traffic pumping which has become a major problem of late by prohibiting carriers from sharing access charges with third parties that offer free or reduced cost services making rural exchanges more marketable for telephone companies that desire to sell them by eliminating the parent trap and making permanent the anti deficiency act exemption for universal service so that and you all waivers are not required on appropriations bills on an ongoing basis we welcome this morning the views of our witnesses and of members of the subcommittee as we seek to broaden the consensus on the reforms that are needed in order to make sustainable the universal service fund that completes mild name statement and i'm pleased to recognize th time for two minutes the gentleman from nebraska mr kerry for his opening statement i might just note for if you'll excuse me for a moment mr kerry for the benefit of our witnesses that our republican colleagues are having a conference at the moment on that urgent business for them i'm sure and that accounts for the fact that on our side of the aisle we're somewhat better represented here that and that on the republican side but they are embarked i'm sure terry the chairman emeritus of the full energy and commerce committee the gentleman from michigan mr dingell is recognized for five minutes i thank you i commend you for holding today's hearing it is important you very much chairman dingell the gentleman from florida mr stearns the ranking republican member of our subcommittee is recognized for five minutes good morning mr chairman this is a very important hearing us and i see a lot of folks here very distinguished group of witnesses here i'm encouraged that your view towards reforming the broken universal service fund is a high priority there are many different ideas on how to best achieve this as we can see from the number of witnesses we have today so i look forward to their testimony the universal service fund needs to be reformed and quickly as possible we can all perhaps agree on that one point the system is fraught with fraud abuse a major overhaul is necessary so the question before us is what are the appropriate goals of the program and obviously how do we best achieve that the one nine hundred ninety six tel service but the concept goes back decades earlier to the time when there was only one phone company now the landscape looks a whole lot different yet the phone is still administered by out dated rules among the impacts of the growth of the universal service fund have been the growing universal service this contribution factor as a percentage of interstate end user revenue the telecom companies must pay and change changes quarterly depending upon the needs of the program now in the second quarter of two thousand was five point seven percent it has since grown to twelve point three percent that means that consumers are paying fees  excess of twelve percent of their monthly phone bills and that is expected to go up to fourteen percent next year accordingly there's a need to reform the program away from subsidies that may no longer be necessary as technology and services improve and of course become more widespread instead we need to move towards a solution that ensures a goals of universal services but minimizes consumer costs throwing additional money at this crumbling program  makes little sense at this time the purpose of this hearing is to reexamine to examine the discussion draft of the universal service reform act of two thousand and nine this draft takes several positive steps towards reform but it also contains questionable directions in particular is not clear that this draft strains cost in any real significant way in fact the size of the fun perhaps will ultimately increase more can and should be done to rein in cost to improve transparency first we need to impose a firm cap to prevent uncontrolled growth in the fun while this draft bill would cap the high cost portion of the of the fund the cap is subject to several significant exceptions that would grow the fun in my opinion these exceptions include an annual growth factor changes to increase support for certain non rural carriers and carriers by other local carriers and an upward adjustment if the f c c adopts an alternative recovery mechanism for enter carrier compensation revenues that increases demand for you universal service fun support so it's not clear how much these exceptions would cost the fund and consumers yes and other sources have given us recently an estimate that the changes to non rural support alone ranged from increase of two hundred to seven hundred million dollars this is only if no additional carrier carriers requests this type of support and if the support is for boys service not broadband service in addition reforming intercalary or compensation as it would require could cost upwards of one billion dollars while some of that increase would be offset i understand by reduction in other charges some customers are likely to see their overall phone bills obviously go up i think we ought to know the price tag before we start handing out subsidies so i question the reform that's proposed and i'm hoping that we can find out from our witness today how this would work moreover we need to institute competitive bidding procedures that apply to all carriers this type of process will help ensure that we are getting the most out of the subsidies otherwise we will continue to see an inefficient use of consumers money we also need to target the money to the places and the people who obviously really need it cable companies for example suggest that we eliminate subsidies anywhere there un subsidized wireline provider it certainly seems to make good sense that we eliminate subsidies where the market has demonstrated clearly service can be operated without subsidies so again thank you mr chairman for holding this hearing it's important to reexamine the goals and i look forward to hearing from our witnesses thank you mr stearns the gentleman from massachusetts mr markey is recognized for two minutes chairman it is long overdue that we fix the bloated system that likely overpays eligible telecommunications carry is more than what is warranted when approaching reform proposals i believe that we should harness in manses in technologies and insist on administrative offici drive down costs and create savings wherever and whenever possible and second we must also ship over time to more rational stable sources of funding while embracing broadband as a supportive service broadband will be indispensable in the twenty first century it will provide our ability to be able to manage energy efficiency technologies lower health care costs along with other social and economic and that's why i successfully amended the american recovery and reinvestment act in february and required the f c c to develop a national broadband plan for the country that is due next february while the u s lags behind other countries in the world in several key broadband metrics there is one area where the united states leads the world connections to classrooms why well because the one nine hundred ninety six telecom act we had a plan as the primary house author of the e rate program and that landmark bill i have seen first hand what we can do when we actually have a plan and the ninety percent plus of classrooms today connected to the internet is testimony to a forward leading approach with a national telecommunications broadband plan the federal communications commission has a chance to give the country a blueprint for our broadband future i urge the commission to give a plan to us that is practical but persistent with our consistent with our history of tackling the big infrastructure challenges with big ideas and a commitment to action without any national broadband plan focused on deployment to all americans and on addressing affordability must include universal service and related issues into carrier compensation as a key ingredient i congratulate him and boucher  the rural areas and i think there's been a lot of support for that i agree we need to target waste fraud and abuse and we need to legislate and we do not need to regulate on this on a side note i don't want to our ranch in this whole debate but as we focus on pushing out i hope broadband connectivity places i don't have a high speed net neutrality debate could come in here because it could change the business plan and so it's not explicitly written in this bill but it is of concern that if the pipes cannot make a decision or are on issues like telemedicine recognized for two minutes thank you mr chairman for holding this hearing and providing us with your discussion draft of the universal service reform act of two thousand and nine the draft is springboard for a healthy discourse on the next step for the fund and more than a few hearings on this subject and i think that it's time to develop a workable piece of legislation i welcome all the witnesses and certainly mr roston who is a constituent and a good friend it's wonderful to see you here there are a myriad range of problems with the universal service fund based in part on changes in the telecommunications industry in one nine hundred ninety six which is only thirteen years ago  regular years but in telecommunications years during that time we've seen a virtual explosion of new services and products the current system reflects the mid twentieth century telecommunications economy when long distance calls were defined as distinct from local calls and classified as a more expensive service this is the age of broadband and mobile telepathy and national and international packages have made this system  relic fit for the national history museum the program as it now stands is inefficient and fragmented with episodes of corruption but we know that the fund would cost too much even if its administrative problems are solved because the ways it collects revenue and picks and compensates vendors doesn't make sense anymore we heard arguments at our last hearing about the need for change and whether that changes come in the form of a reverse auction or requests for proposals would picking recipients we heard ideas about how to fix inner carrier compensation and the identical support rules a discussion draft should take us to the next level to concrete solutions i think it's time to integrate broadband into the fund base for contribution purposes and i'm pleased that the draft bill does so but i'm concerned about issues related to minimum speed and broadband rollout i signed on to congresswoman metz to his bill because i want to discuss the next steps for you for utilizing the fund to support broadband access unfortunately the bill before it does not address the low income lifetime program that would support universal broadband deployment under mismatched dewey's bill so i'm interested in alternative message methods that you would have for addressing this issue it also does not discuss the schools and libraries program that leaves a lot out of the equation schools and libraries  are anchor institutions and i have voiced my concern for funding their broadband access and the last mile of broadband needs to go to urban as well as rural areas quickly both in times of time both in terms of time  speed so i look forward to working on the bill mr chairman with you and mr terry developing this important piece of legislation that i believe needs to be comprehensive and holistic in it put it in terms that average people understand i like the bill i'm ready to take you to the prom but i'm not ready to marry you know there's still work that needs to be done mean more people have cell phones in have hard line phones the united states is the most wired country in the world those of us that have all the a t o centric laws that we've got to deal with have to blackberries three cell phones plus all the hard line phones in my condo here in washington in virginia i  i really really want to support but it does concern me that under this bill the size of the fund could actually increase and not decrease i think we need a farm cap obviously that's something that we need to work on  discuss there are some things that we could do that are not in the bill to make it more competitive in the service fund i think it's ridiculous that some areas have thirty different phone companies and get subsidies i just i don't i don't buy that i can i can buy two maybe or three for competitive purposes but thirty i think that's wrong and why you and i have discussed this at some length having a mandate is a difficult concept for somebody like me to swallow for broadband i'm not saying it's may much mr barton given the distance that we've traveled a prom date is good enough for today but i have and i'm happy to get the invitation the gentleman from pennsylvania mr recognized for two minutes thank you mr chairman i'm still trying to get that image of mr barton taking you out to the prom out of my head that's just metaphysical it's not literal even that scary thank you mr chairman for holding this hearing i'm pleased that you're holding a hearing on your bill to reform the universal service fund i think we have to rethink what universal service means and how the universal service fund implements these goals i've said many many times that we need an overhaul for the broadband age a universal two point zero universal service two point zero shouldn't build on the current structure just because it's what we have that structure should undergo a thorough review to make sure that every dollar spent is a dollar that the private sector isn't competing against and that every dollar spent enables low income consumers to choose the communication services they need i think the bill takes a number of steps in the right direction but i have some concerns that i believe have to be addressed before i can support it today my constituents pay a lot of money into that fund and i want to make sure that the fund just doesn't take from those in urban areas just to hand it over to rural areas who are capable of paying for it themselves i think that mismatch suis bill that allows for low income americans to qualify for a broadband lifeline subsidy is a good start and i intend to add my name as a co sponsor however although it's critically important in many cases monthly price isn't always the biggest reason that people or an online at home there's the other program link up that needs to be addressed also and universal service two point zero because there are other barriers like access to a computer or even a lack of understanding the benefits of broadband some people suggest that we shouldn't be subsidizing telephone service for upper income communities in areas like aspen colorado perhaps we need to consider legislation that will move the universal service fund to a voucher system for low income consumers that will allow them to in the ways that they want to i'm interested in learning if that's a viable solution to meet the goals of universal service two i look forward to hearing from our panelists today and i look forward to asking some questions mr chairman thank you thank you very much  appreciate your comments this morning general lady from tennessee ms blackburn is recognized for two minutes thank you mr chairman i do thank you for the hearing i know that you and mr terry are hard at work on this issue and i want to say welcome to all of our our visitors here today it looks like with a large number of you we are going to be spending the day together talking about this issue but i'm glad that you're here and i hope as we go through this hearing today that we're going to touch on a number of issues that really need to be addressed the inner carrier compensation competitive bidding caps on the u s s distribution the reverse auctioning cost of this to the consumers several of us have mentioned and as you know they are of concern to us i'm concerned that the legislation in its current form is where not really addressing hitting the problems that we're hearing from our constituents we're just not hitting them head on and i think the american people have gone  talk they want to see some action on some issues i'm hearing from some of my constituents who would be affected by this why is it not going to dramatically increase access or improve access exactly what is going to happen with the broadband plan and expansion how you're going to handle that mr shimkus mentioned net neutrality termit fairness doctrine for the internet indeed concern about complications and how that would be handled people are concerned that we put taxes on the books and then we don't take taxes off the books but we cannot always define what is a better use or a fair distribution for those taxes so there's plenty for us to look at and talk about and i do hope we're going to have some good common sense coming from all of you i want to say a special welcome mr chairman if i may to mr greer who is from tennessee and is someone that  i enjoy my conversations with when we talk about how this affects our rural areas and as we look at the telecommunications issues in the rural areas i also want to say a special welcome to mr graham who graduated from mississippi state university and like me a fellow bulldog looking at you i can tell you were there much later in life than than was i and that you probably graduated many years after i had i'd also like to commend your efforts to expand broadband access to more americans and your draft us as we form legislation and like to thank the witnesses for joining us today i'd also like to thank ms issue ms a dial for their supportive comments on my broadband afford y act in today's economy the internet has become a necessity not a luxury americans needed to obtain emergency information for educational purposes to find low cost health care options and to seek employment assistance in fact about seventy five percent of all large u s employers now require applicants to apply online creating a significant disadvantage for those without broadband we need to not only expand broadband access but also to address the fact that millions of americans simply cannot afford to pay up to sixty dollars a month for broadband a recent study found that ninety six percent of americans have access to broadband services well that some sixty five percent actually subscribe other current problem that studies by the institute and p p i c have strongly suggested that broadband adoption rates are largely associated with income lower income families create a program for universal broadband adoption similar to the current u s lifeline assistance program the bill will ensure that lower income americans living in urban and suburban and rural areas have access to afford farm legislation help us bridge this nation's digital divide by dressing affordability barriers i look forward to working with mr chairman and mr terry and all my colleagues looking forward into your back my time thank you very much the gentleman from oregon mr walden is recognized for two minutes thank you very much mr chairman topic of today's hearing universal service one reform is one that it appears everyone has something to say about judging by the panel of ten witnesses and we welcome you all this is a complex matter so i appreciate your assembling such a thorough complement of witnesses mr chairman should be most helpful it isn't often that there are two oregonians  in the room for one of our subcommittee hearings day is one of those times and i welcome my friend ray bob who is a commissioner with the oregon public utility commission and chair of the national association of regulatory utility commissioners committee on telecommunications wearing both these hats and as the state chair of the joint board on universal service re will share his insight with us on u s f reform and i appreciate his testimony which i read through last night during my years as a state legislator legislate or i worked alongside and i found his perspective to be thoughtful and comprehensive and i'm pleased that he's here to help this subcommittee in its efforts to reform the u s congress continues to discuss the issue of ubiquitous broadband deployment and how best to achieve it commerce department are engaged in this topic as well as the nation's unemployment rate of twenty six year high oregon's unemployment rate at eleven point three percent and some counties in my district pushing twenty percent the economic development potential the broadband service provides cannot come fast enough i'm interested to learn more about the implications however of using us after support broadband  service from our witnesses about how this would functionally work in a district as rural as mine that is several counties with population densities less than one person per square mile overlaid my district over the east coast it would start at the atlantic and in ohio i realize that none of our witnesses here today can speak to specific problems within for example the us and library program however i would like the hearing record to reflect that we should address the challenges that applicants face  navigating this very complex program my office has been working with the baker county oregon library district for a year and a half on delays it is experience with receiving funds if it is the intent of the program to support schools and libraries through the program then let's make sure it functions properly remove roadblocks which cause applicants to give up completely on the program so i welcome the witnesses here today and i thank you very much mr walden i also want to commend you mr chairman congressman terry for your work in drafting the bill and your long term legislative efforts to try to keep the universal service fund program in sync with a rapidly changing technology landscape and i'm pleased that today will have an opportunity to have a meaningful discussion of the issues that are important to reforming the u s that's including the overall budget for the high cost new contribution methodology and expanding the u s up to support broadband adoption among others i think everyone is in agreement on the need for reform but also on preserving the intent codified in the one nine hundred ninety six act which is to provide affordable telecommunications services across the united states as a representative of a district that is insular area w line carriers which represents a serious threat to the need for increased investment in the telecommunications infrastructure in rural areas it's important places like the virgin islands rural areas with minimal level competition and a small market but they are not left out or left behind by this critical industry so i look forward to our discussion today on challenges to reforming and taking the us into the twenty first century and i want to welcome the panelists and look forward to the testimony and their the gentle lady from florida ms castor is recognized for two minutes good morning thank you mr chairman for holding this important hearing and for the progress that you and representative have made in beginning to craft  are within appalachian proper and that said we are the poster child for the universal service fund support many of our towns are small insular and expensive for providers to serve in much of my district consequently lacks access the by the advent of new and diverse technology and also has an extremely detrimental effect on our ability to deliver health care and education what we're seeing now is really the beginning of the integration of technology into those processes and we can no longer afford to remain so far behind in such a vital area i am extremely pleased to see that chairman about you and congressman terry's draft bill supposedly authorizes the coverage of broadband under the universal high cost fund i believe that coupled with the investment we made through the american recovery and reinvestment act we are on a path to ensuring that americans everywhere regardless of how rural their own town is may have equitable access to vital infrastructure further support the efforts of my colleagues to restore some accountability and cost containment the universal service fund through sensible auditing and oversight provisions and to capping the fine with built in accommodations for future changes i look forward to continuing to work on universal service fund reform with my colleagues on this committee and i think i think we all agree that such reform is long past overdue and the rural areas of our country have in the meantime gone shortchanged mcnair and he's recognized for two minutes thank you mr chairman always my opening statement thank you mr mcnerney the gentleman from north carolina mr butterfield is recognized for two minutes let me thank you mr chairman for your outstanding work on this issue and for the work you and your developing your universal service reform act discussion dressed as a member of this committee who represents a particularly rule district in my state of north carolina i am acutely aware of the need for the u s effort and to ensure the telecommunications services are made available to the high cost remote areas of our country at the same time should we do nothing to reform us after we put ourselves on an unsustainable path a path that already projects the contribution back to rising to over fourteen percent in the coming year i am pleased to see much needed provisions addressed in the bat uteri universal service draft including requiring us after sapience to include broadband internet access and broadening the base of contributors to help bring down the rising contribution factor directing the f c c to address the into carrier compensation system and targeting support to rule y or centers as opposed to a formula based on statewide averaging and these are steps in the right direction and i look forward to hearing the comments from the witnesses before us today and also from my colleagues about these and other proposals finally i remain particularly interested in the comments  romance regarding much needed reforms in the rule health care program that's very special to me we have not been able to achieve the full effectiveness of this program and i look forward to discussing how the addition of broadband services and u l will potentially enhance broadband telehealth emp a structure and deployment in the rule health care program i have been an advocate of tele health and telemedicine and i believe these health care delivery too will be viable in ru communities across america and so i want to thank the ten witnesses eyes that he encountered all of you i want to thank the ten witnesses on the panel and i look forward to hearing your testimonies today i yield back thank you mr butterfield the gentleman from washington state lee is recognized for two minutes thank you and i'll pass thank you mr chair thank you mr inslee all members now having had an opportunity for opening statement we welcome our panel of witnesses and we thank each of you for taking time to join us here this morning i will say just a brief word of introduction about our witnesses today mr peter davidson is senior vice president of public affairs policy and communications for verizon mr leslie greer is the chief executive officer of d t c communications testifying this morning on behalf of the national telecommunications cooperative association a very large organization representing rural carriers mr michael rohde is the senior vice president for government affairs at when stream communications mr joel luban is a vice presidents of public policy for a t n t services incorporated miss katherine morier is the director of legal and regulatory affairs for pioneer communications testifying today on behalf of  the honorable ray bomb is a commissioner of the oregon public utility commission testifying today on behalf of nehru kyle mix lerato is president and chief executive officer of the cable television association mr telemedicine at the university of virginia health systems she also serves as president of the american telematics an association and as board chair of the virginia tele health network mr gregory roston is a deputy director at the stanford institute for economic policy research at stanford university without objection all of your opening statements will be made a part of the record and we would encourage your oral summaries and given the num ber of you this morning we would ask that you try to hold those statements to approximately five minutes mr davidson will be happy to begin with you thank you good morning everyone thank you chairman boucher ranking member stearns member of members of the committee thank you for the opportunity to address the committee this morning on the new universal service reform act of two thousand and nine circulated recently by chairman boucher and mr terry this committee has always been a leading voice on universal service reform and today we endorse the boucher terry legislation because we believe it embraces policies to reform and sustain the fund that directs funds to meet the true communications needs of consumers we will continue to work with the sponsors in this committee to ensure that this legislation accomplishes the objectives of modernizing the universal service program so that it meets the needs of americans in the twenty first century in the past decade the communications industry  invested hundreds of billions of dollars in private capital to deploy new innovative broadband technologies recently congress passed mapping legislation funded broadband grants for unserved areas and now we have a full complement of f c c commissioners focusing on broadband adoption and deployment policies encouraging deployment and adoption of next generation networks will keep america competitive in our global economy and will help address some of our most pressing challenges such as healthcare reform education and energy conservation we also believe that there should be a role for the universal service fund related to broadband but right now the fund is in trouble and left on change is in no shape to contribute to the broadband solution s contribution factor is near an all time high and just to pay the fines of the today's levels as everyone has noted this morning is projected to rise again next year to more than fourteen percent when added to other communi charges and fees these assessments really hit consumers hard especially in these economic times and this trend is simply unsustainable the problem with universal service is not that we spend too little money it's that we do not spend it on the right services in the right places we cannot put off any longer the tough choices on major issues we must fix the broken universal service framework before layering on additional priorities arise and supports the draft universal service reform act because it takes a big step toward addressing five of the most pressing issues one an overall budget for the high cost fund to a contribution methodology three competitive bidding for wireless support for a date certain for related reform of inner carrier compensation in five and then to traffic pumping allow me to briefly and i will be brief address each of these points first the bill recognizes the need to set an overall budget for the high cost on this is important because consumers pay for the fun having grown and consumers have limited resources the high cost fund is already at a tipping point having grown to about four point five billion from less than three point five billion only five years ago well the assessable revenue base declines rapidly without some restraint the us s contribution factor would surely rise to fifteen percent perhaps even twenty percent or more we simply must have the discipline at the outset of any overall the high cost fund to define some reasonable funding boundary second the way that we fund the fund and it through an assessment of an interstate revenues is a mess the system may have worked in the days of one network  only two services local and long distance calls but it's not practical with the converged any distance services consumers expect today the draft bill acknowledges the need to update the universal service contribution system and would commit the f take a high look at an alternative contribution system for many reasons the best contribution method is one mentioned in the bill a flat charge on each working phone number to pay for all or part of the u s contribution base u s l contribution base third a competitive bidding cism system is the best way to distribute high cost support to wireless carriers the draft bill recognizes the benefits of this market based approach insensibly puts in place a forward looking competitive bidding system to support and expand the reach of wireless networks the f c c will need to address quality of service requirements and rules and in a competitive bidding system but that is manageable through legally enforceable contract signed with those wireless carriers that win the to provide service and high cost areas just as the federal government does in hundreds of her care many areas to ensure quality of goods and services for we must fix the broken in our carrier compensation system at the same time that we update the universal service fun all that's needed is the resolve to get this done and the draft universal service reform act requires the f c c to act on our carrier compensation compensation reform within one year that is certainly workable and we have to stop the so called traffic pumping schemes that have plagued the industry the last several years the drop universal service reform act would help do that by making it illegal for traffic pumpers to charge other carriers for access on traffic subject to those revenue sharing agreements chairman with your in the committee's leadership the universal service reform act we can get through we can get the fun back on the path of sustainability and focused on meeting the telecommunications needs of our country and i thank you for the opportunity to testify here this morning thank you very much mr davidson mr greer chairman about ranking member starr and members of the subcommittee good morning and thank you for the invitation to participate in today's discussion with the universal service reform act of two thousand and nine my name is leslie graham the c e o of d t c communications in alexandria tennessee as a resident of tennessee i'd like to take this unique opportunity to thank represented in a discordance to represent blackburn for their service on the subcommittee and to our great state my remarks today on behalf of d t c communication as well as a and its other five hundred eighty plus community based members that serve rule areas throughout our nation and would like to recognize chairman boucher and represent terri for their long standing focus and awareness of the critical need for continued universal service support for our nation's telecommunications network which will help usher in the new era of advanced communications the universal service reform act contains many program modifications we have advocated for many years i will briefly outline our position on some of the most critical provisions of the bill from a rule provider's perspective how i would like to remind the subcommittee that further analysis of these provisions and others can be found in my written testimony government policies and programs including universal service or instrumental to the realization of affordable and comparable telephone service for all united states public telecommunication network remains the envy of the world the same should be true for the united states national broadband network the universal service reform act make takes many important steps toward making this a reality however to achieve truly ubiquitous broadband much more needs to be done therefore in looks forward to continue working with the f c c in the coming months to develop a national broadband plan to meet the needs of broadband networks and high cost rule areas throughout the country to ensure americans living in these areas are not denied the opportunity to realize the full promise of the internet the bill would expand assessments of contributions supports this change and believes all broadband access provider should contribute to the universal service fund this change alone will dramatically reduce the quarterly contribution factor on all simultaneously ensuring that all those who utilize benefit from the network are in fact supporting the bill gives the f c c the authority to determine whether to use a contribution methodology based on  or a combination of the two and requires a study and findings in support of the method chosen telephone numbers have nothing to do with broadband internet access which will be the basis for all communication services in the future with this in mind as well as policies and programs if they are conducted appropriately unfortunately the audit process is mostly failure therefore we support efforts by congress and the provisions included in this bill to ensure the appropriate audit methodology  the solution for compensation is a simple one if a service provider uses another provider's network that service provider must compensate the other provider for such use at an appropriate rate we fully support the bills provisions directing the c to reform medicare compensation within one year the universal service reform act requires carriage to identify all traffic on their network and to pass through traffic identification details and supports this provision to eliminate phantom traffic which has become one of the most pervasive problem space in the telecommunications industry today supports the elimination of the f c c is a longstanding nonsensical identical support rule that allows a competitor in a given market to receive support based on the income imbedded cost even though the competitors cost usually far less because they have not been required to serve all customers throughout the market area as incumbents have the draft contains other provisions will help ensure this program's effective operations including primary line and anti deficiency prohibitions removal of the parent trap and allowances to accommodate potential future regulatory shifts of anarchy or compensation or access charges within the universal service system with these things in mind we support passage of this bill thank you and i look forward to answering any questions you may have thank you very much mr greer mr rota chairman boucher ranking member stearns and members of the subcommittee thank you for this opportunity this morning to discuss our views on the draft text of the universal service reform act of two thousand and nine my name is mike rowe and i'm the senior vice president for government affairs at windstream which provides communications and entertainment services to consumers in sixteen states windstream serves more than three million voice customers and more than one million high speed internet customers we provide affordable broadband services speeds of at least three meg to virtually every community in our service territory and we've deployed high speed internet access to more than ninety percent of our voice customers windstream service areas are primarily rule with an average density of nineteen customers where mile mr chairman let me say that carriers windstream receives relatively little high cost support on a per line basis instead windstream must implicitly subsidize service for customers in remote areas with revenues from its customers in larger more densely populated towns more than a decade ago congress recognized in section fifty four of the communications act that such implicit subsidies would be unsustainable in a competitive telecommunications marketplace and unfortunately universal service regulations remain virtually unchanged since time we've seen the programming shortcomings up close a good example is one of our customers residing in a new rule nebraska who recently contacted us to ask why he could not purchase broadband at speeds comparable to his rule neighbors down the road his neighbors are served by a smaller company whose network has been modernized by universal service his frustration is understandable when streams commitment to deploying affordable broadband rule america is undeniable but existing universal service mechanisms have created drastic imbalances in rural nebraska and enroll america at large some high cost areas  arguably too much support while many others far too little or no support at all while the neighboring companies in this example receive an average of eight hundred dollars annually per line in support windstream nebraska operations receive approximately ten dollars per line annually about your terry bill takes a large step towards eliminating disparities in high cost rule areas by narrowly targeting support to those areas that need it a single windstream study area stretches before with the texas a distance of more than seven hundred miles and contains nearly two hundred exchanges ranging in size from forty four thousand customers to forty seven with competitive pressures mounting and lower cost more densely populated areas severe strains are placed on a carrier's operations because low cost no longer generate sufficient revenue to offset costs in remote higher cost areas the second problem lies with the non role mechanisms classification of entire states as either eligible or not eligible based on statewide average costs this limitation disqualifies ru areas in a state like california from receiving support no matter how small how remote or how costly a community is about terry draft establishes a sensible transition path for incorporating broadband in the universal service the strength of the boucher terry draft is that it sets the nation on a path to universal broadband but with recognition of the significant cost to achieve this goal and an opportunity to amortize those costs over time finally when stream strongly supports the bill's recognition of the important role that revenues from existing in or care compensation mechanisms play in offsetting the high costs in rural areas many on this subcommittee remember that one year ago the considered a proposal to eliminate most compensation revenues that proposal would have been disastrous for consumers and businesses in high cost rule areas windstream recognizes that the current rates and arcane rules of inner compensation are unsustainable and the company has presented practical alternatives to the that would not hobble the ability of mid size carriers to serve  consumers in closing mr chairman i would like to assure all members of this subcommittee that there is broad agreement within the telecom industry on the need for significant universal service reform and that that reform is long overdue while reforms carry certain risks the larger risk is to stand by and watch well documented problems continue to pull down communities and consumers residing in rural america significant change is the only way to save this program and position it to fulfill its mission thank you thank you very much mr rohde mr lubin good morning thank you chairman boucher ranking member stearns and other members of the subcommittee for again including  in this continuing dialogue of universal service reform a t n t s the largest provider of telephone service to rural america this is the second time i've had the opportunity to address this committee subcommittee this year the first time was in march of two thousand and nine at that point in time when we were talking about high cost universal service reform we identified three critical areas that needed to be addressed the first one was contribution reform contribution reform is so important because it's all about what customers pay and which customers pay the second was in her carrier compensation and her character compensation is critical because it's just subsidization to rural america the third is once and for all to identify an explicit endorsement for the use of high cost universal service mechanisms to promote the deployment of next generation broadband and expanded and improved wireless in rural areas let me highlight mr chairman and representative terry i wish to congratulate you for this legislation when introduced and enacted will address the three items that highlighted in march of two thousand and nine we support and endorse this legislation perspective of universal service as it exists today at both the federal and state levels is fundamentally grounded on a dying business model and dying regulatory model which no longer serves the foundation of sustainable social policy plain ol telephone service pots by which local exchange providers provide basic local exchange service with inner exchange access to long distance service will soon go by the way of a slide rule and earlier casualty of digital technology and today's communications marketplace the only thing falling faster than subscribers on local basic service called potts is the switch to access minutes on these collective networks and the circumstances no government could hope to prop up the pots model for long even if it wanted to in order to sustain universal service instead universal service reform must be forward looking and policy makers must continue to work on comprehensive national universal service reform policies in order to promote in advance universal service objectives for the twenty first century the universal service reform act of two thousand and nine both appropriately the reflects the insights of its sponsors and the committee leadership and recognizes the reality of the rapidly eroding implicit subsidies in the disappearing switched access world as well as the need to establish explicit funding mechanisms in order to ensure universal service objectives are met for the twenty first century let me return to the three pressing areas of reform that i described before first is the respect to contribution assessment rate could approach and exceed over fourteen percent of interstate telecommunications revenues when i was here in march of two thousand and nine that factor was nine point five percent in less than a year we see a fifty percent increase we have asked the f c c to act on a longstanding proposal by a t n t and horizon which is supported by a number of individual companies and individuals associations to implement a telephone numbers based contribution mechanism that would address the problem posed by the overall reduction of interstate revenues which is the basis for the universal service contribution base this would create a more stable robust collection mechanism for universal service this is of critical importance to the goal of providing more explicit support for a robot for a broadband deployment second is the section on in her carrier compensation reform is also critical for the transition to full deployment of broadband which will accelerate the complete underline the word complete elimination of access charges as a source of universal service funding we can debate what the rate is but a rate times zero minutes is going to generate zero dollars and ultimately the question is if that was supporting universal service how does it work in a broadband world we have needed in our character compensation reform for years and the importance of this draft measures requirement that the commission act within one year to complete reform initiative cannot be overstated further the bill makes access stimulation charge some people call it access something an unreasonable practice under the mission's communication act and prohibits local exchange carriers from assessing access stimulation or traffic charges third a t m t is pleased that the bill creates a statutory framework one removes any doubt that it is the policy of the united states i testified today as first vice chairman of the organization for the promotion and advancement of small telecommunications companies pascoe represents more than five hundred thirty independently owned local exchange carriers and forty seven states companies in cooperatives represented by this association provide numerous services to their communities including broadband internet access video and wireless first of all let me state our appreciation to chairman boucher and for the leadership that both of shown on the reform of the universal service fund this program has a successful history of assisting communications network providers in their service to rural and low income consumers we look forward to working with congress and the federal communications commission us as a part of a forward looking solution and the ever changing communications arena support into a new and modern broadband support on the draft continues to call for universal service support that a lot of rumors in rural areas services and rates reasonably comparable to those provided urban areas its contribution mechanisms will federal state joint board on universal service it's my personal belief that broadband deployment is essential to the economic development and quality of life for the rural communities of america those real communities who don't have adequate broadband will be just a disadvantaged economically as those rural communities in the first half of the twentieth century did not hide like access to electricity or paved highways the form of inner carry koppen usa is a potential to that broadband deployment i began by three different states through that contribution base we grateful for the opportunity to continue to assess that we also support the anti efficiency act exemptions we also support the continued role of the federal state joint board on universal joint board recommendations we're very pleased with the language requiring compliance with the political state and federal consumer protections and service quality standards this is key to consumer protection and it keeps the state consumer cops on the beat we do have some concerns about the preemption language and interstate rate setting we would propose that we use a more cooperative approach conditioning receipt of u s f funds in states that mare the interstate rate and return for the forward forgone intrastate revenues the those funds will be transferred to the federal fund in any case we're committed to working with you on modifying this provision of the bill remaining issues narrowcast not taking a position and so i'll speak to them  based on my own opinion as my experience as chair than universal service joint board and as former chairman of the name kerry compensation taskforce i know that the draft legislation echoes many other provisions in the joint board's recommendation of two years ago i applaud you for designating broadband as a supported service two years ago this month a joint board made that same recommendation i would encourage you to make sure that point would be can point to broadband should be a condition of receiving universal service funding the high cost fund should be transitioned to a broadband fund and it should focus on underserved areas and anchor institutions mr chairman i believe you're one point five megabits it's a good start but let me just suggest to you that might be better to realize what's coming in the future i want to kind of up the ante i think it's three to five megabits for residential customers and twenty to fifty may which frankly is a two sions has to be the minimum for going to face the new broadband world with corporate ravers for certain under served areas the service levels are the standard in most urban areas and should be comparatively available in high cost rural areas as required in the draft legislation the white house auction provisions of the bill are a positive step in the right direction it's a defacto repeal of the danica support rule however there is a seismic shift in the wireless broadband looming on the horizon in open networks it will be the communication device of choice people want to be mobile and want to have broadband this is looming reality is coming upon us and it evolves huge amounts of spectrum and exponential increases in backbone capacity i would urge you to to encourage the f c c to transition into carry compensation rates to zero in a five to seven year period they are going away anyway and you might as well plan for it and it won't work at all in the broadband we need to compensation reform and repeal the parent trap the universal service fund should be based as much as possible on forward looking cost models and on why based on a wire center basis as we go forward mr chairman an expeditious implementations of the major provisions of this draft legislation will greatly mitigate the digital divide that exist today between urban and rural america and will prevent that divide from becoming an irreversible chazan i personally support the major provisions of your bill we can address these issues soon enough the joint board is committed to working with you and the f c c and achieving these goals we thank you again for your leadership thank you very much commissioner b discussion draft which i think is a valuable step toward addressing issues like cost containment by injecting notions of competitive neutrality both on the distribution side and on the contribution side i want to just in the time i have focus on one area where i think the draft might be improved with a proposal that i think compliments the direction that you and mr terry are taking these reforms and it is it is to  note i know the members of the subcommittee are aware that the cable industry offers broadband service to ninety two percent of american households less well known perhaps is that we offer phone service competitive phone service to eighty percent of american  and i'm told it's going to actually reach ninety percent by the end of this year in less than a decade we've gone from less than a million phone customers to over twenty million and with very few exceptions cable digital phone service isn't subsidized by the universal service on the form so our view is that that change in the competitive landscape as you think about the future of universal service to mean something  proposals this that in the rural study areas for example that receive high cost support today we already know that forty percent of those rural study areas have a wireline unsubsidized competitors usually a cable company but not necessarily we don't actually know the answer in those other areas because statewide averaging is harder to know for the non world local exchange carriers but in those markets in those areas where we would say there is a competitive unsubsidized wireline phone service to more than seventy five percent of households we would say universal service on high cost universal service fund support and that marketplace alternative is in those regions or states where the state legislature has itself determined that the level of competition means that the retail rates of an incumbent carrier should be priced a regulated we can make a showing with one of those two triggers either evidence of significant competition evidence of deregulation by the states and set up a process where people can figure out how to folk on those non competitive areas where there indeed might still be requirements for high cost support every member of the subcommittee today i think has in one way or another suggested that they want to put more dollars on target in the most efficient way possible i think injecting notions of the changed competitive landscape will help you toward that goal and look for to answer your questions on that or other parts of the discussion draft thank you very much m mr chairman good morning and thank you for the opportunity to be here today to present testimony on behalf of cellular south and as a carrier member of the rural cellular association nearly one hundred carrier members provide commercial wireless services covering approximately eighty three percent of the nation's geography as you would expect much of this territory is in rural areas and therefore many r c a members including cellular cell are eligible to participate in a federal universal service program these carriers are using support to build high quality networks and some of the most rural areas of the country i cannot emphasize enough that for many rural areas universal service support is the difference between high quality wireless service and no coverage at all today citizens and thousands of places across the country such as floyd virginia oregon grand isle maine bunker hill illinois and many others are receiving wireless service as a result of the universal service program for its part cellular south has a long history of serving rural areas and  universal service support to provide service in places like ellisville mississippi simply would not have coverage otherwise this program has allowed cellular south to build a network that covers over ninety percent of the state of mississippi and upon which cities counties and state agencies depend for reliable wireless services r c a believes in rural america and its members bal you the people who live there in cellular south twenty years of general areas we have come to understand what rural consumers want in their wireless service it's very simple they want the same things that people in washington d c boston massachusetts los angeles california new york city want quality coverage modern technology the latest devices and the ability to access compatible networks wherever they go while congress works to modernize and otherwise reform the universal service fund is critical to keep in mind that device exclusivity and data roaming issues must also be resolved if congress still believes that rural americans should have services that are reasonably comparable to those in urban areas today consumers demand broadband and mobility policymakers and those of us in the telecom industry have seen this coming for years and everyone in this room has acknowledged the need for more broadband services yet since two thousand and one the f c c has not released an order that would promote rural consumers access to these services between two thousand and two thousand and eight the f c c subsidize wireline voice service to the tune of approximately twenty six point three billion dollars while funding wireless voice services at approximately four point six billion dollars broadband services receives zero universal service mechanism cannot continue to support fixed voice service nineteenth century technology at a rate of over three billion dollars per year as the world evolves toward broadband in mobile services so too should the funds distribution mechanism accordingly r c a supports chairman about your proposal to include broadband as a supportive service within the universal service fund however it is absolutely critical that the distribution of universal service support is competitively neutral in other words the distribution mechanism must not favor or disfavor any technology or class of carrier or that it should not protect any technology or class of carrier support should be portable and new entrants and incumbents alike should be allowed compete for customers this puts consumers in charge by increasing choices consumer choice increases service quality and lowers prices r c a is not convinced that reverse options for just one class of carrier are consistent with the principle of competitive neutrality to be clear a fully accepts the need to sustain the fund however we do not believe that reverse auctions are the solution because they sacrifice the goals of universal service in the name of sustainability there are a number of structural issues that must be overcome before competitive bidding can be a realistic option first and foremost we have not seen an auction mechanism proposed that eliminates the opportunity for us of opponents to game the system by submitting artificially low bid in order to drive out competition assuming to you could avoid that problem the proposed auction system would limit support in an area to a maximum of two providers for a period of up to ten years this ensures that no new providers will enter that area and it forces policy makers into the position of regulating an artificial marketplace a monopoly or do operate furthermore if the goal of reverse auctions is the less and support in a given area and thereby reduce the size of the fund there is no certainty that it will happen under reverse auctions finally as proposed reverse auctions exempt the largest category of recipients from the high cost portion of the universal service fund in conclusion r c a believes that supporting a high cost area should be fixed at the amount needed to deliver reasonably comparable high quality services to consumers with support only being awarded when a carrier gets a customer and with that support being taken away when the carrier loses a customer we believe that no one should be insulated from competition and we believe that new entrants should be allowed into markets to maximize competition and improve choices and service for consumers thank you again for the opportunity to participate today and i look forward to your question thank you very much mr graham we have several provisions in the draft that address the rural health care  her comments will address those provisions  and you'll need to turn that on good morning thank you chairman boucher ranking member stearns and other distinguished subcommittee members my name is dr karen rubin and i'm a practicing pediatric cardiologist and medical director of the office of tele medicine at the university of virginia i'm also honored to serve as president of the american telemedicine association thank you for this opportunity to testify and support the draft universal service reform bill the health reform debate has galvanized our nation the powerful tools of tele medicine and health information technologies are key to a transition from care delivered episodically in a balkanized model to an integrated systems approach sound policies must facilitate ubiquitous and affordable access to the broadband infrastructure to support access to health care using advanced technologies especially for rural americans the need for access to care is greater than ever before our nation faces a critical shortage of physicians with a projected deficit of two hundred thousand doctors by twenty twenty the aging of our population has created increased demand for health care services access to specialty care is inadequate for many americans telemedicine programs can be found in every state offering clinical services that span the entire spectrum of health care at uva we've been privileged to work with chairman boucher to deploy an extensive telemedicine network connecting more than thirty federally qualified health centers clinics hospitals schools and correctional facilities in his district in addition to other regions of the commonwealth medical specialty societies have endorsed tele health as an effective tool for the delivery of care as an example during an acute stroke lifesaving clot busting therapies administered by neurologist telemedicine have been proven to reduce the morbidity mortality burden and cost  stroke telemedicine programs improve access to prenatal care the university of arkansas now reports a twenty six percent reduction in neonatal mortality attributable to their high risk of death rates telemedicine program telemedicine plays an important role in chronic disease management the v a s care coordination and home tele health program has resulted in a nineteen percent reduction in readmission to the hospital and twenty five percent reduction in hospital days each telehealth application relies on broadband communication services that meet the need of the specific clinical service required surgical mentoring requires high definition and higher bandwidth as to the transfer of large medical image files and video teleconferencing remote monitoring and home telehealth require less bandwidth regardless of the clinical application affordable reliable secure quality of service is imperative the rural health care program has been critical to tell a health network nationwide however statutory and regulatory barriers has severely undermined the program's effect as of june thirtieth two thousand and nine sack reports a total disbursement over twelve years total of only two hundred forty nine million dollars which is only five percent of the originally authorized amount for the rural health care program to see succeed as intended a number of areas need to be corrected that have been addressed in your draft bill statutory barriers limit the eligible consuls origination site excluding such important entities as nursing homes e m s providers and even for profit rural hospitals for purposes of emergency preparedness or for access to emergency care there is no question that rule for profit hospitals serve the public interest program is bound by definitions of rural that fail to take into account our serious maldistribution of specialty healthcare providers and expansion of the rural definition would align universal service support with the specialty workforce shortages other administrative barriers including allowing only twenty five percent support for internet services counter intuitive in an era where most tele health programs deploy ip based technology all communications provider should be eligible to participate in the program in two thousand and seven the f c c launched the rural health care pilot program recognizing sixty nine entities including uva as eligible to receive more than four hundred million dollars in funds to expand the communications infrastructure for health care as of june thirtieth beginning the third year of the program less than one million dollars had been disbursed this program albeit well intended is equally fraught with significant barriers eligible providers are restricted no funds are available for project management and yet we as applicants are asked to provide letters of agency for each remote site secure fifteen percent in cash as matching funds provide detailed quarterly reporting even in the absence of funding and signed five year contracts for service for purposes of sustainability these obstacles have hindered the program telehealth services both drive demand for broadband adoption and increased access to acute care and chronic disease management through networks that include hospitals clinics physician offices nursing homes and balances the workplace and the home broadband provided over wireline wireless cable satellite power lines and other emergency emerging technologies provide the communications infrastructure that supports the transformation of healthcare delivery as you have addressed in this bill are universal service programs must be modernized with a closer alignment with our healthcare needs so that one major value problem our investment in universal service can be achieved that is an improvement in the health of all americans thank you thank you very much dr rubin mr austin the morning thank you my boss has always told me that in order to do a good job you should take your predecessor and unfortunately i have failed and not today but i'm going to go recognize my colleague brad wimmer of the university of nevada las vegas for his work on this testimony and our research over the past decade on universal service i serve now as deputy director of the stanford institute for economic policy research and have studied universal service for more than ten years we're pleased that you have put forth legislation to reform the current universal service program as with any program it is important to implement universal service in his efficient manner as possible the current discussion dropped includes some provisions that likely increase the efficiency of the universal service program but changes are possible they could decrease the cost substantially without sacrificing coverage or quality the committee should implement legislation that makes revenue raising as efficient as possible and harnesses the power of the market to drive down subsidies and increase competition for consumers first i'll address the revenue side the chargers to raise money for universal service distort customer behavior and can be very costly the best way to minimize these distortions are to have a low tax rate which can be achieved by keeping the size of the program relatively small and then deriving the revenues from a broad base it's good that the proposed legislation broadens the funding base that should reduce distortion if the lower tax rates uniting increased spending using general tax revenues would be a better way to find universal service while such an approach may not be politically feasible at this point in time it should be considered the discussion draft has several provisions declaring broadband to be universal service using wire center averaging the primary line rule and eliminating the so called parent trap that have the potential to increase the size of the universal service fund and some draft provisions have the potential to compound harm by decreasing efficiency without any offsetting benefits so first now in a move on to service pr the primary reason that a household does not subscribe to the connect to the communication network is because the household is not willing or able to pay as much for telecommunications services as the price charged a lifeline and link up programs for vide subsidies to low income households and in an attempt increase subscription rates among poor households representative matt sui has introduced a bill that would extend the life line and link up programs to cover broadband service we think that such a program has the potential to increase broadband subscription rates among low income populations although more study is needed before any firm conclusions can be drawn the results of our recent research indicate that moving money from the lifeline program to the linkup side has the potential to increase the penetration rate without increasing the program size because link up is targeted to households not connected and  low income households face high barriers upfront costs to getting connected the high cost fund subsidizes the companies that provide services in the high cost areas the majority of the subsidies are given to the incumbent local exchange carriers or i lax and the discussion draft includes several proposals that appear to insulate the i like from competition for subsidies which in turn insulate them from competition it would be best to distribute subsidies to roll comp roll customers themselves not to the companies that serve them extending a program lifeline would cost and income based vouchers to rural customers and urban customers could accomplish this goal as mr doyle discussed every dollar in the us out program comes from someone else's pocket so it's important to be careful on how this is spent the real high cost fund as increase substantially over the past several years but one cause of this competition provides an indication that the current system is broken and that there is room to reduce increase subsidies competition to drive down subsidies not increase the discussion draft a plan to use subsidy options but only in very limited circumstances and not for all providers instead subsidy options should be used pervasively there should be subsidy options when there are two or more providers of any type and all providers participate in a subsidy auction such expansion of the subsidy auction plan could help drive down subsidy payments substantially while the same time protecting consumers the most important feature of the subsidy auctions is that the incumbent local exchange providers would be subject to competitive discipline in the amount of subsidy they receive provide for providing service if it truly costs a lot of money to serve households and rural areas companies serving the consumers in those high cost areas will end up with relatively high subsidy payments to the auction system but if there are ways to serve the customers more efficiently as mr mclaren has stated the auction system will reveal that the current system and the system in the current draft do not have these critical features there is little incentive to reduce costs or the overall size of the universal service fund obviously the design of subsidy auctions needs to be considered carefully but the experience with subsidy auctions in other countries and the success with spectrum auctions and united states shows that we can implement such a system in a pro competitive manner the major concern we have overall is that there not only be mechanisms to reduce the growth of the growth of the fun but there are also be mechanisms to make the find as small as possible while still sizes find the goal of connectivity we think that the current bill makes a very good move to broadening the base of support to minimize distortion and arbitrage incentives we also think that it could be improved substantially if it were to set up a framework to allow competition to reduce the size of the subsidies because that would be an interest of all consumers more details in our written testimony thank you for having me here today and i'm happy to answer any questions thank you mr austin and our thanks to all of our witnesses for their very thoughtful comments here this morning particularly for the broad consensus and support of the draft referencing the recommendations made by mr mclaren where he says that the principles of competitive neutrality may be violated where you have wireline voice competition with one wireline carrier receiving support and competing with a wireline carrier that does not on its face i think his argument has merit and wondering what your response to that is and if we were to consider a provision that would prohibit support being provided in those instances where you have actual voice competition by wireline limiting the un availability of support just to the precise areas where the competition actually exists what would be your response to that now i realize it may be a question of first impression and if you don't have a definitive answer today that's certainly acceptable but i wanted to pose that to you and get your thoughts at least for the for the record this morning  chairman boucher on the surface we do have some concerns with the competitive bidding between the two because how are you going to well it wouldn't necessarily let me just interrupt to say be a competitive bidding i think his proposal doesn't actually relate to competitive bidding it relates to simply saying that support would not be available where you have a carrier that is offering voice service without support in theory where you have a carrier that's the service in that particular study area without support suggests that support is not necessary in order to sustain a service suggesting that you do not have competitive bidding you just deny the support under the circumstance fifteen square miles the majority over ninety percent of our population is going to reside areas so when we get outside of those areas we're talking about customers in a very large service area that would need to be served  you're talking about dollars that are going to be exponentially related to those very few customers obviously proposal here just last week we would be more than happy to in those areas to where there is wireless and wireline competition when we look at our u s and how we average our cost we average it over our whole service so it's a limited portion of that in our cost in those other to get back to you that's fine thank well thank both of you for that i frankly would have been somewhat surprised if you had just immediately agreed with the entire recommendation let me pose another question to you some have suggested that the high cost approximately four point five billion dollars per year be repurposed whole or in part in order to provide broadband services and my understanding is that four point five billion dollars for that funding is presently fully subscribed at order for you to offer the telephone services that you're offering that between when we actually put money in the ground and the support or the cost recovery for those dollars that we have already spent so part of that problem going forward is the issue of what happens to what in two thousand and nine if in two thousand and ten the entire fund is repurposed there are ongoing maintenance costs that are always going to be there my companies were several hundred miles from any major metropolitan area that transport to any major there needs to be some potential paid to that fact the two year lag all right very quickly mr greer we concur with those comments as well and currently the cost that we were not reimbursed till two years down the road anyway you do agree that those monies are fully subscribed they are fully and there's nothing available really to support broadband deployment within the size of the existing fund without surrendering the low cost of the affordable telephone service that you presently provide that is correct ok thank you very much my time has expired the gentleman from florida mr stearns is recognized for five minutes thank you thank you mr chairman mr lew been vice president of public policy services you're probably a good one to answer this and i have limited time so if you could just answer in a very small a man of time by the word increase or decrease is the key term could you estimate whether each of the following provisions is more likely to increase or decrease the size of the phone or if it's unclear to you could you please tell us what additional information you would need to provide a cost estimate in the first one is moving from a geographic to wire center averaging does it increase or decrease the phone that is moving from geographic to wire  it's a function of what model you use and the current language in the bill says two point seven five using that modeling what it increase or decrease when you say using that model that's in the bill it's not clear to me  what we're using in the ok it's not clear to you ok that's a good point and i mean that goes to the idea that you need additional information before you could say increase or decrease but at this point you're saying it your first hand blush is it increases that trap the potential is it would increase ok it's a function of how many exchanges and lines get sold ok creating an alternative recovery mechanism for enter carrier compensation revenues never repeat that creating an alternative recovery mechanism for answer kerry compensation revenues will increase the size of the fund or decrease it your opinion that has the potential for increasing again it's a function of how and what the benchmarking ok so in this question i've given you three areas and it looks like to me in all three areas you said it would increase i said the potential is the probably getting to the second half of the question which is are there other aspects of the legislation that could potentially decrease the size of the fund as well be happy to real i'm happy with the decrease i'm just i'm just concentrating this morning on what areas that i think might increase and just so we more so than he has some qualifying points here do you feel pretty much that all three of will increase in your mind i'm pretty good study this mean much much more detail than i have for example the parent trap would have almost no chance of decreasing the find and any sales would probably increase the size of the find as one example of the same would be true of inner carrier compensation ok let me go to mr miss claire you recommended targeting support for broadband services to areas and consumers that currently lack service i guess the first question is do we know those areas and consumers are today do we know where they where they are i think by and large we do and so i think we do have the ability to target or where it's most needed shouldn't we wait on the results of the seven point two billion broadband stimulus and the broadband mapping efforts that are currently underway before paying companies even more to provide broadband service in areas that they may already have it think the answer is yes but i think it's going to happen i mean the timeline here we're already in november of two thousand and nine the mapping will get done next year in any plausible scenario where this legislation moves i think it'll match up so they will have that data so in your opinion we should wait no i'm not suggesting we wait out what i'm suggesting is the mapping what i think will get done before the bill passes yes ok that's dr ross and isn't it true that a tax on broadband could decrease broadband subscription and inhibit adoption  increasing taxes on broadband to pay for as i said earlier every dollar you spend comes from someone else's pocket that would increase the price for other people and they would possibly respond by reducing their subscriptions do you think in your heart of hearts that the bill is drafted right now would lower consumers bill i mean would you put your money on it my own money your own money your own money as i close to what we  do i truly believe that by expanding the contribution base yes it would so in your heart of hearts you put your own money on this i guess that's what i'm hearing that you have some skin in the game so i respect your opinion thank you thank you thank you i don't think we should lowball them as part of the overall reform effort i think we need to keep in mind that we have no idea what will be happening in six years telecommunications develop so quickly that this might be is how can we use the broadband map to help guide our policies especially on determining the appropriate be do we really need one speed for the whole country and i'm also concerned about the the bill essentially maintaining the status quo for the high cost fund recipients of the fund are not required to provide broad bad services which i think is a huge mistake i think that we're ignoring our future i think we're  the present much less the future so i think that is a big hole in the bill in this area and so my second question is shouldn't the bill require the f t c to utilize the new broadband map to terminate if an area is already served by a provider that may not receive any you know fund support is there any sense how much could be saved if we first determine which areas and i think mr mclaren spoke to this and maybe some others did as well is there any sense how much could be saved if we first determine which areas are already served by a provider offering voice video and data today and not receiving any government support and lastly if there's anyone that would like to comment on this map dewey's bill which will use the lifeline program as the basis for a broadband accessibility for the unserved in the under served population so those are my three questions and  k the issue of speed is all of about how much are we willing to pay into the fund meaning how big is the higher the speed more the size of the fund will be so that is a trade off for the policy makers if you want bill and you're going to ultimately be a form of making a commitment to provide commers with that speed and so our concern with going even one dot five megabit potentially is too high when you start looking at what the size of the fund would be so that that's our concern with regard to the first question with regard to the second question and served areas in terms of the mapping we think it's a very important issue to be addressed and t april eighteenth two thousand and eight made a filing teaming up this point where we should focus on and served areas thus possibly being able to control the size of the fund so having focused on unserved is a very important aspect but i would like to highlight to you is once you do that in particular for the arl x if you start looking at the very high cost areas the presumption is you may  the size of the fund i think hit it right on the head is that once you do that you may in fact start to increase the size of the fund with regard to lifeline we think as we transition from the spots world to a broadband world we think the lifeline is going to be absolutely critical in a broadband world our bottom line with regard to lifeline is we think the whole lifeline plan alone do you think it's going to take to get us to do what you're describing that you think we should set this down to lower numbers for six years six long years that's good policy for the country again it's a question back to how much are you willing to fund how big will it cause the fund i've already heard issues about what the concern of the growth of the fund will be i think if you make it much greater than one dot five that question's on the table if you want to suggest less than six years i think that's that's a valid thing to say let's look at it shorter than six years but listening to this conversation clearly the higher it is the bigger the size of the fund that's that's the linkage in the issue thank you very much mr rubin the gentleman from texas  having been president but i have been observant well i've been multitasking i brought my bill for rise and bill and for services i'm paid twenty six dollars and fifty of virginia does charge me a virginia federal universal service fund surcharge just about your seventy six cents and i hope you can do something about that if i wanted to ask a trick question that i asked mr davidson what a sensible man it is to rise in charge me two dollars a month for a sensible minute i have no clue what a sensible man it is and i don't know the gentleman deal just for a moment universal service has been inherent in the structure of the telephone network essential sense it's inception and it wasn't on cell the telecom act of ninety six  we made the universal service subsidies explicit when did we first start charging universal well that's been inherent in the structure of of the flow of revenue centrally ever since but it wasn't a federal mandate and it was not a mandate it was just done within the industry where urban residents and users of long distance wound up paying somewhat more in order to keep telephone service is broadband today the equivalent of basic telephone service in the thirt i think that's not an economics question that i would answer as i kind of it is it is probably much if you look at the data broadband is much more pervasive adopted today than telephone service was in the one nine hundred thirty s whether you ask that of the values question i can't answer that but just sort of the data broadband has been adopted much more rapidly than telephone service was and it's much more pervasive than it was and well the reason i ask that is because one of the apparent premises of the draft is that broadband should be equivalent to basic phone service that it is almost an entitlement and should be treated as such and i'm not quite ready to go there i think broadband is an improvement i think it's enhanced when i think it's a good thing to have but if i choose to live in very rural america by choice i like that last hour i don't know that one of the witnesses from one of the  smaller phone companies basically said people that live in rural america expect to have the same services la di da di da people live in urban america and i'm not sure i mean i think you make a  that's not the answer i wanted but thank you it's the answer that i'm glad i gave thank you thank you very much mr barton the gentleman from pennsylvania mr doyle is recognized for five minutes  chairman mr austin in your testimony you said you believe that should follow consumers not companies to increase competition and choice do you think is a reverse auction the only way to testimony that went that was sort of my view would be low income vouchers that would cost adjusted so that a low income household in a dense urban area would get a smaller voucher because the company would be charging a lower price in that area conditions that you would have a telephone service or broadband service and could be done without an option and it would probably would cause consumers to have the ability to choose their provider and the providers would have to compete with it for the service whether system where we put more money in the hands of the consumers themselves and let them make choices is probably a better system and i also want to give you the opportunity i know that several of the testimony from the phone companies talked about some of the it still allows the incumbent who's receiving support to come forward and say here all the reasons why if you took out support in the competitive area my revenues can't cover my costs so they still have an opportunity to make a showing  for some level of support and actually asked a question i didn't get a chance to answer you are analysis is that there is about two billion dollars that we would at least under our proposal take  thank you for your answer did a great job of kind of hitting on what the main issue here we understand that was some of these reforms that cost will have additional pressures  that the price of broadband is a determining subscribership factor in many low income americans and urban and rural areas so my research is focused on lifeline only go for telephone service not necessarily for broadband but it would be sacrilegious as an economist not to say that price matters for low income households i think we should study to make sure that any program we have we can figure out what is the impact of price on low income households the evidence you know our research is that there are two programs lifeline and link up in our our view we found in our research we didn't go into this thinking about it but the linkup turned out to be much more effective because of the high cost of for telephone service just paying the connection for broadband service you need to not only pay the connection fee but you also need to have a computer and knowledge of how it might work and how it might benefit you to link up targeting those who are not already online is consumers as it would be for urban consumers yes i think so i think where people live both in urban and rural areas and so lifeline would be beneficial in both areas ok thank you i have a question moralize begin with you is well know that one of the barriers to further broadband deployment in rural areas are getting more households to subscribe to broadband in your view what a program for broadband adoption similar to the current lifeline program help increase adoption rates in the communities in which you serve and other role areas across the country and would it help further the goal of broad as two thousand and six we talked about adoption programs we've been in recently to do the same and i think we need to cover the cost of the of the device the laptop the computer i think they need to cover education some people just clearly don't understand the benefits that broadband bring to them and then they also finally need to cover the cost of the monthly service in some respects so we're fully supportive of your efforts ok thank you and i've a question for mr obama deployment of broad consider that to be about right if we had broadband service the benchmark for that service would be in the thirty dollars heading towards forty dollars in the future because that's simply the basic cost out there for that one point five chairman thank you for your patience and your indulgence i know you've been here for quite a while i got just a couple of questions that are i want to add and let me start mr davidson with you a contribution formulation i think that's the most efficient way in the modern in the modern world of the various means so let me interrupt you right there the contribution formulation just to give some specifics on that to define right mister we have we have concerns with the cap but we look forward to working with the on the national broadband plan when it comes out next year from when streams perspective narrowcast concerns about the preemption language but on a personal basis i think they need to be realistic as to what we really need in the economy and the economy and we have to also acknowledge that there are a lot of rural constituencies t produce the food and fiber for the country that need access to this kind of bad broadband technology is not a choice for them to live there it's how we feed ourselves and their hospitals and schools have to have that same same access to broadband have already talked about my proposal and peter talked about numbers i'm going to cheat and add a third which is ensuring that if we are going to have support going to broadband to be restricted to truly unserved america guarantee a reduction in cost and they discourage new entrants however if we move forward with reverse auctions they absolutely should apply to everyone participating in the u s s fund not only wireless providers of wireless providers are subject to it as part of  surely wireline providers who have depreciated point in the ground over a number of years to compete as well for purposes of telemedicine we're very supportive of the bill in its current status the one thing we might add is to ensure upstream bandwidth as well because for telemedicine we're trying to get feedback from the patient or from the hospital so it should be bi directional so i i would change the whole system to be a low income household but given that i'd that's not going to change in this bill i would say extend auctions set a time limit for the f c c and put them in in the next six to twelve months and go ahead they're not a silver bullet but they're better than the current system changes so fast and i think that one of the things that we need to look at is what we can do to ensure that the universal service mechanisms work in a changing environment in a boy environment and making certain that this bill is going to work in a world and i know i'm out of time but i will would appreciate your response to that question in writing as we move forward or at a later support all of the services i think for a surgical mentoring it's not sufficient i think it is sufficient for a clinic operation or for only for the  home health wouldn't require quite as much bandwidth of some of the more sophisticated applications and if you have multiple users providing health care services in a hospital you can imagine that the demand for the bandwidth would be significantly greater so again one point five four is good for some applications but not for others thank you i guess i would ask this question to mr obama mr austin but if anyone else wanted to jump in be fine section one o four and eligible recipients of universal service support exit exams existing with the ends of the us that fund primarily world telcos from the requirement to deploy and provide high speed broadband service of five years the f may also grant a three year waiver provision of the provided demonstrates that it's not technically feasible or would materially impair its ability to continue to provide local exchange service waivers renewable for every three years option there will be some really remote pockets of population and even single family that simply are too far out in the rural areas of america to be receiving broadband fixed basis through their services either some kind of wireless broadband or in this instance since it would be like we simply can't get everywhere in the country we might get to ninety eight percent ninety six percent somewhere and also remember that we never got phone service beyond about ninety five covers pretty much most everywhere and especially the high cost areas that would be a safety valve in this well let me ask you mr us and one of your main point is that the d of subsidies should go to consumers not companies to increase competition and choice could you elaborate on that very attractive it sounds like it may be a major upheaval could you elaborate on that recommendation sure it's  generally a way of giving consumers choice in what they want if you decide that the best service for your house is a wireless service because you work outside a lot of the time and need to be accessible that you'd have that's right i mean the question is finding out right now where the true needs of consumers are and i would also go back and focus the panel on the needs of the consumer to which i think it's been a great part of this hearing spend a lot of time talking about that so  the mechanisms that the boucher terry bill uses to figure out where that where the services are needed and where they are i think are very important so the competitive bidding portion again i mentioned the numbers formulation before and i think we're adequately addressing that issue and i think they are yes i think that the i think the bill has many provisions in it that's trying to prioritize where the scarce resources should be directed there are many aspects of the bill that are that are directed toward doing that and there's been some other ideas raised on the panel here as well as ideas interesting and others as well so i think those should be examined to make sure that we're prioritizing  funds thank you thank you thank you very much ms kristiansen the gentleman from oregon mr walden is recognized for five minutes very much mr chairman i want thank all the witnesses for their testimony today on this very important piece of legislation i want to go to mr balm in oregon where certain nationwide service providers are shedding their remaining rural lines can you outline for us how the parent trap may impact other carriers decision to step in to provide phone service  constituents well the reality is that the regional bell operating companies have been unable to do an adequate job at the point broadband in their high cost were all areas that's because they face competition their urban areas and their business or anywhere from the low seventy's to the high eighty's they just don't have a business model that works for the parent trap would allow some of the mid size of small companies to come into those areas and to refurbish him and get the subsidy that they would receive as our lacks to refurbish some of those broadband it would be important to have that dealt with in some way because really the failure to deploy broadband in rural high cost areas is largely a regional bell operating companies issue and affects about fifty percent of the country and we simply have to address that issue and that's why it's important that we do something on that regard about the parent trap it's also important that we focus some of this money at the risk them on the end served areas a commissioner what you're seeing in terms of where this money is going because it seems to me that with the taxpayer dollars involved or the u s f dollars involved it should go into areas that have no service to begin with if we're going to get this country together in a broadband world one of the problems of the current broadband stimulus package is some of the bigger companies have declined to because of some issues over net neutrality and not certain about what those strings mean to the deployment of dollars  half of the countries areas they don't have the major i like in that area even applying in high cost areas now there are some other people that are kind of a little bit of an older build some of them are other you know we have  proposing essentially to test one would be a study where there is significant competition which we're defining as seventy five percent or more of households can receive a competitive and subsidize service or a situation where the state is actually deregulated prices on the competition so i guess my question would be again i have a district that seventy five thousand square miles so you could have the urban area we have in a very large geographic area and probably serve seventy five percent of the population and my concern is what happens that other twenty five percent that's out in the how do you get it out do you define that circle if you will which you use score the seventy five percent penetrated it's a good question i think and this goes to one of the schools in the bill i think moving to wireline centers actually helps i think the smaller you can make the right the less you're going to run into that problem but remember under our proposal you still have the ability if in fact there's some other area that isn't being covered to make a showing us cost more to still procreated cover with internet consider the telecommunication needs of public safety and if so how would you go about doing that well you're aware that public safety is one of the applications that's eligible under the broadband stimulus on the stimulus right yes and there's also those seven hundred megahertz applications that some of the local jurisdictions are applying for waivers to get from the public safety trust so that's moving on that front so there's kind of some things moving ahead there right now instance in oregon we have a four hundred forty million dollar project to build out microwave public safety network and those are local state efforts so nationally there are some funding available for the homeland security stimulus money there it's obviously not going to do the trick but when we judge our applications for stimulus based on how many of the proposals they serve where they provide public safety application they proposal distance learning all those things are part of the application process that we're encouraging companies to it thank you the easiest way to deploy broadband for public service at least within the state of mississippi is to make broadband service immediately we are in the process of preplanning applications with the mississippi  which would allow officers to have a program with a wireless connection it would also allow them to input data into their laptop in their chair but that's basically for state employees right how do you get your local money we never seem to get anywhere in our metro one of our metro counties we've already launched with the sheriff's department similar program they've got broadband connectivity from their cars applications are easy to envision where they have real time video on late at night on a county road and you can easily extend that into paramedics emergency responders like that the county may have it but what about the municipalities within there are they part of that same system they're not part of that same system yet they could be part of that system could be would be to be lack of money on it services as long as the cloud is there the broadband cloud is there they can access it let me ask you this is mr graham based on your only since two thousand u s f has provided like twenty six billion dollars in subsidies we've increased the contribution that consumers are paying and yet we kept the wireless seems like we're getting less for more so joe barton when he comes over the telephone bill he's paid more but yet we have less than we did two years later for wireless communication is not really the way we're going we're completely agree with that we've got we're going the wrong direction capping wireless wireless may have seen growth but it's because we've gone from zero funding to the funding we received today allow certain high cost carriers to receive support indefinitely do we run the risk of freezing investment much like what has occurred with rural wireless we do run that risk and in some areas curtail investment and in other areas but the cap continues to run indefinitely what would you propose that changes in the current legislation we would target the support to areas where it's absolutely necessary we think a thorough review by the expert agency must be undertaken that has not been done no one has ever sat down and figured out exactly where the support really truly needs to go mr levin let me ask you because in your testimony you also urge a bit of caution about how we utilize a cap to contain cost the support that was going to each of them and we overlaid that on top of what we knew about where unsubsidized competition was alright you get that seventy five percent area then you get compensated competition around regulate and i should just point out in our proposal we took we actually made what we believe is the most conservative we're not even take into account wireless we're just saying if there's another unsubsidized wireline competitor that that's the case for taking a fresh look let me ask you this it's my understanding your concern with broadband network connections be and assess for contribution into the plus level broadband as we've all been talking about still has some adoption challenges so we're a little leery putting another assessment on the cost of broadband we're actually over here trying to drive more adoption but the numbers approach or some kind of  clarify when you were answering questions mr barton relative to the expansion i got this sense did you really mean that we should be taxing broadband contribution factor are going to be reaching fourteen percent next year and no end in sight unless we fix the system i think everyone agrees that there needs to be some kind of cap on the process here or it will simply become unsustainable what is unsustainable mean  sustainable means that people like mr barton other folks are looking at the bottom of the telephone bill are going to say i'm not going to pay twenty twenty five percent of my bill subsidize the system anymore so it has to be fixed i think  what representatives about your interior have done is introduced a cap concept and as you hear throughout this panel there are a lot of different positions on how exactly to do that i would just urge this committee and all of those that are going to be participating in a legislat process to preserve the discipline as much discipline as possible in keeping that cap as concrete as it can be as it moves through the process because that's what's going to that's what's going to keep the system sustainable that i haven't studied it much but it seems to me that numbers or connections would be a better way than revenues vermont mr welch thank you very much mr chairman i appreciate your work here commissioner bomb if i could the discussion draft allows eligible providers to avoid the requirement of offering broadband service where it's costly for them to do that and i gather that's about three times the national average do you see this as a clause almost an escape clause that could lead providers that still receive support not make now back to your question at some point we have to have the way by which we're going to try and how far we're going to penetrate into those high cost real areas and protect the answer portions and i'm not sure if that two point seven five ratio is accurate we may be able to go further than that but at some point we're probably not going to build affordable vied at high speed broadband to every person or residence in america or garst where they're located but i'm kind of wondering if we have it structured right because obviously there may be a point where the cost is beyond what is affordable but on the other hand there's a lot of rural areas where we need that service from not among them and the specific question i have is whether you're going to have under the draft language some possibility of companies on the one hand receiving support but on the other hand actually not doing build out in some of these areas i just can't tell you based on the i wasn't briefed on how that actually worked or was i part of that process but there's got to be some way about which we can figure out how far we're going to go and the percentage should be in the high ninety's and i'm just not sure between ninety five and one hundred percent how far we can go on affordability basis ok thank you mr austin how about you i know you've studied the economics of this  pretty extensively so my view is if you went to a system of consumers you would not have to worry about this because they'd be cost and you would get them able to pay in other areas i think it's important to also consider the satellite alternatives very very high cost areas and what's what is the cost of a satellite connection might my impression i have unsubscribed i thought it was somewhere between seventy and ninety dollars a month for broadband access  you as well as by folks on this table that dead build out is really a lifeline for the economic activity of those rural residents and they're there for a variety of reasons i don't think it's quite an individual choice to  deserve high cost targeted support and it's about taking scarce dollars and putting them where they're needed i will say that at least in our own industries experience whether it's broadband or phone we don't actually differentiate in terms of the pricing in an urban area  ahead i think one of the things to recognize as well as that that expense in the areas that you represent aren't necessarily last mile expenses as well we have a proposal that deals with what so called middle mile which is terms of amount of transport the broadband needs to go over long areas to get to remote areas and then those remote areas so i would be happy to explain and come talk to you a little bit more about what our proposal is but basically we think that if you provide some support to build those middle mile facilities and then the and then that subsidy goes to the end broadband provider it doesn't go to the middle mile facility but it makes it possible for that middle mile provider to build build the transport that's enough of network i'm wondering whether verizon's willing to commit to serve every customer in the carrier of last resort throughout all of your rural areas without any universal service support well  first of all let me let me i wanted to respond to this question earlier that came up as well commissioner bahman mentioned the development of this new rural lac company and we have windstream here we have century link we have  others that do an excellent job with the business model in terms of serving rural areas so issues like the parent trap and others are very important and kind of get to your question as well in terms of the in terms of the arising territor s we currently participate in the universal service program in certain certain areas were by far pay or into the system by a large amount and we take a small amount out and that amount is decreasing over time due to merger conditions and other reasons so we actually participate on the side to a very small percent right now but again we support the bill and we support moving through the process in terms of serving our  everyone to get support when they get customers and lose support when they lose customers thank you very much mr welch and the committee thanks to all of our witnesses today we've had a thorough ranging and informative conversation the universal service i appreciate the broad consensus of support for the discussion draft that's been expressed by the witnesses here today and the many recommendations that we've received for possible additional changes that we could make which would expand that consensus even further we intend to focus on those recommendations and have gone subsequent conversations with many of you as we do so over the coming weeks and our goal will be to fashion a reform that with broad bipartisan support we can pass through this committee in the house and have an active into law during the course of this congress each of you here has contributed to the process today and we thank you for it and this hearing stand