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ENSURING COMPETITION ON THE INTERNET: 

NET NEUTRALITY AND ANTITRUST 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INTELLECTUAL PROPERTY, 

COMPETITION, AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

FEBRUARY 15, 2011 

Serial No. 112–13 

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 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM REED, New York 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION, AND THE INTERNET

BOB GOODLATTE, Virginia, Chairman 

HOWARD COBLE, North Carolina, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM REED, New York 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MELVIN L. WATT, North Carolina 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

BLAINE MERRITT, Chief Counsel 

STEPHANIE MOORE, Minority Counsel 

(III) 

C O N T E N T S 

FEBRUARY 15, 2011 

Page 

OPENING STATEMENTS 

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

of Virginia, and Chairman, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 1 

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

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

The Honorable F. James Sensenbrenner, Jr., a Representative in Congress 

from the State of Wisconsin, and Member, Subcommittee on Intellectual 

Property, Competition, and the Internet ............................................................ 4 

The Honorable Judy Chu, a Representative in Congress from the State of 

California, and Member, Subcommittee on Intellectual Property, Competition, and the Internet .......................................................................................... 4 

WITNESSES 

Larry Downes, Senior Adjunct Fellow, TechFreedom 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 9 

Laurence Brett (‘‘Brett’’) Glass, Owner and Founder, LARIAT 

Oral Testimony ..................................................................................................... 54 

Prepared Statement ............................................................................................. 57 

Gigi B. Sohn, President and Co-Founder, Public Knowledge 

Oral Testimony ..................................................................................................... 61 

Prepared Statement ............................................................................................. 64 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of Parul P. Desai, Policy Counsel, Consumers Union, 

submitted by the Honorable Zoe Lofgren, a Representative in Congress 

from the State of California, and Member, Subcommittee on Intellectual 

Property, Competition, and the Internet ............................................................ 84 

Statement of the U.S. Department of Justice, submitted by the Honorable 

Maxine Waters, a Representative in Congress from the State of California, 

and Member, Subcommittee on Intellectual Property, Competition, and the 

Internet ................................................................................................................. 95 

Letter to the Federal Communications Commission (FCC), submitted by the 

Honorable Maxine Waters, a Representative in Congress from the State 

of California, and Member, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 143 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of Randolph J. May, President, The Free State Foundation ........................................................................................................................ 155 

Letter from Lisa R. Youngers, Vice President, External Affairs, XO Communications, and Others ........................................................................................... 170 

(1) 

ENSURING COMPETITION ON THE INTERNET: 

NET NEUTRALITY AND ANTITRUST 

TUESDAY, FEBRUARY 15, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION, AND THE INTERNET, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 1:30 p.m., in room 

2141, Rayburn House Office Building, the Honorable Bob Goodlatte 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Goodlatte, Smith, Coble, Sensenbrenner, Chabot, Issa, Jordan, Poe, Chaffetz, Reed, Griffin, Marino, 

Adams, Quayle, Watt, Conyers, Berman, Chu, Sa ́nchez, Lofgren, 

Waters, and Jackson Lee. 

Staff Present: (Majority) Holt Lackey, Counsel; Olivia Lee, Clerk; 

and Stephanie Moore, Minority Counsel. 

Mr. GOODLATTE. Good afternoon. The Subcommittee will come to 

order. I will now give my opening statement. 

Welcome to this hearing of the Intellectual Property, Competition, and the Internet Subcommittee entitled: Ensuring Competition on the Internet: Net Neutrality and Antitrust. 

The Judiciary Committee’s jurisdiction over the antitrust laws in 

the Telecommunications Act of 1996 and our long history overseeing the Department of Justice’s decades of litigation with the 

AT&T monopoly, endowed this Committee with a special duty to 

ensure that the communications and information markets of the 

United States operate in a free, fair, and legal fashion. 

This Committee has long been concerned on a bipartisan basis 

about allegations and fears that the incumbent telephone and cable 

companies who provide a majority of this country’s Internet service 

could abuse their power in the Internet service market to discriminate against certain website content or platforms to anticompetitive effect. 

Today marks the House Judiciary Committee’s third hearing in 

the past 5 years exploring the net neutrality issue. After hearings 

in 2006, the Committee adopted bipartisan legislation that would 

have amended the Clayton Act to enshrine certain net neutrality 

principles. The Judiciary Committee’s bipartisan commitment to 

protecting competition and freedom online continued under Democratic control, and the Committee visited the issue once again in 

a 2008 hearing entitled: Net Neutrality and Free Speech on the 

Internet. 

2 

This newly formed Subcommittee on Intellectual Property, Competition and the Internet will continue this tradition of protecting 

the competition and innovation that has marked the Internet era. 

But it is the FCC’s recent open Internet order that makes today’s 

hearing both necessary and urgent. That widely criticized order 

seeks to entrench a one-size-fits-all regulatory approach to net neutrality that circumvents Congress’ law making authority and that 

threatens to stifle innovation on the Internet in a morass of bureaucratic rules. 

The FCC is pushing this order notwithstanding the D.C. Circuit’s 

Comcast decision which squarely held that Congress has never 

given the FCC the broad authority it claims to regulate Internet 

services. 

Today’s hearing is a first step in reasserting that under our constitutional system, it is the role of Congress, the people’s elected 

representatives, to make the laws. Most agree that those who provide access to the Internet should not be able to discriminate 

against certain online content or engage in other anticompetitive 

behaviors that restrict access to online services. 

The question presented by today’s hearing is whether potential 

anticompetitive conduct by Internet service providers is better addressed by the FCC’s proposed industry-wide regulations or by a 

more flexible, antitrust-based regime that targets bad behaviors. I 

believe that the right approach is a light touch that focuses on punishing anticompetitive behavior, enforcing antitrust laws, and even 

potentially tweaking those laws to ensure that they still operate as 

intended in the digital age. Antitrust law will better balance the 

need for innovation and competition than an FCC regulatory regime possibly can. 

Regulatory approaches often result in regimes where innovators 

must seek permission before rolling out new products or services. 

However, the Internet is simply too dynamic for that kind of heavyhanded, top-down regime. An antitrust approach would allow the 

private sector to move forward with innovation subject to being 

held to account if and when it became anticompetitive. 

The FCC’s regulations would hinge on a vague standard of 

whether or not a particular innovation was reasonableness in the 

eyes of the Commission. Antitrust law would judge that reasonableness and legality of actions according to objective economic principles and more than a century of case law. 

FCC regulations would be enforced and interpreted according to 

the whims of D.C.-based regulators who too often are subject to 

capture by special interests and repeat players. Antitrust law 

would be enforced by the independent judiciary in courtrooms 

throughout our Nation. Furthermore, as Ronald Reagan once said: 

A government bureau is the nearest thing to eternal life we will 

ever see on this Earth. 

Once the door is opened to FCC regulation of the Internet, it will 

be hard to both turn back those regulations and prevent the regulations from expanding to reach other online industries, including 

online content providers. 

Both sides of the aisle on this Committee have long agreed that 

a court-based antitrust approach is preferable to the bureaucratic 

approach proposed by the FCC. 

3 

As Ranking Member Conyers pointed out when the Committee 

reported an antitrust-based net neutrality bill in 2006, the FCC is 

like a moss pit, there is nothing that can happen there. 

The Internet must be allowed to grow and innovate and continue 

to deliver the astounding new products and services that have 

come to characterize it. We must not allow the Internet to be mired 

in a regulatory moss pit. I look forward to today’s hearing and to 

the light that our distinguished panel of witnesses can shine on 

this important subject. 

It is now my pleasure to yield to the Ranking Member of the full 

Committee for a further elaboration of the definition of ‘‘moss pit,’’ 

the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Goodlatte, Mr. Chairman. I wish 

you would be more critical in selecting quotes to read back that I 

said. I can’t deny that I said that, but I can tell you that I have 

modified my view somewhat and I will not use that kind of terminology today. 

And I wanted to thank you and Chairman emeritus Sensenbrenner and even Darrell Issa who have all been people who have 

been working on this very important subject of how we ensure competition on the Internet. The considerations of the FCC, of antitrust law, and using our own legislative jurisdiction are all things 

that I would like to continue to work with you and all of the Members of the Committee on. 

You have been working on this issue, and, by the way, Howard 

Berman of California has been on this, too, for quite awhile. 

Now, the question that concerns me the most is that the Internet 

is now a function of free speech in this country and in the world. 

As a matter of fact, many of the uprisings in the Middle East are 

all based on—and as a matter of fact they are called Twitter riots. 

It is a new mode of us talking to one another, not just in this country but everywhere. 

In some countries, like China, there are very severe limits on 

what is acceptable, and we have had cases even in this country 

where service providers have arbitrarily terminated the services of 

their customers because they didn’t like what they were doing. 

So we come here today to consider how we can make sure that 

this commonly referred to net neutrality, that it is open, that it 

doesn’t turn on what classification you get or how much you pay, 

but that lawful, legal, content should be available to everybody in 

as fair and democratic a manner as possible. So we continue these 

hearings. 

The American job market hinges on a dynamic, open Internet. 

That is how we get innovation and create new ideas that are translated into business and commercial and industrial activity. So we 

in this country must and do remain committed to technological innovation, including the universal access to broadband technology in 

order to keep American workers competitive. 

But as people watch live sporting events from their cell phones, 

and bloggers update the world in real-time events, we must remember that most people in the United States can only choose between one, and, sometimes if they are lucky, two Internet service 

providers for high-speed Internet access. Therein lies the problem. 

Recent proposed business plans give telecommunication companies 

4 

favored treatment to some Internet content and disfavored treatment to other content. So I think that is an important part of what 

we are here for today. This is an important hearing. 

It is now my view, since you have quoted me so accurately in a 

previous hearing, for me to say that the FCC rulings on net neutrality are weak. They are not overarching or strong. They don’t 

meet up to standards. I am looking forward soon to have hearings 

in your Committee to make certain that we can deal in a more fulsome way with this subject matter. 

I thank you for this opportunity. 

Mr. GOODLATTE. I thank you, Mr. Conyers. 

We will now stand in recess. There are a series of votes and we 

will resume the hearing after we return from the votes. 

[Recess.] 

Mr. GOODLATTE. The Subcommittee will reconvene. And it is now 

my pleasure to recognize the Chairman emeritus of the Committee, 

the gentleman from Wisconsin, Mr. Sensenbrenner, who has done 

a lot of work in this area. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. And 

I want to commend you for holding this hearing so early in this 

Congress. 

The whole issue of access to the Internet—net neutrality, or however it is described—I think is a very important one because the 

Internet and its expansion has been the principle driving force behind technological innovation, not just in the United States, but 

worldwide. 

I am concerned that the type of regulation approved by the Federal Communications Commission ends up picking winners and losers. And frankly, it is not the job of the government to pick winners 

and losers, it is the job of the government to protect people against 

anticompetitive and monopolistic practices. That is why I believe 

that the proper thing for the Congress to do would be to set aside 

the FCC’s order and make whatever amendments to the antitrust 

law that are necessary so that antitrust provisions can be effectively enforced. 

The other thing is that antitrust laws are supervised by judges, 

and that is the way it has been for 100 years. That seems to have 

worked out fairly well in dealing with these issues, rather than either having the Congress do it or the commissioners of the FCC to 

do it. And I am just convinced, and have been for a while, that the 

road the FCC has gone down is not good for the Internet, not good 

for the people, and not good for competition. So I would hope that 

we would continue vigorously pursuing this issue, and I yield back 

the balance of my time. 

Mr. GOODLATTE. I thank the gentleman. 

And I am now pleased to yield to the gentlewoman from California, Ms. Chu. 

Ms. CHU. Thank you, Mr. Chair. And I would like to thank Mr. 

Goodlatte for holding this hearing. 

Mr. Watt, the Ranking Member, could not be here today, but he 

sends his regards. I am just temporarily taking over the Ranking 

Chair position at this point. 

While today it is estimated that more than one-quarter of our 

world’s population, or nearly 2 billion people, use the Internet, from 

5 

social working to political campaigns, the Internet is now the leading tool for speech and action. We need only to look at the role that 

the Internet has played during democratic demonstrations across 

the globe. Journalists named uprisings in Moldova and Iran during 

2009 the ‘‘Twitter revolutions,’’ and the Web has played a critical 

role in disseminating information and rallying crowds as Hosni 

Mubarak’s rule has ended in Egypt. 

Furthermore, the future of the American job market hinges on a 

dynamic, open, and lawful Internet. The United States must remain committed to technological information and investment, including universal access to broadband technology, in order to keep 

American workers competitive. 

But as people watch live sporting events from their cell phones, 

and bloggers update the world in real-time events in Tahrir 

Square, we must remember that more than 90 percent of U.S. Consumers can choose only between one or two Internet service providers for high-speed Internet access. 

Recent proposed business plans from telecommunication companies would give favored treatment to some Internet content and 

disfavored treatment to others. What treatment you get could be 

determined by how much you pay or potentially whether the Internet service provider approves of the content or has a financial interest in it. The problem is that many of the innovations we have 

enjoyed on the Internet may never have occurred if some of the 

proposed regimes were left unchecked. We would never have had 

a Google search engine or eBay auctions or Huffington Post blogs 

if pay-to-play had been our national policy. 

I am concerned that if the U.S. Government stands by and does 

nothing, we will find that only a handful of companies dictate 

where and how people access information on the Internet. So as we 

delve into this issue, we must remember that Congress and the executive branch must tread lightly. Nothing less than free speech 

and millions of jobs are at stake. 

I do want to emphasize that an Open Internet can and must be 

a lawful Internet. Digital piracy has ravaged U.S. companies and 

cost America countless jobs. The Internet has also afforded anonymity for criminals who steal identities and exploit children. Network neutrality does not mean safe havens for piracy, child exploitation, or other Internet crimes. Network neutrality fosters fairness. 

Our colleague, John Lewis, and esteemed poet, Maya Angelou, a 

native of Mr. Watt’s district, along with several others, are receiving the Presidential Medal of Freedom at a ceremony at the White 

House at this time, and this is why Ranking Member Watt cannot 

be here today. He regrets that he cannot attend and will submit 

his questions to the witnesses in writing. And he looks forward to 

additional hearings on net neutrality with officials from the FCC. 

I look forward to hearing from our witnesses today and to a 

meaningful discussion on today’s topic. 

Mr. GOODLATTE. I thank the acting Ranking Member. And without objection, other Members’ opening statements will be made a 

part of the record. 

And before we introduce our witnesses, I would ask that they 

please stand and take an oath. 

6 

[Witnesses sworn.] 

Mr. GOODLATTE. Thank you. Please be seated. 

Our first witness is Larry Downes, a senior adjunct fellow at the 

newly formed think tank, TechFreedom. He is the author of three 

books and has held faculty positions at Northwestern University 

Law School, the University of Chicago Graduate School of Business, and the University of California at Berkeley, where we was 

associate dean of the School of Information and a senior lecturer 

at the Haas School of Business. After graduating magna cum laude 

from the University of Chicago Law School, Mr. Downes served as 

law clerk to the Honorable Richard A. Posner, Chief Judge of the 

United States Court of Appeals for the Seventh Circuit. 

Mr. Downes is an Internet industry analyst and consultant who 

works primarily with technology companies to integrate emerging 

technologies into business strategy, with a special emphasis on 

legal and regulatory constraints. His clients have included startups 

as well as leading global technology providers. His expertise in the 

legal business and regulatory environment of the Internet industry 

strongly qualify him to testify at this hearing. 

After him, we will hear from Mr. Brett Glass. All too often the 

conversation in the Beltway, whether in Congress or at regulatory 

agencies like the FCC, becomes dominated by large interest groups 

with permanent D.C.-based lawyers and lobbyists to advocate for 

them. There is a tendency to think about these issues in terms of 

big businesses, but as FCC Commissioner Robert McDowell observed in his dissent from the Open Internet Order, many 

broadband providers are not large companies, many are small businesses. The same is true of content providers and hardware companies. Many of the businesses who will be affected by the Open 

Internet Order are small. 

It is fundamentally important when settling policy to always 

bear in mind the effect of the rules made in Washington and what 

they will have on ordinary Americans and the small businesses 

that are the primary job creators throughout the country. That’s 

why I am pleased to introduce our next witness, Brett Glass of Laramie, Wyoming, to testify about the effect that he believes the 

FCC’s Open Internet Order will have on his small business and 

other small businesses like his. 

Our final witness will be Gigi Sohn, President and Co-founder of 

Public Knowledge, a nonprofit organization that seeks to promote 

openness, access, and the capacity to create and compete in all 

three layers of our communication system: the physical infrastructure, the systems, and the content. Ms. Sohn is the senior adjunct 

fellow at the Silicon Flat Iron Center for Law, Technology and Entrepreneurship at the University of Colorado, and a senior fellow 

at the University of Melbourne Faculty of Law, Graduate Studies 

Program in Australia. She has been a nonresident fellow at the 

University of Southern California Annenberg Center and an adjunct professor at Georgetown University and the BenjaminN. 

Cardozo School of Law at Yeshiva University. 

We will begin with Mr. Downes. Welcome. 

7 

TESTIMONY OF LARRY DOWNES, SENIOR ADJUNCT FELLOW, 

TECHFREEDOM 

Mr. DOWNES. Mr. Chairman and Subcommittee Members, thank 

you for inviting me here today. 

I commend this Subcommittee for its prompt attention to the 

dangerous and illegal rulemaking of the FCC on December 23, 

2010. 

The agency’s Report and Order on Preserving the Open Internet, 

passed by a bare majority of commissioners, just as the 2010 lame 

duck Congress was about to adjourn, created new regulations for 

some broadband Internet access providers. These new rules entomb 

into law one view of what some refer to as the ‘‘net neutrality principle.’’ 

Now as an early Internet entrepreneur, I share the enthusiasm 

of all five commissioners—not just the three who voted to approve 

the new rules—for the Open Internet. I just don’t believe there is 

any need for regulatory intervention to save this robust ecosystem 

or that Congress ever granted the FCC authority to do so. 

As the report itself makes clear, the premise of looming threats 

to the Open Internet that motivated these proceedings proved chimerical. The rulemaking process is unduly political and disappointingly obtuse. The order rests on a legal foundation the agency cannot seriously expect will hold up in court or in Congress. The result: regulations that no one, other than FEC Chairman Julie 

Genachowski, publicly supported. 

The Report and Order is deeply flawed. And as with any regulation involving disruptive technologies, the risk of unintended consequences is high. In its haste to pass something before the new 

Congress convened, the FCC has interfered with the continued evolution of this vital technology, preserving Open Internet principles 

in the same way that amber preserves prehistoric insects—by killing them. 

I want to highlight just a few of the fatal defects of the Report 

and Order. 

Number one, there was no need for new regulation. Despite thousands of pages of comments from parties on all sides of the issue, 

in the end the majority could only identify four incidents in the last 

10 years of what it believed to be non-neutral behavior. All four 

were quickly resolved outside the agency’s adjudication processes, 

yet these four incidents provide the majority’s sole evidence of the 

need to regulate now. 

With no hint of market failure, the majority instead issued what 

it calls ‘‘prophylactic rules’’ it hopes will deter any future problems. 

But it’s worth noting that the rules, as adopted, would, at most, 

only apply to one of the four incidents which involved a small ISP 

alleged in 2005 to have blocked its customers’ access to Voice Over 

Internet Protocol telephone service. If anticompetitive practices do 

emerge, existing antitrust enforcement mechanisms are in place to 

correct them. Indeed, these laws already provide adequate deterrence. 

Therefore, to justify their new rules, the majority preemptively 

and recklessly rejects the idea that a violation of the new rules requires proof of anticompetitive practices or demonstrable consumer 

harms—hallmarks of modern antitrust practice. 

8 

All one can say charitably is that the majority is reserving to its 

future discretion a determination of what practices actually violate 

the spirit of the new rules. It’s hard to think of a better example 

of an arbitrary and capricious decision. 

Number two, exceptions reveal a profound misunderstanding of 

the Open Internet. The Report and Order detail at least 16 significant exceptions, caveats, and exemptions for current non-neutral 

network management practices, practices the majority acknowledges are ‘‘inconsistent’’ with the Open Internet first principles. 

In most cases, the inconsistent practices are exempted only because they have become entrenched and vital features of the online 

experience for consumers, with no harm to the Open Internet. The 

long list should have made clear to the majority that network engineering has evolved beyond simplistic slogans of an open and neutral network. The evolution of these network practices is far from 

over, but the majority’s ‘‘these and no more’’ list condemn future 

innovations to the relatively glacial pace of FCC approval. This will 

unintentionally skew, slow, or stunt the next-generation Internet 

ecosystem in ways that threaten U.S. competitiveness in this most 

global of all markets. 

The majority have promised to review the rules no later than 2 

years from now, but in Silicon Valley, where I come from, 2 years 

might as well be forever. 

Number three, the FCC lacked authority to issue the rules, and 

likely knew it. Despite promises that the agency’s very smart lawyers had unearthed legal support for their new rules beyond arguments rejected by the D.C. Circuit in the Comcast decision, the Report and Order largely repeated those arguments. This half-hearted 

effort suggests the agency has little expectation the rules will survive court challenges that have already begun, and issued them 

solely to get the messy proceedings off its docket. 

I have submitted a report examining these and other concerns in 

detail, and I look forward to your questions. Thank you. 

Mr. GOODLATTE. Thank you, Mr. Downes. 

[The prepared statement of Mr. Downes follows:] 

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Mr. GOODLATTE. Mr. Glass, welcome. 

TESTIMONY OF LAURENCE BRETT (‘‘BRETT’’) GLASS, 

OWNER AND FOUNDER, LARIAT 

Mr. GLASS. Thank you, Chairman Goodlatte, Ranking Member 

Chu, Members of the Committee, thank you very much for inviting 

me to testify. It’s a great honor for me to be the first of my relatively young industry to speak before Congress. 


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To stay as close as I can to my allotted time, I would like to offer 

you an abridged version of my prepared testimony, which I hope 

you will enter into the record in full. 

First, some background. I’m an electrical engineer. I received my 

bachelor’s of science from the Case Institute of Technology in 1981 

and my master’s at Stanford in 1985. I have designed computer 

chips, written popular computer software, and penned more than 

2,500 published articles. In the early 1990’s, I moved from Palo 

Alto, California, to the beautiful small college town of Laramie, 

Wyoming. 

Laramie is roughly the size of Stanton, Virginia. When I arrived, 

I discovered there was no ready access to the Internet outside of 

the University of Wyoming campus, so I founded LARIAT, the 

world’s first fixed Wireless Internet Service Provider, or WISP. 

LARIAT began as a nonprofit cooperative whose purpose was to 

teach, promote, and facilitate the use of the Internet. 

Fast forward 11 years to 2003, the Internet was well established 

and the membership decided they no longer wanted to be members 

of a co-op, they simply wanted to buy good Internet service from 

a responsible local provider. So the board prevailed upon me and 

my wife, who had served as caretakers of the network, to take it 

private. 

We did, and we’ve been running LARIAT as a small, independent 

Internet service provider ever since. We have very slim margins. 

Our net profit is less than $5 per customer per month, but we’re 

not doing it to get rich, we’re doing it because we love to do it and 

want to help our community. 

We at LARIAT have always been the strongest possible advocates for consumer choice, of free speech, and of inexpensive, highquality Internet access. It’s our mission and it’s our passion. And 

while I now have more help, I still climb rooftops and towers to install Internet with my own hands, to train my employees, and to 

check the quality of every job. 

Now, since LARIAT has started, the cable and telephone companies have also gotten into the broadband business. We compete 

gamely with them within the city limits, but our services, unlike 

theirs, extend far into the countryside. Other WISPs were started 

and set up shop in our town, forcing us to compete harder and innovate more. We estimate that there are now between 4,000 and 

5,000 WISPs, as shown on the map in the written version of my 

testimony. WISPs now serve more than 2 million people and reach 

approximately 70 percent of all U.S. homes and businesses, including many with no access to DSL or cable. We create local, high-tech 

jobs and we stimulate the development of other businesses. We can 

cost effectively serve areas where there is no business case for any 

other form of terrestrial broadband. 

We also provide vigorous competition where other kinds of 

broadband do exist. For example, a WISP called D.C. Access serves 

homes and businesses here on Capitol Hill. It even provides the 

free Wi-Fi on the Supreme Court steps. Unfortunately, I’mhere to 

tell you today that the network neutrality rules enacted by the 

FCC will put WISPs’ efforts to provide competitive broadband and 

to deploy to rural and urban areas who do not have access or competition at risk. 

56 

Firstly, the rules address prospective harms rather than any actual problem. Contrary to what advocates of regulation say, ISPs 

have never censored legal, third-party Internet content. Secondly, 

even before the rules were issued, the Commission’s notice of proposed rulemaking created uncertainty which drove away investors. 

The final rules are vague, permitting reasonable network management, but not fully defining what the word ‘‘reasonable’’ means. As 

Commissioner Robert McDowell pointed out in his well-written dissent, this lays the groundwork for protracted, expensive, legal 

wrangling that no small business can afford. 

The rules also allow anyone, whether or not he or she has service 

from a particular provider, to file a formal complaint alleging violations. Even, now before the rules have taken effect, groups here in 

D.C. have filed complaints against MetroPCS for offering a great, 

affordable Smart phone service plan which prohibits a few bandwidth-hogging activities. My own company could suffer a similar 

fate. Our most popular residential service plan comes with a minor 

restriction; it does not allow the operation of servers. 

Now, Mr. Chairman, most Internet users would not know what 

a server was if it bit them, and they have no problem uploading 

content to a Web site such as YouTube for distribution. This means 

customers that do need to operate a server could obtain that capability by paying a bit more to cover the additional cost. But if the 

FCC decides against MetroPCS, we will almost certainly be forced 

to shift everyone to the more expensive plan. We will therefore be 

less competitive, offer less value to consumers, and especially less 

value to economically disadvantaged ones. 

We will also hesitate to roll out innovative services for fear that 

the Commission could find fault with some aspect of them. For example, selling priority delivery of data, even for a new high-tech 

service such as Telepresence, is strongly disfavored by the rules. 

This is like telling UPS or FedEx that they cannot offer shippers 

overnight delivery because it’s somehow unfair to those who use 

ground service. 

Now in my FCC filings, I urged the Commission to promote competition rather than requiring us to ask permission to innovate, but 

the majority rejected this approach in favor of onerous regulations 

which address a problem that does not exist. 

I therefore urge Congress—which is the ultimate source of the 

FCC’s authority—to set things right. Rather than the excessive regulation which would extinguish small competitors like WISP and 

create a duopoly that did require constant oversight, we should facilitate competition, crack down on anticompetitive tactics, and 

then allow markets to do the rest. Only by adopting this approach 

can we allow American small businesses to create jobs, innovate, 

and prosper while solving a very real problem, providing ubiquitous 

broadband access to our Nation. 

Thank you. 

Mr. GOODLATTE. Thank you, Mr. Glass. 

[The prepared statement of Mr. Glass follows:] 

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Mr. GOODLATTE. Ms. Sohn, welcome. 

TESTIMONY OF GIGI B. SOHN, PRESIDENT AND CO-FOUNDER, 

PUBLIC KNOWLEDGE 

Ms. SOHN. Chairman Goodlatte, Members of the Subcommittee, 

thank you for the opportunity to discuss the importance of network 

neutrality to protect consumers and competition on the Internet. 

An Open Internet is vitally important to political and social discourse, commerce, innovation, and job creation in the U.S. Past acVerDate Aug 31 2005 13:35 Apr 19, 2011 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6601 H:\WORK\IP\021511\64583.000 HJUD1 PsN: 64583

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tions by incumbent broadband Internet access providers have 

threatened the Open Internet, requiring the FCC to set enforceable 

baseline rules. 

Contrary to assertions by incumbents that consumers enjoy competition when it comes to broadband Internet access and can simply switch providers, the FCC’s national broadband plan reported 

that nearly 91 percent of all Americans reside either within a monopoly or duopoly broadband market. Given this reality, it is important that the Subcommittee work to promote net neutrality to 

ensure competition on the Internet. 

In its Competitive Impact Statement in a Comcast-NBCU merger, the Justice Department laid out how the competitive harms presented by the merger were matters of antitrust and how they warranted clear network neutrality protections. The DOJ recognized 

that online videos distributors, OVDs, represent an emerging class 

of competitors to traditional multichannel video service providers, 

MVPDs, like Comcast. Although new MVPDs have endured nationally, incumbent video service providers like Comcast remain dominant in their regions. 

Because OVDs are able to provide service in any geographic area, 

they are a source of direct competition to cable in the geographic 

area in which it is dominant. At the same time, because the profit 

margins from subscription video are far greater than that of program distribution, Comcast and other traditional MVPDs have a 

strong incentive to interfere with nascent OVD competitors. Thus, 

the DOJ found that Comcast had a much greater incentive to prevent the emergence of rival video services such as OVDs than it 

does to cultivate them as customers for video service. Comcast simply cannot hope to make up lost revenue caused by cable subscribers cutting the cord through the sale of programming to OVDs. 

Network neutrality rules, such as the conditions imposed by the 

DOJ and Comcast, work against this anticompetitive danger. While 

the DOJ was specifically addressing Comcast, these antitrust concerns apply across the broadband market. A customer may wish to 

cut the cord and drop the video subscription, but the monopoly or 

duopoly broadband Internet access provider, also offering a video 

package, will have the incentive and ability to prevent this by 

interfering with the delivery of online video. 

That same harmful incentive exists in the market for telephony. 

Just as the incumbent cable provider has a strong incentive to 

interfere with broadband delivery of competing video, the incumbent telephone provider has a strong incentive to degrade competing voice traffic. These harms are not speculative. There is a 

documented history of anticompetitive actions taken by broadband 

access providers. 

Aside from the Madison River and Comcast/BitTorrent cases, 

AT&T has blocked several applications, such as SlingBox video 

streaming and VoIP applications like Skype, from its mobile network while permitting similar products to use its network. Cox and 

RCN both admitted to slowing or degrading Internet traffic, and 

despite claims that these practices were designed to handle congestion, neither provider disclosed their traffic management practices 

to subscribers. 

63 

Despite proclaiming that they have no intention of ever actually 

blocking or degrading content, broadband Internet access providers 

include within their terms of service provisions that allow them to 

engage in precisely these practices. And let me emphasize, these 

are only the cases we know about. Organizations like mine don’t 

have the kind of money to track everything that ISPs do. 

Now, I want to make clear that while I believe that antitrust law 

has a role to play in ensuring an Open Internet, it cannot do the 

job alone. Broadband providers can discriminate against applications of service providers without that discrimination rising to the 

level of an antitrust violation. And as the Judiciary Committee recognized when it introduced Open Internet-related legislation in 

2006, the Supreme Court’s Trinko decision severely limits the applicability of antitrust laws to regulated industries like cable and 

telephone companies. Thus, the recently enacted FCC rules are 

crucial to preserving an Open Internet. 

Public Knowledge is deeply concerned about recent decisions in 

Congress to invoke the Congressional Review Act to repeal those 

rules. Should Congress enact a CRA repeal, the FCC’s power to 

protect an Open Internet and not just the recently enacted rules, 

would be virtually eliminated. 

Mr. Chairman, through the years, the Judiciary Committee and 

this Subcommittee have played a vital role in making certain that 

American consumers were protected by the vigilant enforcement of 

antitrust laws. This mission is now more critical than ever. As a 

DOJ analysis shows, anticompetitive activities by large carriers 

have the potential to affect millions of consumers in what may be 

net neutrality issues or may not. We urge the Subcommittee to 

keep a close watch on today’s communications markets and to be 

alert to the kind of abusive market power that can affect consumers, companies, and the economy as a whole. 

I thank you and look forward to your questions. 

Mr. GOODLATTE. Thank you, Ms. Sohn. 

[The prepared statement of Ms. Sohn follows:] 

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Mr. GOODLATTE. I will now recognize myself to begin questions. 

Let me ask each of you, how do you anticipate the Open Internet 

Order of the FCC affecting the ability of startup companies that 

you advise to raise capital—I guess we are directing this to you, 

Mr. Downes—and have you already seen any effect? 

Mr. DOWNES. I have not seen any effect yet. Of course the rules 

are very new and there is already, as you know, two legal challenges as well as discussions in Congress about potentially disapproving of the order. But in general I think it’s quite accurate 


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to say that the ability of my clients, particularly in the hardware 

business, to raise capital will be affected by these orders. The problem, of course, is there is a great deal of uncertainty. There was 

a lot of—the rules themselves are fairly vague, but of course all the 

exceptions and exemptions I mentioned in my opening statement 

make it very difficult to tell what is and isn’t allowed as far as a 

network management practice, techniques for optimizing certain 

kinds of content or certain kinds of media. We don’t know if in the 

future if I invent some new network management technique—and 

of course they’re being invented all the time—it would be much 

more difficult for me to raise capital, or for my clients to raise capital, to pursue those kind of techniques. I think it’s safe to say particularly early-stage investors will want—the way they currently 

ask for patent stuff, they’ll ask for approval from the FCC. 

Mr. GOODLATTE. Is it fair to say that while there’s always risk 

in investing in a business—particularly a new business—that with 

antitrust laws you know the rules of the road and you can consult 

an attorney, you can take into account what you think those rules 

are as you move forward; but with FCC regulation, you can look 

at a set of regulations, begin down that path, and while you are 

substantially invested in this new technology, this new idea, suddenly those regulations can be changed and you’re in a situation 

where you are no longer a profitable investment? 

Mr. DOWNES. Yes. I think that’s absolutely correct, Mr. Chairman. And it is also, I think, worth mentioning that the way the 

FCC implemented the enforcement provisions of its order, very, 

very broad. Any party has standing to bring a complaint, formal 

complaint before the FCC about any practice that it believes may 

or may not violate the net neutrality rules, even non-customers. 

And it’s very difficult, of course, for anyone to know. You know, if 

the Internet goes slow one day, you don’t know if that means somebody is doing a net neutrality violation or if it’s slow because something is broken. But under the enforcement provisions of the order, 

the FCC will file essentially a full legal case, with discovery and 

everything that goes with it, for any time a formal complaint is 

filed. And that, of course, is potentially disastrous. 

Mr. GOODLATTE. And the ability to raise capital as well as the 

ability to incentivize the development of new technologies would be 

affected the same way by the uncertainty created by FCC regulations. 

Mr. DOWNES. Yes, I believe that is so. 

Mr. GOODLATTE. Let me turn to Mr. Glass. Would you say that 

you are able to be more flexible and customer oriented than your 

competitors in your capacity as a small ISP? And if you agree with 

that statement, will the FCC regulations make it harder for you to 

remain as flexible and customer oriented? 

Mr. GLASS. Mr. Chairman, let’s see; as Mr. Downes said, we do 

not know exactly how the FCC regulations are going to be enforced. 

It may be at the whims of these commissioners or at some future 

sitting commissioners that may have different opinions. They are 

vague enough that we’re not exactly sure. So I can’t tell you exactly 

how they might affect our ability to provide innovative services, but 

we do provide innovative services now that are unique. 

74 

For example, we have doctors on our network, some of whom live 

fairly far out of town; and what we do, when someone goes into the 

emergency room and they get a CAT scan or an MRI, we go ahead 

and we prioritize the traffic so that that doctor can immediately— 

or as least as fast as possible—view the CAT scan and determine 

what’s wrong, give an opinion to the hospital, dash to the hospital 

if he needs to do so. That sort of priority could arguably be in violation of the FCC’s rules. We don’t know, but they presumptively discriminate against that prioritization. So we really don’t know 

where things are going, but we are very concerned. 

Mr. GOODLATTE. Ms. Sohn, I appreciate your attention to antitrust laws, but I have a concern about your suggestion that antitrust laws and FCC regulations will work well together in this regard. My reading of the Trinko decision is different than yours. 

Quite frankly, my understanding of that decision is that if you 

have an industry that is regulated like the cable industry is regulated, like the telephone industry is regulated, then the Supreme 

Court said that in the Trinko case that you look less to antitrust 

laws. 

But here the point, is that the FCC is not regulating the Internet 

now and should not be, and therefore the vitality of our antitrust 

laws would be stronger and more effective if we do not have additional FCC regulation of the Internet, which I am very concerned 

is simply kicking the door open for the FCC to regulate this incredibly innovative development in our society and in our economy that 

I think has grown tremendously and become such a huge part of 

our economy because it has not become heavily regulated. 

Do you want to respond to that? 

Ms. SOHN. Sure. Network neutrality it is not regulation of the 

Internet, it is regulation of the companies that provide the onramps to the Internet—telephone and cable companies. And the 

FCC does regulate them, and that’s why I’m very concerned that 

the Trinko decision really guts antitrust law, and that’s why former 

Chairman Sensenbrenner introduced that law in 2006. 

Mr. GOODLATTE. Sure. But that law was designed to tweak our 

antitrust laws to make them more effective. And I would freely acknowledge that we need to look at what we need to do with our 

antitrust laws to make them effective in addressing what’s going 

on on the Internet, but not turn this over to a regulatory process 

that is very different than antitrust, which, as we just discussed 

with Mr. Downes, creates a lot more certainty in terms of investment, in terms of developing new technologies, than having the uncertainty of ever-expanding regulatory powers for the FCC, which 

I think, as I stated at the outset, are in violation of Congress’ intent to begin with. 

Ms. SOHN. Look, I share your concern. I’m not for big FCC regulating everything, regulating the Internet. My organization, probably to your dismay, brought the case that struck down the FCC’s 

authority to implement the broadcast flags, so I share those concerns. But the problem is even if—let’s set the Trinko case aside— 

and I would point you to testimony that Howard Shelansky of the 

FTC did about the effect of the Trinko case on antitrust enforcement in this area. And Howard Shelansky is no fan of network 

neutrality. 

75 

But setting that aside, there are places that are of concern to 

consumers and concern to edge companies, like Facebook and Twitter and Netflix and Google that just won’t be touched by antitrust 

law. For example, let’s say Verizon or Comcast wants Google to pay 

for faster service or better quality of service, that’s not something 

necessarily that is going to be covered by antitrust law. It’s not as 

easy as a situation where AT&T blocked Skype, where you know 

that AT&T has a competitive interest in disfavoring VoIP. So there 

can be instances of discrimination that the FCC rules cover that 

antitrust law just does not. 

Mr. GOODLATTE. Mr. Downes, would you care to respond, or Mr. 

Glass? 

Mr. DOWNES. Well, Mr. Chairman, it is possible that, of course, 

the broadband provider may ask a company to pay more for more 

service.That’s sort of the nature of competitive industries. It isn’t 

necessarily a violation of net neutrality in principle, and it’s certainly not necessarily anything that would be considered anticompetitive or demonstrable consumer harm. That’s the standard 

for antitrust. I think that’s a good standard. 

And the problem, as I said, with the FCC is that they didn’t give 

us any standard at all. They said we reject that as the standard 

by which we’re going to enforce the antidiscrimination rule, but we 

don’t know what standard they’re going to apply instead. They just 

don’t want people to be picking winners and losers on the Internet. 

But I don’t want to leave that to the discretion of the FCC. 

Mr. GOODLATTE. Thank you. 

Mr. Glass. 

Mr. GLASS. Yes. I would really like—it would be really wonderful 

for me, because I do experience a lot of anticompetitive tactics, especially at the hands of the local incumbent—local exchange carrier 

to have some recourse under antitrust law. Right now, I am forced 

to operate as if I don’t. And actually, because of that, the best thing 

that I can ask the government to do is enable competition and at 

least don’t keeping me from competing. I would like to see the antitrust law fixed, however. 

Mr. GOODLATTE. Thank you. 

The gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. 

I am in the process, lady and gentlemen, of separating out three 

considerations: One, the concept of net neutrality; two, the role of 

the Federal Communications Commission; and three, antitrust law. 

And so I have come to this hearing with the view that the FCC has 

probably not exercised its fullest authority in this area before this 

is all over. 

Contrary to those who think the FCC has exceeded its authority 

and it’s not what Congress intended, I think that a case could be 

made for the FCC becoming stronger. So let me question you in 

this respect: We all agree on the validity and significance of net 

neutrality as a telecommunications concept; is that true? Yes. 

Blank. Blank. 

Okay. Do you have reservations about net neutrality? Do you 

think it’s dangerous, or are you worried about where it’s going, or 

what? 

76 

Mr. DOWNES. Well, as I said in my statement, Mr. Conyers, I am 

not against net neutrality. I am in favor of the Open Internet, I’ve 

been a beneficiary of the Open Internet. My concern is principally 

with the idea that the FCC, as a regulatory body, is the one to decide what it actually means and to enforce it. 

Mr. CONYERS. Well, I’m not talking about the FCC. That’s number two on my list. I’ll get to that. But you seem reluctant to just 

come out and say that you are for net neutrality. 

Mr. DOWNES. No, I’ve said it. I have written that I am in favor 

of net neutrality in principle. 

Mr. CONYERS. Fine. But I’ve had to kind of tease it out of you. 

What about you, can I get a straight, okay, yes, I’m for it answer? 

Mr. GLASS. Mr. Conyers, I would love to be able to give that sort 

of a response. The problem is even if you look at Wikipedia, there 

are three or four definitions of net neutrality under that one heading. 

Mr. CONYERS. Well, you take the one that you want. Would you 

like net neutrality as you would define it? 

Mr. GLASS. I would like to see net neutrality if it means freedom 

from anticompetitive tactics. I would not like to see it if it means 

onerous regulation or micromanagement of innovative companies 

that are trying to do things. 

Mr. CONYERS. Well, I’m talking about the concept itself, I’m not 

talking about who’s running it and how it’s being managed. I don’t 

mean to put words in your mouth, for goodness sake, heaven forbid, but from you two witnesses I seem to sense that there is some 

hesitation about just coming out and saying net neutrality is a 

good thing and I’m glad it’s here. 

I mean, you start telling me about the FCC and who’s regulating, 

I’m just asking you about net—everybody isn’t for net neutrality. 

And I suspect that—I’m not a psychiatrist, but deep down do you 

have some reservations about net neutrality? You can say yes if 

you want to. 

Mr. GLASS. I think I do have reservations—— 

Mr. CONYERS. All right. Very good. Now that’s what I’m trying 

to get at. 

Now Professor Downes, deep down, don’t you have some reservations about net neutrality? 

Mr. DOWNES. No. Look, if net neutrality is a political term, yes; 

if it’s an engineering term, no. 

Mr. CONYERS. Well, let’s see. Okay. Now let me ask the 

gentlelady witness, where do you come out on this net neutrality? 

Ms. SOHN. I am a stalwart supporter of net neutrality. My organization does not think that the FCC’s rules went far enough, although we are willing to live with them. They are rules of the road. 

We believe, as the Commission does, that the companies that provide the on-ramps to the Internet—they are either a monopoly or 

duopoly in 90 percent of this country—should not be able to pick 

winners and losers. 

Mr. CONYERS. Well, now let me raise this, since my time is just 

about gone—you fellows did a good job on making me work so hard 

to get a yes or no answer. 

77 

But the last question, Mr. Chairman, if I might, on the question 

of antitrust, do all of you agree with me that antitrust is a very 

difficult thing to prosecute? There are certain standards and levels. 

And antitrust in the Department of Justice has been going down 

for decades. We don’t get much of that anymore. Does that statement ring positive with you? 

Mr. DOWNES. Well, I don’t think if you asked companies like 

Microsoft and Intel if they think antitrust has gone down, they 

would say no. 

Mr. CONYERS. Yeah, but I’m asking you. 

Mr. DOWNES. I think, certainly in terms of the technology industry, antitrust has been applied more than it had been before, and 

often I think with dangerous consequences. 

Mr. CONYERS. Well, there wasn’t any industry before. 

What do you say, sir? 

Mr. GLASS. From the point of view of a small business person, 

I don’t know if I will ever have recourse to antitrust, but I would 

love to be able to avail myself of such remedies. 

Mr. CONYERS. Yes, ma’am. 

Ms. SOHN. Well, I agree with you 100 percent. And particularly 

when it comes to regulated industries like broadband Internet access providers, the Trinko and Credit Suisse cases have completely 

eviscerated antitrust enforcement. 

Mr. CONYERS. Thank you, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentleman. 

The Chair recognizes the gentleman from Pennsylvania, Mr. 

Marino. 

Mr. MARINO. Mr. Chairman, I have someone that I have to meet 

here shortly. Could I reserve my time and when I get back, if I 

have questions, ask them? 

Mr. GOODLATTE. Absolutely. We will do that. 

And now the Chair turns to the gentlewoman from California for 

her questions. 

Ms. CHU. Thank you, Mr. Chairman. 

Well, some would suggest that current antitrust law is sufficient 

to protect consumers with regard to access to broadband. Ms. Sohn, 

you seem to imply that both the Department of Justice and the 

FCC have a role to play in protecting net neutrality. 

If the FCC were stripped of its ability to enforce net neutrality 

principles, would the Department of Justice have the ability to prevent broadband providers from discriminating among Internet content? 

Ms. SOHN. Within the context of a merger like Comcast, yes. And 

I think the Justice Department did an outstanding job in doing 

that. However, if it comes to plain old antitrust enforcement, that 

kind of enforcement has been severely limited by Supreme Court 

decisions in the Trinko case and the Credit Suisse case. So I think 

it would be very difficult without some legislation. And I would encourage this Subcommittee to think about it. 

And particularly if you’re concerned about the competition in the 

application space between search engines or between social networks, there is nothing in antitrust law that would allow you to 

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committee to think about how do we repair the damage done by the 

Supreme Court in the Trinko and Credit Suisse cases. 

Ms. CHU. And why is it important to have the FCC involved? 

Ms. SOHN. Because the FCC, first of all, in light of those Supreme Court cases, there is very little that an antitrust authority 

can do when it comes to regulated companies like broadband Internet access providers. And secondly, there are activities that 

broadband Internet access providers can do that discriminate, that 

hurt an Open Internet, that do not rise to an antitrust violation. 

So there are gaps there that the FCC, with its public interest mandate, can fill. 

Ms. CHU. Let me ask about the authority of the FCC. There has 

been significant debate about the Commission’s authority to regulate broadband, and in particular Verizon has appealed the Commission’s Open Internet Order, alleging that the FCC has acted 

outside the bonds of its statutory authority. Do you believe the 

FCC does have the authority to develop net neutrality rules? 

Ms. SOHN. Well, we would have preferred that the FCC reclassified broadband Internet access as a telecommunications service, 

just as Justice Scalia suggested in the Brand X case. Unfortunately, they did not do that. The FCC believes that it has threaded 

the needle that the D.C. Circuit gave it, the hole that the D.C. Circuit gave it in the Comcast decision, and the court will decide that. 

Again, we would have preferred that they had gone to Title 2. They 

decided to go a different way, and the courts will decide. 

Ms. CHU. I have to admit that this all seems academic to me because the FCC can clearly regulate this area if they decide to reclassify broadband under the Telecommunications Act. In your 

view, why has the Commission held off on reclassifying broadband? 

Ms. SOHN. I think it’s just fear. It’s fear of the political blowback 

that would have happened. Yes, it would have been a controversial 

decision, but it would have been the most legally sustainable. It’s 

unfortunate. I think the FCC’s general counsel was quite correct 

that not reclassifying not only would have affected net neutrality, 

but would affect universal service, would affect privacy, would affect any number of important consumer protections that the FCC 

might undertake, but I think it’s all about politics. 

Ms. CHU. Thank you. I yield back. 

Mr. GOODLATTE. I thank the gentlewoman. 

The gentlewoman from Florida, Ms. Adams, is recognized. 

Mrs. ADAMS. Thank you, Mr. Chairman. 

Commissioner McDowell’s dissent that said that reasonable 

standards set out in the Open Internet Order is one of the most 

subjective and litigated standards in the legal system, do you agree 

with that statement? 

Ms. SOHN. Could you repeat that? I didn’t quite understand that. 

Mrs. ADAMS. The observation in Commissioner McDowell’s dissent that the reasonable standard set out in the Open Internet 

Order is one of the most subjective and litigated standards in our 

legal system? 

Ms. SOHN. That is absolutely correct, because under Title 2 of the 

Communications Act—again, the place where I would have preferred the FCC to go—what is prohibited is unjust and unreasonable discrimination. So the good thing about, had they decided to 

79 

go there, is that you have years and years of precedent. Now they 

have set this new standard, ‘‘reasonable network management,’’ 

which I don’t think is as onerous as my colleagues but, however, 

is going to have to undergo a whole new set of adjudications. 

So yes, I agree with Commissioner McDowell, but perhaps we 

disagree that that would have been the better way to go because 

there is precedent, and because telecommunications providers know 

how to behave under that precedent. And in fact, there are over 

800 telecommunication providers who choose to be regulated under 

Title 2. And wireless telephone service—not broadband service, is 

also regulated under Title 2. So it’s something we know. 

Mrs. ADAMS. So, would you agree that a standard that determines a behavior’s reasonableness by a majority vote of FCC commissioners, is harder to predict than either a bright-line rule or a 

rule of reason constrained by over a century of antitrust law? 

Ms. SOHN. Well, I mean, that’s an interesting question. But as 

I said before, antitrust law doesn’t really apply here because of Supreme Court precedent. So it’s hard for me to say which is better 

and which is not. But let me say something about reasonable—— 

Mrs. ADAMS. Let me ask you something. Let’s get a little bit 

clearer. Would you rather have something under an antitrust law 

that has been century tested, or a reasonableness law that is subject to the five—I think it was five—commissioners’ discretion? 

Ms. SOHN. Well, I would say the reasonable standard in Telecom 

was also time tested. It’s also 70 years old. So I guess to me it’s 

a wash. 

Mrs. ADAMS. I’m asking you, would you rather have one or the 

another? 

Ms. SOHN. I think you have to have both. It’s a false choice, you 

cannot choose. You have to have both. 

Mrs. ADAMS. So you think that the antitrust law, if not amended 

to quell your concerns, would be a better route than—or the reasonableness law would be a better route than the antitrust law? 

Ms. SOHN. No. The problem is that even if the antitrust law is 

vigorously enforced, there are still gaps that it doesn’t reach when 

it comes to preserving an Open Internet. The gap where, for example, an Internet service provider wants to charge a Facebook or a 

Google for speedier service, okay; not because it has its own search 

engine, but just because, because it wants the money, that isn’t 

really covered by antitrust law. Okay. And that’s something that 

can come under the FCC’s public interest standard. 

So the problem is the gap, and that’s why I can’t—it’s not fair 

for me to say I like one better than the other because you have to 

have both. 

Mrs. ADAMS. Mr. Glass, you look like you would like to answer 

that. 

Mr. GLASS. Well, I guess what I’m concerned about is there are 

five commissioners on the FCC. The appointments are usually political and partisan. The organization is far more politically driven 

than it should be, and this is something that we need to fix. I honestly believe that the FCC has structural problems that Congress 

should eventually address. 

But as it stands right now, it really has been capricious. And I 

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pending on who is sitting on the Commission at the moment. It’s 

very difficult to conduct business in an industry where you have 

that sort of uncertainty. 

Mrs. ADAMS. Mr. Downes, would you like to comment. 

Mr. DOWNES. Yeah. I mean, I think it’s worth noting that what 

they did end up with in the end was not as strict and not as onerous as what they started with, which was a nondiscrimination rule. 

And I think what’s interesting is in the year and couple months’ 

process by which the FCC was taking comments and having testimony on the net neutrality proceeding, I think one of the things 

they realized was there are a lot of discriminatory practices in the 

network’s design, some of them very recent, some of them there to 

optimize certain kinds of content or certain kinds of media or certain kinds of services. And that those practices are not harmful to 

consumers, they were not intended to be anticompetitive, and in 

fact they’re necessary to have an Internet today that looks like 

what it does, not what it looked like back in 1996. 

So I’m actually pleased that the FCC stepped back from the 

brink in terms of how far it went with the anti-discrimination rule. 

Obviously, I would have preferred them not to have any rule at all, 

but the one they had is not as bad as what they started with. 

Mrs. ADAMS. Thank you. I yield back my time. 

Mr. GOODLATTE. I thank the gentlewoman. 

The gentlewoman from California, Ms. Sa ́nchez, is recognized. 

Ms. SA ́ NCHEZ. Thank you, Mr. Chairman. 

Mr. Glass, I would like to start with you. 

In your written testimony you state that Internet service providers have never censored third-party content. So I want to ask 

you a very simple yes-or-no question. Are you familiar with AT&T’s 

2007 admission that they did censor part of a 2007 Pearl Jam concert that was critical of then-President George W. Bush? Are you 

familiar with that? 

Mr. GLASS. Yes, I am. However, they were the publishers of the 

content, and therefore they had a First Amendment right to edit 

it. 

Ms. SA ́ NCHEZ. They were also the Internet service provider, the 

ISP; correct or not correct? 

Mr. GLASS. As far as I know, you didn’t need to use just their 

service in order to access the content. So I’m not sure if they qualify as the ISP in the same sense. 

Ms. SA ́ NCHEZ. Well, don’t you agree that that type of precedent 

allows for the possibility that an ISP could censor content? 

Mr. GLASS. There is always that possibility, but as an ISP who 

has worked my whole life to give people access, I amfervently in 

favor of not doing so. 

Ms. SA ́ NCHEZ. I just was asking about whether or not the possibility existed there. And I think, if I’m not mistaken, you answered 

yes, that that possibility does exist. 

So without net neutrality, what is to stop a rival ISP from blocking access to Web sites, for example, promoting LARIAT service, in 

effect blocking potential customers from knowing that there are alternative services? 

Mr. GLASS. The market has generally taken care of that. We 

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based providers in our area. Customers are easily outraged by such 

tactics, and they will switch. 

Ms. SA ́ NCHEZ. That is my next question. In your written testimony, you argued that consumers will ‘‘move quickly to competitors 

if they dared to try censoring content.’’ However, as the FCC’s national broadband plan notes, 13 percent of Americans have only 

one broadband access provider and 78 percent of Americans have 

only two broadband options. 

So what would you say to the citizens of both of those groups 

who have very limited options with regard to who their providers 

are going to be, that hey, if you are outraged at the censorship, if 

that occurs from your Internet service provider, and you don’t have 

another provider to go to, what is the recourse? And even maybe 

where there are two providers that are present, what if both are 

engaging in that activity, what is the recourse there? 

Mr. GLASS. Well, I’m not sure where that figure came from because, again, wireless ISPs reach 70 percent of U.S. Homes and 

businesses right now, and they are continuing to expand. 

Ms. SA ́ NCHEZ. That is businesses. That is not necessarily individuals. 

Mr. GLASS. Homes and businesses. But I am hoping we will certainly work to resolve that problem. 

Also, I have here, and we may want to enter it into the record, 

a white paper from the FCC which was published in December 

2010 where they surveyed customers, and two-thirds of them 

thought it would be easy to switch providers if they wanted to. 

Ms. SA ́ NCHEZ. But those two-thirds may be under the mistaken 

impression that they have more than one provider available in 

their area, and what if they don’t? 

Mr. GLASS. Actually, Ms. Sa ́nchez, I would be inclined to think 

that it is the reverse. What we find is that most people don’t know 

that wireless ISPs like myself are an option, and we are working 

to correct that by advertising as hard as we can. Many people do 

not realize that we do offer a real alternative, and will offer more 

of one as time goes by. 

Ms. SA ́ NCHEZ. Ms. Sohn, do you agree with what Mr. Glass has 

to say about censorship and recourse for consumers? 

Ms. SOHN. AT&T engaged in blatant censorship when they 

wouldn’t allow Sling Media to be on their platform, even though 

they allowed MLB streaming video. That was censorship as well. 

I am not a First Amendment law expert, but I can tell you I don’t 

know of any case, Supreme Court or otherwise, that says that a 

telecommunications provider, like AT&T, has absolute First 

Amendment rights that don’t get balanced against the First 

Amendment rights of people like you and I. 

Let me say something about WISPs because I love them. I love 

Brett’s company. I think they are terrific. But by nature, they are 

niche players. They are enterprise oriented, and they operate mostly where there aren’t spectrum congestion problems. In many 

places they serve as hot spots. And if you look at Mr. Glass’s own 

Web site, it shows you the guaranteed downstream capacity. And 

for residential areas, it is 256 K, 384 K, 384 K, 512 K, 768 K. That 

doesn’t even meet the definition of broadband that the FCC has put 

out. So I admire his service. I would love to see him compete and 

82 

*The material referenced was not submitted to the witness. 

compete and compete; but to say that they measure up to a 

Comcast or to an AT&T or even a broadband wireless service is 

just not the case. 

Ms. SA ́ NCHEZ. Thank you for your answer. 

Mr. Chairman, I will submit my additional questions in writing 

in the interest of time.* I yield back. 

Mr. GOODLATTE. I thank the gentlewoman. 

I am now pleased to recognize the gentleman from California, 

Mr. Issa. 

Mr. ISSA. Mr. Glass, sometimes being around here for awhile actually has a benefit besides sitting on the top row. Wasn’t it roughly 8 years ago that the world gold standard for high bandwidth was 

256, set by Korea when they came out with universal 256 

broadband? So how many years are you behind the leading edge of 

broadband typically? When will you be at T1 speeds in your rollout? 

Mr. GLASS. Mr. Issa, we are not behind T1 speeds now. The only 

reason why we offer lower tiers, and by the way, the FCC standard 

for broadband until recently was 200 K, meaning that every one of 

our services met the old standard. 

Mr. ISSA. Thank you. 

Mr. GLASS. They moved goalposts. In any case, we can do far 

more. However, due to anticompetitive behaviors relative to special 

access, in other words the way we get our bandwidth from the 

Internet, our bandwidth is very, very expensive. The reasons you 

see those rates on our page going down to those levels is simply 

the bandwidth is so expensive that people don’t want to pay more 

to get more. We would love to give them cheaper broadband, and 

we are working on it. But unfortunately right now, due to those 

anticompetitive tactics, that is what we can offer for that price. 

Mr. ISSA. Let me go through a line of questioning. 

Mr. Glass, today with the bandwidth you have available, if I 

have a small- to medium-sized business and no other access and I 

wanted to run VoIP enterprise system at my business, you would 

by definition, I assume, be prepared to just treat me like any other 

bandwidth and interrupt me all the time and have me have voice 

go up and down; or would you give me assured service and priority 

so that my voice traffic was reliable and predictable and quality? 

Mr. GLASS. Actually, this is one thing, Mr. Issa, that we do differently from other ISPs. Other ISPs don’t give you a guaranteed 

minimum speed on your connection. Our company does that for 

every customer, whether it is residential or business. And we can 

go to quite high speeds as long as the customer is willing to purchase the bandwidth. 

I have right here—— 

Mr. ISSA. Okay, so you don’t have a bandwidth limitation as earlier was said off of that sheet. That is some sort of a misunderstanding? You can deliver high bandwidth, assured service, and 

you do? 

Mr. GLASS. Absolutely. 

Mr. ISSA. Ms. Sohn, going back to you, with the FCC sticking in 

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tially, providing services such as hundreds or thousands of simultaneous VoIP connections, something that wasn’t even thought of 

outside of a Cisco in your building system a few years ago, what 

is it that the FCC brings incrementally to this process in your opinion? What is that they are going to do better than what has been 

happening the last decade? 

Ms. SOHN. They are going to provide clear rules of the road to 

ensure that consumers are protected, that they can access any Web 

site, any application, any content they want. They will be bring certainty, and not just certainty for consumers. 

Mr. ISSA. Okay, I will assume that is exactly what they are going 

to provide. Are they going to guarantee me that I can take all of 

the bandwidth available at the maximum speed, that it is given to 

me by the carriers? In other words, if I have 15 MIP download, 

they are going to guarantee that I can take all 15 at all times; 

right? 

Ms. SOHN. No, I don’t think so. 

Mr. ISSA. Okay, so right now—and I don’t want to sound like 

O’Reilly, but let me be a little bit here. 

Ms. SOHN. Be my guest. You are doing a great job. 

Mr. ISSA. Right now, if everybody wants to take the maximum 

speed, of course, the system crashes or it slows down. So assured 

bandwidth, with some sort of metering or prioritizing, in your opinion, wouldn’t you say that is in the interest of the consumer? In 

other words, if I need my voice traffic to actually keep going, even 

while somebody else is trying to download 10 movies simultaneously, don’t I have an interest; and how is the FCC going to do 

a better job than what was already in place? 

Ms. SOHN. First of all, what the FCC is doing is keeping the status quo in place. And I think that is really, really important here 

when people talk about the FCC is imposing net neutrality. 

Mr. ISSA. Okay, I will take your answer as the status quo. 

Mr. Downes, since I only have a few moments left, if they are 

keeping the status quo and the growth has been exponential and 

it has been done throughout the FCC, how am I from the dais to 

understand what the benefit is to this grab by the FCC during a 

recess? 

Mr. DOWNES. Frankly, Mr. Issa, I see no benefit to what the FCC 

is doing. I see only harm, and the harm is the potential for them 

to slow down the process by which these things will continue to improve. And new services and new network management engineering will be introduced into the network over time. The only thing 

that is going to happen is that will slow down or worse. 

Mr. ISSA. Thank you. 

Thank you, Mr. Chairman. I yield back. 

Mr. GOODLATTE. It is now my pleasure—this is a California-centric thing here. This is the third woman from California I am 

pleased to recognize. 

Mr. ISSA. We are going to give you a lot more. This is important 

to California. 

Mr. GOODLATTE. It sure is. The rest of the country, too. We are 

glad to hear from Californians, including the gentlewoman from 

Silicon Valley, Ms. Lofgren. 

84 

Ms. LOFGREN. Thank you. Before I ask my questions, I ask unanimous consent to make some testimony from Consumers Union a 

part of the record. 

Mr. GOODLATTE. Without objection. 

[The information referred to follows:] 


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64583A-2.eps
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Ms. LOFGREN. I am glad we are having this hearing. As we have 

listened to the testimony, I think it is important to recall that 

something like 96 percent of Americans have a choice of only two 

wire-line ISPs. If that were not the case, we probably would have 

a very different set of circumstances that face us. And when we 

talk about true broadband Internet, really fast enough to allow 


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88 

Americans to enjoy next-generation applications such as high-quality video, the market for true broadband is really even smaller for 

most Americans. 

Most of us have no alternative but our cable company which, of 

course, is facing competition for content on the Internet which 

raises all kinds of other potential concerns. 

Now, Ms. Sohn, thank you so much for being here today. You 

have been a witness many times before the Judiciary Committee. 

You have described in your testimony the concern about the monopolies and duopolies. I am wondering, can you give us a comparison on what we are facing here with, say, another First World 

area, say Europe; do they have greater competition there? 

Ms. SOHN. Yes. In almost every international comparison that 

you see, the U.S. is 15th, 25th as far as speed and value is concerned. That is because we took our regulatory system that we had 

in the 1990’s and the early aughts and we got rid of it when the 

FCC reclassified broadband Internet access as an information service instead of telecommunication service. And so those countries 

that are beating us—and it is not just countries in Europe, it is 

countries in Asia, it is even countries like Iceland and some of the 

Nordic countries as well—they either require dominant telecommunications providers to open up their networks so competitors 

can use them, or they heavily subsidize their system. The government does that. 

I am not necessarily a big fan of the second one since I am a taxpayer, but I am a huge fan of the first one. If we were to go back 

to Title 2, we could go there. And I think it would be a great boon 

to American consumers because prices would go down and choices 

would go up. I remember the narrow band world, dial-up world. I 

am old enough to remember that. 

Ms. LOFGREN. Me too. 

Ms. SOHN. In that era, American consumers had a choice of 13 

Internet providers; 13. And now you are lucky if you have two. 

Even here in D.C., I only have a choice of three. 

Ms. LOFGREN. I am still waiting for Verizon FIOS to hit my 

street. 

Ms. SOHN. It is wonderful. 

Ms. LOFGREN. Maybe that is an invitation if anyone from Verizon 

is listening. Now, the competition in other countries that have true 

broadband, how did they get it? 

Ms. SOHN. The regulatory scheme is different. We decided here 

that we are going to let the free market flourish, and what happened is competition has sunk to where it is right now where you 

have monopolies and duopolies. 

Ms. LOFGREN. I think it’s even been discussed here today that 

some of the issues are not amenable to antitrust remedies, and I 

think somebody said you might be able to charge Google, for example, a special fee for traveling on your network. Frankly, Google 

could afford it. But I’m more worried about not the Googles who 

are sitting financially very happily, but the guy in the garage who 

doesn’t have that, and that we would have the ability really to stifle innovation without some guarantee of access. 

Ms. SOHN. That is absolutely right. Chairman Goodlatte talked 

about what kind of investment would there be under net neutrality 

89 

rules. I think investment, where you are from, Congresswoman 

Lofgren, would be enormous. Investment in the next Twitter, the 

next NetFlix, the next Facebook, that is who we really care about 

here. You are right, Google can take care of itself. But imagine if 

10 years ago Larry Page and Sergey Brin had gone to a venture 

capitalist and said, I would like you to fund this new crazy search 

engine idea I have; but, you know, AT&T/Verizon are asking me to 

pay for transport. The VC would say, See you later, I will invest 

in something else. 

So it is really the next great innovation, like the ones that were 

used in Egypt to stir democracy. That is what I am really concerned about. 

Ms. LOFGREN. I would just note that it is necessary, especially 

with the growth of video on the network, there is going to be some 

crunch time here as we catch up. But my understanding is that the 

rule does not forbid reasonable network management or nondiscriminatory pro-competitive management of the resources. I 

guess what I am hearing is that is not as well defined as it needs 

to be. It may be correct. We may need to have some closer definition so everybody knows what that means. If that is the take-away 

from this hearing, I think we will have achieved something. 

Mr. GOODLATTE. I thank the gentlewoman. 

Ms. LOFGREN. I thank the Chairman for yielding. 

Mr. GOODLATTE. The gentleman from New York, Mr. Reed is recognized. 

Mr. REED. Thank you, Mr. Chairman, and to each and every one 

of the witnesses here today. 

Being relatively new to this body and to this Committee, I will 

say that I have a preference for witnesses that come from the front 

line, the people that are out there day in and day out—not to mean 

any disrespect to the think tanks and the academic world, we listen 

to them and enjoy their information—but I would like to have a 

conversation from you, Mr. Glass, because you are out there. 

Since I am on the other side of the coast from California to New 

York, but rural New York, western New York, in your testimony 

you provided to us it talks about—I think there’s a clause here, 

‘‘Unfortunately, I am here to tell you today that the net neutrality 

rules enacted by the FCC will put wireless ISPs’ efforts to provide 

competitive broadband and to deploy it to the rural and urban 

areas that do not have access or competition at risk.’’ 

I want to clearly understand what brings you to that conclusion. 

Can you summarize that for me? 

Mr. GLASS. Well, Mr. Reed, there are several reasons why it 

would cause problems for us. First, it would discourage investment. 

Even when the notice of proposed rulemaking came out way before 

the rules were issued, we had investors who were very concerned. 

One fellow actually, very dramatically, clapped me on the back and 

said: The Feds are here. Small businesses like you aren’t going to 

be able to play anymore. Why don’t you go sell your business instead of asking for capital from me? 

The second problem is the uncertainty of what we were allowed 

to do and what we can’t do. We don’t have freedom to innovate 

anymore without asking permission. 

90 

The third thing is the potential for censure by the FCC and serious penalties, if someone who isn’t even our customer comes along 

and complains, and we have to either defend ourselves and buy expensive lawyer time or potentially be fined. 

Mr. REED. Well, as a lawyer, I can understand that bill and that 

concern. And I always go after the frivolous lawyers because they 

give us all a bad name. And the defense cost, being a small business developer myself, that is a risk of business. So I appreciate 

that firsthand information. 

Mr. Downes, in your testimony you indicated something about 

the risk of unintended consequences on this report ordered out of 

the FCC are high. What are those unintended consequences? Can 

you articulate those for me? 

Mr. DOWNES. Well, it is difficult to articulate unintended consequences, but we essentially have a lot of history, not just with 

the FCC and not just with the Federal Government, State governments as well, who passed laws trying to regulate certain problems, sometimes very specific problems—say child pornography or 

indecent speech or other kinds of identify theft or spam and so 

on—where the legislation, because the process of legislating is relatively slow to the speed with which things change in terms of 

technology, and especially the Internet, by the time the legislation 

is passed, even with the best of intentions, it winds up certainly 

not solving the problem it intended to solve, and in fact opening up 

the door for unintended types of uses where regulatory agencies or 

local prosecutors would use that law to prosecute or try to interfere 

with behavior that they don’t like, but which was not actually what 

the law was intending. 

So my concern, particularly with this rule, is again that because 

the FCC has said these are the only exceptions that we are going 

to allow to the neutrality principle, these are the only network engineering practices that we think are acceptable, even though 

they’re inconsistent, that the unintended consequence here will be 

a slowdown in the innovation of new techniques that we desperately need to keep the growth that we have. 

Mr. REED. Thank you very much. 

Ms. Sohn, do you see any unintended consequences on the horizon? I understand unintended consequence are hard to identify and 

articulate, but we have been regulating many industries for long 

periods of time. Do you see any similar situations where the unintended consequences could flow out of these types of actions? 

Ms. SOHN. Well, look, you can always have unintended consequences. But I do think my fellow panelists are exaggerating, 

and let me tell you why. First of all, both of them say there have 

been hardly any documented instances of discrimination, so what 

is the problem? If that is the case, then you will not have hundreds 

of complaints. 

My organization was one of the organizations that brought the 

complaint against Comcast for throttling back BitTorrent. That 

took an awful lot of work, okay, and the FCC rules say you have 

to make a prima facie case. So even if you give standing to everybody, not everybody has the expertise. And I can say in my organization, they don’t have the resources to represent everybody. So I 

91 

think that unintended consequence is a little overwrought because 

it is really, really hard to bring a legitimate complaint. 

And would you rather have class action suits? Would you rather 

have the States take care of it? I mean, class action suits were 

brought against Comcast in California and in Florida. So in some 

ways this process is even better 

Mr. REED. I am a States’ rights guy, so I would tread lightly 

there because the Federal Government, in my opinion, should be a 

limited Federal Government. So I would defer to the States. 

Mr. Chairman, my time has expired so I will yield back. 

Mr. GOODLATTE. I thank the gentleman. Now I proceed to recognize another Californian, the gentleman from Los Angeles, Mr. 

Berman. 

Mr. BERMAN. Thank you, Mr. Chairman. It is good to be here. 

On medical malpractice, I am a States’ rights guy. 

We need to be on this whole subject, I think we need to be careful; at least my view is net neutrality means neutral as in anti-discriminatory and not necessarily a totally open net. If the FCC is 

going to regulate, there needs to be allowances for reasonable network management to stem the flow of infringing works, child pornography, unlawful content not in the American sense of unlawful, 

not in the Mubarak sense of unlawful. And why do I say that? Because I really think, ultimately, without the incentives for legitimate content, the Internet is never going to reach its full potential, 

which I think is a goal of the FCC, and it is therefore critical that 

policy makes it clear that steps can be taken to protect content 

from being stolen and that the existing rules do not prohibit ISPs 

from taking reasonable steps to do so. 

I would like to ask one question. Ms. Sohn, how the heck are 

you? 

Ms. SOHN. I am shocked you are asking me that question. 

Mr. BERMAN. I thought you were going to say, Why don’t you go 

back to Foreign Affairs? 

In your testimony, you cite to the Comcast decision as one which 

illustrates a claim for why a provider may block access, and I will 

quote you here: Both providers deny wrongdoing and claim that 

these practices were designed to handle congestion, but in neither 

case did providers disclose their traffic management practices to 

subscribers. It is ironic that providers which publicly proclaim they 

have no intention of ever actually blocking or degrading content 

routinely include statements in their terms of service that would 

allow them to engage in precisely these practices and without prior 

notice to consumers. 

I would like to get a little better handle on what concern you are 

expressing. Do you disagree there may be an appropriate situation 

in which access is denied or blocked and is the issue notices to subscribers? From your testimony, there is an acknowledgement that 

subscribers were informed in their terms of service, so is it something else that you are seeking here? 

Ms. SOHN. So both former E&C Chairman Waxman and the 

FCC, I think wisely, decided to take matters of network management—that is, making the network flow properly—they took copyright infringement and pornography enforcement out of that standard, and I think that was the right choice. But what the FCC did 

92 

do, and I agreed with this, it said there should be nothing in the 

net neutrality rules that prevents Internet service providers from 

taking reasonable measures to protect against copyright infringement. And it also says that nothing in the net neutrality rules 

should prevent the enforcement of intellectual property laws. 

So the point there is ISPs, if they engage in reasonable measures 

to enforce copyright, would be well within the net neutrality rules. 

And as I understand it today, content providers and ISPs are talking about what those reasonable measures should be. 

So it is not network management in my mind, because that is 

about making sure that there is no congestion, but nothing in the 

FCC’s rule would prohibit something like that happening. I am not 

a fan of blocking. I am certainly not a fan of ISPs throwing customers off the network, although they do have that ability to do 

that under the Digital Millennium Copyright Act if they are adjudged to be infringers, but I am not concerned that the network 

neutrality rules would prohibit reasonable measures to ensure that 

copyright. 

Mr. BERMAN. So you are telling me that if my concern about net 

neutrality rules is that it will be interpreted to essentially prohibit 

ISPs from getting involved in efforts, reasonable steps to stop infringing material, I shouldn’t be concerned because you are not 

seeking that? 

Ms. SOHN. It is right there in the order. I don’t want to be boastful, but I helped to negotiate that language. I guess I am being 

boastful. No, you should not worry. 

Mr. BERMAN. That is the kind of thing that you can boast about 

any time for my purposes. Thank you. 

I yield back. 

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

is recognized for 25 minutes. 

Mr. MARINO. I guess I am going to pose this question to all three 

of you; but, Ms. Sohn, I will start with you. If the FCC gets involved here, would you agree with me that it needs an entirely additional level of administration? 

Ms. SOHN. Well, I might agree that it could probably use one or 

two more administrative law judges to the extent there may be 

more adjudication. But the point I want to make, there is also this 

body called the Broadband Internet Technology Advisory Group, 

and I sit on its board along with Verizon, AT&T, Comcast, Google 

and others. That is going to be a place, a nongovernmental, multistakeholder forum where ISPs and others can go to get predeterminations as to whether something is reasonable network 

management. 

I think that is going to take the load off the FCC from having 

to have layers and layers of new bureaucracy. They will still have 

to have some. 

Mr. MARINO. If it is going to take the load off, then why have 

the FCC—and we are in a position here in this country where 

spending is out of control. Government is way too big, and we are 

talking about creating another administrative branch, even if it is 

a branch of the FCC, to come in and regulate. 

Now, in my research concerning the FCC, it has been having a 

tough time regulating television and other matters. I see this as, 

93 

in addition to an impingement of perhaps constitutional rights violations, free speech, we have an entirely new, additional branch of 

government that we have to pay and it is something that we can’t 

afford at this point. 

Ms. SOHN. Well, look, the BITAG cannot enforce rules. It is not 

a government entity. It is a multi-stakeholder group that’s only 

purpose is to tell ISPs whether, according to good engineering technique, or common engineering technique, something is reasonable 

network management or not. You still need a government agency 

to enforce rules of the road. 

So you need both. I don’t disagree with you. We don’t want to 

bloat government bigger than it is already; however, they may need 

to shift some resources. They only have one or two administrative 

law judges, which is crazy. They have adjudications in other places. 

So they will need to add a few people, but I don’t see it becoming 

more bloated. 

Mr. MARINO. I have heard that before with the Federal Government. Let’s start out with 2, and a year later it is 222. If we are 

going to hire more administrative law judges, I would be forced to 

argue there are other areas where we need administrative law 

judges, you and I disagree on that. Mr. Glass and then Mr. 

Downes, would you care to respond? 

Mr. GLASS. Mr. Marino, I have actually expressed this in 

writings earlier that I made online. One of my concerns is that the 

push for network neutrality regulations at the FCC has diverted it 

from other pursuits which are more important. The FCC, after it 

published the national broadband plan, laid out a calendar that 

said certain things are going to be done in 2010. And because it 

was spending so much time and energy and money on addressing 

net neutrality, there were goals that it set for the third quarter of 

2010 that it has not yet gotten to. So I am very concerned that it 

wasted a lot of the Commission’s resources. 

Mr. DOWNES. I certainly agree with that, particularly in terms of 

spectrum reform, which is another matter altogether. I think it is 

important to understand that the FCC has been out of the business 

of regulating the Internet in any respect since 1996. One of the 

things that is clear from the proceedings of the last year is that the 

FCC, and I don’t mean any disrespect to the very hardworking 

staff over there, but they just don’t understand technologically 

what happened in that intervening period. If they are going to start 

enforcing reasonable network managing practices, the engineering 

expertise will have to come up significantly from where it is. 

I agree with Ms. Sohn that BITAG has great potential to assist 

them if they listen to the recommendations of BITAG. But in order 

for them to actually enforce these provisions, they are going to 

have to do things we don’t necessarily like, which is look very closely at a lot of Internet traffic to see if in fact discrimination is happening, or if the speed is happening because the speed is happening. 

Mr. MARINO. Just quickly, Mr. Downes, first, I want you to address the constitutionality or lack thereof, particularly pertaining 

to free speech, how do you see FCC, if it does have control and authority, drawing that line between the two? 

94 

Mr. DOWNES. The Report and Order sort of hedges its bets and 

contradicts itself in some sense, because the FCC does recognize 

under the Constitution and section 230 of the Communications Act, 

Internet service providers have the ability to shape content in 

many meaningful ways. So they haven’t outright said they are 

going to stop that practice. But on the other hand, they said we 

don’t see ISPs as typically being speakers. And at the same time, 

they recognize that under the Constitution and 230, they do have 

certain rights. 

Mr. GLASS. Mr. Marino, I don’t believe it is a First Amendment 

issue. There may be some Fifth Amendment issues, I think, possibly here, in that if conforming to these rules cripples our network, it may be considered regulatory taking. 

Ms. SOHN. I am not sure what kind of speech a broadband Internet access provider actually is engaging in. 

Mr. MARINO. That is my point. 

Ms. SOHN. Well, no court that I know of has ever said that the 

owner of the infrastructure has an absolute First Amendment 

right. And to the extent that the courts have addressed it, it always 

has been balanced against the rights of the public to receive information. The classic case is the Turner case. It is an old case, but 

it still is the leading precedent in this area which said that cable 

operators had to carry over-the-air broadcast stations because the 

public had the right to see free over-the-air broadcast TV. 

Mr. MARINO. Don’t you see an onslaught of additional litigation? 

Ms. SOHN. There already is. 

Mr. MARINO. I mean more? 

Ms. SOHN. Look, if Verizon and Metro PCS want to drop their 

lawsuit against the FCC, I would be all for it. 

Mr. MARINO. That is an issue not before us, but that is my concern of, again, the additional litigation involved here plus the fact 

that the cost, that it is going to be to the American taxpayers. 

Mr. GOODLATTE. If the gentleman would yield, the issue in that 

lawsuit is the very topic of the discussion here today being approached from a different vantage point, and that is, is the FCC 

under the laws passed by Congress entitled to do what they are 

trying to do? 

It is now my pleasure to yield to the fourth woman from California, Ms. Waters. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Before I begin my questions, I ask unanimous consent to submit 

for the record the Department of Justice’s competitive impact statement prepared by the agency’s antitrust division in connection to 

the Comcast-NBC merger approval. 

Mr. GOODLATTE. Without objection. 

[The information referred to follows:] 

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Ms. WATERS. I have another submission and that is from a group 

of economists sent to the FCC discussing the importance of net 

neutrality rules. 

Mr. GOODLATTE. Without objection, so ordered. 

[The information referred to follows:] 


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Ms. WATERS. Thank you very much, Mr. Chairman. 

I would like to thank our panelists for being here today. I find 

this discussion very engaging, and I am particularly interested, 

since I spent so much time on the Comcast-NBC merger and 

learned so much about the power of a huge organization with a lot 

of resources. 

And I want to know, and I would like to ask Ms. Sohn, what 

challenges will exist for online content providers in light of mergers 


64583C-2.eps
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that will follow the Comcast-NBC merger? How can an ISP like 

LARIAT, for example, compete against an ISP like Comcast-NBC? 

Ms. SOHN. First, Congresswoman Waters, I really want to thank 

you for the work you did, really bringing the public’s attention to 

that merger, because it was a merger of unprecedented proportions. 

I was disappointed that nobody—few people in the government, 

save you and perhaps Mr. Cole and Mr. Frank and the Senate, had 

the guts to say, How can we even consider this? But, unfortunately, 

you guys were really sole practitioners in that regard. 

So, you know, I don’t think Larry can compete. There is no way. 

I mean, Comcast now has this vertical merger of one of the most 

popular broadcast networks in the country. And also, it is the biggest Internet service provider and the biggest cable operator. I 

think the Justice Department did the best it could within the limits 

that it had. Again, in fear of Trinko, I will say they didn’t want 

to push too far because they were concerned about these precedents 

that really limit antitrust law. 

So the good news about the competitive impact statement that 

you just submitted for the record is that it says that online video 

distributors, what I call OVDs, are competitors. They are part of 

the market, and that big ISPs like Comcast cannot discriminate 

against them, cannot withhold programming from them, and cannot throttle their traffic when they provide online service. 

Ms. WATERS. Thank you very much. 

Let me just ask in what ways can Internet service providers impede access to content, products, services available on the Internet, 

and what options do Internet users have if they find they cannot 

access certain content, products, or services? 

Ms. SOHN. They can either slow an application for a service provider’s service. They can block it. Or they can slow it so much that 

it is almost like blocking it. That is what we were challenging in 

the Comcast-BitTorrent case. 

So there are many different ways that Internet access providers 

can hurt consumers’ access to the things they want to access over 

the Internet. 

What is the recourse? Well, that is what the FCC rules are all 

about. They are about providing rules of the road so that consumers, if they do see that they are being unlawfully blocked or degraded from the content, services, and applications that they want 

to access, that they can go somewhere and have some recourse. 

And if these rules are overturned, either in court or by the Congress, through the Congressional Review Act or by any other method, then consumers will not have that. They will basically be out 

in the cold. 

Ms. WATERS. You are basically saying there will be no options? 

Ms. SOHN. Absolutely. Again, as I mentioned before you were 

here, antitrust law has been so neutered for regulated industries 

like broadband Internet access providers, that right now without 

some kind of law being passed by this Subcommittee and the Judiciary Committee, there is no recourse there either for consumers. 

Ms. WATERS. If I have time left, do you have an opinion about 

what you saw happening in the Congress of the United States? I 

found, in talking with Members, that many Members were confused or misled as to what net neutrality is or should be, and so 

146 

many of them didn’t even know—of the 74 who signed on to that 

letter, didn’t realize. What is the confusion, and do you have any 

ideas how we can help people clear up what net neutrality is and 

what it isn’t? 

Ms. SOHN. Net neutrality, quite simply, prohibits telephone and 

cable operators who are the two main, who provide the two main 

on-ramps to the Internet, from picking winners and losers, from deciding that Microsoft is going to win over Google. Or deciding that 

LinkedIn is going to win over Facebook. So that’s what it is about. 

It is really no different than the telecommunications regulation 

we have had in this country for 100 years that said that telephone 

companies cannot decide whether your phone call is going to go 

faster than my phone call, or whether Mr. Glass’s phone call is 

going to be a better quality than my phone call. It is that simple. 

Ms. WATERS. Thank you very much. 

I yield back the balance of my time. 

Mr. GOODLATTE. It is now my pleasure to recognize the gentleman from Arizona, Mr. Quayle, for 5 minutes. 

Mr. QUAYLE. Thank you, Mr. Chairman. 

Ms. Sohn, I am going to get back to some of the beginning testimony because I am trying to figure out the numbers. The 92 percent of people who live in areas where broadband is only a monopoly or duopoly, does that include wireless providers in that number 

as well? 

Ms. SOHN. To the extent that wireless providers are providing 

what the FCC now says is broadband, so the FCC’s definition of 

broadband is 4 megabits down and one megabit up, and a lot of 

wireless providers are not providing those kinds of speeds. That 

may change soon, but it is not the case today. 

Mr. QUAYLE. So that is only wired? 

Ms. SOHN. To the extent that there are any wireless, I don’t 

know of any wireless providers that are providing those kinds of 

speed. So the answer is yes. 

Mr. QUAYLE. So as wireless continues to evolve and innovation 

continues to evolve on the wireless front with the expansion of 4G 

and then 5G, won’t that alleviate any of the competition concerns 

that you have going forward, because there will be enough competition via wireless carriers, via phone, via cable, via probably other 

avenues where you can actually address this with the market system rather than having the FCC regulate this on this basis? 

Ms. SOHN. I am afraid not, particularly because the two largest 

landline providers, AT&T and Verizon, are also the two largest 

wireless providers. Everybody else is struggling for air. I mean, TMobile, Leap, Sprint, they are struggling to compete against AT&T 

and Verizon. So, no. I wish it was the case, but it is not at all the 

case that as—and again, in so many issues that I work on in Public 

Knowledge, we are always told the next great thing is around the 

corner, so why regulate? I am still waiting for broadband over 

power lines. Clearwire just abandoned residential service. That is 

a wireless home service. They just abandoned it to go to enterprise. 

Mr. QUAYLE. Mr. Downes, can you address that question? Do you 

agree with Ms. Sohn’s assessment? 

Mr. DOWNES. Only in part. It is true that the statistics that Ms. 

Sohn and some of the other members have cited from the national 

147 

broadband plan, that was a reference to wire-line broadband. There 

is a separate set of statistics that are in the plan to talk about 

wireless competition. And, of course as we know, wireless competition is much more robust. There are many more providers. 

I think it is absolutely the case that as 4G networks and later 

networks get rolled out, assuming that we can solve our spectrum 

issues, and we know this as consumers, we are moving away from 

the sort of fixed computer experience of the Internet and moving 

to a mobile Internet. It is app-based. It is an app-based economy. 

As that happens and as we get the 4G speeds and the kinds of capacity, yes, it will provide more options and more competition. 

It is true that one of the most promising technologies, particularly for the rural areas that may today have no options, is 

broadband over powerline. And I would reference my written testimony where I point out that the FCC has been delaying and interfering with the ability of VPL providers to do experiments. So if 

what the FCC wants is more competition, they really ought to be 

more supportive of new technologies rather than holding them up. 

Mr. QUAYLE. Mr. Glass, Ms. Sohn was talking earlier about innovation within Internet companies, Facebook, Twitter. Now, how 

would the Open Internet Order deter other companies like yours 

from expanding and upgrading their services, because it seems like 

there would be a lot of capital-intensive improvements that you do 

that could fall by the wayside to somebody else? 

Mr. GLASS. Mr. Quayle, actually we are involved right now in 

some very capital-intensive upgrades. This radio I have here in my 

hand, we are deploying these. These allow access to the Internet 

at 54 million bits per second. We can attach these to an antennae, 

put it on your house, and you can get up to that speed. There is 

a question of cost still, but we are working on that very heavily. 

The big problem we see is being able to raise capital, as I mentioned before. If people believe that we are a little guy and we are 

unduly impacted by regulation, that is what is going to hurt. 

When we recently expanded our network, and as a matter of fact, 

we are in the process of completing the expansion now. We went 

to our customers and we asked them if they would invest in us by 

paying ahead for a year of service. Now, that is a Faustian bargain 

because it kills your cash flow. You get a lot of money up front, a 

lot of capital up front, but you also have a huge liability at that 

point. We had to do that because we could not get conventional investors to invest in our company. 

Mr. QUAYLE. Mr. Downes, there has been a lot of talk about antitrust laws and how some people believe they are not effective for 

this area. Do you believe the antitrust laws can adequately account 

for any misbehavior by Internet service providers and monopolistic 

opportunities they may have? 

Mr. DOWNES. Yes. It is theoretical because we have not tested 

them, and we have not tested them because there haven’t been any 

serious cases that require testing them. I don’t necessarily read the 

Trinko opinion the same way as Ms. Sohn does. I have every reason to believe that between the FTC and the Justice Department, 

if there were serious anticompetitive problems that had demonstrable consumer harms, the effect of which was to reduce the 

148 

Open Internet, I am quite confident that our existing antitrust 

laws and enforcement mechanisms would take care of the problem. 

Mr. QUAYLE. Thank you very much. I yield back. 

Mr. GOODLATTE. I thank you. I am now pleased to recognize the 

gentlewoman from Texas, Ms. Jackson Lee. 

Ms. JACKSON LEE. Mr. Chairman, my interest in this Committee 

is about creating jobs and competitiveness. I am going to kick the 

football in your direction, Ms. Sohn. Do you think that the Justice 

Department—and in this instance I think you said the FTC—the 

FTC are sufficient and have taken note enough to determine 

whether or not they need to file action and whether or not there 

is an anticompetitive impact on some of the entities that you are 

suggesting are negatively impacted, and is there a reason why they 

haven’t acted? 

Ms. SOHN. I believe that the Supreme Court has effectively gutted antitrust enforcement when it comes to regulated companies 

like the telephone and cable companies that provide broadband 

Internet access service. The Trinko case and the Credit Suisse 

case—and it is not just me saying this—Howard Shelanski, I mentioned him before, he testified in front of the Subcommittee on 

Courts in June, and he basically said that the Trinko and Credit 

Suisse cases have made it virtually impossible to apply antitrust. 

Ms. JACKSON LEE. What would you offer as a remedy? 

Ms. SOHN. I think Congress has to reverse those decisions and 

revivify antitrust law. I think it will be helpful in a lot of different 

ways. 

Ms. JACKSON LEE. And that would be overall, because I think the 

antitrust laws are weak, period. 

Ms. SOHN. Absolutely. 

Ms. JACKSON LEE. We just recently saw a merger dealing with 

Continental and United, and it is almost as if the Justice Department said we have no teeth, we have no ability to respond. So you 

are suggesting a legislative fix? 

Ms. SOHN. Absolutely. That is the only way you are going to be 

able to overturn a Supreme Court precedent like that. 

Ms. JACKSON LEE. Mr. Downes, if you have large telecommunications companies who also operate as Internet service providers, 

and they might be perceived as unfairly thwarting competition by 

slowing down the Internet speed of access for customers who access 

the Web sites, do you see a solution for them? What solution would 

you offer? 

Mr. DOWNES. So you are talking about telecommunication companies who also are service providers? 

Ms. JACKSON LEE. And someone is trying to access, and because 

you have another provider, you might be slow in having access. Do 

you see a remedy for that? 

Mr. DOWNES. Obviously, one remedy is to switch. You don’t have 

to buy the whole bundle of services from the same provider. If you 

have more than one choice, you can have cable from Comcast and 

telephone from AT&T and Internet from Verizon if it is mobile. So 

you have your choice of providers in many areas. 

In the areas you don’t, I think one of the things to recognize is 

that—and we see it quite dramatically in what happened in Egypt 

over the last month. The very tools that have made the Internet 

149 

so powerful in the last few years in particular allow consumers 

really to exercise their dissatisfaction and unhappiness with governments or with companies much more easily and effectively and 

quickly than ever before. 

Ms. JACKSON LEE. What I am trying to say, they try to access 

these giants from their Web site, from a competitor Internet service. That is the question. And they feel that they are not getting 

the access as quickly as possible. It can’t be that they can go to 

Verizon. They are talking about those particular entities. 

Mr. DOWNES. I’m not clear what you are asking. You’re a 

Comcast customer and you want to go to Verizon? 

Ms. JACKSON LEE. No. You are a small consumer and you are 

trying to go to AT&T or Verizon, and you are not able to access 

as quickly as you would like; it is a slow process. Do you think 

there would be any slowing down of the utilization of those services? 

Mr. DOWNES. Well, it depends on what is causing the slowdown. 

A lot of times you experience slowdowns because of technical—— 

Ms. JACKSON LEE. You don’t think it would be purposeful and 

you don’t think that small companies should have some protection? 

Mr. DOWNES. It could be purposeful. 

Ms. JACKSON LEE. What would you perceive to be a remedy for 

that? 

Mr. DOWNES. The antitrust enforcement mechanisms that already exist for anticompetitive behaviors that have demonstrable 

consumer harms. 

Ms. JACKSON LEE. You feel comfortable that they are sufficient? 

Mr. DOWNES. Yes. As I say, since we haven’t tested them, we 

don’t know. And we haven’t tested them because we haven’t needed 

to. 

Ms. JACKSON LEE. Let me go to Mr. Glass. Let me ask you the 

same question. Do you believe that the current laws which protect 

against monopolies or duopolies in Internet service providers and 

broadband providers are sufficient? Do you believe antitrust laws 

can protect small companies? 

Mr. GLASS. Ms. Jackson Lee, I think the law needs fixing. I am 

especially concerned about what will happen if the FCC rules 

stand, because as Ms. Sohn sort of alluded, when we become a regulated entity, then suddenly Trinko kicks in and we lose remedies 

under the laws. 

Ms. JACKSON LEE. What do you want to see strengthened under 

the antitrust laws? 

Mr. GLASS. I would like to have the ability to take action under 

antitrust to deal with the problem I am having right now—anticompetitive pricing of the inputs to my business by the telephone 

company. 

Let me explain. I rent leased lines from the telephone company 

to connect me to the Internet. They charge me more per megabit 

per second for wholesale connections to the Internet than they do 

to retail consumers who are buying DSL from them. As a result, 

they are trying to make it impossible for me to be competitive and 

also be profitable. I would like to be able to take action about that. 

Ms. JACKSON LEE. Do they argue that you are in an area that 

is difficult to serve? Do you make that kind of argument? 

150 

Mr. GLASS. Actually, there is no rational justification. The physical plant, the wires, have been fully depreciated for decades. There 

is no reason why they could sell me that access at a very low cost, 

except they want to prevent me from being a better competitor. 

Ms. JACKSON LEE. Mr. Chairman, to conclude, we have had the 

privilege of serving on this Committee in past Congresses and, 

frankly, have had these hearings. I would make the argument that 

we want to see competitiveness. We like large companies and small 

companies. But I wonder whether or not we in the Judiciary Committee are going to be the only ones who will raise this concern and 

whether our collaborators on Energy and Commerce will not, and 

whether or not we will be able to move forward in trying to answer 

some of the concerns and still balancing the commitment to competitiveness and providing jobs that our large companies do provide. 

I yield back. 

Mr. GOODLATTE. I thank the gentlewoman for her comments, and 

look forward to working with her on that very objective. 

It is now my pleasure to yield to the Ranking Member of the 

Subcommittee, the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. 

I apologize to the Chairman and the witnesses for not being here 

earlier, and I thank Mr. Conyers and Ms. Chu for substituting for 

me. I had to go over to the White House to the Presidential Medal 

of Freedom presentation. One of my constituents, or somebody who 

lives just outside my congressional district was being honored, so 

I needed to be there, along with John Lewis and Stan Musial and 

Yo-Yo Ma and Warren Buffett and some other people. I didn’t need 

to be there for those reasons, but I needed to be there for my constituent. 

I thought I would not ask questions, but just sitting here listening to the questions that got asked, I got provoked to ask a couple 

of questions. Somebody was talking about somebody providing 

broadband over power lines. Who in the world is doing that, and 

who would have the incentive to do that in today’s market? Is anybody actually doing that? 

Mr. DOWNES. Yes. It’s a technology that has been in development 

for quite some time. 

Mr. WATT. Is anybody doing it? 

Mr. DOWNES. There are a number of companies that are doing 

trials with it. It is very attractive for rural customers because the 

infrastructure is already in place. They already have electricity, 

where they may not have high-speed Internet connections, or they 

can’t get mobile for obvious reasons. So it is, in fact, a very appealing technology, but so far it has not been commercially successful. 

Mr. WATT. And would the FCC’s order have some impact on that 

one way or another? I mean, would it disincentivize it or would it 

have any impact on it at all. 

Mr. DOWNES. Well, the BPL providers would be subject to the 

same rules as any other Internet provider, assuming they’re offering broadband speeds, which is what they are doing. My point was 

just that up until now, the FCC has not been particularly helpful 

in encouraging this new technology, and in fact has been criticized 

by the courts for rulings that have slowed down the deployment of 

151 

that technology. There is a concern that it interferes with hand 

radio operators. 

Mr. WATT. I thought you all wanted the FCC to get out of the 

way. 

Mr. DOWNES. Get out of the way of the broadband power line, 

yes. 

Mr. WATT. You want them in in some things and out of other 

things. Okay. All right, I got you. That’s what most people want. 

They want what they want, and then they want them out of the 

way when they don’t want what they want. 

Let me just ask a general question to all three of you. I don’t 

know how you promote competition in a capital-intensive, cost-prohibitive industry. I mean, you know, you’re ending up with two 

major carriers here, Verizon and AT&T. I mean, a lot of our private 

enterprise is becoming more and more concentrated just because, 

I mean, there’s just—these in many ways are utilities, and the capital costs are so heavy. I’m just trying to figure out how do we promote competition in these areas? 

Ms. Sohn, and then we will just go down the line, and then I will 

yield back, Mr. Chairman. 

Ms. SOHN. Ranking Member Watt, I mean, you are absolutely 

correct; there are very high barriers to entry. Not everybody can 

get spectrum. And T-Mobile and Sprint are begging the Federal 

Government to perhaps put limits on what AT&T and Verizon has, 

so they can get some more. Not everybody can lay lines, coaxial 

cable. You have to get permission from the State government, so 

the barriers to entry are huge. 

So what do you do? I think the answer is to do what the countries in Europe, Scandinavian countries, and in Asia are doing and 

beating us at broadband value and speed. You have to go back to 

the way we regulated these entities in the nineties and the early 

aughts. You have to require the dominant telecommunications and 

cable providers to open up their networks so competitors can use 

them as well, what we call line sharing—some call line sharing, 

unbundling, there are different ways. But the notion is the countries that have dozens of Internet service providers are those that 

have required the big guys—the British telecoms, the French 

telecoms, to open up their networks to competitor—— 

Mr. WATT. So how do you responded to their argument that they 

paid for that and therefore shouldn’t give it away, or give it away 

at reduced cost after they’ve developed it? 

Ms. SOHN. Well, without public rights of way, there would be no 

cable industry, there would be no telephone industry. I mean, they 

are—— 

Mr. WATT. And basically you’re using this as a public utility argument. 

Ms. SOHN. Exactly. 

Mr. WATT. Okay. Mr. Glass and Mr. Downs, and then I’ll yield 

back. 

Mr. GLASS. Yes, Ranking Member Watt. The best way to promote 

competition, I think, is to do several things. The capital cost of the 

kind of wireless that I provide is actually within reach. It’s not insurmountable. It’s never easy to raise capital, but it certainly is 

possible. What we need to do is encourage investors to bring that 

152 

capital to the table, and in order to do that we need to be very 

careful about deterring them using regulation. 

We need to reduce barriers to entry—and again, regulation is potentially a barrier to entry in this arena. We need to come down 

hard on anticompetitive tactics. We’ve already talked a little bit 

about special access as being one of the barriers to rural broadband 

deployment.That is an anticompetitive tactic. It’s not asking to use 

something for free, it’s asking to get something at a reasonable 

price. 

We also need to deal with spectrum. The preemptive bids by the 

large incumbents so as to lock out competition are something which 

the FCC hasn’t addressed and really does need to address. 

But mainly I guess I need to come back to the point that I’ve 

been making throughout the hearing. As Henry David Thoreau 

once said, ‘‘Government never furthered any enterprise but the 

alacrity with which it got out of the way.’’ What we need is simply 

to remove the barriers, and then the market will encourage investment and will encourage deployment. 

Mr. DOWNES. I think for many reasons the most attractive option 

for more competition, particularly with broadband Internet access, 

is in the mobile space. With more wireless providers, that’s where 

the technology is going, and also that’s where the consumers are 

going as well. The most effective thing we can do then to promote 

more competition would be to do a better job of managing the existing spectrum. That was a goal the FCC had last year. They didn’t 

really work on it because of the net neutrality proceeding. We’d 

like to see them go back to that and actually start with an inventory just of who has what spectrum in the first place, and then see 

if we can find ways to manage it more effectively so we can speed 

up the competition offered by broadband mobile providers. 

Mr. WATT. My time is up, but it just seems ironic that you’re saying on one side get the FCC out of the way, and then saying on 

the other side put the FCC back in and let them do this. I mean, 

I don’t know how you can have it both ways. I mean, I understand 

what you’re saying, it just seems—but now is not the place to pursue it. 

I appreciate the Chairman’s indulgence. 

Mr. GOODLATTE. I appreciate the gentleman’s comments as well. 

And I will just close by saying that it was over 10 years ago that 

I introduced legislation—probably the first net neutrality legislation introduced in the Congress—along with Congressman Rick 

Boucher in 1999, I think. We didn’t call it ‘‘net neutrality,’’ we 

called it ‘‘open access.’’ It was designed to make sure that there 

was open competition on the Internet, but it was antitrust-based. 

And it never got to the finish line because the various interested 

parties in this kept shifting sides, and the sands underneath our 

legislation kept shifting. Some of the companies that were supporting our legislation back then are now looking in a different direction. Some that were opposing our legislation back then would 

very much support the idea today. 

I very much agree with Mr. Downes’ comment; the principle purpose of the FCC is to allocate spectrum and to try to find the most 

efficient way to do that; that spectrum is public property, if you 

will, and therefore it is the reason for the existence of the FCC. 

153 

I think the FCC has been on mission creep for decades now. And 

we need to be very, very careful that we don’t put ourselves in a 

situation where we think that it is a great idea to have the FCC 

regulate the Internet the same way they have regulated the telecommunications industry and others. This is a rapidly changing, 

dynamic environment, and all kinds of decisions are made by all 

kinds of companies based upon what’s going to be available in 

terms of capital, what’s going to be available in terms of new technology and new ideas. 

And I don’t think it’s going to happen if we empower the FCC 

in a way that they have clearly not been empowered in the past. 

They’ve been rebuffed by the courts in this area. They have chosen 

to take a different route that I think is very spurious in what they 

are attempting to do, and I hope the courts will rebuff them again. 

But failing that, I think that Congress should act, and I agree that 

it shouldn’t just be a negative act to stop the FCC; it should be a 

positive act to look at our antitrust laws and see if they give appropriate access to small actors like Mr. Glass, and to look to see 

whether laws written 100 years ago are responsive to this dynamic 

environment. 

But if they are clear rules of the road that exist before a decision 

is made to develop a product or to come up with the finances for 

it, we will be better served than to go down a path where we set 

about trying to find the capital, find the people to take the risks, 

and then have the rules changed in the middle of the game, which 

is where I fear the FCC will lead us. 

So I thank everyone for their participation. It has been a very, 

very good discussion. 

And without objection, all Members will have 5 legislative days 

to submit to the Chair additional written questions for witnesses, 

which we will forward and ask the witnesses to respond as promptly as they can so that their answers may be made a part of the 

record. 

And without objection, all Members will have 5 legislative days 

to submit any additional materials for inclusion in the record. 

And with that, I again thank our great witnesses, and this hearing is adjourned. 

[Whereupon, at 4:20 p.m., the Subcommittee was adjourned.] 

(155) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD


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f 


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Letter from Lisa R. Youngers, Vice President, External Affairs, 

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Æ 


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