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WRECKING THE INTERNET TO SAVE IT? 

THE FCC’S NET NEUTRALITY RULE 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MARCH 25, 2015 

Serial No. 114–18 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Staff Director & Chief Counsel 
(III) 

C O N T E N T S 

MARCH 25, 2015 

Page 

OPENING STATEMENTS 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 1 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 3 

WITNESSES 

The Honorable Tom Wheeler, Chairman, Federal Communications Commission 

Oral Testimony ..................................................................................................... 6 

Prepared Statement ............................................................................................. 8 

The Honorable Ajit Pai, Commissioner, Federal Communications Commission 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 14 

The Honorable Joshua D. Wright, Commissioner, Federal Trade Commission 

Oral Testimony ..................................................................................................... 20 

Prepared Statement ............................................................................................. 22 

The Honorable Terrell P. McSweeny, Commissioner, Federal Trade Commission 

Oral Testimony ..................................................................................................... 45 

Prepared Statement ............................................................................................. 47 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Bob Goodlatte, a Representative in 

Congress from the State of Virginia, and Chairman, Committee on the 

Judiciary ............................................................................................................... 51 

Material submitted by the Honorable J. Randy Forbes, a Representative 

in Congress from the State of Virginia, and Member, Committee on the 

Judiciary ............................................................................................................... 57 

Material submitted by the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Committee on the Judiciary ......................................................................................................................... 69

Material submitted by the Honorable Hank C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Member, Committee 

on the Judiciary ................................................................................................... 82 

Material submitted by the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Committee on the 

Judiciary ............................................................................................................... 94 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from the Honorable Tom Wheeler, 

Chairman, Federal Communications Commission ............................................ 124 

(1) 

WRECKING THE INTERNET TO SAVE IT? 

THE FCC’S NET NEUTRALITY RULE 

WEDNESDAY, MARCH 25, 2015 

HOUSE OF REPRESENTATIVES

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Committee met, pursuant to call, at 2:07 p.m., in room 2141, 

Rayburn Office Building, the Honorable Bob Goodlatte (Chairman 

of the Committee) presiding. 

Present: Representatives Goodlatte, Smith, Chabot, Issa, Forbes, 

King, Franks, Gohmert, Jordan, Poe, Marino, Collins, DeSantis, 

Walters, Buck, Ratcliffe, Bishop, Conyers, Nadler, Lofgren, Jackson 

Lee, Cohen, Johnson, Chu, Deutch, Richmond, DelBene, Jeffries, 

Cicilline, and Peters. 

Staff Present: (Majority) Shelley Husband, Chief of Staff & General Counsel; Branden Ritchie, Deputy Chief of Staff & Chief Counsel; Allison Halataei, Parliamentarian & General Counsel; Kelsey 

Williams, Clerk; Anthony Grossi, Counsel; (Minority) Perry Apelbaum, Staff Director & Chief Counsel; Danielle Brown, Parliamentarian; James Park, Counsel; and Rosalind Jackson, Professional 

Staff Member. 

Mr. GOODLATTE. Good afternoon. The Judiciary Committee will 

come to order. Without objection, the Chair is authorized to declare 

recesses of the Committee at any time. 

We welcome everyone to this afternoon’s hearing on ‘‘Wrecking 

the Internet to Save It? The FCC’s Net Neutrality Rule,’’ and I will 

begin by recognizing myself for an opening statement. 

On February 26, the Federal Communications Commission voted 

3-to-2 along party lines to approve the commission’s new Open 

Internet order. FCC Chairman Wheeler argues that this order will 

preserve and protect the Internet as a platform for innovation, expression, and economic growth. He claims that the order will not 

raise Internet service costs, slow broadband speeds, reduce investment, limit consumer choice, or let the government regulate rates. 

Chairman Wheeler also asserts that the commission’s dramatic, 

last-minute departure from the FCC’s proposed rule was made 

independently without undue White House influence and was consistent with the Administrative Procedure Act. 

Today’s hearing will challenge each and every one of these assertions. The order will undoubtedly raise Internet service costs. The 

text specifically permits the FCC to impose additional fees, raises 

the rate carriers must pay to deploy broadband, and opens the door 
2 

to higher State and local taxes. The result is an estimated $11 billion in new taxes and fees. 

This estimate, moreover, does not include regulatory compliance 

costs. An army of lawyers and accountants will be required to comply with the 300-plus page order and the dizzying array of additional regulations, proceedings, and opinions that it contemplates. 

The order will also slow broadband speeds. 

Europe already imposes utility-style regulation on its broadband 

providers. As result, Europe trails America in virtually every measurable category relating to Internet speed and deployment. Indeed, 

Europe is thrilled that the FCC is leveling the competitive playing 

field. The Secretary General of the European Policy’s Party recently remarked that the FCC was about to impose the type of regulation which has led Europe to fall behind the U.S. in levels of 

investment. 

The FCC’s order will reduce consumer choice. A group of 142 

wireless Internet service providers, 24 of the country’s smallest 

ISPs, and the Small Business and Entrepreneurship Council all 

urged the FCC not to impose Title II regulation, because it would 

hinder our ability to further deploy broadband, erode investment 

and innovation, and badly strain our limited resources. 

These are the types of companies that serve small and rural communities, like many in my district, and the FCC’s regulations 

threaten their very livelihood. Forcing companies out of business 

rarely results in more consumer choice. 

The FCC’s order will discourage investment. Nothing chills investment faster than regulatory uncertainty, and this order is the 

very definition of it. It allows the FCC to regulate virtually any activity it deems to have violated its vaguely worded, seven-factor 

‘‘Internet conduct’’ standard. 

Chairman Wheeler describes this new authority as ‘‘sitting there 

as a referee and being able to throw the flag.’’ What he doesn’t tell 

you is that he won’t be the only one who can throw the flag. 

Hoards of trial lawyers will now have the ability to file a suit in 

any Federal court in the country claiming violations of the new, 

vague conduct standard. 

Additionally, there is uncertainty regarding the validity of the 

FCC’s order itself, which has already been challenged in court. The 

last time the FCC acted in this area, it took over 3 years for the 

courts to largely invalidate the FCC’s net neutrality rule. 

Chairman Wheeler told other congressional Committees that the 

order does not allow the FCC to regulate rates. Chairman Wheeler 

further argues that his commission will set precedent that will 

make it more difficult for future commissions to regulate rates. Yet, 

it is this very commission that has overturned decades of precedent 

to categorize Internet service under Title II. Obviously, precedent 

does not carry much weight at the FCC. 

Furthermore, it increasingly appears that the FCC changed its 

proposed order under political influence, rather than independently. In the words of Commissioner Pai, ‘‘Why is the FCC changing course? President Obama told us to do so.’’ 

Finally, the public did not receive adequate notice of the final 

rule as required by the Administrative Procedure Act. Nearly every 

facet of the final rule is distinguishable from the proposed rule, and 
3 

many aspects of the final rule did not receive even a single mention 

in the proposed rule. 

The Internet that existed before this FCC order was dynamic, 

competitive, open, and free. By raising costs, imposing a heavy regulatory burden, introducing regulatory uncertainty, and instituting 

government meddling into nearly every aspect of the Internet, the 

FCC will seriously undermine the competitive nature of the Internet. Barriers to entry will rise. Smaller rivals will be forced to exit. 

And consolidation will likely ensue. 

Given these fundamental changes to the Internet, one would expect widespread documented abuses. Yet, within its 300-plus page 

order, the FCC does not point to a single example of actual anticompetitive conduct occurring on the Internet. Four million Americans wrote the FCC asking it to protect and promote an Open 

Internet. The FCC turned a deaf ear and delivered the most heavyhanded regulatory regime imaginable. 

The FCC has destroyed the city in order to save it. 

I look forward to hearing today’s testimony on how the FCC’s 

order will impact the future of competition on the Internet, and I 

now am pleased to yield to the Ranking Member of the Committee, 

the gentleman from Michigan, Mr. Conyers, for his opening statement. 

Mr. CONYERS. Thank you, Mr. Chairman, for your views. 

Now, the full Committee of Judiciary has a central role in studying the issue of net neutrality, and, more generally, competition on 

the Internet. As the Committee considers today the specific question of what impact the Federal Communication Commission’s latest Open Internet order has on competition and innovation, we 

should keep several factors in mind. 

To begin with, whatever approach one uses to ensuring an Open 

Internet inaction is not an option. There are real threats to net 

neutrality. And as I have observed earlier at hearings in 2008, 

2011, 2014, there are many areas in the United States where consumers have the choice of only one or two broadband Internet service providers. As a result, these providers effectively function as 

monopolies or duopolies. 

In turn, their control over the broadband access market can result in differential treatment of content, depending on how much 

a content provider pays, whether the broadband provider also offers competing content, or if any other financial incentive for discriminating for or against given content were present. 

These concerns I have expressed before and have only become 

more problematic since then, particularly in light of further acquisition by broadband providers that may result in even less consumer choice, less innovation, higher costs, more power in the 

hands of these few broadband providers. 

In light of this threat, I commend the Federal Communications 

Commission and its leadership for its work in crafting a strong set 

of rules for ensuring an Open Internet. Congress has created the 

FCC to develop the specialized expertise to properly regulate the 

complex telecommunications industry in the service of public interest. 

After a lengthy rulemaking period, during which almost 4 million 

Americans and all industry stakeholders made their voices heard 
4 

on this issue, the FCC has fulfilled that mandate with respect to 

preserving and promoting an Open Internet. Rules to address net 

neutrality have the benefit of addressing potential threats to an 

Open Internet before they fully materialize. 

Additionally, having a set of best practices enshrined in rules 

would provide certainty for industry. The FCC’s net neutrality 

rules, therefore, must be given an opportunity to take root. 

So I am pleased that the FCC’s Open Internet order contains key 

provisions that I and others have long called for and that will help 

protect competition. They include a rule preventing broadband providers from blocking Internet access; from imposing paid 

prioritization of Internet traffic; also a restriction prohibiting any 

other practices that unreasonably interfere with or disadvantage 

users’ ability to access broadband service or lawful content applications or services; and a requirement mandating disclosure to users 

of information concerning network management practices and any 

terms, conditions, or limitations on the broadband service itself. 

These measures are critical to protecting the virtuous cycle of innovation, which net neutrality fosters, and which ensures both 

competition and innovation among broadband and content providers to the ultimate benefit of consumers. 

Finally, enforcement of existing antitrust law as the exclusive or 

primary means of ensuring an Open Internet would be insufficient. 

Under the current antitrust law, there is relatively little that 

regulators can do outside the merger review context to address the 

conduct of a regulated industry, such as broadband Internet service, with respect to enforcing net neutrality principles. 

Through a series of decisions, the Supreme Court has limited the 

potential to successfully pursue claims under the Sherman Antitrust Act with respect to net neutrality. Moreover, exclusive reliance on antitrust enforcement is simply insufficient. 

While having the benefit of a more nuanced and fact-specific approach to the problem, antitrust enforcement alone, I am sorry to 

say, would also be a cumbersome, more limited, more resource-intensive, and after-the-fact way to develop a regulatory regime for 

net neutrality. 

Another potential approach would be for the Federal Trade Commission to use its authority under Section 5 of the Federal Trade 

Commission Act to stop unfair methods of competition. Although I 

hold an expansive view of Section 5, to the extent that this approach goes beyond the scope of the Sherman Act or other antitrust 

laws, it would be very controversial, as some of my friends here in 

the Committee would be the first to note. 

So finally, moreover, antitrust law is not sufficiently broad in 

scope, as it fails to address the noneconomic goals of net neutrality, 

including the promotion of innovation, and the protection of free 

speech and political debate. 

That is why the former Chairman of this Committee, a Republican, and Zoe Lofgren from California and I, all three of us introduced a bipartisan piece of legislation going back to 2006 to 

strengthen antitrust law to address net neutrality, in part because 

the FCC was doing too little at that time, in my view. 

So I do not have that concern with the FCC’s latest Open Internet order. Rather, I congratulate them on their good work. And I 
5 

welcome all of our witnesses, especially the chairman of FCC himself, to join in this discussion this afternoon. 

And I thank you, Mr. Chairman, for the time. 

Mr. GOODLATTE. Thank you, Mr. Conyers. 

And without objection all other Members’ opening statements 

will be made a part of the record. 

We welcome our very distinguished panel today. And if you 

would all rise, I will begin by swearing in the witnesses. 

Do you and each of you swear that the testimony that you are 

about to give shall be the truth, the whole truth, and nothing but 

the truth, so help you God? 

Thank you very much. 

Let the record reflect that all of the witnesses responded in the 

affirmative. 

Tom Wheeler is the current chairman of the Federal Communications Commission. Prior to his appointment to the commission by 

President Obama, Chairman Wheeler was involved in telecommunications as a policy expert, advocate, and businessman. He 

has worked in senior positions at two technology investment companies, founded a technology company, and served as president and 

CEO at both the National Cable Television Association, and the 

Cellular Telecommunications and Internet Association. Chairman 

Wheeler earned his undergraduate degree from the Ohio State University. 

Ajit Pai currently serves as an FCC Commissioner. Prior to his 

appointment to the commission by President Obama, Commissioner 

Pai held several positions within the FCC’s Office of General Counsel, including as Deputy General Counsel. 

Before joining the FCC, Commissioner Pai worked in both the 

public and private sectors. He was a communications law partner 

at the firm Jenner & Block, associate general counsel at Verizon, 

a trial attorney in the Antitrust Division of the Department of Justice, and chief counsel to a Senate Judiciary Subcommittee, and a 

clerk for Judge Feldman in the District Court of the Eastern District of Louisiana. 

Commissioner Pai earned his undergraduate degree with honors 

from Harvard University, and his law degree from the University 

of Chicago, where he was an editor of the law review. 

Joshua Wright currently serves as a commissioner to the Federal 

Trade Commission. Prior to his appointment to the commission by 

President Obama, Commissioner Wright was a professor at George 

Mason University School of Law and held a courtesy appointment 

in the Department of Economics. He is a leading scholar in antitrust law, economics, and consumer protection, and has published 

more than 60 articles and book chapters, coauthored a leading 

casebook, and edited several book volumes focusing on these issues. 

Commissioner Wright is currently on his fourth stint at the FTC, 

having previously served in both the Bureau of Economics and Bureau of Competition. 

Commissioner Wright earned his undergraduate degree with 

honors from the University of California, San Diego, and his law 

degree and Ph.D. from UCLA. 

Terrell McSweeny currently serves as commissioner to the FTC. 

Prior to her appointment to the commission by President Obama, 
6 

Commissioner McSweeny served as chief counsel for the Competition Policy and Intergovernmental Relations Department within 

the Antitrust Division of the Department of Justice. Commissioner 

McSweeny previously served as senior adviser to President Obama 

and Vice President Biden, deputy chief of staff to then-Senator 

Biden, and counsel to the Senate Judiciary Committee. She also 

worked in private law practice at the firm O’Melveny & Myers. 

Commissioner McSweeny earned her undergraduate degree from 

Harvard University, and her law degree from Georgetown University School of Law. 

All of your written statements will be entered into the record in 

their entirety, and we ask that each of you summarize your testimony in 5 minutes or less. To help you stay within that time, there 

is a timing light on your table. When the light switches from green 

to yellow, you have 1 minute to conclude your testimony. When the 

light turns red, that is it, time is up. It signals that your 5 minutes 

have expired. 

Chairman Wheeler, we are very appreciative of your being here 

today. You are welcome to begin the testimony. You may want to 

push the button on that and pull the microphone closer. 

TESTIMONY OF THE HONORABLE TOM WHEELER, CHAIRMAN, 

FEDERAL COMMUNICATIONS COMMISSION 

Mr. WHEELER. As you said, Mr. Chairman, I did not go to law 

school, but I have built companies, met payrolls, and created jobs, 

and it is from that perspective that I would like to address the 

issues today. 

The widespread use of the Internet exists because of decisions of 

the FCC decades ago that restrained the power of the dominant 

telecommunications network operator. To take one example that 

was important in my education as an entrepreneur, FCC regulations enabled open access for the modems that powered the early 

use of the Internet. There would have been no AOL without the 

FCC’s openness mandate, for instance. 

The whole Open Internet debate burst into the public consciousness when a Republican-led FCC took action against Comcast for 

degrading the delivery of content. The decision was overturned in 

court. 

That led to the 2010 Open Internet rules. These, too, were challenged, and the court remanded them to the agency because the 

commission imposed common carrier-like requirements on activities 

previously characterized as information services. 

Nonetheless, the court upheld the commission’s power to protect 

the Open Internet and observed, ‘‘Broadband providers represent a 

threat to Internet openness.’’ 

This observation is not academic theory. It was my real-life experience as an entrepreneur. I was part of a new pay-per-view video 

service. When we would seek to get on a cable system, the first 

question the cable operator would ask is, what is our cut? Access 

had to be purchased. 

Likewise, when I was a venture capitalist in the early days of 

mobile data, the only way a wireless carrier would let an application provider on his network was for a cut of the revenue. Again, 

access had to be purchased. 
7 

When internet protocol allowed consumers to leap these walled 

gardens, the ISPs sought to use their position as network gateways 

to their advantage. 

Congressional leaders such as Representatives Walden and 

Upton, and Senator Thune, as the chairs of the FCC’s authorizing 

Committees, introduced legislation banning blocking, throttling, 

and paid prioritization. Our order has a similar ban, as well as establishing that, in the future, ISPs cannot act to hurt consumers 

or innovators, a determination the FCC would make on a case-bycase basis, not by broad prescriptive regulations. 

We took a businesslike approach in our report and order. It was 

patterned on the regulation the wireless industry asked for in 

1993, and which has proven so successful, Title II status and the 

forbearance from the old parts of Title II that don’t apply to the 

new circumstances. And it is an approach that worked. 

When, for instance, the big wireless carriers refused to let voice 

customers of smaller carriers roam on their networks, it was a Republican-led FCC that in 2007 invoked Title II to mandate open access. 

Finally, allow me to quickly reflect on the allegation that our 

order creates business-threatening uncertainty. When Title II was 

applied to broadband DSL in the late 1990’s and early 2000’s, it 

didn’t chill investment. The network industry invested more than 

it had before or since. 

Similarly, during the 4 years the 2010 Open Internet rules were 

in place, broadband capital investment increased steadily, topping 

out at almost $70 billion annually. It is no wonder, therefore, that 

Sprint, T-Mobile, Frontier Communications, Google Fiber, Cable 

Vision, along with hundreds of small rural phone companies and 

the small competitive wireless companies, all say they can build 

their business within Title II. 

Even behemoths like Comcast, AT&T, and Verizon, who opposed 

what we did, continued to invest in their networks even knowing 

the rule was coming. In fact, AT&T and Verizon did so very dramatically in the recent AWS-3 spectrum auction. 

There would be, however, a serious casualty of uncertainty were 

no Open Internet rules in place, the innovators who need to know 

that they will be able to get on the networks owned by Comcast 

and AT&T and Verizon. 

Openness without fear of pay-to-play is the key to innovation. 

Similarly, if investors believe their capital will be siphoned off by 

the big network providers or, worse, the companies won’t be able 

to reach consumers, investment capital will dry up. 

I recognize the propensity of this issue to dance on the heads of 

legal pins. In reality, however, this issue is simply about whether 

those who operate networks will be the rule-makers or whether 

consumers and innovators will have the security of knowing that 

the network operators will not be able to misuse their position. 

Thank you again for this opportunity. I look forward to your 

questions. 

[The prepared statement of Mr. Wheeler follows:] 
8 
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Mr. GOODLATTE. Thank you, Chairman Wheeler. 

Commissioner Pai, welcome. 

TESTIMONY OF THE HONORABLE AJIT PAI, COMMISSIONER, 

FEDERAL COMMUNICATIONS COMMISSION 

Mr. PAI. Thank you, Mr. Chairman. Chairman Goodlatte, Ranking Member Conyers, Members of the Committee, thank you for inviting me to testify today. I appreciate the opportunity to share 

with you my views on one of the most important regulatory decisions in recent history, the FCC’s decision to regulate the Internet. 

Put simply, Title II Internet regulation is a solution that won’t 

work to a problem that doesn’t exist. 

First, the Internet isn’t broken. There was nothing for the FCC 

to fix. Indeed, the Internet ecosystem in the United States is the 

envy of the world. Nonetheless, the FCC decided to treat 

broadband as a public utility. In so doing, it erased a bipartisan 

consensus dating back to the Clinton administration that the Internet should be unfettered from government regulation. 

Second, the FCC’s Title II solution isn’t narrowly tailored to solve 

even the hypothetical net neutrality problem. It goes far beyond 

that by adopting a broad and general Internet conduct standard 

rule, by threatening Internet service providers with rate regulation, 

by claiming authority to regulate Internet interconnection, and by 

applying a variety of Title II provisions that have nothing to do 

with net neutrality. 

All of this regulation will be a raw deal for consumers. It will 

mean higher broadband prices, lower broadband speeds, fewer 

service plan choices, and less competition in the broadband marketplace. 

Now let me focus on that last point, since antitrust teaches that 

robust competition is the best way to protect consumer welfare. 

Title II will reduce competition among Internet service providers. 

Monopoly rules designed in the monopoly era will inevitably move 

us in the direction of a monopoly. Thousands of smaller ISPs don’t 

have the means to withstand a regulatory onslaught. 

This isn’t just my view. The President’s own Small Business Administration admonished the FCC that its proposed rules would 

unduly burden small businesses. 

Unsurprisingly, small ISPs are worried. One-hundred-forty-two 

wireless ISPs said the FCC’s new rules ‘‘would likely force us to 

raise prices, delay deployment expansion, or both.’’ Twenty-four of 

the country’s smallest ISPs, each with fewer than 1,000 customers, 

told us that Title II ‘‘will badly strain our limited resources.’’ And 

43 government-owned broadband providers told the FCC that Title 

II will ‘‘risk serious harm to our ability to fund and deploy 

broadband without bringing any concrete benefit for consumers or 

edge providers.’’ These are joined by many other companies, big 

and small. 

In sum, the FCC’s Title II regulations not only address a nonexistent problem in the marketplace, they will actually harm consumers by limiting their broadband choices. 

Even if there were evidence of anticompetitive behavior, antitrust would provide the appropriate framework for addressing this 
13 

problem. The scalpel of antitrust, not the sledgehammer of Title II, 

is the best guarantor of consumer welfare. 

The Department of Justice and the Federal Trade Commission 

are quite capable of vindicating the public interest by investigating 

and, as appropriate, prosecuting business practices that threaten 

competition. These authorities are likely to be more effective than 

applying Title II. 

For one thing, the FCC’s order goes far beyond bright-line rules. 

It adopts vaguely worded standards that are sure to mire the FCC 

and the industry in novel, free-ranging, and expansive proceedings. 

For another thing, antitrust law focuses on the abuse of market 

power, but the FCC’s Title II regulations presume that each and 

every Internet service provider is, per se, an anticompetitive gatekeeper. This view has no basis in economics or the agency’s record. 

The notion that corporate behemoths like Facebook, Google, and 

Netflix need to be protected from Main Street Broadband, an ISP 

with four customers in Cannon Falls, Minnesota, is absurd. 

Finally, antitrust allows the DOJ and the FTC to target the actual exercise of market power by dominant providers whenever it 

presents a threat to online competition. In contrast, the FCC’s Title 

II approach focuses solely on the conduct of ISPs, ignoring evidence 

suggesting that startups face a greater and existing threat from a 

different corner, dominant edge providers. 

Twitter’s recent blocking of Meerkat, detailed in my written testimony, is just one example. 

For these and other reasons, I believe that the FCC’s heavyhanded Internet regulations will reduce competition and harm consumers. Antitrust enforcement would be a far superior approach. 

Chairman Goodlatte, Ranking Member Conyers, Members of the 

Committee, thank you once again for allowing me to testify. I look 

forward to answering your questions and to working with you and 

your staff in the time to come. 

[The prepared statement of Mr. Pai follows:] 
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Mr. GOODLATTE. Thank you, Commissioner Pai. 

Commissioner Wright, welcome. 

TESTIMONY OF THE HONORABLE JOSHUA D. WRIGHT, 

COMMISSIONER, FEDERAL TRADE COMMISSION 

Mr. WRIGHT. Thank you, Chairman. Chairman Goodlatte, Ranking Member Conyers, Members of the Committee, thank you very 

much for the opportunity to appear before you today. My name is 

Josh Wright, and I am a commissioner at the Federal Trade Commission. 

Before diving into the FCC’s latest net neutrality regulation, I 

want to make clear that the views I express today are my own and 

do not necessarily reflect the views of the FTC or any other commissioner. My views are based upon my experience and expertise 

as an academic economist, antitrust lawyer, and law professor researching antitrust and regulation, and as a commissioner of the 

FTC. 

I want to begin by discussing net neutrality from an economic 

perspective. The first relevant question to address in my view is 

what market failure, if any, is the FCC trying to solve with net 

neutrality regulation. Chairman Wheeler has expressed concern 

that broadband providers are gatekeepers. There are gatekeepers 

everywhere. Not all gatekeepers require regulation. 

Starbucks is the gatekeeper to my all-important morning cup of 

coffee, and the supermarket is the gatekeeper to your access to 

Cheerios. A gatekeeper becomes an economic problem potentially 

worthy of regulation only insofar as the broadband industry is either a natural monopoly or otherwise exhibits meaningful monopoly power. The simple fact that there are multiple suppliers of both 

wired and wireless broadband Internet render this justification of 

regulation unpersuasive. 

Nevertheless, fearing that any network discrimination by 

broadband providers creates undue risks of competitive harm, net 

neutrality proponents have argued for a one-size-fits-all prohibition. This categorical prohibition ignores the empirical economic research that demonstrates plainly that contractual arrangements 

between entities that occupy different links in the same supply 

chain—in this case, Internet access providers and content providers—very rarely result in consumer harm. 

Further, economists have long understood that these vertical restraints often and, indeed, overwhelmingly provide substantial benefits for consumers. As one study from leading economists assessing the state of empirical evidence on vertical contracts at issue 

here says, ‘‘With few exceptions, the literature does not support the 

view that these practices are used for anticompetitive reasons.’’ 

Other surveys of the economic literature by prominent economists come to similar conclusions. So does the FTC’s investigation 

of the broadband industry. 

In my view, it is more than fair to say there is a general consensus upon empirical economists on this point. 

Surely, given the state of the economics literature and the FTC’s 

own report, the FCC’s categorical prohibition is inappropriate and 

likely to harm consumers. 
21 

Now if the best economic evidence cannot possibly justify an outright ban on vertical restraints in the broadband industry, yet 

there is some chance that vertical restraints can harm some 

broadband consumers some of the time, then what should a regulatory agency like the FCC do? My answer is nothing, and the reason is that antitrust law is exceptionally well-equipped to pick up 

the slack. 

Indeed, President Obama’s current regulatory czar and former 

director of the FTC’s own Bureau of Economics, Howard Shelanski, 

has noted that antitrust enforcement is often superior to broad regulation. This is because antitrust jurisprudence has evolved a highly sophisticated rule of reason to adjudicate various types of 

vertical arrangements by analyzing their cost and benefits to consumers on a case-by-case basis. 

Indeed, antitrust law initially adopted but ultimately and long 

ago rejected a categorical prohibition of certain vertical restraints, 

not unlike the FCC’s new prohibition on paid prioritization. The 

FCC should learn from antitrust’s historical mistakes rather than 

relive them. 

I am quite confident that the antitrust regime, after more than 

a century of developing expertise and applying it to rule of reason, 

will be able to apply it to the broadband industry. 

I will now turn from antitrust to the FTC’s other enforcement 

priority, consumer protection. By reclassifying broadband Internet 

providers as common carries under Title II, the FCC threatens to 

strip the FTC of its jurisdiction to regulate broadband providers. I 

believe reclassification under Title II will unequivocally harm consumers by depriving them of the FTC’s activities in the broadband 

sector. 

Importantly, the FTC has certain enforcement tools at its disposal that are not available to the FCC. Unlike the FCC, for example, the FTC can bring cases in Federal district court and obtain 

equitable remedies, such as consumer redress. 

The FTC’s recent action against AT&T in Federal district court 

involving failure to disclose throttling to consumers on unlimited 

data plans and its settlement with TracFone, who agreed to pay 

$40 million to the FTC for consumer redress to settle charges that 

it deceived millions of consumers with its promise of unlimited data 

service, are just two examples illustrating the consumer benefits 

that will disappear with reclassification. 

In my view and for the reasons discussed, I am confident that 

a complete and economically rigorous cost-benefit analysis of the 

FCC’s new regulation would reveal that it will harm competition 

and leave consumers worse off than a regime focused upon antitrust. 

Thank you for your time and for the invitation to testify. I am 

happy to answer any questions. 

[The prepared statement of Mr. Wright follows:] 
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Mr. GOODLATTE. Thank you, Commissioner. 

Commissioner McSweeny, welcome. 

TESTIMONY OF THE HONORABLE TERRELL P. McSWEENY, 

COMMISSIONER, FEDERAL TRADE COMMISSION 

Ms. MCSWEENY. Thank you. Thank you very much. And I want 

to thank the Members of the Committee and Ranking Member 

Conyers for the invitation to appear today. 

My name is Terrell McSweeny, and I am also a Federal Trade 

Commissioner. Like my colleague, Commissioner Wright, I will 

begin by making the usual disclaimer. I am speaking on behalf of 

myself and not the commission or my colleagues. 

I am delighted to talk to you today about the role of competition 

enforcers like the Federal Trade Commission in protecting consumers and competition. For 100 years, the Federal Trade Commission has worked to ensure that American consumers and the entrepreneurs who bring new and exciting products to the marketplace 

are free from anticompetitive, deceptive, and unfair practices that 

threaten to harm them. 

The FTC’s role as a consumer protection and antitrust enforcer 

has evolved along with the economy, adapting to the interconnectedness of our 21st century lives to protect consumers online and on 

mobile platforms. In the last decade, the FTC has brought more 

than 100 cases involving consumer data security and privacy, and 

we have cracked down on emerging issues such as cramming on 

mobile phone bills, and unauthorized in-app purchases by children, 

winning millions of dollars in redress for consumers harmed by 

these practices. 

The FTC plays an important role promoting innovation by advocating for competition that can be introduced by disruptive entrance, and by investigating and prosecuting anticompetitive practices across a wide variety of industries. While antitrust enforcement is vital to protecting a competitive marketplace, it is not always the most effective way to address policy issues in the economy. 

Sometimes the public interest is best protected through a combination of antitrust enforcement and well-designed regulation. 

Protecting the virtuous cycle of the Open Internet is one of these 

instances. 

The debate over the best way to protect the Open Internet raises 

a host of complicated issues, including public policy issues that go 

beyond the scope of antitrust and consumer protection enforcement. 

The FCC has spent years studying the Open Internet issue, informed by the data and input from market participants, academics, 

and the views of nearly 4 million commenters. 

On the basis of that record, the FCC concluded that Internet 

openness promotes a virtuous cycle, in which innovation by providers of new content, applications, and services generates increased consumer broadband demand. This increase in broadband 

demand increases broadband infrastructure investment, which in 

turn spurs new innovation from content producers. 

Ex post, case-by-case antitrust enforcement is unable to offer the 

same protections to innovators in the content space as clear, ex 

ante rules. 
46 

Under the Open Internet order, innovators who seek to provide 

new content, applications, and services can have confidence that 

discriminatory network access will not threaten their chances of 

competitive success. Antitrust enforcement, on the other hand, 

would require detection, investigation, and a potentially lengthy 

rule of reason analysis. 

I would also like to point out that the FCC considered First 

Amendment interests, freedom of expression, diversity of political 

discourse, and cultural development as a part of the Open Internet 

proceeding. These are noneconomic, but very important values that 

are not generally protected by antitrust laws. 

I want to stress that there is not an either/or choice that must 

be made between FCC regulation and FTC enforcement as it relates to the Open Internet. Both are different tools with different 

features, and both have a role to play when it comes to protecting 

consumers and ensuring an Internet that continues to foster competition and innovation. 

The optimum outcome for consumers is Open Internet coupled 

with repeal of the common carrier exemption in the FTC Act, 

which may hinder the FTC from protecting consumers against unfair and deceptive common carrier activities. 

The FTC has decades of experience and specific statutory tools, 

such as consumer redress, that complement FCC oversight of common carriers, and we have a long history of successfully working 

together with the FCC and look forward to continuing to work with 

them. 

I will conclude by pointing out that the status quo in the United 

States is overwhelmingly one of an Open Internet. It is almost outof-date to refer to the Internet as its own sector somehow detached 

from the rest of the economy. The Internet has truly become the 

Internet of everything. It is the medium that we use to carry on 

friendships, file our taxes, book vacations, talk to our doctors, 

watch movies, manage businesses, and increasingly coordinate our 

lives from the moment we get up until the time we go to bed. Ensuring that the Internet remains a fountain of innovation and disruption is at the heart of Open Internet policy. 

I don’t view this as a situation in which the FCC’s Open Internet 

order threatens to usher in some new and unproven market reality. 

Rather, it is the elimination of the Open Internet in this country 

that would put us in unchartered territory. 

Thank you for holding this hearing and for having me here, and 

I look forward to answering your questions. 

[The prepared statement of Ms. McSweeny follows:] 
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Mr. GOODLATTE. Thank you, Commissioner McSweeny. 

Before we begin the questioning by Members of the Committee, 

I will ask unanimous consent to enter into the record a letter dated 

today from the Consumer Electronics Association on behalf of its 

more than 2,000 U.S. technology companies, indicating support for 

an Open Internet and expressing concern that the swath of Title 

II regulations and legal challenges to FCC authority will cause uncertainty, slow investment, reduce competition, and hinder innovation, and calling on Congress to take action in this area. 

[The information referred to follows:] 
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*Note: The submitted material, the dissenting opinion of the FCC Commissioner, is not printed in this hearing record but is on file with the Committee and can be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103236. 

Mr. GOODLATTE. Secondly, I would ask unanimous consent to 

enter into the record the dissenting opinion of the FCC Commissioner Mr. Pai.* 

Without objection, they will be made a part of the record. 

And we will turn to the questioning. 

If I may, I will start with you, Chairman Wheeler. Can you 

please walk us through the many specific examples of anticompetitive actions taken by Internet service providers over the last 3 

years that support issuing massive regulations on the Internet? 

To be clear, I am looking for actual examples of bad conduct 

rather than hypothetical conduct. To my knowledge, there were not 

any specific examples cited in the 300-plus page order. 

Mr. WHEELER. Thank you, Congressman. Yes, I would be happy 

to. I think the root is what the district court said when they said 

that there is the technological capability and the economic incentive to do something. 

Mr. GOODLATTE. I am talking about actual examples where it has 

taken place in the last 3 years. 

Mr. WHEELER. So for instance, in 2007, a Republican commission 

moved against wireless carriers who were doing exactly the same 

kind of thing we are talking about here, and used Title II to deal 

with that. What was happening was the wireless carriers, the big 

guys, were saying to the small guys, ‘‘Your customers can’t roam 

onto our turf, onto our networks.’’ 

Mr. GOODLATTE. Chairman Wheeler, let me interrupt because 

that was 8 years ago that that took place, and we are talking about 

in the last 3 years. But let me give you another question. 

To the extent that actual anticompetitive conduct was occurring 

on the Internet and the FCC chose not to intervene, why wouldn’t 

the Federal Trade Commission be able to prosecute that conduct 

under current law? 

Mr. WHEELER. Thank you, Congressman. I was going to get to 

more recent things, if you are interested. I mean, there are examples of blocking of iPhone apps, iPad apps, Android apps, blocking 

a mobile wallet app that was put on the phone, limiting access to 

Google Voice. And as recently as last August, Verizon tried to 

throttle the data speeds for users who had bought unlimited access. 

So there is a list, and I can go through others, if you want. 

Mr. GOODLATTE. Let me ask Commissioner Pai if he wants to 

shed light on that. Why is it that there were no examples cited in 

the report? 

Mr. PAI. That is a key question, Mr. Chairman. The answer is, 

as detailed in the FCC’s decision, there is no evidence of a systemwide failure in the Internet marketplace. The fact that the agency 

has to rely on a decade-old example of a small ISP in North Carolina, of isolated niche examples since then, all of which were solved 

through private initiatives, not through the application of heavyhanded Title II rules, demonstrates that there was no problem to 

be solved here. 

Mr. GOODLATTE. Will there be an increase in State and local 

taxes levied against Internet service providers as a result of the 
53 

Open Internet order? And will the Internet Tax Freedom Act, 

something that has very strong bipartisan support here in the Congress, protect against all of these types of taxes? 

Mr. PAI. Mr. Chairman, I believe the answer to the question is 

no. The order explicitly opens the door to the imposition of billions 

of dollars of new taxes, the most notable of which is the assessment 

of Universal Service Fund fees or taxes on broadband. The only 

thing the order promises is that those fees won’t go up on the effective date of the order itself. 

Moreover, there are a number of State and local fees and taxes 

which will be assessed. One example, which flows from the reclassification of broadband as a Title II telecom service, is pole attachment rates. Previously, a lot of the competitive providers were able 

to avail themselves of a relatively lower rate, applicable to cable 

companies. Now that rate will go up to a higher rate that telecom 

providers pay. 

All of those costs will be passed on to the consumer. 

Mr. WHEELER. Mr. Chairman, can I—— 

Mr. GOODLATTE. Let me turn to Commissioner Wright, and if I 

have some time left, I will come back to you, Mr. Chairman. 

The FCC adopted the one-size-fits-all regulatory approach in its 

Open Internet order. Why is it important to evaluate each anticompetitive action on its merits using decades of antitrust case law 

and deploying an economic analysis? At the end of the day, what 

is better for consumers? 

Mr. WRIGHT. Thank you for the question, Mr. Chairman. 

I think it is important to note that sometimes this idea that antitrust is ex post and regulation is ex ante is a bit overplayed. Antitrust has ex ante regulations. For example, we ban all price-fixing. 

Sometimes, we have broad prohibitions like you see here. Sometimes we don’t. We used to have ex ante, broad prohibitions on 

vertical restraints. 

The reason we don’t, and the reason that antitrust, starting 

about 40 years ago, went to a case-by-case approach is because an 

economic revolution of both theory and empirical data on vertical 

restraints hit the world in the ’60’s and ’70’s and ’80’s. And what 

we learned was not only were these types of contracts unlikely to 

harm competition, but importantly, oftentimes, they offer serious 

benefits for consumers. 

The virtue of a case-by-case approach isn’t just how often that 

you can attack or detect anticompetitive conduct. It is allowing consumers to reap the benefits of the conduct when it is procompetitive. And that is the difference between a case-by-case approach 

and a per se prohibition, and why it is important to retain the 

former. 

Mr. GOODLATTE. Thank you. 

My time has expired, but, Chairman Wheeler, we will give you 

a moment to add what you wanted to add a moment ago. 

Mr. WHEELER. Well, I was just going to say that what Commissioner Pai said about taxes isn’t quite as portrayed. The reality of 

property taxes is that they are on telephone companies ‘‘and utilities.’’ And we do not reclassify and specifically address in the order 

that that does not deal with this. 

The second issue—— 
54 

Mr. GOODLATTE. It could be done in the future, though, could it 

not? 

Mr. WHEELER. It specifically says in the order that we are talking about telecommunication—— 

Mr. GOODLATTE. Once you go down this road, a future FCC could 

change that order and go that direction as well, could they not? 

Mr. WHEELER. Mr. Chairman, future companies can behave in 

ways that they tell us that they are not going to behave as well. 

We all live with this. 

Mr. GOODLATTE. And future Congresses. 

Mr. WHEELER. Valid point. 

One other point is the issue of application of Universal Service 

against broadband. Commissioner Pai sits on the bipartisan Federal-State board that will deal with that issue. So there will be a 

recommendation coming from them, which Commissioner Pai, in 

which he will be participating. But even if they come back and say 

you should change the contribution, it is not an increase in the 

amount collected; it is just that it gets applied to different things. 

So, essentially, in a household, it becomes the same kind of a 

number. 

Mr. GOODLATTE. We will follow up on that in a moment, but my 

time has expired, so we will turn now to the gentleman from Michigan, Mr. Conyers, for his questions. 

Mr. CONYERS. Thank you. 

Well, I am very interested in this discussion. Let me just ask, 

Mr. Wheeler, how has FCC encouraged competition and innovation 

over communications networks? 

Mr. WHEELER. Thank you very much, Congressman. 

The joke around the FCC is that my mantra has been ‘‘competition, competition, competition,’’ or, more appropriately, spoken as 

‘‘competition-competition-competition,’’ because it ought to be the 

ultimate mantra of everything we do. 

And the difficulty that we face today is that, insofar as highspeed networks in this country, about 80 percent of Americans 

have either only one choice or zero choice. About 25 percent of 

them have zero choice for high-speed networks. And what we need 

to be doing is encouraging that. 

That is why specifically in this order we said that we will not 

have rate regulation, we will not have tariffing, we will not have 

unbundling, those kinds of things associated with the so-called utility status, because we want to create an environment in which carriers are investing in ever-faster, evermore ubiquitous, competitive 

broadband services. 

The interesting thing is that Wall Street seems to agree, because 

if this was the end of the world that everybody keeps talking about, 

then you would think you would see the stocks crashing. Instead, 

the stocks have been going up. And on the day of the vote even, 

when we adopted the rule, they went up. 

So it is very important that we build a strong economic base so 

that carriers are incentivized to build competitive, ever-faster networks. 

Mr. CONYERS. One of your colleagues says the Internet is not 

broken, and there is nothing for the FCC to fix, and it is only based 

on hypotheticals. Is there much truth in that or any? 
55 

Mr. WHEELER. Thank you, Congressman. 

You know, Mr. Walden and Mr. Upton and Senator Thune have 

all introduced legislation to ban blocking, ban throttling, ban paid 

prioritization—the three big things that we ban in our order. So 

there is, I think, a suggestion that at least some other people other 

than us feel that there are difficulties in the marketplace. 

We did have the instance of Comcast blocking. We did have the 

instance I told the Chairman about of Verizon throttling. 

Verizon, interestingly enough, went into court when they were 

suing to overturn the 2010 rules, and their lawyer said: I have 

been specifically instructed to tell the court that one of the reasons 

we are appealing is because we want to do paid prioritization. 

Then in a letter to Chairman Leahy, when he was chairing the 

Senate Judiciary Committee, the major ISPs, when asked if they 

would pledge to not do paid prioritization, they said we do not foresee. They did not say they would not. 

Our rule says you will not. And again, I go back to what the 

court said, which was that there is an incentive, an economic incentive, and a technological capability for these network providers to 

harm innovation, to harm competition, and to harm this virtuous 

circle of innovation driving new networks, which drive more innovation, et cetera. 

Mr. CONYERS. Very interesting. 

Commissioner McSweeny, what are potential limitations in relying on antitrust enforcement to protect an Open Internet? 

Ms. MCSWEENY. Thank you for the question. I would note there 

are a couple of problems here. 

One, and it is not an insignificant one, is detection. First, it 

might be very difficult for antitrust enforcers to detect some of 

these problems because it is hard sometimes for consumers to even 

know that they are happening. 

The second would be just to note that because, by its nature, 

antitrust enforcement is after the fact, it is on a case-by-case basis 

after an intensive investigation. It can be very difficult to remediate harms. 

So if your concern is about the innovators who never get to consumers, or the consumers who never get to the innovators, it can 

be very difficult to rely solely on antitrust to protect that. 

Mr. CONYERS. Let me ask you, finally, can we get FCC and FTC 

to cooperate in enforcement and regulation? 

Ms. MCSWEENY. Absolutely, sir. In fact, we already have a long 

history of cooperating together quite successfully. 

Mr. CONYERS. Very good. Glad to hear it. 

Thank you, all. 

Mr. GOODLATTE. Thank you, Mr. Conyers. 

The Chair now recognizes the gentleman from Virginia, Mr. 

Forbes, for 5 minutes. 

Mr. FORBES. Mr. Chairman, thank you. 

Commissioner Pai, you heard I believe Chairman Wheeler mention something about a redistribution of taxes to all companies. Do 

you agree with him? Or can you give us your thoughts on that? 

Mr. PAI. Thank you for the question, Congressman. I respectfully 

disagree with the Chairman. 
56 

First of all, nothing the FCC says about the classification of 

broadband provided for tax purposes binds any State and local authority. The mere fact that they are now telecom providers means 

that the door is open for State and local entities to reclassify them 

as such. 

If I could enter into the record the Washington Post ‘‘Fact Checker’’ that just came out today, suggesting that a left-leaning Progressive Policy Institute study indicating that $11 billion in State and 

local fees would be raised is, in fact, the case. 

Mr. FORBES. I would request that we allow that to be submitted. 

Mr. GOODLATTE. Without objection, that document will be made 

a part of the record. 

[The information referred to follows:] 
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Mr. PAI. Secondly, in terms of the Federal taxes, in particular, 

the writing is on the wall. If you look at some of the promises the 

FCC has made in terms of the programs that are administered 

under the Universal Service Fund, last December, just to give you 

one example, the FCC decided to increase by $1.5 billion the 

amount of spending on the schools and libraries program. That 

money has to be funded from somewhere. It is going to be funded 

through Universal Service Fund contributions. 

So the pressure to apply it to broadband is tremendous. And now 

the FCC having indicated that the door is open, I think we clearly 

know the consumers are going to be paying from the bottom line. 

Mr. FORBES. Okay. 

Chairman Wheeler, even if everyone who is participating here 

today could agree that blocking, throttling, and paid prioritization 

by Internet service providers is not good for innovation and not 

good for consumers, don’t you think the Open Internet rule that 

was passed by the FCC on a party-line vote is one dimensional and 

does nothing to prevent other stakeholders from violating the same 

principles of protecting an open Internet, specifically making interconnection negotiations one-sided and anticompetitive for ISPs, 

therefore, hurting Internet users? 

For example, on several occasions, edge providers have blocked 

Internet users from accessing their content on the Internet based 

off of their ISP. 

Mr. WHEELER. Thank you for your question, Congressman. I 

think that it is equally bad when edge providers block content. The 

question is whether the Congress has given us authority to deal 

with that. What Congress did give us authority to deal with was 

when an ISP connects to the public Internet. 

What we said in our order was that we would assert jurisdiction 

and be watching, that we would not assert regulation, which a lot 

of folks wanted us to do, we would not say we are going to do this 

or that, but that we would watch what was happening there. That 

goes to the concept that I think is at the core of what we are trying 

to do, which is how do you establish a set of basic concepts, which 

is the just and reasonable test which has stood the test of time and 

been well-established in the litigation, and have what I call a referee on the field, who can take a look at something and say, ‘‘Now 

does that fit with inside that kind of circumstance?′′ 

I think that is in keeping with what was going on that Commissioner Pai referenced leading up to the Open Internet order, which 

was when various commissions were saying, ‘‘Here are the rules of 

the road. Here are the standards we want you to adhere to. And 

we are holding the sword of Damocles over your head that if you 

don’t, we have the ability to do something.’’ 

The problem was that when the Verizon court made its decision, 

it took away the sword. And it put us in a position where we have 

to say, what is it that we are regulating, and what are the standards, and how are we going to continue—on the point you made, 

and the point Commissioner Pai made—making sure that we are 

watching that marketplace to make sure that the behavior there 

does not hurt consumers and does not hurt innovators. 

Mr. FORBES. Commissioner Wright, I only have seconds left, but 

do you agree or disagree with Chairman Wheeler on that? 
62 

Mr. WRIGHT. With what portion of it? 

Mr. FORBES. Well, whatever you can do in 30 seconds, I guess, 

because that is all I have—or Commissioner Pai, either one. 

Mr. PAI. Congressman, I think your question targets exactly the 

reason why Title II regulation by the FCC is inferior to antitrust. 

The fact is that there is no evidence in the record of anticompetitive blocking sufficient to support industry-wide regulation. 

To the contrary, the FCC is also, by focusing myopically solely 

on ISPs, ignoring other potential threats that could come from edge 

providers. 

I provided the example in my written testimony of Meerkat, a 

very innovative live-stream application that, it argues and some 

have argued, has been crippled by Twitter refusing access to its social graph. 

Those are the kinds of threats that antitrust is perfectly wellsuited to examine, but the FCC simply isn’t able to do it based on 

Title II. 

Mr. FORBES. Thank you. 

Mr. Chairman, I yield back. 

Mr. GOODLATTE. I thank the gentleman. 

The Chair recognizes the gentleman from New York, Mr. Nadler, 

for 5 minutes. 

Mr. NADLER. Thank you, Mr. Chairman. 

Along with President Obama and about 4 million other Americans, I urged the FCC to defend the principle of net neutrality and 

to reclassify broadband providers as common carriers under Title 

II of the law, in order to ensure that everyone has equal access to 

the Internet. Therefore, I am very pleased with the actions of the 

FCC. The FCC chairman, in particular, should be applauded for his 

actions and for his leadership. 

The FCC has a vital role to play in protecting the virtuous cycle 

of innovation by preventing broadband providers from blocking, 

throttling, or offering paid prioritization. Providers should be common carriers, and must not block content; slow, or degrade the 

transmission of content; or extract higher fees for faster transmission of content. 

The FCC must never allow for a pay-to-play Internet, where one 

company can refuse to allow fast access to another company unless 

they pay a premium. That could lead to anticompetitive behavior 

and the stifling of innovation. 

What if a smaller competitor with a great idea cannot afford to 

pay an additional fee for access to the Internet’s fast lane? Innovation would suffer and, ultimately, consumers would be harmed. Everyone deserves equal access at equal speeds. 

I agree with the FCC chairman when he says that having an 

Open Internet and net neutrality is beneficial to consumers. I agree 

with the FCC chairman when he says he wants to prevent blocking. E.g., Comcast can’t say no access to YouTube. I agree with the 

FCC chairman when he says he wants no discrimination. Comcast 

can’t degrade Netflix in order to make Comcast’s competing service 

look better. I use Comcast only as example, not an allegation. 

The best way to ensure that these rules are strong and enforceable is to use the Title II common carrier authority. The FCC has 
63 

every right to do so and, in fact, was merely acting on the court’s 

suggestion to reclassify broadband providers as common carriers. 

In addition, antitrust law is not sufficient on its own to prevent 

big Internet providers from harming consumers. Antitrust law is 

important, but so is regulation, and the two should work hand-inhand to protect consumers and promote competition. 

We shouldn’t have to wait until a monopoly starts beating up on 

consumers before the law steps in. 

As Gene Kimmelman and Allen Grunes put it in an op-ed in The 

Hill, ‘‘The FTC is a bit more like a fire hose. It is there to put out 

a fire after it has started.’’ 

Well, we want to prevent forest fires, if you will, and we need 

the FCC there to help us at the front end. 

Commissioner Wheeler, Commissioner Pai says that Title II regulation will reduce competition among broadband providers, and 

that it will harm consumers by limiting the kinds of pricing and 

data plans that smaller and upstart broadband providers can offer. 

What would you say to that? 

Mr. WHEELER. Well, thank you very much, Mr. Nadler, for your 

comment. 

And I think Commissioner Pai and I have different views of the 

world. He tends to see a world full of small ISPs and behemoth 

edge providers, when I think the reality is there are three behemoth ISPs, and thousands, tens of thousands of innovative edge 

providers, and two guys and dog in a garage who got a new idea 

that will be up tomorrow, thanks to the openness of the Internet. 

The expectation a consumer should have should not be determined by the net revenue of the company they happen to do business with, which typically is the only choice they have to get highspeed broadband. But the rules should apply to everybody. 

Mr. NADLER. Thank you. Now, some have alleged that President 

Obama directed the FCC to reclassify broadband providers under 

Title II. Some have alleged that White House staff had inappropriately ex parte communications with the FCC prior to the President’s public call for reclassification and strong Open Internet 

rules. 

What is your response to these two? 

Mr. WHEELER. No, sir, there were no secret instructions from the 

White House as to what we should be doing. 

Mr. NADLER. And no improper ex parte communications? 

Mr. WHEELER. And no improper ex parte communications. 

Mr. NADLER. Thank you. 

Commissioner McSweeny, do you think it inconsistent that some 

of your fellow witnesses complain about the supposed uncertainty 

stemming from implementation of Internet conduct rules? That is, 

the rule prohibiting unreasonable interference or disadvantaging of 

users’ Internet access or use of lawful content that is contained in 

the Open Internet order on the one hand, but then trumpet a piecemeal, case-by-case approach to protecting net neutrality using antitrust enforcement on the other? 

Ms. MCSWEENY. Well, Mr. Nadler, as a consumer protection and 

competition enforcer, I strongly believe in both the role of enforcers, 

but I also believe in the role of regulators. That is why I think it 

isn’t really a choice that we need to make, that the most ideal out-
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come here would be to have both the FTC and, to the extent it is 

relevant, the Department of Justice undertaking their enforcement 

mission to protect consumers, and the FCC similarly using its authorities with an Open Internet rule to provide the same kind of 

protection. 

Mr. NADLER. Thank you. My time has expired. 

Mr. GOODLATTE. The Chair thanks the gentleman. 

The Chair now recognizes the gentleman from Iowa, Mr. King, 

for 5 minutes. 

Mr. KING. Thank you, Mr. Chairman. 

I thank the witnesses for your testimony. 

And I turn first to Mr. Pai. I am just wondering this. Let us just 

say that I have an Internet service provider, and he is doing all of 

these things that seem to be crossing some of the philosophy within 

the commission itself, and that would be slowing down some traffic 

and billing more for faster traffic, and some of those things. 

What are my alternatives, if I have a fiber-optic landline that 

maybe comes through a municipal service provider? What can I do 

under the proposal that you have, which is let us not change it. Let 

us leave it, actually, the way it was. What are my alternatives? 

Mr. PAI. Congressman, if any consumer is facing what they consider to be a consumer-unfriendly practice by their provider, they 

can always seek recourse from the Federal Trade Commission to 

the extent that there is anticompetitive conduct involved. The Department of Justice and Federal Trade Commission always have 

authority. 

But I would argue that the best tonic to those kinds of problems 

is competition. Ranking Member Conyers put his finger on the 

issue. If you have sufficient choices, the issues of net neutrality 

vanish because there is no incentive, no ability whatsoever, to engage in that kind of conduct. You can simply switch. 

And that is why Title II takes our eye off the ball by reducing 

competition, making it harder for smaller ISPs to enter the marketplace. 

Mr. KING. Okay, so I might have one or two or more landline 

providers. I might have a satellite provider. I might have more 

than that. I have two or so satellite providers, and I could have a 

wireless provider. Is it possible that people out there have as many 

as five or six different options to choose from now if they are unhappy with the provider that they have? 

Mr. PAI. It is, and I think one of the reasons why the American 

Internet economy is the envy of the world, is because we do have 

a multiplicity of providers in a lot of areas. Companies are spending billions of dollars to acquire spectrum, to deploy infrastructure. 

What is needed now is for the FCC to remove some of the barriers to infrastructure investment, to essentially do what Google 

Fiber has done in Kansas City, but on a national level, to allow 

every American to benefit from the broadband revolution. 

Mr. KING. Well, then who is this FCC rule trying to help? What 

is the object? 

Mr. PAI. I am not sure what the object is, but I can tell you what 

the result is. The results will be simply less competition for the 

benefit of the American consumer. 
65 

Mr. KING. Could this be spawned from the idea that ‘‘it isn’t fair’’ 

idea? It isn’t fair that some people have more money than others. 

It isn’t fair that some people can pay for a faster service than others. It isn’t fair that everybody can’t ride in first class. 

Mr. PAI. One could very well make that argument. 

And if I could respectfully disagree with the Chairman in his 

characterization of how I view the marketplace, just to give you one 

example, Google is worth more than Comcast, Verizon, and T-Mobile combined, so it is not as if we are dealing only with scrappy 

edge providers working out of their garages. 

But, secondly, I think the reason why we see Wall Street and 

other people perhaps inflating the values of these dominant company stocks is precisely because they know that Title II regulation 

is going to squeeze a lot of these providers out of the marketplace. 

It is going to make it impossible for the wireless ISP, for the small 

cable company, for even the municipal broadband provider, to provide a competitive alternative. 

Mr. KING. Let me try another thing here. I spent my life in the 

business world, and I would invest capital. And if the government 

came in to try to regulate that capital, I would invest it under the 

rules we had, but when the rules changed, then the value of my 

assets might be diminished if it is more difficult for me to extract 

profit out of those assets. 

So is there any discussion on the commission about the rights to 

property that are being regulated into a diminished state of competitiveness? Was that part of the discussion? 

Mr. PAI. I don’t think that concern was addressed adequately. I 

think the fact that the rules are so broad and so vague makes it 

very unclear how people who are in the private sector who have to 

take that risk are going to be able to pull the trigger and make 

that investment decision. 

Mr. KING. The expectation to be able to make a profit on your 

capital investment though, would it be your opinion that it is diminished with this rule? 

Mr. PAI. I think it is diminished, and the question of whether it 

rises to the level of a regulatory taking for constitutional purposes 

is something that a court will have to sort out. 

Mr. KING. Commissioner McSweeny, you have heard this dialogue. Do you have any comments on what might be rights to property, and the opportunity to get a return on investment, the comments that we have had in exchange? 

Ms. MCSWEENY. Sure, I mean it is my understanding that the 

action the FCC is taking is based on an extensive record grounded 

in trying to protect the virtuous cycle of innovation that it assessed 

exists here. 

When innovators create content, people want more broadband. 

When they want more broadband, more broadband gets built. 

So I would suggest, from my perspective, the evidence I see in 

the marketplace is that mostly in America, two-thirds of Americans 

have a choice of one broadband provider, and they don’t have a lot 

of competition on the local level for these kinds of services. Very 

often, they can also be locked into plans as well that have switching costs for them when they are making those choices. 
66 

**Note: The submitted material is not printed in this hearing record but is on file with the 

Committee and can be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103236. 

So I think the evidence the FCC is acting on here is to protect 

that virtuous cycle of innovation and competition, and that the evidence is relatively well-established by an exhaustive record that 

has even been acknowledged by the D.C. Circuit. 

Mr. KING. Thank you, Commissioner. 

I thank the witnesses and yield back the balance of my time. 

Mr. GOODLATTE. The Chair thanks the gentleman, and recognizes the gentleman from Michigan for a unanimous consent request. 

Mr. CONYERS. Thank you. I have five letters, one of which is addressed to both of us, plus an article from The Hill, and I ask 

unanimous consent to enter them into the record, sir. 

Mr. GOODLATTE. Without objection, they will be made a part of 

the record.** 

Mr. GOODLATTE. And the Chair now recognizes the gentlewoman 

from California, Ms. Lofgren, for her questions. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

As you know, I represent Silicon Valley here in the Congress, 

and I will say that the level of excitement and gratitude, Commissioner Wheeler, over the decision made by the FCC is immense. I 

brought this paper because the San Jose Mercury News is kind of 

the newspaper of record. Here it is, 2 days after the commission 

vote, ‘‘GOP, Valley Unable to Click.’’ There is a picture of our colleague, Kevin McCarthy, and, ‘‘Republicans react harshly to tech 

line in the sand over protections for Internet.’’ 

I mean, other than SOPA, this is the biggest issue that has been 

before the tech community in a long, long time. 

In the article, one of the founders of TechNet said this, ‘‘The 

GOP seems to think that Orwellian language is going to work on 

the world’s smartest people. If you say net neutrality is government regulation, and if you think there is anyone in the Valley who 

thinks that is a true statement, you are already dead in the water. 

They would be better off just saying we disagree.’’ 

So I hope that this hearing is just more whistling in the wind, 

and I do believe that your very wise decision will prevail. 

I have a couple of questions. The first is just for my enjoyment. 

I remember when SOPA was discussed here, and we had about 10 

million phone calls and emails in half a day. How many Americans 

contacted the FCC to ask you to do this net neutrality rule that 

you did? 

Mr. WHEELER. About 4 million people, Congresswoman. 

Ms. LOFGREN. Very good. And has anything else generated that 

level of input recently? 

Mr. WHEELER. It even broke the record of Janet Jackson’s wardrobe malfunction. 

Ms. LOFGREN. Wow. You know, in terms of Title II, I am interested in competition. As has been pointed out by Commissioner 

McSweeny, there isn’t any in most of the country, in terms of 

broadband access. 

How might your ruling actually help in the deployment of 

broadband? One of the issues that I am sort of intrigued by is that 
67 

common carriers now have access to utility poles in ways that they 

did not before. 

Just for one example, Google Fiber was looking at deployment in 

my town, and people are very eager because it is like 10 times faster than any other provider, but a big constraint is tearing up the 

streets, and they don’t have access to the poles. But now, maybe 

they do. 

Do you have an opinion on that? 

Mr. WHEELER. Thank you, Congresswoman. 

Yes, Commissioner Pai talked about pole attachments as an 

imaginary horrible. I think it is actually a leveling of the playing 

field and quite good news. 

I happened to be involved in the cable industry when the Congress in 1978 said, ‘‘Hey, the telephone companies are keeping 

cable companies from getting on the poles, and we think cable companies ought to get on.’’ As the cable companies then became dominant, they turned around and said, ‘‘Oh, the law says only cable, 

and so Google and other competitors can’t get on.’’ What we have 

done here is to level the playing field on that. 

There is talk about that increasing rates. The reality is in our 

order we say, we are going to be watching, and if utilities start 

playing around with that, we are going to step in and it is not 

going to happen. 

The point that you made is really important, however, and that 

is that every day we are seeing major ISPs step forward and say, 

‘‘We are going to build new competitive high-speed broadband.’’ It 

is not just Google that is out building. 

Ms. LOFGREN. No, I wouldn’t want it to be just them. 

Mr. WHEELER. Exactly, it is not just them. It is over-building 

each other, and that is what we want to have. And the reason they 

are doing it is because there is no rate regulation, and we haven’t 

affected their ability to get a return. 

Ms. LOFGREN. Let me ask you this, in terms of municipal providers, does your rule affect them or are you taking other steps to 

allow municipalities that want to provide broadband as a utility to 

step forward? 

Mr. WHEELER. Thank you. It does not specifically address them. 

In the same meeting, we did happen to rule on two petitions we 

had from Tennessee and North Carolina where municipal providers 

were asking us to preempt State laws that kept them from expanding. 

Ms. LOFGREN. So there is some hope. 

Let me just do, finally, the FTC Act does relate to common carriers, and Commissioner McSweeny recognized that a lot of things 

you do, the free speech issues and the like, have nothing to do with 

what she does. What do you think about amending the FTC statute 

so that the common-carrier carve-out was either diminished or 

eliminated? Would that make any sense? 

Mr. WHEELER. Thank you, Congresswoman. I think that that is 

an idea that is definitely worthy of review. We have had great 

working relationships with the FTC. We work in tandem on many 

issues. As you point out, it is going to require legislation to resolve 

it. 
68 

We are trying to take steps in the interim and make sure that 

we have an MOU that says, ‘‘Here’s how we are going to be working together.’’ But I think the point you have raised is a very good 

one. 

Ms. LOFGREN. Mr. Chairman, I would like to ask unanimous consent to place in the record, ‘‘GOP, Valley Unable to Click.’’ 

Mr. GOODLATTE. We would be happy to place that in the record. 

[The information referred to follows:] 
69 
70 
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Mr. GOODLATTE. The Chair recognizes the gentleman from Texas, 

Mr. Poe, for 5 minutes. 

Mr. POE. I thank the Chairman. 

I thank you all for being here. 

Mr. Pai, let me start with you, and I have the same questions 

for everybody, but let me see if I can get through all the questions. 

What country has the best Internet service? 

Mr. PAI. The United States. 

Mr. POE. If we implement the rule that you all have agreed to, 

the statement has been made that the Europeans, who are our 

competitor, would be glad because it would diminish our quality 

down to their quality. Is that a fair statement or not? 

Mr. PAI. I do think the playing field will be leveled in the sense 

that America’s broadband marketplace will become less competitive, and Europe is actively trying to get rid of some of their utility 

style regulation to make themselves more competitive. 

Mr. POE. This 300-page regulation doesn’t mention any specific 

examples of abuse. Is there a reason for that? 

Mr. PAI. I think the reason is because there is no industry-wide 

evidence of abuse. There are isolated examples from 8 years ago, 

from 10 years ago. But one would expect a broken Internet to offer 

up a plethora of current contemporary examples. 

Mr. POE. This is implemented. How much is it going to cost, 

counting all the lawyers, all the regulators, all the people viewing 

the Internet? How much is this going to cost taxpayers? 

Mr. PAI. The answer is unknowable, and that is because the application of the rules, is unknowable. I think it is telling, for example, with respect to the Internet conduct standard, that the FCC 

on the very date it adopted this standard, said, and I quote, ‘‘We 

don’t know where things go next.’’ The recipe for regulatory uncertainty is there to see. 

Mr. POE. That is based upon the concept of the general conduct 

rule, is that what you are talking about? 

Mr. PAI. That is correct. 

Mr. POE. Basically, if I quote the Chairman correctly, we don’t 

know what that general conduct rule really means. 

Mr. PAI. I think that is exactly the problem innovators and entrepreneurs are going to face. We are essentially going to be funneling 

their entrepreneurial spirit through a regulatory bottleneck. 

Mr. POE. Okay, general conduct rule—no, sir, I am asking questions. You will get your turn in a minute. 

The general conduct rule is meaning that, basically, the FCC is 

going to determine what is fair, as far as Internet service access. 

Is that a good word to use, what is fair? 

Mr. PAI. Essentially, that is the standard because the agency 

lays out seven vaguely worded standards, says it is nonexhaustive, 

doesn’t give you any indication of how it is going to be applied, and 

explicitly tees up what appear to be pro-consumer options, such as 

T-Mobile’s Music Freedom, that are on the chopping block. 

Mr. POE. You know, fair means different things to different folks. 

I was a judge in Houston a long time, and I heard that word a lot. 

It meant different things to whoever you were asking the question 

about, whether something is fair. That troubles me in a report 

starting new regulations that we don’t really—the government, God 
73 

bless us, the government is going to decide what is fair. That concerns me, just as a comment. 

What countries have the greatest control over their Internet’s 

system? 

Mr. PAI. Certainly, I think some countries like North Korea, 

Cuba, and countries like that I think exercise a fair degree of control. 

Mr. POE. How about China? Do they control their Internet? 

Mr. PAI. They do, and they actively block a lot of applications 

and services. 

Mr. POE. Do the Russians? Does tsar Putin control his Internet? 

I am sorry, President Putin, control the Internet in Russia? 

Mr. PAI. I have heard instances of the Russian Government. 

Mr. POE. Do they control who has access to the Internet? 

Mr. PAI. I am not clear to what extent. 

Mr. POE. If you know. 

Mr. PAI. On that particular question, I am not sure. 

Mr. POE. Will Internet speed, for those of us who use the Internet, will it increase or will it decrease if the FCC implements this 

300-page rule? 

Mr. PAI. I believe it will decrease. 

Mr. POE. Why? 

Mr. PAI. Because it will dis-incentivize companies from making 

the major investment decisions they have to make. It will impede 

them from deploying the infrastructure that carries some of this 

high bandwidth traffic, and especially to the extent that consumers 

are using bandwidth-hungry applications, it is going to make it 

more difficult for those applications to be delivered. 

Mr. POE. FCC doesn’t control content of Internet, does it not? 

Mr. PAI. It does not, thankfully. 

Mr. POE. I agree with that. Thankfully, it does not. 

It concerns me that we may get to a point where the FCC decides 

in the name of fairness to control content, which I think is a constitutional violation. 

Let me ask you this, does a rule that is implemented and proposed, how do we get there? I see there is a conflict in statements. 

Were you told, or the commission told by the Administration, impose this, let FCC control net neutrality. 

Mr. PAI. Well, I think the President’s statement on November 10, 

if you go to the White House Web site, it says, ‘‘This is my plan, 

and I am asking the FCC to implement it.’’ That is a pretty direct 

statement. 

Mr. POE. Was that before or after you implemented the plan? 

Mr. PAI. That was before we implemented the plan, but well 

after we adopted the proposal in May of 2014. 

Mr. POE. I have the same question for the other three, and I will 

put these in writing so you all can answer them in writing. 

You think the plan will diminish competition? Is that what you 

said? 

Mr. PAI. I do. 

Mr. POE. Okay. Thank you, Mr. Chairman, for your patience. I 

will have the same questions, if I may, for the other three in writing. 
74 

Mr. GOODLATTE. We will ask that they respond to them in writing. 

The Chair now recognizes the gentlewoman from Texas, Ms. 

Jackson Lee, for 5 minutes. 

Ms. JACKSON LEE. Mr. Chairman, thank you, to the Ranking 

Member as well. 

It looks like a journey that we travelled some years ago. If you 

are on this Committee long enough, you will see some circular returns as we looked at dealing with some other, if you will, communication entities on another journey that we took some years ago 

dealing with how we would best serve the American public. 

Frankly, to the witnesses, I believe that this is what this discussion is about. They are our bosses, and this is about serving the 

American public. 

So I would like to ask Chairman Wheeler and Ms. McSweeny to 

help me walk through this journey. I am looking at some questions 

that I asked. We are trying to track the date, either 2010 or 2011, 

and I assume it is public record. I can say that it was a witness 

by the name of Ms. Sohn, and we went through a journey dealing 

with issues of competition and what would best suit the consumer. 

The last answer indicated it would be anticompetitive. 

So, Chairman Wheeler, let me ask you the question, on net neutrality, where would it be on the scale of competitiveness or 

anticompetitiveness? 

Mr. WHEELER. Thank you, Congresswoman. It is a procompetitive activity, and at its core is the fact that it is not old-style 

utility regulation. It does not regulate rates, does not have tariffs, 

does not have unbundling. 

Let me give you a couple of examples of that. Here’s a Wall 

Street analyst’s report. He says, we think the path to retail rate 

regulation is so difficult that it is close to inconceivable. 

Now people keep talking about these imaginary horribles about 

there could be rate regulation in these unique circumstances. 

Ms. JACKSON LEE. If I may stop you for a moment, I am going 

to let you finish. So in essence, net neutrality could provide a profit 

on both ends, those who access it and those who own the highway? 

Am I correct? 

Mr. WHEELER. Thank you for putting it that way. Yes, ma’am, 

because the goal here is how do we make sure that we have consumer protections and protections for those innovators in place 

and, at the same point in time, create incentives for the build-out 

of capacity and the competitive build-out for capacity. 

If you look at what is been going on, as I was saying before, 

when people knew that we were headed toward Title II, they are 

still building. The stocks are up. The analysts are saying there is 

not going to be these things pulling back. 

There was huge bidding in the AWS-3 spectrum auction, setting 

all kinds of records, about three times what we expected we would 

make, despite the fact that people knew they were going to be covered under Title II of the act. 

So, yes, this has been designed to make sure that carriers are allowed to charge the rates they need to justify the investment to 

build competitive and ever-faster broadband. 
75 

Ms. JACKSON LEE. But all those who have modeled their life, 

maybe the new Millennials, maybe the Generation X and beyond, 

after the likes of founders of the various techs that are out in California, per se, or in Austin, Texas, they all still have an opportunity. They can wake up one morning in a college dorm and have 

a brilliant idea and pursue it under this net neutrality. 

If I might get Ms. McSweeny, and I would like to come back to 

you, Chairman, in my short time. 

Commissioner McSweeny, if you would, answer the same question about competitiveness. But I then want both of you to follow 

up on the idea of how this differs from the garden variety enforcement of utilities. People are fearful that we are going to pounce 

down on them in an opposite way, which is net neutrality. They 

won’t have any assistance from us. 

But, if you could, on the idea of competitiveness, very important. 

Consumers having access. The highway being in top shape. 

Ms. MCSWEENY. Yes, Congresswoman, and to your point, also the 

innovators. I would say it is virtuous on both ends of that cycle. 

So the edge providers, those students you referred to in Austin that 

have this great idea, having clear rules that provide them access 

is very important to making sure that that innovation pipeline remains open and available to people. 

So yes, I would say that that is part of why this Open Internet 

order is very important to maintaining the Open Internet. 

Ms. JACKSON LEE. Commissioner Chairman, did you want to just 

get back on enforcement? 

Mr. WHEELER. There are 48 sections of Title II, and we have 

forborne from 27 of those, saying those are the old rules, those are 

what you did in the monopoly era, those are what you did when 

you were treating this as a utility. We have patterned it on the 

model that has worked so well for the last 22 years for the wireless 

industry. 

Interestingly enough, the wireless industry asked to be regulated 

under Title II, and to have old rules forborne, and the commission 

forbeared, forborne—whatever the word is—from 19 of the sections. 

We did it for 27 sections, so we are actually 50 percent more deregulatory than the wireless industry has had for the last 22 years 

and been wildly successful. 

Mr. GOODLATTE. Time of the gentlewoman has expired. 

Ms. JACKSON LEE. Thank you, Chairman. Thank you. 

Mr. GOODLATTE. The gentleman from Pennsylvania, Mr. Marino, 

is recognized for 5 minutes. 

Mr. MARINO. Thank you, Chairman. 

Welcome, panel members. 

Commissioner Wright, it appears that the FCC’s Open Internet 

order will prohibit smaller rival companies to compete with large 

companies. What say you about that? 

Mr. WRIGHT. I think Commissioner Pai articulated this concern 

in a way that is consistent with my understanding a little bit earlier. I think he is correct that there is substantial risk that raising 

the cost of smaller rivals to compete, and thus entrenching existing 

monopoly power to this extent, is a real concern to be worried 

about under this order. 
76 

Mr. MARINO. The way I understand antitrust laws is they protect 

one’s ability for free competition. Is that the main idea behind antitrust law? 

Mr. WRIGHT. Yes. 

Mr. MARINO. The FCC, again, Mr. Wright, the FCC has asserts 

that it can protect consumers and their privacy. Yet the FTC, and 

not the FCC, has a longstanding history of prosecuting this type of 

conduct. How many cases has the FTC prosecuted? 

Mr. WRIGHT. If we are talking about both consumer protection 

cases in this space as well, I don’t have an exact number, but we 

have been around prosecuting these cases for a long time. 

Mr. MARINO. Do you know how many the FCC has pursued? 

Mr. WRIGHT. I do not. 

Mr. MARINO. Okay. 

Ms. McSweeny, do you know how many the FCC has pursued? 

Ms. MCSWEENY. No, sir, I don’t. 

Mr. MARINO. Okay. Well, my research shows me that the FCC 

has pursued two. 

Commissioner Pai, what do you have to say about the FCC’s ability and experience with consumer privacy investigations and litigation, relative to the FTC? 

Mr. PAI. Congressman, that is a great question. Thank you for 

it. 

Our experience, as you pointed out in your colloquy with our FTC 

counterparts, is extremely limited because the FCC, until reclassification, simply didn’t have that much authority in this space, in 

the broadband space. 

Mr. MARINO. Mr. Pai, again, what happens with the fines, the 

money, that the FCC collects? Do you know what happens with 

that money, where it goes? 

Mr. PAI. My understanding is that those fines are deposited in 

the United States Treasury. 

Mr. MARINO. What happens with the fines and the money that 

the FTC collects? 

Mr. PAI. I would defer to my FTC colleagues on that. 

Mr. WRIGHT. They go back to consumers. 

Mr. MARINO. Okay. Do we all agree that—and if you don’t agree, 

raise your hand—that that money should be going back to the consumers and not into the Treasury? 

You don’t agree, Chairman? 

Mr. WHEELER. I think that the answer to the FTC question is 

that it is both, and we have participated in some recent settlements with the FTC that have just done that. Some actually also 

goes back to States because we have done it collectively. 

Mr. MARINO. Are you saying the FCC money goes to States and 

consumers? The FCC money, not the FTC. 

Mr. WHEELER. No, I am saying the FTC, we work together with 

the FTC, and in things that we have done together, it has been 

States, Federal Government, and consumers. 

Mr. MARINO. But they have been initiated by the FTC, not the 

FCC. If you have a fine, where does it go? If the FCC has a 

fine—— 

Mr. WHEELER. No, ours go to the Treasury. 
77 

Mr. MARINO. Okay, I think it is better off going back to the consumer, my personal opinion. 

Mr. WHEELER. Sir, could I correct one thing on the privacy question? 

Mr. MARINO. Quickly, because I don’t have much time. 

Mr. WHEELER. I think the two privacy actions you were talking 

about are in the last 6 months. We have had decades of CPNI, Customer Proprietary Network Information, rules and enforcement 

against that to protect what people watch, what people dial. 

Mr. MARINO. Sir, I understand where you are going with that, 

but that is complete and distinct from the prosecution end of 

things. I am a prosecutor. I know these things. I have done these 

things. That is distinct of that. 

Mr. WHEELER. It is more than two. Those are the basics. 

Mr. MARINO. Ms. McSweeny, for decades the FTC has used antitrust laws to protect against anticompetitive actions in a wide 

range of industries. Do you agree with me on that? 

Ms. MCSWEENY. Yes, sir. 

Mr. MARINO. Why do you believe, or perhaps you don’t believe, 

the FTC is ill-equipped to prosecute anticompetitive conduct on the 

Internet? 

Ms. MCSWEENY. Sir, I believe the FTC is well-equipped to prosecute it. My point is that I think consumers are better off, and entrepreneurs are better off, when there are clear rules in the Open 

Internet order, and also the FTC on the beat to protect consumers 

and to protect competition. 

Mr. MARINO. Yes, but why do we need two forms of government 

for doing something like this? The government is big enough at this 

point. We don’t need duplicative services. 

I am colorblind, sir. Has my time run out? 

Mr. GOODLATTE. We will allow the witness to answer your question. 

Mr. MARINO. Yes, please. 

Ms. MCSWEENY. Thank you. 

I mean, I would say that you are correctly pointing out that there 

are slightly different tools in the FTC toolbox than there are in the 

FCC toolbox. From my perspective as a Federal Trade Commissioner, I think the FTC tools are providing consumer redress, and 

the fact that we are not limited by a 1-year statute of limitation, 

are very good tools for protecting consumers, which is why support 

repealing the common carrier exemption in the Federal Trade Commission Act. 

Mr. MARINO. Thank you. 

Mr. GOODLATTE. It would be a good question how that matches 

up with the Supreme Court’s decision in the Trinko case, but we 

will now recognize the gentleman from Georgia for his questioning. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Commissioner Pai, you do agree that open debate is healthy and 

that elected leaders should take sides on important issues so that 

voters can hold them accountable? 

Mr. PAI. Absolutely. 

Mr. JOHNSON. And public statements by the White House on the 

important subject of net neutrality were appropriate, were they 

not? 
78 

Mr. PAI. I think that any citizen of the United States can weigh 

in, and the President is a citizen of the United States, like any 

other. 

Mr. JOHNSON. In fact, it was his comments that contributed to 

the more than 4 million public comments that were ginned up, and 

that the FCC was able to peruse and consider in its rulemaking 

process. Isn’t that correct? 

Mr. PAI. Well, the President’s comments postdated the bulk of 

those comments. The agency was considering a very different proposal when the President made his announcement on November 

10. 

Mr. JOHNSON. Well, my question was, though, that his comments 

contributed to the volume of in excess of 4 million comments that 

were actually received by the agency in the rulemaking process. 

Isn’t that correct? 

Mr. PAI. My understanding is the vast majority of the comments 

came before the President’s announcement. 

Mr. JOHNSON. Well, there were some though. Come on, give the 

President some credit. Can’t you do that? And if you can’t, I understand. 

Well, now, it is a fact that under the past four Administrations, 

both Republican and Democratic presidents, that they have publicly participated in the FCC rulemaking process. Isn’t that a fact? 

Mr. PAI. I am not aware of anything on the level of the November 10 announcement. 

Mr. JOHNSON. Well, let me ask Chairman Wheeler, are you 

aware of that, sir? 

Mr. WHEELER. Yes, sir. 

Mr. JOHNSON. Certainly, there is nothing wrong with that, is 

there, Mr. Pai? 

Mr. PAI. Well, I think the concern comes when the agency is proposing X and the President instructs the agency to do Y and the 

agency does Y. I think that is a concern. 

Mr. JOHNSON. Well, you are kind of getting warm a little bit now. 

So the President publicly commented, which you say it is okay, 

he should do as a public official, and that actually helped to gin up 

more public comment, and others have done it in the past, other 

Presidents have done it in the past. 

Now, FCC rules, there are some exemptions that allow for ex 

parte communications between the FCC and other Federal agencies 

during the rulemaking process. That is correct, isn’t it? 

Mr. PAI. That is correct, sir. 

Mr. JOHNSON. And the White House is also exempted. 

Mr. PAI. I can’t recall whether the exemption covers other Cabinet departments, or whether it also includes the White House, the 

Executive Office of the President, but there is an avenue for White 

House participation. 

Mr. JOHNSON. Let me ask you this question, you have no evidence to refute the assertion that Chairman Wheeler made during 

this hearing that there had been no ex parte communications between the FCC and the White House on this particular issue during the rulemaking process. Is that correct? 

Mr. PAI. I have no personal knowledge of any consultations. 
79 

Mr. WHEELER. Mr. Johnson, if I can do one clarification, there 

was an ex parte when Jeff Zients, an adviser to the President, 

came to see me to say the President was going to have an announcement and take a position. There was an ex parte filed on 

that. 

Mr. JOHNSON. I see, okay. 

Well, other than that, Mr. Pai, do you know of any evidence that 

supports the Republican charge or allegation that the President 

strong-armed the FCC in some way to issue the order that we are 

concerned with here today? Do you have any information or any 

evidence that you can share with us? 

Mr. PAI. Congressman, I know various congressional Committees 

are looking at that. I am solely looking at what the President actually said publicly. 

Mr. JOHNSON. You don’t know of any evidence that the President 

has exerted any undue influence on the decision-making process. Is 

that correct? 

Mr. PAI. Other than the public statements that the President 

made, I am not aware of any. 

Mr. JOHNSON. Which was something that Presidents do, and it 

was entirely proper, I think you have already stated. 

Mr. PAI. Well, Congressman, as a former staffer under Republican and Democratic administrations, I cherish the agency’s independence, and my concern comes when a political actor of any 

party instructs the agency as to what to do and even the legal theory that it is supposed to use. 

Mr. JOHNSON. Well, sir, you can’t have it both ways, now. 

Mr. GOODLATTE. Time of the gentleman has expired. 

The Chair recognizes gentleman from Georgia, Mr. Collins, for 

his questions. 

Mr. COLLINS. Thank you, Mr. Chairman. I appreciate it. 

Chairman Wheeler, thanks to you and the rest of this panel 

today. I appreciate you coming forward and discussing this reclassification on the commercial Internet as Title II, but I think even in 

light of the last questioning and line of questioning, and I want to 

go over a timeline, which I think may put this in perspective, because I have always operated off the perception in life, and I think 

it is true, that perception is reality. And that may not be the truth, 

but perception is reality, and it clouds most of what we do. 

So then going over the timeline, Mr. Wheeler, you had stated on 

February 19 in 2014 in response to the D.C. Court of Appeals ruling of Verizon v. FCC rejecting your assumption of authority to regulate the Internet, the FCC would accept the D.C. Court’s invitation by proposing rules that will meet the court’s test for preventing improper blocking of and discrimination among Internet 

traffic. 

Nearly 2 months later, you formally proposed the Chairman’s 

draft of proposed rulemaking to your fellow commissioners. Notably, this draft did not propose to reclassify broadband under Title 

II. 

Then on May 14, 2014, the FCC’s NPRM containing consideration of Title II reclassification passed by vote of 3-to-2. 

In the months that followed, things got really interesting. On November 10, 2014, President Obama publicly stated what he be-
80 

lieved the FCC and independent agencies should do: reclassify consumer broadband under Title II of the Telecommunications Act. 

The day after the FCC vote, President Obama sent a thank you 

note to Reddit users for their advocacy for Title II reclassification. 

And the next day, Politico reported that DNC sent out an email 

stating the FCC approved President Obama’s plan. 

As an independent agency—again, perception takes hold—you 

are under the highest scrutiny to act in a manner completely free 

from political influence and executive branch pressure. I am very 

concerned that this has been a failure. 

Legally, it appears the executive branch may have legislated de 

facto through your agency and is now implementing its policy, and 

you have allowed the credibility of the agency to suffer because of 

it. 

When the many lawsuits come, and I do not believe you will 

enjoy the presumption of the Chevron defense, and ultimately your 

flawed theory justifying this expansion will be struck down rightly. 

In the Utility Air Regulatory Group v. EPA, the Court made it 

clear that an agency must be grounded in the statute, which I do 

not believe you are, and the agency has no power to tailor legislation to bureaucratic policy goals to regulating ways unrecognizable 

to Congress that designed it, which in this case I believe you truly 

are. 

Now, Mr. Wheeler, I don’t know if you want to be a Member of 

Congress. It is not a fun process to get here. But if that is what 

you want to do, then you know, find your application, run, spend 

a million, let your world know who you are, and come on and join 

us and legislate, because one of the things that you said earlier 

was that Congress, several legislators have put forward ideas in 

legislation to deal with this. 

Again, many of us do believe there is an Article I issue here, and 

that your role has been overstepped in this by doing what you are 

doing. You have applied the most antiquated regulatory framework 

to an area where innovation and growth have thrived. We cannot 

regulate our way to better innovation here. And we also can’t do 

that by circumventing Congress to do so. 

So in light of that, let me go to Mr. Pai. 

Mr. Wheeler, if you want to jump in, that is fine. We don’t have 

a lot of time. 

Basically, the order touts the FCC’s substantial experience over 

the past decade on last-mile issues, but admits that the agency 

lacks similar depth in the Internet traffic exchange. The net neutrality order represents—and I am skipping here just a second— 

but, the net neutrality order represents a massive expansion of the 

commission’s role and is a precursor to a larger, more costly bureaucracy overseeing and regulating Internet from the top to bottom. 

I want to know a comment how this monster that you have unleashed is going to be kept in check. 

Mr. Pai, and then just briefly Mr. Wheeler. 

Mr. PAI. Congressman, there is no question that before February 

26, the FCC did not exert jurisdiction over Internet interconnection. After February 26, it does. 
81 

Before February 26, the FCC didn’t purport to have jurisdiction 

over such things as wireless service plans. After February 26, it 

does. 

Before February 26, the FCC had no arguable role in rate regulation. After February 26, there is ex post rate regulation, as we 

agreed last week. 

Mr. COLLINS. Mr. Wheeler, just a question here, do you all have 

a lot of free time over at the FCC? I mean, a lot of free people sitting around doing nothing to take on such an expansion? 

Mr. WHEELER. Congressman, thank you for the question. 

In 1996, the Congress changed the rules and said we want you 

to look both in terms of telecommunication services and information services. A telecommunication service is defined as a service 

that hauls an information service. When the commission first 

looked at the question of were these ISPs telecommunication services or information services, it was an entirely different world back 

in 2002. 

Mr. COLLINS. I am going to stop right there. I am going to reclaim my time for a second, because I think that is the heart of 

what we are dealing with here, is what was dealt with at that 

time, that is a congressional decision. That is something that 

should be debated in the halls of Congress, not in an executive 

agency. 

Mr. WHEELER. I am sorry, I wasn’t making myself clear. I am 

sorry. 

Mr. COLLINS. I think that is the whole problem with this. It is 

not clear. 

Mr. WHEELER. Congress said to us to make the decision about 

whether it is a telecommunication service or an information service. In 2002, there were about a million Web sites, and what ISPs 

were doing was providing information services. Today, there are 

1.25 billion Web sites, and what ISPs are doing is hauling traffic, 

not providing information services. 

So what we were doing was saying Congress said to us, ‘‘These 

are the rules you should look at,’’ and we looked at that, and we 

saw that in the intervening time, the activities of those regulated 

had changed substantially from one class to the other. 

Mr. GOODLATTE. Time of the gentleman has expired. 

Mr. COLLINS. I yield back. 

Mr. JOHNSON. Mr. Chairman, I have a unanimous consent request. 

Mr. GOODLATTE. Gentleman will state his unanimous consent request. 

Mr. JOHNSON. To insert an op-ed entitled, ‘‘Why Presidents Advise the FCC’’ by Harold Feld and Kate Forscey; another publication entitled, ‘‘It Is Common and Legal Practice for the President 

to Weigh In on FCC Policymaking’’ by Public Knowledge; and last, 

an article published by the Washington Post entitled, ‘‘Will the 

FCC’s Net Neutrality Decision Cost Americans $15 Billion in New 

Taxes? Nope,’’ for the record. 

Mr. GOODLATTE. Without objection, they will be made a part of 

the record, and I am sure they will be excellent reading. 

[The information referred to follows:] 
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Mr. JOHNSON. Thank you. 

Mr. GOODLATTE. The Chair recognizes the gentlewoman from 

California, Ms. Chu. 

Ms. CHU. Commissioner McSweeny, you state in your testimony 

that the FCC considers noneconomic values that are not generally 

protected by antitrust laws. These values include free expression, 

diversity of political discourse, and cultural development, and antitrust actions take into account economic considerations. 

To what extent, if any, would antitrust actions taken by the FTC 

be able to take these factors into consideration? 

Ms. MCSWEENY. I think you are correctly pointing out that the 

FCC proceeding does balance some of these noneconomic values 

and that generally antitrust law isn’t the right framework in which 

to protect those. Antitrust law is quite correctly grounded on very 

rigorous analysis of harm to competition, and that is its primary 

focus. 

Ms. CHU. Chairman Wheeler, when it comes to noneconomic values, the FCC is obligated to abide by national policy goals such as 

the goal that requires the FCC to seek to promote the policies and 

purposes of favoring diversity of media voices, vigorous economic 

competition, technological advancement, promotion of the public interest, convenience, and necessity. So basically, you have an obligation to promote diversity and competition in your regulations. 

Can you describe this obligation, how it applies in this order, and 

why it matters? 

Mr. WHEELER. Thank you, Congresswoman. I think that you 

have just identified the key issue that, and again, I want to emphasize, we work in tandem with the FTC; we should work in tandem 

with the FTC. It is a great one-two punch. 

Their job is statutorily defined with one set of criteria, and our 

job is statutorily defined with another. Then what we have the 

statutory authority, mandate, to do, is to create regulations that 

address the kind of issues you talked about in terms of how you 

expand and protect the public interest, convenience, and necessity. 

That is a big difference between us and the FTC, that we have 

this kind of regulatory authority on that kind of a set of standards 

to pass regulations that will govern how markets work different 

from the way the FTC has. 

Ms. CHU. Now I would like to ask you about innovation. One of 

our key goals is to ensure that new entrepreneurs are able to 

thrive and innovate. You state that there would have been no AOL 

without the FCC’s openness mandate. 

Can you describe how enabling access for modems contributed to 

the growth of an entity like AOL? 

Mr. WHEELER. Thank you, Congresswoman. 

AOL was made possible by the fact that there were such things 

as commercially available modems. Remember the old Hayes 

modems that would squeak and screech at you? 

Before the FCC stepped in, AT&T said you couldn’t attach something like that to the lines. It was a foreign attachment. An alien 

attachment, it was called. If that had been the case, Steve Case 

wouldn’t have been able to go out and build his business. 

Openness is at the core of what built the Internet. And what we 

need to make sure continues is that that kind of openness is avail-
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able for innovators who have an idea to reach their potential customers. 

If Steve Case had had to go around and go to Dayton, and then 

go to Poughkeepsie, and then go to Minneapolis, and one step at 

a time, say, ‘‘Can I get on your network? Can I get on your network? Can I get on your network?’’ it never would have been possible. But because there is openness, the innovators of today don’t 

have to do that. The two guys and a dog in a garage tomorrow can 

be online and have 100,000, and a week later have a million people. And I have seen those businesses develop that way. 

When I was a venture capitalist for 10 years before coming to 

this job, I was involved in those. We would not have been able to 

invest money and create jobs had we not known that there was the 

opportunity for open access, that these innovators could take their 

idea out and test it in the marketplace, rather than have to go carrier to carrier knocking on doors and say, ‘‘May I please get on your 

network?’’ That is what is powerful about this. 

Ms. CHU. It seems as though Open Internet actions were taken 

under both Republican- and Democratic-led commissions. 

Can you give a prime example? 

Mr. WHEELER. Yes, ma’am. As I indicated before, there was what 

the Republican-led commission did insofar as the wireless industry 

is concerned, when the big wireless carriers said that they were 

going to shut out the customers of the small wireless carriers, and 

the commission came in and said, ‘‘No, under Title II, you have to 

be open to roaming.’’ 

There was a situation where under a Republican administration, 

the commission said to Comcast, ‘‘No, you may not disadvantage 

this service provider. You must provide service.’’ I think that we 

are continuing that tradition. 

Ms. CHU. Thank you. 

I yield back. 

Mr. GOODLATTE. The Chair thanks the gentlewoman. 

Recognizes the gentleman from Texas, Mr. Gohmert, for his questions. 

Mr. GOHMERT. Thank you, Mr. Chairman. Thank you to the witnesses. Appreciate you being here. 

Mr. Wheeler, a Wall Street Journal on article February 4 says 

about you that you wanted to leave some room for broadband providers to explore new business models. Is that correct? 

Mr. WHEELER. I am not sure the article you are talking about, 

but one of the key precepts that we have been working on is how 

do we make sure that broadband providers have the initiative to 

be creative and the initiative to invest. 

Mr. GOHMERT. So you do want to leave some room for broadband 

providers to explore different business models, correct? 

Mr. WHEELER. Yes, sir. And we have also explicitly said that we 

do not cover what have been traditionally called specialized services or managed services. It was interesting to note that the 

Verizon CFO, about a week ago, said Verizon’s growth opportunities are going to be in over-the-top services, and Internet of Things 

services, both of which it appears they are going to offer on their 

specialized services. 
91 

Mr. GOHMERT. We can find out those things from Verizon, but I 

was wanting to ask you directly about things that you specifically 

could answer from your own experience and knowledge. 

There was a court ruling in January 2014 that threw out the 

prior effort to control the rules to control the Internet. What makes 

the new rules more able to withstand court challenge, Commissioner Wheeler? 

Mr. WHEELER. Thank you for asking that question, Congressman. 

The basis of the court’s decision was that we had imposed common carrier regulation on the ISPs without classifying them as 

common carriers. The heart of this decision is that, in fact, we did 

classify them as common carriers, thereby addressing the principle 

issue in the Verizon decision. 

Mr. GOHMERT. Okay. So different facts, you just used different 

words to describe it, is the way it sounds. 

But I heard you just say Congress asked us to look at the rules. 

What from Congress asked the FCC to look at rules regarding the 

Internet? 

Mr. WHEELER. The 1996 Telecommunications Act. 

Mr. GOHMERT. Oh, so it was recent. That was 19 years ago. You 

seized on that to say Congress was asking you to look at the Internet, 19 years later. 

Well, I would submit to you that something in 1996 had nothing 

to do with wanting you to take charge of the Internet. 

And I would also thank you for your willingness to leave some 

room for exploratory business models and new business models. 

That is really so gracious of you, because before the FCC stepped 

in, everybody was able to explore new business models. The only 

difference is now you are playing God with the Internet saying, ‘‘I 

will decide. We will leave some room for you to come up with new 

business models.’’ 

That is not your job. The court said that in January 2014, and 

you can change the wording around, but it doesn’t change the facts. 

And Congress is not asking you, was not asking you, to take over 

the Internet. 

I want to make that clear. You find something in the last 4 years 

where Congress has passed it by elected officials of this country, 

and said, ‘‘Please take over the Internet,’’ then that would be good 

evidence before this Committee. 

But until that happens, some of us—most of us in the House and 

most of us in the Senate do not want you to decide who gets to develop a new business model and who cannot. 

I yield back my time. Thank you. 

Mr. GOODLATTE. The Chair thanks the gentleman. 

Recognizes the gentleman from Florida, Mr. Deutch, for his questions. 

Mr. DEUTCH. Thank you, Chairman Goodlatte, and Ranking 

Member Conyers. 

Thank you to the witnesses for coming and subjecting yourselves 

to what we are providing. 

At Rice University in 1962, President Kennedy asked the American people to envision the progress of the first 50,000 years of 

human history as if it took place in 50 years. And I quote, ‘‘Stated 
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in these terms,’’ President Kennedy said, ‘‘we know very little 

about the first 40 years. Only 5 years ago, man learned to write 

and use a cart with wheels. Christianity began less than 2 years 

ago. The printing press came this year. And less than 2 months 

ago, during this whole 50-year span of human history, the steam 

engine provided a new source of power. Last month, electric lights 

and telephones and automobiles and airplanes became available. 

Only last week did we develop penicillin and television and nuclear 

power. And now, if America’s new spacecraft succeeds in reaching 

Venus, we will have literally reached the stars before midnight tonight.’’ 

Surely, if President Kennedy were with us today, he would count 

the transformative power of the Internet as the start of a brand 

new day in the history of human progress. By his measure, in the 

matter of seconds, we have gone from a clunky desktop dial-up to 

lightning fast data at our fingertips and in our pockets. 

From Google searches and PayPal transactions to Netflix shows 

and Facebook friends, I think we can all agree that the Internet 

has proven to be a platform capable of transforming every facet of 

our culture, our economy, and everyday life. 

I think we can also agree that when it comes to regulatory or legislative changes to how we govern the Internet, our guiding principle must be to preserve it as a platform for progress and innovation. For many years, that guiding principle has been net neutrality, the principle that consumers and businesses can use the 

bandwidth that they pay for however they choose. 

Mr. Chairman, protecting that freedom is a concern that transcends partisan boundaries. How do I know this? Because of the 

hundreds and hundreds of calls that we have received from constituents in recent months in support or net neutrality, they are 

not calling as Republicans or Democrats. They are small startups 

working on the next great social network. They are aspiring stars 

who are singing their hearts out on YouTube. They are professors 

collaborating with academics around the world on medical research. And they are seniors Face Timing with their grandchildren 

across the country. 

I know that is true because, in my district, I have a lot of those. 

They are Americans who don’t want interference on the Internet, 

whether it comes from overly rigid regulations imposed by government, or anticompetitive agreements struck between corporations. 

And we can’t blame them. 

I am glad the debate between consumers and academics and 

businesses and cutting-edge telecom companies has moved past 

whether or not net neutrality is a good thing. The question that remains involves how we enforce that widely supported principle. 

And to their credit, in the past decade or so, the FCC has attempted to enforce net neutrality using the lightest hand possible. 

Yet those strategies were slapped down by the courts. 

Like many of my colleagues, I have some questions about how 

the Title II reclassification ruling, recently announced by the FCC, 

will play out in practice. How can we ensure that new regulations 

keep up with the rapid pace of advancements on the Internet? How 

can we work to promote affordability for consumers and bring con-
93 

nections to underserved areas? How can we encourage investment 

in new infrastructure? 

These are the kind of questions, Mr. Chairman, that this Committee ought to be focused on in the coming weeks and months. Instead, I fear that some of my colleagues in the majority are more 

concerned with turning net neutrality, an issue of longstanding bipartisan support, into another wedge issue for which to attack the 

President. 

That being said, we don’t have to treat Title II classification as 

the be-all and end-all solution to every issue regarding the Internet. 

I look forward, Mr. Chairman, to digging deeper into the many 

issues that impact the regulation of the Internet, from common carrier classification to our antitrust framework. 

Mr. Chairman, the space program created by President Kennedy 

may have aimed for the moon, but it yielded technological discoveries touching our lives in so many ways, and even contributed to 

the development and adoption of the Internet. 

Today, cyberspace remains a great frontier for discovery for all, 

and we must work to ensure the Internet’s power as a platform for 

innovation accessible by all continues to thrive. That is why this 

hearing is so important. 

Chairman Wheeler, just two quick questions. Number one, does 

your action set rates and prices and regulate content? And number 

two, how will leveling the playing field for innovators and startups 

be good for my constituents? 

Mr. WHEELER. Thank you, Congressman. No, we specifically forbear from rate regulation, tariffing, unbundling, and the traditional 

components. 

Let me pick up on your—— 

Mr. GOODLATTE. Time of the gentleman has expired. 

The gentlewoman from Texas has a unanimous consent request. 

Ms. JACKSON LEE. Yes, Mr. Chairman. I ask unanimous consent 

to put into the record a letter dated January 29, 2015, for about 

four pages of signatures from law professors from as far away as 

New York Law School and the University of South Dakota School 

of law. I ask unanimous consent to place this in the record. 

Mr. GOODLATTE. Without objection, that will be made a part of 

the record. 

Ms. JACKSON LEE. And I ask unanimous consent, Mr. Chairman, 

to put into the record testimony on pages 148 to 150—148, 149, 

150—from a hearing that we held on February 15, 2011, and questioning on the issue of competition. I ask unanimous consent. 

Mr. GOODLATTE. Without objection, that will be made a part of 

the record. 

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Excerpt from February 15, 2011 hearing. 
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Mr. GOODLATTE. We have Members who wish to ask questions, 

and we have a vote on the floor, so with the forbearance of our witnesses, we would ask, if you are able to remain, please do so. And 

we will return and resume the hearing as soon as these votes are 

completed. 

Committee will stand in recess. 

[Recess.] 

Mr. MARINO [presiding]. The Chair now recognizes the gentlewoman from Washington, Congresswoman DelBene. 

Ms. DELBENE. Thank you, Mr. Chair. 

Mr. MARINO. From the State of Washington. 

Ms. DELBENE. From the great State of Washington. 

Mr. MARINO. The great State of Washington. 

Ms. DELBENE. Thanks, everyone, for being here with us today. 

This is an incredibly important issue to make sure we do everything possible to maintain an Open Internet. 

As someone who has worked in technology, my background is a 

businesswoman and entrepreneur. I have definitely seen firsthand 

how we have had an evolution in how we connect and do business, 

and how that has completely transformed the way the world works, 

and how critical the Internet is now to everyday life. 

In my district in Washington State, we have everything from 

farming communities to high-technology hubs, and they all will 

benefit from responsible and forward-looking net neutrality policies 

that will promote equal treatment of content and affordable access 

for consumers and for businesses. While there may be vast disagreements on the best way to achieve this goal, I just want to 

thank everyone for working toward this goal, because it is an important goal. 

We now see legislation and changes that are taking place in the 

way the Internet works that really weren’t anticipated when we 

put communications law in place. And I believe strongly, as a technology person, we need to do a better job of keeping laws up to date 

with the way the world works. Clearly, we haven’t quite done that. 

We have a regulatory framework that is quite old. 

And, Chairman Wheeler, I wondered if you agree with that statement, and if you look at the framework that you are working with 

right now, would you like to see changes there, so that we could 

do the best job possible of putting together a great environment to 

support innovation in this area? 

Mr. WHEELER. Well, thank you, Congresswoman, and I agree. 

This is like that line in Through the Looking Glass that it takes 

all the running you can do to stay in the same place when you are 

talking about all the changes in the Internet. 

It is interesting that the Communications Act itself, the Congress 

was incredibly farsighted in 1996, in particular, when they put in 

flexibility for decision-making to be made by the commission along 

the way. I think it is always worthwhile for Congress to involve 

itself in making sure that the statutes are up to date, but the flexibility that Congress has put in the statute has also enabled us to 

try. 

But what we have tried to do is not to be prescriptive and say, 

‘‘We are smart. We know what is going to happen in the marketplace. We know what technology is.’’ But rather to say, let’s have 
110 

a general yardstick that can be used to measure things that we 

have never thought about as they come along, and the authority to 

do something if, in fact, they fall short of that yardstick. 

Ms. DELBENE. Now, I know there is a Republican draft piece of 

legislation that has been put together to actually put forward legislation on this issue, and the draft that I have looked at has some 

particular carve-outs in it, one for specialized services, which seems 

to be loosely defined, as I read it, and also a carve-out that seems 

to allow paid prioritization of certain Internet services where consumers specifically approve it. 

I wondered if you had feedback, if you have had a chance to see 

some of this, and if you had feedback on those carve-outs, and how 

you think those might impact competition in the market. 

Mr. WHEELER. Yes. Thank you, Congresswoman. 

We have had conversations with the sponsors of the bill, expressing some concerns about those carve-outs and about the limitation 

on the ability of the agency to deal with what I just talked about, 

which is how do you have that yardstick going forward. 

Ms. DELBENE. Commissioner McSweeny, by reclassifying 

broadband under Title II, the FCC gains the ability to govern privacy issues, and it might appear that the FTC in some cases loses 

some of this authority as well. I wondered if you would comment 

on whether you agree that that is true, or if that is an accurate 

assessment, and whether you see room for the FCC and FTC to collaborate to protect consumer privacy under Title II? 

Ms. MCSWEENY. I absolutely see room for the FTC and FCC to 

collaborate on privacy. I think that would be very important. We 

already do work together and have had some recent examples of 

consumer protection cases where we have worked together very effectively. 

As you point out, reclassification may have an impact on FTC jurisdiction. This is why the legislative recommendation that I am 

prepared to make today is repealing the common carrier exemption 

in the Federal Trade Commission Act. 

I think that, as Chairman Wheeler has pointed out, it is wonderful when Congress takes the time to think about how to update the 

consumer protection laws. And from my perspective as an FTC 

commissioner, that would make a lot of sense. 

But again, we can work with the FCC. We do work with the 

FCC. And I think consumer privacy is a priority for both the FTC 

and the FCC. 

Ms. DELBENE. Privacy is an area that we have definitely seen 

legislation that is out of date, whether it is the Electronic Communications Privacy Act or other areas where legislation that was put 

in place decades ago hasn’t been updated. 

Do you think we can do it this way versus another legislative solution with respect to privacy? 

Ms. MCSWEENY. Well, there are several recommendations that 

have been put forward. The Administration has put forward privacy legislation as well. All of these are really valuable contributions. 

I would add that data security is a big priority of mine personally 

as well. And I would continue to support the passage of comprehensive data security legislation that would not only provide con-
111 

sumers with breach notification, but would lay out stronger security standards. 

Ms. DELBENE. Thank you. 

Thank you, Mr. Chair. I yield back. 

Mr. MARINO. Thank you. 

The Chair now recognizes the gentleman from Florida, Congressman DeSantis. 

Mr. DESANTIS. Thank you, Mr. Chairman. 

Commissioner Pai, do you view this decision as being motivated 

by political pressure, the decision to regulate the Internet under 

Title II? 

Mr. PAI. Congressman, I think there is no question that the public pressure put upon the agency by the November 10 announcement by the President was the defining factor in this proceeding. 

But for that announcement, we would not have made the decision 

we made. 

Mr. DESANTIS. And in fact, once the decision was made public, 

you actually had the national Democratic Party praising the adoption of President Obama’s Internet rules, correct? 

Mr. PAI. That is correct. 

Mr. DESANTIS. Now, in terms of the Internet being as it has been 

one of the keys being permissionless innovation, is Title II going 

to further that value or undermine that value? 

Mr. PAI. I think it will undermine the value, Congressman. The 

best example of that is the Internet conduct standard. It throws 

seven vaguely worded factors up in the air, and says it is nonexhaustive. And when asked to clarify how exactly will this be applied, the FCC admitted on February 26, we don’t really know. The 

FCC will sit there as the referee and throw the flag. That is the 

very definition of innovation only by permission. 

Mr. DESANTIS. Absolutely, and when you don’t have ex ante 

rules, I think it really stunts the ability of people to dedicate capital. 

What about the taxes issue? It seems to me that this opens the 

door for taxes, Universal Service Fund taxes on people’s broadband. 

And so when my constituents ask what is going on with the Internet, can I tell them with a straight face that they will not pay more 

as a result of this? 

Mr. PAI. I don’t think you can. I think the writing is on the wall. 

And I said on February 26, read my lips, more new taxes are coming. And it is going to be applied to broadband for the first time. 

Mr. DESANTIS. And that obviously will be passed on to consumers, and it is going to make what they buy more expensive. 

There is just no way around that, right? 

Mr. PAI. Exactly, and I think the other effect, which hasn’t gotten a lot of attention, is it is particularly the low-income and underserved populations who rely on broadband for all kinds of things 

who are going to be disproportionally affected. 

Mr. DESANTIS. In terms of the process, do you think that this 

complies with the Administrative Procedure Act? I remember when 

the notice was put out, Title II, I mean it was mentioned, admittedly, and I think Chairman Wheeler had pointed that out in a previous hearing, but it was not a notice about Title II being the central issue. 
112 

So you got a bunch of comments, true. But do you think that is 

the way the process should work? 

Mr. PAI. I don’t. I detail in my dissent all the reasons why I 

think the agency’s decision did not comport with the Administrative Procedure Act. Just to give you one of many examples, the application of Title II to mobile broadband, nowhere in the document, 

in the Notice of Proposed Rulemaking, will you find the phrase 

‘‘public switched network’’ and how Title II reclassification could 

work with respect to mobile. For good reason: the Verizon court 

itself said explicitly you cannot define mobile providers as common 

carriers under Section 332. 

And so I think for a variety of reasons, the agency just didn’t 

give the public sufficient notice of what it was going to do. 

Mr. DESANTIS. Now, much has been made that there has been 

nearly 4 million comments during this period, but weren’t there a 

lot of comments opposing using Title II? 

Mr. PAI. There were, and my understanding is that the reply 

comment phase, the majority of those who weighed in, once the 

FCC’s intentions became clearer, did oppose the application of Title 

II. 

Moreover, I would point out, Peter Hart, who runs Hart Research 

Associates, a very respected Democratic polling firm, found by a 21 

percent margin, the American people disagreed with what the FCC 

was proposing to do. 

Mr. DESANTIS. So at this point, what is the way forward? I mean 

legally, I know you wrote a very well-written dissent. Clearly, this 

is already sparking litigation. I know that previous rules have had 

trouble in the courts. 

Do you think that this is a legally flawed rule that will run into 

trouble with the courts? 

Mr. PAI. I do, unfortunately. If past is prologue, we have years 

of litigation in front of us. The 2008 decision that the Chairman 

mentioned was rejected in 2010. The 2010 rules were rejected only 

in 2014. And given the likelihood of Supreme Court review here, 

we might be at the end of the decade before we resolve the propriety of these regulations. 

Mr. DESANTIS. So if somebody comes to you and says, ‘‘Look, I 

don’t want Comcast throttling my Internet service or doing this or 

doing that,’’ what is your response as to how the Internet should 

work and the appropriate policy response, if any? 

Mr. PAI. My response is encapsulated in Congressman Deutch’s 

statement. All of us want a free and open Internet. There has been 

a bipartisan consensus for 2 decades that the Internet would be 

free and open with light-touch regulation. And I would argue the 

fact we are where we are, with the Internet economy the envy of 

the world, is precisely because the government has been restrained, 

has let the free market flourish and, where appropriate, has allowed antitrust to govern. But I fear that we are going on a different path now, a partisan one, which shouldn’t be the case. 

Mr. DESANTIS. And I agree. I will yield back in a second. The 

Clinton-Gore administration, they established this light-touch approach, a Democratic administration. It was continued through, 

and I think this is a major departure, and I appreciate what you 

have done to highlight the problems. 
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And I yield back. 

Mr. MARINO. Commissioner Pai, would you please clarify something for me? You were asked the first question if you thought this 

was a political pressure, and you responded yes, public pressure. 

Did you mean public pressure or political pressure? 

Mr. PAI. Congressman, what I meant was that, based solely on 

the statements the President made publicly, and on the statement 

on his Website, which is public, that alone imposed a lot of pressure on this formerly independent agency because we were clearly 

heading down a different path until the President’s public announcements. And those pronouncements obviously had a very significant political effect on the decision-making. 

Mr. MARINO. Just wanted a clarification for the record on that. 

Thank you. 

Mr. PAI. Thank you. 

Mr. MARINO. The Chair now recognizes the gentleman and my 

friend from New York, Congressman Jeffries. 

Mr. JEFFRIES. I thank the distinguished gentleman from Pennsylvania. 

If we can just pick up on that discussion, Commissioner Pai, you 

indicated that you thought it was public pressure brought to bear 

by President Obama in connection with what resulted in terms of 

the FCC order, is that correct? 

Mr. PAI. That is correct. 

Mr. JEFFRIES. So did the President engage in wrongdoing by articulating his position? 

Mr. PAI. Oh, I certainly don’t embrace the view that there was 

any kind of affirmative wrongdoing. I think, from my perspective 

though, as someone who cherishes the agency’s independence, 

ideally, we should make our decisions based solely on the law and 

the facts and record, not on extraneous political considerations. 

And that is where my concerns kick in. 

Mr. JEFFRIES. All right. Do you have any direct evidence, or even 

indirect evidence, that the decision that was made by the FCC is 

based on extraneous political consideration? What evidence do you 

have of that point? 

Mr. PAI. The best evidence is the fact that the agency was considering two very different proposals until the November 10 announcement. Shortly after the November 10 announcement, the 

FCC publicly ruminated whether or not it needed to seek more 

comment because the President’s plan had not been given sufficient 

attention by the agency. 

Mr. JEFFRIES. Right. Now, there were over 4 million comments 

received, a majority of which expressed support for the Title II position, correct? 

Mr. PAI. My understanding is the majority did, yes. 

Mr. JEFFRIES. And that was the American people expressing 

their opinion in terms of petitioning the government, correct? 

Mr. PAI. That is correct. 

Mr. JEFFRIES. So it is your view that that had nothing to do with 

the ultimate decision that the FCC reached, that it was all about 

what President Obama said, who, by the way, is the leader of the 

free world, elected by the people of the United States of America. 

But putting that small fact aside for a moment, you don’t think 
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that the FCC’s decision had anything to do with public sentiment, 

which I gather in a representative democracy is pretty important? 

Mr. PAI. I think, Congressman, the agency as an independent 

agency should render its decisions based on the law set by Congress and the facts in the record. Where the agency was on November 9 was very different even given the fact that we already had 

almost 4 million comments on the record. 

The decisive event was what happened on November 10. And 

that is not something that is a fact. It is more an opinion expressed 

by a political actor. 

Mr. JEFFRIES. Okay. Thank you. 

Chairman Wheeler, I want to explore this concept of light-touch 

regulation. I think the previous questioner indicated that we have 

gone beyond that, but I wanted to actually explore that and drill 

down on that. 

There are 47 sections, I believe, that are part of Title II, correct? 

Mr. WHEELER. Yes, sir. 

Mr. JEFFRIES. And I think you have expressly engaged in forbearance with respect to 27 of those sections. Is that correct? 

Mr. WHEELER. It may actually be 48, and we have forborne from 

27, yes. 

Mr. JEFFRIES. Okay, thank you for that clarification. 

In terms of what you have forborne, regulating the Internet providers as a utility or rate regulation, is that part of the forbearance 

that has taken place? 

Mr. WHEELER. That is what we have not done, sir. 

Mr. JEFFRIES. Exactly, that is what you have not done. 

Can you talk about what else you have not done? 

Mr. WHEELER. Yes, sir. You take a look at the classic components 

of utility regulation, and it starts with rate regulation. Then it is 

a process of tariffing. And then it is the process of ‘‘here is how you 

are going to run your network in terms of unbundling and providing services.’’ Then it begins to go even further into, ‘‘Here is 

how you are going to operate your company. Here is how your 

board of directors will be structured. Here are the reports you will 

make to us. Here is the series of accounts. Here is how you will 

do your accounting and report to us.’’ None of that is involved. 

Mr. JEFFRIES. Okay. There has been some legitimate concern 

raised about how a consumer confronting discrimination would 

navigate their way through the FCC process as compared to an 

FTC process, if that were to avail itself. So could you walk me 

through sort of how your Open Internet order would allow for the 

adjudication of a consumer who is alleging discrimination in the 

form of either blocking or throttling? 

Mr. WHEELER. Well, we are always responsive to petitions or information that we receive from consumers, and we have historically 

responded to both formal and informal complaints. 

Mr. JEFFRIES. Okay. 

Commissioner Wright, I think it is your position that the FTC’s 

adjudication process may better serve a consumer. Could you elaborate as to why you think that may be the case, if that is your position? 

Mr. WRIGHT. That is my position, and I appreciate the question. 

Thank you. 
115 

My position in brief is that a large amount of conduct that is 

banned or deterred under the FCC approach would be scrutinized 

under a case-by-case approach under the antitrust laws. The antitrust laws circa 1960 adopted an approach very similar to what is 

in the FCC order with respect to relationships between Internet access providers and content providers. 

Over the last 50 years, that approach has largely been rejected 

out of an increase in economic learning. So it is my view that consumers benefit from the case-by-case approach because it allows 

them to accrue the benefits of conduct that helps consumers and 

increases innovation, but allows the antitrust laws to operate, to 

deter, to penalize conduct when it does harm consumers. I think 

that that is the right approach and the best balance for consumers. 

Mr. JEFFRIES. Thank you, my time has expired, but could I just 

ask the Chairman for leave—— 

Mr. MARINO. Without objection. 

Mr. JEFFRIES [continuing]. The Chairman for leave to ask Commissioner McSweeny if she could just respond. Thank you. 

Ms. MCSWEENY. Sure, thank you, Congressman. 

My position is that the optimal outcome for consumers is both 

the FCC having in place an Open Internet order, and the FTC 

being able to use its consumer protection expertise to protect consumers from deceptive advertising, unfair practices, and anticompetitive conduct. 

To do that, we would need the common carrier exemption in the 

FTC Act to be removed. 

Mr. JEFFRIES. Thank you, and I thank the Chair for the additional time. 

Mr. MARINO. Thank you. 

The Chair now recognizes the gentleman from Michigan, Congressman Bishop. 

Mr. BISHOP. Thank you all very much for your testimony today. 

I would like to go back to what Representative DeSantis started 

with regard to, Commissioner Pai, your dissent. 

He broached the subject about lawsuits, and in your dissent you 

state that the trial lawyers will be able to open the Internet. Can 

you tell me about that? Are you suggesting that this is going to 

lead to rampant lawsuit abuse? And if, indeed, that does happen, 

what is the impact on the consumer, in the aggregate? 

Mr. PAI. Thank you for the question, Congressman. 

The FCC in its order explicitly opens the door to complaints both 

to the FCC and in any Federal court in the country under Section 

208 of the Communications Act, from which the agency explicitly 

does not forbear. 

As a result of also not forbearing from ex post regulation, but 

only ex ante regulation, the agency obviously invites litigation over 

the reasonableness of rates. And my concern is that litigation, as 

you know, generally does not produce anything good for the consumer at the end of the day, because, number one, those costs of 

litigation are passed on to the consumer, and number two, the companies, instead of having to spend their time innovating and delivering innovative services, have to spend time litigating. 
116 

So I think that is part of my concern, that the agency didn’t explicitly shut the door on some of the litigation, both at the commission and in court. 

Mr. BISHOP. Thank you very much. 

Commissioner Pai, many of the FCC’s conclusions regarding the 

competitive nature of the Internet marketplace are predicated on 

the notion that 25 megabits download speed is the appropriate 

threshold. That seems arbitrary to me. How did we get to that 

number and what does it mean? 

Mr. PAI. Congressman, I share your concern. In December, the 

FCC voted to spend billions of dollars over the next decade deploying what it then called broadband, which was defined as 10 megabits per second for rural areas. In January, we suddenly decided 

that 25 megabits per second was the standard, which excludes 

most mobile broadband offerings, including 4G LTE. Suddenly, in 

February, we decided that everything, any kind of connection to the 

Internet was broadband. 

So my concern is that instead of looking at it objectively and trying to figure out what do consumers use the Internet for, and trying to tailor our benchmarks to that standard, obviously with a little bit of an uptick based on the increased usage of the Internet 

over time, instead, we have picked a standard that allows us to 

achieve the regulatory goal of the moment. And that is not something that I think is objective or reasonable. 

Mr. BISHOP. So that is a completely random, arbitrary number, 

25 megabits. 

Mr. PAI. Yes, if you look at the FCC’s January decision, it was 

grasping for things like marketing materials, anything other than 

the actual uses of the Internet by the common online consumer. 

Mr. BISHOP. Thank you, Commissioner. 

Commissioner Wright, after the Trinko and Credit Suisse decisions, can an antitrust claim survive against an entity regulated by 

Title II? 

Mr. WRIGHT. It is possible under very narrow circumstances postTitle II for a claim by a Title II regulated entity to survive. The 

vision of the relationship between regulation and antitrust contemplated by Trinko and Credit Suisse I think raises an important 

question. A lot of the questions today have touched upon the issue 

of whether regulation and antitrust are complements or substitutes, or whether they can work in tandem. Certainly, it is true 

that sometimes they can. 

Here, however, I think that it is important to note that there is 

a real inherent conflict between the approach adopted in the FCC 

order and modern antitrust laws. Were it 1960, and 1960’s antitrust approach to vertical restraints governing, the orders would be 

complements. They would work together quite well. However, what 

the order does is take conduct that the antitrust laws generally 

presume as procompetitive and declare them to be illegal and anticompetitive in all circumstances. 

In a regime like that, where it is totally and plausibly the case 

that in other situations antitrust and regulation can coexist, here 

my fear is that there is an inherent and inevitable conflict that is 

going to result in marginalization of antitrust enforcement in favor 

of a view that looks much more like an antitrust era from the 
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***Note: The submitted material is not printed in this hearing record but is on file with the 

Committee and can be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103236. 

1960’s that virtually all antitrust scholars of any stripe have long 

since rejected. 

Mr. BISHOP. Thank you, Commissioner. 

I yield back. 

Mr. MARINO. Thank you. 

The Chair now recognizes the gentleman from Rhode Island, the 

former Mayor of the beautiful town of Providence, my friend, Congressman Cicilline. 

Mr. CICILLINE. I thank the Chairman. 

Thank you to the witnesses for this very important hearing, and 

thank you for being with us this afternoon. 

Chairman Wheeler, I want to start with you. There was just reference made to this 25 megabits per second. I don’t want to spend 

a lot of time on it, but would you just quickly explain why that isn’t 

arbitrary, and that there is actually a basis for a use of that by the 

FCC? 

Mr. WHEELER. Thank you, Congressman. 

About 80 percent of America has access to that today, and that 

is kind of a definition of a performance standard. 

Mr. CICILLINE. Great. 

Commissioner Pai, you mentioned in your testimony several 

times that the Internet here in the U.S. is the envy of the world. 

I am wondering, in light of the fact that, for example, Akamai, 

which does an annual survey of the state of the Internet, ranks the 

top 10 countries on a whole range of things including connectivity, 

speed, availability. It rates Hong Kong, Singapore, South Korea, 

Japan, Israel, Romania, Uruguay, Latvia, Taiwan, and Luxemburg. 

The U.S. isn’t even in the top 10. The World Economic Forum 

ranked the United States 35 out of 148 countries in Internet bandwidth. Other studies ranked the United States anywhere from 14th 

to 31st, globally, in average connection speed. Other countries with 

much more regulated markets have more options for Internet access at faster speeds and at a lower cost. 

So I am wondering whether or not, in light of the fact that 75 

or 80 percent of American homes only have one option, whether 

you consider, not only it the envy of the world, but equally importantly, that that is a competitive marketplace, when 75 or 80 percent of the consumers have access to one provider? 

Mr. PAI. Thank you for the question, Congressman. 

There are two components—— 

Mr. CICILLINE. I am sorry, may I also ask unanimous consent 

that those two reports, and an article entitled, ‘‘Why the U.S. Has 

Fallen Behind in Internet Speed and Affordability,’’ in the New 

York Times on October 3, 2014, be made part of the record.*** 

Mr. MARINO. Without objection. 

Mr. PAI. Thank you for the question, Congressman. There are 

two components to the answer. 

First, with respect to the overall Internet ecosystem, there is no 

dispute that America’s online platform is the greatest in the world 

for innovation and investment. That is the reason why we see such 

great companies, such as Google, Facebook, Netflix, Twitter, et 
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cetera, building on top of this broadband infrastructure that we 

have in the United States. 

Secondly, with respect to some of the countries you mentioned, 

the United States is in a very different situation from say Taiwan 

or Latvia. We have a very sparsely populated country by comparison. And part of the benefit of having the American communication 

system we have is that we have a commitment to universal service, 

and we try to connect as many people as possible in this country 

to the opportunities online. That is a difficult thing to do when you 

are talking about places like my home State of Kansas, for example. 

Nonetheless, however, as the Chairman pointed out, 80 percent 

of Americans have access to 25 megabits per second speeds. That 

is remarkable when you think about how dispersed our population 

is. 

Now, with respect to the second part of your question, you put 

your finger on the exact problem that we should try to solve at the 

FCC. How do we get more competitive alternatives into the marketplace? That is why I focus on a variety of different policies making it easier to deploy wireless infrastructure, getting more spectrum out there, embracing the IP transition. Those are things that 

could give people more alternatives than just the one or the none. 

Mr. CICILLINE. Chairman Wheeler, could you respond to that? 

Mr. WHEELER. This will shock everybody to find that Commissioner Pai and I are actually agreeing on something today. But I 

think there are multiple reasons. One is our geography. Two is the 

national investment that they have made that we have not. 

But the key that we are guiding on, Congressman, is what is it 

we are doing today to make sure that that chart doesn’t exist tomorrow? Because the chart is the result of decisions made a decade 

ago. 

I think there are three things to it. One is competition. We have 

to have competitive broadband providers. Two is spectrum, because 

spectrum is the pathway of the 21st century. And three is we have 

to have openness, because if these entities are allowed to build and 

then act as gateways where they make the decision of how networks are used, we will continue to fall down that list. 

Mr. CICILLINE. Mr. Chairman, one of the criticisms of the order 

of the FCC has been that it would either discourage or suppress 

capital investment in broadband, which is obviously necessary to 

accomplish just what you described. 

Would you respond to that? And have you seen any evidence of 

that? 

Mr. WHEELER. Thank you, Congressman. A couple of quick examples. 

Number one is if you take a look at investment over the last 18 

or 20 years, what you will find is that the highest level of investment was when broadband—DSL at the time—was regulated 

under Title II. Then it kind of dips down and you are in a period 

where there is no regulation, and then the 2010 Internet rule 

comes in and it goes back up. So the fact of the matter is that, one, 

it is cyclical, and, two, it doesn’t seem to be impacted by these 

rules. 
119 

The other thing that is interesting is to watch Verizon in the 

wireless space. Verizon paid $4.7 billion at auction to buy C Block 

spectrum, which was encumbered with a requirement by the commission that it follow certain Open Internet-like rules, the only 

piece of spectrum where that ever has applied. 

They paid top dollar for it. They built it out. And not only did 

they build it out, that is where they put America’s first 4G LTE 

network. And clearly, those kind of openness rules neither held 

them back on their investment, nor held them back on putting the 

latest technology in place. 

Mr. CICILLINE. Thank you. 

I thank you, Mr. Chairman. I yield back. 

Mr. MARINO. Thank you. 

The Chair recognizes the gentleman from Texas, the former 

United States attorney, Congressman Ratcliffe. 

Mr. RATCLIFFE. Thank you, Mr. Chairman. 

Thank you, Chairman Wheeler and all of the commissioners for 

being here today. 

I have only been in Washington for two and a half months. One 

of the reasons that I have the opportunity to be here is because the 

people back in my district, back in Northeast Texas, are extraordinarily frustrated with Washington. And that frustration can be 

summed up on two points: one, executive overreach; and two, intrusive government regulation. 

So as to that first point, my constituents overwhelmingly believe 

that this Administration has ignored the Constitution, changing, 

waiving, and entirely suspending laws. And in fact, it is beyond debate but that Obamacare has been waived or delayed more than 20 

times. Now more recently, we are dealing with the fact that laws 

have been suspended, which allow 4 to 5 million unlawful immigrants to remain in this country. 

To the second point, we are seeing an expanding government 

that tries to impose regulations into the everyday lives of the people that I represent. The Obama administration in the President’s 

first term averaged seven new Federal regulations every single 

day, each one of those regulations a tax, each one of those regulations some abridgement of someone’s freedom in this country. 

Which brings us to this most recent encroachment of freedom on 

the people that live in my district, and, indeed, this 300-page net 

neutrality rule really embodies the two things that my constituents 

dislike the most about Washington, frankly, a total disregard for 

the constitutional separation of powers and the government trying 

to reach further into their lives. 

It, certainly, appears to me that one of the most frustrating 

things about this regulation is that it is a solution in search of a 

problem that doesn’t exist. 

So I have to ask, why did this happen? And it begs the question, 

did this happen for political reasons? 

So, I would like to ask this question, was this decision motivated 

by politics, Commissioner Pai? 

Mr. PAI. Congressman, I don’t know what the specific motivation 

was. What I can tell you, however, is that it did not address a problem that actually existed in the marketplace. 
120 

Mr. RATCLIFFE. Commissioner Wright, do you believe that there 

were political motivations here? 

Mr. WRIGHT. I, certainly, being a whole different building down 

the street can’t speak to what was going on in the FCC, so I have 

no opinion on the decision-making process at that agency. 

Mr. RATCLIFFE. Ms. McSweeny? 

Ms. MCSWEENY. Like Commissioner Wright, I don’t have any visibility into the decision-making process of the FCC. 

Mr. RATCLIFFE. So let me turn to the Chairman. 

Was this politically motivated? 

Mr. WHEELER. This was based on a record, an extensive record 

that had millions of comments in it and was, from the very beginning, an attempt to follow on in the precedent of the commission 

that had established under both Republican and Democratic Chairmen. 

We have talked about how previous Republican Chairmen and 

Republican commissions have moved to have openness in the wireless industry by invoking Title II, how they have moved against 

Comcast for blocking on the Internet, how the kinds of blocking, 

throttling, activities that are in our order are also in the bill 

that—— 

Mr. RATCLIFFE. Well, let me reclaim my time here, Mr. Chairman, because I heard your testimony earlier about throttling and 

blocking, and some of the examples. And obviously, you disagree 

with my opinion that this is a solution in search of a problem. 

So let me ask you this question, to the extent, and you went 

through some examples with Comcast and Verizon, but to the extent there was actual anticompetitive conduct occurring on the 

Internet, and the FCC simply chose not to intervene, what would 

prevent the FTC from prosecuting? 

Mr. WHEELER. I think that the issue for the FTC is whether the 

actions fall within the gambit of their authority. And as we have 

discussed earlier with another Member, there is a different set of 

authorities that we have. And we felt that they definitely did fall 

within our gambit. 

Mr. RATCLIFFE. Well, let me move to the issue of cost here, and 

how this rule is going to affect the cost of the constituents that I 

represent. 

Let me start with you, Commissioner Pai. Is this going to make 

what people buy in my district on the Internet more expensive? 

Mr. PAI. Yes, it will. 

Mr. RATCLIFFE. And what would be the reasons for that? 

Mr. PAI. The reclassification of broadband as a telecommunications service, and the consequent imposition of Universal Service 

Fund fees will increase consumer broadband bills. And it is just a 

question of when, not if, those increased fees are going to be passed 

on. 

Mr. RATCLIFFE. Chairman Wheeler, do you agree with that? 

Mr. WHEELER. I have a different opinion, and as I said before, 

universal service is kind of a red herring. Commissioner Pai is on 

the joint board that will make a recommendation on that, and I 

think I have been gathering what his vote is going to be. 
121 

But insofar as the other activities, I think that we are going to 

be promoting competition, and competition increases speed and 

drives down cost. 

Mr. RATCLIFFE. Mr. Chairman, I would love to ask more questions, but my time has expired. 

I yield back. 

Mr. MARINO. Thank you. 

Ladies and gentlemen, this concludes our hearing. Thanks to all 

of our witnesses for being here. I want to thank the people in the 

gallery for spending time here. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record. 

This hearing is adjourned. 

[Whereupon, at 5:31 p.m., the Committee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Response to Questions for the Record from the Honorable Tom Wheeler, 

Chairman, Federal Communications Commission 
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