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91–268 2015

OVERSIGHT OF THE FEDERAL COMMUNICATIONS 

COMMISSION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 20, 2014 

Serial No. 113–146 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

(III) 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

ROBERT E. LATTA, Ohio 

Vice Chairman 

JOHN SHIMKUS, Illinois 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

ANNA G. ESHOO, California 

Ranking Member 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., NEW JERSEY

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 4 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 5 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 7 

Prepared statement .......................................................................................... 8 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 10 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

prepared statement .............................................................................................. 59 

WITNESSES

Tom Wheeler, Chairman, Federal Communications Commission ....................... 11 

Prepared statement .......................................................................................... 14 

Answers to submitted questions ...................................................................... 70 

SUBMITTED MATERIAL

Letter of May 7, 2014, from 100+ venture capitalists to the Federal Communications Commission, submitted by Ms. Eshoo ................................................ 60 

Letter of May 8, 2014, from 100+ Internet Companies to the Federal Communications Commission, submitted by Ms. Eshoo ................................................ 63 

(1) 

OVERSIGHT OF THE FEDERAL 

COMMUNICATIONS COMMISSION 

TUESDAY, MAY 20, 2014 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:30 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Shimkus, 

Terry, Rogers, Blackburn, Scalise, Lance, Guthrie, Gardner, 

Pompeo, Kinzinger, Long, Ellmers, Barton, Upton (ex officio) 

Eshoo, Matsui, Braley, Welch, Lujan, Dingell, DeGette, Matheson, 

Butterfield, and Waxman (ex officio). 

Also present: Representative Yarmuth. 

Staff present: Gary Andres, Staff Director; Ray Baum, Senior 

Policy Advisor/Director of Coalitions; Matt Bravo, Professional Staff 

Member; Leighton Brown, Press Assistant; Andy Duberstein, Deputy Press Secretary; Gene Fullano, Detailee, Telecom; Kelsey 

Guyselman, Counsel, Telecom; Sean Hayes, Deputy Chief Counsel, 

Oversight & Investigations; Grace Koh, Counsel, Telecom; David 

Redl, Counsel, Telecom; Charlotte Savercool, Legislative Coordinator; Macey Sevcik, Press Assistant; Tom Wilbur, Digital Media 

Advisor; Phil Barnett, Democratic Staff Director; Shawn Chang, 

Democratic Chief Counsel for Communications and Technology 

Subcommittee; Margaret McCarthy, Democratic Professional Staff 

Member; Ryan Skukowski, Democratic Staff Assistant; and Patrick 

Donovan, Democratic FCC Detailee. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. We will call to order the subcommittee on Communications and Technology, and I certainly want to welcome our 

Members and our witness, the Chairman of the Federal Communications Commission. Mr. Wheeler, we are delighted that you 

would make time to come and spend with us on this important day 

with so much going on in the telecommunications world. 

Six months ago, this subcommittee met for the very first time 

with the current complement of FCC Commissioners and welcomed 

Mr. Wheeler as the new chairman. Today—and let me welcome Mr. 

Wheeler back—we meet to review the record of action and selective 

inaction that the Commission has taken under the first 6 months 

of your leadership. Unfortunately, given some of the most recent 

2 

actions out of the Commission, I fear that we may be heading into 

rough waters. 

When we last met I offered two pieces of advice to Chairman 

Wheeler and his colleagues. First, I urged them to heed the words 

of Congress where it has spoken and reject calls to act in ways contrary to Congressional intent. Second, I urged them to bear in mind 

that even seemingly small changes in the Federal Communications 

Commission’s rules can have significant impact on the marketplace. I called upon all the members of the Commission to discharge their duties with transparency, accountability, and a long 

view of the technological landscape. In sum, my advice was that 

they must approach their duties with humility and restraint. 

Unfortunately, recent actions have hinted that my advice was ignored. In December we had yet to know that the D.C. Circuit Court 

of Appeals would once again reject the Commission’s attempt to 

regulate the Internet and could only speculate as to whether the 

Commission under Chairman Wheeler’s lead would mount a third 

attempt. Sadly, we now know the answer. Not only is Chairman 

Wheeler leading us down this path again, the item the Commission 

adopted last week tees up the long-dead idea that the Internet is 

a common carrier. This reinvigorated willingness to consider regulating the Internet under Title II of the Communications Act, rules 

that find their roots in 19th Century railroad regulation and were 

designed to regulate the world of a telephone monopoly, harken 

back to a world in which a twisted copper was the only portal for 

consumers to the communications network and voice, the only service. 

The modern communications landscape bears no resemblance to 

the world Title II was meant to regulate, and application of Title 

II to the Internet is, at best, a poor fit. Worse still, the practical 

consequences of reclassification are to give the bureaucrats at the 

FCC the authority to second-guess business decisions and to regulate every possible aspect of the Internet. We should all pause and 

consider the prospect of the FCC as a rate-setting authority over 

Internet access and what that meant for innovation in the telephone network of yesteryear. We should also be aware that this 

path opens the door for states to regulate the Internet. 

Contrary to any intended effect, the reclassification of broadband 

service under Title II will harm consumers, halt job creation, curtail innovation and stifle investment. In sum, at a time when the 

Commission, at Congress’s direction, is taking steps toward even 

greater growth and innovation across Internet access platforms, the 

Commission is simultaneously contemplating rules that undermine 

those very efforts and compromise the fundamental approaches of 

both the Clinton and Bush administrations that laid the foundation 

for the Internet we know today. 

As troubling as some of the actions taken under Chairman 

Wheeler’s watch, the selective inaction of the FCC is equally troubling. Although required under the Telecommunications Act, the 

Federal Communications Commission has failed to complete its 

quadrennial review of the limitations on ownership of broadcast 

properties. It has been 6 years—6 years—since the Commission 

last fulfilled this statutory mandate. Rather than focus on ensuring 

that the rules reflect reality, however, the chairman has now anVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
3 

nounced that the Commission would essentially scrap the 2010 

quadrennial review, and begin in earnest its 2014 quadrennial review. 

Notwithstanding this stale record, the FCC also moved forward 

to make major changes to the regulations that govern media ownership anyway, the adopted changes to its attribution rules that determine how to count stations toward the local television ownership 

rule. The FCC also stated that it would begin counting certain 

shared service arrangements toward the local ownership cap. In 

order to comply with local ownership rules, these pronouncements 

will likely force broadcasters to divest stations and unwind shared 

service agreements that are beneficial to ensuring local content in 

the smaller markets. These changes do not bring benefits to the 

communities served by these broadcasters drawing into question 

how this change could serve the public interest. 

Finally, FCC process reform has been an ongoing priority of our 

Subcommittee. It is an issue my colleagues and I are deeply invested in as demonstrated by the unanimous passage in the House 

of the bipartisan Federal Communications Commission Process Reform Act on March 11 of this year. Unfortunately, after the events 

of the past few months, I am sad to say I continue to be troubled 

by the FCC’s seemingly flawed processes. 

In March, the FCC chose to restrict license transfers involving 

certain shared service agreements, which had long been implicitly 

blessed by the Commission. This action was not debated by the 

commissioners, nor is it subject to any kind of vote. Rather, it was 

announced by the Chief of the Media Bureau as a fait accompli. 

Recent press reports also allege that the chairman’s office withheld presentation of revisions to the Open Internet Notice of Proposed Rulemaking from Republicans for as long as 24 hours after 

having provided the material to the Democratic commissioners and 

to the press during the run up to the May 15th FCC Open Meeting. 

The concern raised by these reports is only compounded by revelations that a substantially revised draft of another item scheduled 

for vote at the Open Meeting was not presented to other offices 

until the closing minutes of the evening before. According to Commissioner Pai’s dissent from the commission’s Mobile Spectrum 

Holdings item, his office received the revised item fewer than 12 

hours before the Open Meeting, and the item contained more than 

3,000 revisions. 

So I find myself channeling Commissioner Rosenworcel who said 

of the Open Internet NPRM that the ‘‘process that got us to this 

rulemaking today is flawed.’’ The committee has opined in the past 

that withholding of a revised draft item from other members of the 

commission until the eleventh hour precludes the scrutiny and 

analysis necessary for reasoned decision-making. It is my hope that 

these occurrences were anomalies. Perhaps Chairman Wheeler will 

want to commit today to providing his fellow commissioners with 

adequate and equal time to review proposed orders and rules. 

The transformative impact of the evolution of technology from 

analog to digital, from narrowband to broadband, has forever altered our lives. The evolution continues and the Commission has 

before it the issues I just mentioned and many more, all significant 

in their impacts on our lives and the economy. You stated in your 

4 

written testimony that you are eager to build on the progress of the 

last 6 months going forward. And I hope working together we can 

move forward in a direction that protects the success this critical 

sector of the economy has enjoyed and facilitates its continued 

growth and job creation unencumbered by regulatory overreach. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

Six month ago, this subcommittee met for the first time with the current complement of FCC Commissioners and welcomed Mr. Wheeler as the new chairman. 

Today—and let me welcome Chairman Wheeler back—we meet to review the record 

of action and selective inaction that the commission has taken under the first six 

months of his leadership. Unfortunately, given some of the most recent actions out 

of the commission, I fear that we may be heading into rough waters. 

When we last met I offered two pieces of advice to Chairman Wheeler and his 

colleagues. First, I urged them to heed the words of Congress where it has spoken 

and reject calls to act in ways contrary to Congressional intent. Second, I urged 

them to bear in mind that even seemingly small changes in the FCC’s rules can 

have significant impact on the market. I called upon all the members of the commission to discharge their duties with transparency, accountability, and a long view of 

the technological landscape. In sum, my advice was that they must approach their 

duties with humility and restraint. 

Unfortunately, recent actions have hinted that my advice was ignored. In December we had yet to know that the D.C. Circuit Court of Appeals would once again 

reject the commission’s attempt to regulate the Internet; and could only speculate 

as to whether the commission under Chairman Wheeler’s lead would mount a third 

attempt. Sadly, we now know the answer. Not only is Chairman Wheeler leading 

us down this path again, the item the commission adopted last week tees up the 

long dead idea that the Internet is a common carrier. This reinvigorated willingness 

to consider regulating the Internet under Title II of the Communications Act—rules 

that find their roots in 19th century railroad regulation and were designed to regulate the world of a telephone monopoly—harken back to a world in which a twisted 

copper was the only portal for consumers to the communications network and voice 

was the only service. 

The modern communications landscape bears no resemblance to the world Title 

II was meant to regulate and application of Title II to the Internet is, at best, a 

poor fit. Worse still, the practical consequences of reclassification are to give the bureaucrats at the FCC the authority to second-guess business decisions and to regulate every possible aspect of the Internet. We should all pause and consider the 

prospect of the FCC as a rate-setting authority over Internet access and what that 

meant for innovation in the telephone network of yesteryear. We should also be 

aware that this path opens the door for states to regulate the Internet. 

Contrary to any intended effect, the reclassification of broadband service under 

Title II will harm consumers, halt job creation, curtail innovation, and stifle investment. In sum, at a time when the commission—at Congress’s direction—is taking 

steps toward even greater growth and innovation across Internet access platforms, 

the commission is simultaneously contemplating rules that undermine those very efforts and compromise the fundamental approaches of both the Clinton and Bush administration that laid the foundation for the Internet we know today. 

As troubling as some of the actions taken under Chairman Wheeler’s watch, the 

selective inaction of the FCC is equally troubling. Although required under the Telecommunications Act, the FCC has failed to complete its quadrennial review of the 

limitations on ownership of broadcast properties. It has been 6 years since the commission last fulfilled this statutory mandate. Rather than focus on ensuring that the 

rules reflect reality, however, Chairman Wheeler announced that the commission 

would essentially scrap the 2010 quadrennial review, and ‘‘begin in earnest’’ its 2014 

quadrennial review. Notwithstanding this stale record, the FCC also moved forward 

to make major changes to the regulations that govern media ownership anyway. The 

adopted changes to its ‘‘attribution rules’’ that determine how to count stations toward the local television ownership rule. The FCC also stated that it would begin 

counting certain shared service arrangements toward the local ownership cap. In 

order to comply with local ownership rules, these pronouncements will likely force 

broadcasters to divest stations and unwind shared service agreements that are beneficial to ensuring local content in smaller markets. These changes do not bring benVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
5 

efits to the communities served by these broadcasters drawing into question how 

this change could serve the public interest. 

Finally, FCC process reform has been an ongoing priority of the subcommittee. 

It is an issue that my colleagues and I are deeply invested in as demonstrated by 

the unanimous passage in the House of the bipartisan Federal Communications 

Commission Process Reform Act on March 11th of this year. Unfortunately, after 

the events of the past few months, I am sad to say I continue to be troubled by 

the FCC’s seemingly flawed processes. 

In March, the FCC chose to restrict license transfers involving certain shared 

service agreements, which had long been blessed implicitly by the commission. This 

action was not debated by the commissioners, nor was it subject to a vote of any 

kind. Rather, it was announced by the Chief of the Media Bureau as a fait accompli. 

Recent press reports also allege that the Chairman’s Office withheld presentation 

of revisions to the Open Internet Notice of Proposed Rulemaking from Republicans 

for as long as 24 hours after providing the material to the Democratic commissioners and to the press during the run up to the May 15th FCC Open Meeting. 

The concern raised by these reports is only compounded by revelations that a substantially revised draft of another item scheduled for vote at the Open Meeting was 

not presented to other offices until the closing minutes of the evening before. According to Commissioner Pai’s dissent from the commission’s Mobile Spectrum Holdings item, his office received the revised item fewer than 12 hours before the Open 

Meeting and the item contained more than 3,000 revisions. 

I find myself channeling commissioner Rosenworcel who said of the Open Internet 

NPRM that ‘‘the process that got us to this rulemaking today is flawed.’’ The committee has opined in the past that withholding of a revised draft item from other 

members of the commission until the eleventh hour precludes the scrutiny and analysis necessary for reasoned decision-making. It is my hope that these occurrences 

were anomalies. Perhaps Chairman Wheeler will commit today to providing his fellow commissioners with adequate and equal time to review proposed orders and 

rules. 

The transformative impact of the evolution of technology from analog to digital, 

from narrowband to broadband has forever altered our lives. That evolution continues and the commission has before it the issues I just mentioned and many more, 

all significant in their impacts on our lives and the economy. You stated in your 

written testimony that you are eager to build on the progress of the last 6 months 

going forward. I hope, working together, we can move forward in a direction that 

protects the success this critical sector of the economy has enjoyed and facilitates 

its continued growth and job creation unencumbered by regulatory overreach. 

# # # 

Mr. WALDEN. With that I yield back, and I recognize my friend 

and colleague from California, Ms. Eshoo, the Ranking Member of 

the Subcommittee, for her opening statement. 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Mr. Chairman, and good morning to all 

of my colleagues, and welcome back to the committee, Chairman 

Wheeler. 

Before we do a deep dive into the specifics of the chairman’s proposal as well as so many other major issues that are before the 

FCC, I think that it would be well for us to step back and appreciate what I believe is one of the most consequential inventions in 

human history. This was dreamed of and built by disruptors. It is 

an American story. It is a product of American genius—the Internet, one word but it really takes one’s breath away in terms of the 

arc of history. 

It is not only an invention, it has reshaped lives, economies here 

and around the world, and our thinking and our debate today realVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
6 

ly should be viewed, I think, through the prism of a critical step 

that we are taking now in the 21st Century. The Internet is a continuum of change. It is accessible, it is open and its innovations 

continue. They empower individuals, entire fields of learning, growing not only our economy but economies around the world and serving humanity in countless ways. 

All of this has taken place, and here we are in the second decade 

of the 21st Century. So this is huge. This is huge. This is not what 

is behind door number one, door number two, door number three, 

where the price is right. This is not some guessing game. This is 

huge. This is something—these decisions are going to affect every 

single American going forward just as it has in the past, and it will 

continue to. 

So all of us—regulators, innovators, consumers, legislators—we 

have to get this right. The stakes are very high, and America cannot lose. It has been our leadership that has advanced the digital 

age, and now is not the time, and actually I don’t think there 

should be ever a time, to unravel the values that have really been 

the hallmarks and the bulwarks of the Internet. 

So the question is, how do we seize the future? At least in my 

view, that is what the question is. I know what I want to see continue, openness, free, accessible. These are also the hallmarks of 

our democracy, and that is why this has been such an extraordinary export of our country. 

I know what I don’t want. I don’t want this to become an auction, 

selling off the best in bits and pieces where some pay for faster 

lanes, others can’t pay. They get stuck in a slow lane—some giant 

company blocking content and others discriminating so that they 

can sell their stuff to keep the other guy’s stuff stymied. That is 

not a very pretty description, but it is a street description of what 

can be at hand. 

I want every day to be essentially the 4th of July for American 

innovation so that it just keeps bursting, it just keeps bursting. 

And I see it every day in my Congressional district. Looking forward 10 years, 25 years, 50 years, I want this to continue, and we 

should all be thinking on a grand scale because this growth and 

this economic driver should be for everyone. We need smart, savvy 

regulations, regulatory decisions. We need a Congress that is engaged in this and a Congress that is vigilant, and I plan to be. 

So what should the FCC do? I think in all the articles you read, 

there is a debate. Should it be 706 or should it be Title II? I think 

that we have to have a clear understanding of what has made the 

Internet what it is today and what basic values need to be protected and preserved and then what that is going to look like. 

And there is more on top of all of this. Can anyone here today 

piece together the effects of a Comcast/Time Warner merger and an 

AT&T/DirecTV merger on consumers and a free and open Internet? 

These are massive decisions and massive pieces that are moving 

forward. And what is going to happen to innovation? 

Mr. Chairman, Chairman Walden, I urge you to convene a hearing to examine these issues here. I think they deserve to be examined and to be debated and questions asked. So as I said earlier, 

every person in the country will be affected by the outcome of these 

decisions that are before the Commission and before us. And so I 

7 

look forward to questioning Chairman Wheeler today. I also ask for 

unanimous consent to two letters, two very important letters, be 

entered into the record, one signed by more than 100 venture capitalists and angel investors who support simple, strong, enforceable 

rules against online discrimination and access fees, and the other 

signed by more than 100 Internet companies, small and large, 

mostly small, that support a free and open Internet. 

Mr. WALDEN. Without objection. 

[The information appears at the conclusion of the hearing.] 

Ms. ESHOO. And I don’t know if I have any time remaining. No, 

I think I have gone over. With that, I will yield back what I don’t 

have. 

Mr. WALDEN. Thank the gentlelady for her opening statement 

and the letters. I will now turn to the Full Committee Chairman, 

Mr. Fred Upton from Michigan, for opening comments. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. Oversight is a critical part of this committee’s work to foster a smaller, more nimble 

government for the innovation age. We have held lots of hearings 

with all of the FCC’s commissioners to address issues of national 

importance, to keep a close eye on the budget, and to ensure that 

Commission process focuses on promoting jobs and innovation, and 

today’s oversight hearing with Chairman Wheeler will continue 

that discussion to ensure that the FCC works in a way that benefits consumers, industry, and certainly the economy, and I thank 

you for coming today. 

There is a lot to discuss. In the 6 months since Mr. Wheeler was 

confirmed as chair, he has addressed a number of items including 

media ownership, the IP transition, universal service, and just this 

past week, of course, the incentive auctions and net neutrality. 

While I appreciate the chairman’s leadership on some of these, I 

have serious concerns with some others. 

As an initial matter, Chairman Wheeler started off his chairmanship with the review of FCC procedure, an issue that this Subcommittee has spent lots of time working to reform in a bipartisan 

manner. But I was disappointed to see some of the process failures 

that occurred last week. Media reports of open meeting items being 

circulated to commissioners as late as midnight the evening before 

the vote on one item and what seems to be partisan sharing of 

items with Democrats as much as 24 hours before sharing them 

with Republicans on another is particularly concerning. Regardless 

of political affiliation, commissioners must be given adequate and 

equal time to consider the items on which they are going to vote. 

Let us all hope that such incidents of favoritism and selective sharing are isolated and not emblematic of the Chairman’s new operating procedure. 

Additionally, I continue to be concerned with the Commission’s 

ongoing defiance of its statutory obligations to complete the 2010 

quadrennial review of media ownership rules. Despite the commission’s woefully outdated record on this issue, it has nonetheless 

moved forward with changes that effectively bar joint sales agreements and change Commission treatment of shared service agreeVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
8 

ments under its media attribution rules. These actions, in the absence of the statutorily required media ownership review, do raise 

significant questions about the Commission’s commitment to making decisions informed by facts and utilizing sound process. 

And lastly, I am troubled by the chairman’s insistence on attempting to regulate the Internet under rules that were informed 

by 19th century railroad regulations and adopted to regulate the 

monopoly telephone network of the past. The Internet has indeed 

flourished under the current light-touch regulatory scheme, and 

subjecting it to burdensome regulations is a leap in the wrong direction. Title II is inappropriate for the Internet, and attempting 

to reclassify it would be harmful to consumers, businesses, and the 

future of the Internet as we know it. Nobody wants telephone service to look like it did in 1984, and we certainly shouldn’t wish for 

our Internet access to return to that rotary phone era, either. 

The communications sector is vital to our national economy, and 

Commission action on even small items can have broad impact. I 

thank Chairman Wheeler for being here today and look forward to 

working together toward a bipartisan, measured, transparent, and 

responsible actions that do benefit consumers, job creation and our 

economy. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Oversight is a critical part of this committee’s work to foster a smaller, more nimble government for the innovation age. We have held multiple hearings with all of 

the FCC’s commissioners to address issues of national importance, to keep a close 

eye on its budget, and to ensure that commission process focuses on promoting jobs 

and innovation. Today’s oversight hearing with Chairman Tom Wheeler will continue this discussion to ensure that the FCC works in a way that benefits consumers, industry, and the American economy. I thank Chairman Wheeler for joining 

us today. 

There is much to discuss. In the 6 months since Mr. Wheeler was confirmed as 

chairman, he has addressed a number of items—including media ownership, the IP 

transition, universal service, and just this past week, the incentive auctions and net 

neutrality. While I appreciate the Chairman’s leadership on some of these items, I 

have serious concerns with others. 

As an initial matter, Chairman Wheeler started off his chairmanship with a review of FCC procedure—an issue this subcommittee has spent considerable time 

working to reform in a bipartisan manner. But I was especially disappointed to see 

some of the process failures that occurred last week. Media reports of open meeting 

items being circulated to commissioners as late as midnight the evening before the 

vote on one item and what seems to be partisan sharing of items with Democrats 

as much as 24 hours before sharing them with Republicans on another is particular 

concerning. Regardless of political affiliation, commissioners must be given adequate 

and equal time to consider items on which they will vote. Let us all hope that such 

incidents of favoritism and selective sharing are isolated and not emblematic of the 

chairman’s new operating procedure. 

Additionally, I continue to be concerned with the commission’s ongoing defiance 

of its statutory obligation to complete the 2010 quadrennial review of media ownership rules. Despite the commission’s woefully outdated record on this issue, it has 

nonetheless moved forward with changes that effectively bar joint sales agreements 

and change commission treatment of shared service agreements under its media attribution rules. These actions, in the absence of the statutorily required media ownership review, raise significant questions about the commission’s commitment to 

making decisions informed by facts and utilizing sound process. 

Lastly, I am troubled by the chairman’s insistence on attempting to regulate the 

Internet under rules that were informed by 19th century railroad regulations and 

adopted to regulate the monopoly telephone network of the past. The Internet has 

flourished under the current light-touch regulatory scheme, and subjecting it to burdensome regulations is a leap in the wrong direction. Title II is inappropriate for 

9 

the Internet and attempting to reclassify it would be harmful to consumers, businesses, and the future of the Internet as we know it. Nobody wants telephone service to look like it did in 1984, and we certainly shouldn’t wish for our Internet access to return to that rotary phone era, either. 

The communications sector is vital to our national economy and commission action on even small items can have broad impact. I thank Chairman Wheeler for 

being here today and look forward to working together toward bipartisan, measured, 

transparent, and responsible actions that benefit consumers, job creation, and our 

economy. 

# # # 

Mr. UPTON. And I yield the balance of my time be split between 

Mr. Latta and Mr. Barton. 

Mr. LATTA. Well, thank you, Chairman, for yielding, and Chairman Walden, I appreciate you holding this hearing today, and welcome Chairman Wheeler. Thanks for being here. 

The communications and technology industry is hailed as a vibrant, dynamic, and productive sector of our economy. This is not 

by accident. As networks and services transition to IP-based platforms, they have had the flexibility to grow, advance and evolve in 

large part because they have not been subjected to the stifling 

hand of legacy government regulations. 

We have pursued a light-touch regulatory approach to the Internet ecosystem because we have seen time and again that it serves 

as a catalyst for increased investment, innovation, job creation, and 

competition. As we look forward to develop policies that would further this growth, we would be remiss to overlook the significance 

of how regulatory restraint has been a fundamental component of 

the industry’s success. That is why I am concerned with some of 

the proposals emerging from the FCC, particularly in consideration 

of reclassifying broadband Internet access services, as a telecommunications service, under Title II of the Communications Act. 

This policy would be an extreme exercise of government overreach 

and likely result in failed Web sites, downgraded and poor customer service, less choice and flexibility for consumers, businesses 

and the stifling of innovation through regulation. Unwarranted attempts to manufacture and shape markets’ outcome, propose solutions in search of problems and impose antiquated regulations will 

frustrate future progress and innovation. 

I intend to introduce legislation that prevents the FCC from following through on this misguided regulatory proposal. 

Mr. WALDEN. Mr. Chairman, with that I yield back the balance 

of my time, and I yield to Mr. Barton. 

Mr. BARTON. We just welcome Chairman Wheeler, and the question before the committee today is are we soon going to be calling 

him Mr. Wheeler Dealer? And with that, I will put my statement 

in the record and in the interest of time yield back to the chairman. 

Mr. WALDEN. I thank the chairman. The gentleman yields back. 

I now turn the gentleman from California, Mr. Waxman, for opening comments. 

10 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman, and I want to welcome 

back Chairman Wheeler. Federal Communications Commission had 

an historic week last week. You are tackling some of the most complex and pressing issues in the communications sector today. In 

2012, Congress gave the FCC a big job, create the world’s first incentive auction to ensure that each front low-band spectrum is put 

to its highest economic value, and you established the ground rules 

for this crucial auction last week. You had a hard job because you 

needed to balance four potentially conflicting objectives: one, maximizing the amount of spectrum made available for auction; two, 

promote competition; three, create bands of unlicensed spectrum to 

spur innovation; and four, raise money. It appears you hit this one 

out of the ballpark. 

I particularly want to commend you for your work to advance unlicensed spectrum. Your plan will create three channels of each 

front unlicensed spectrum throughout the Nation. The vision of 

new super Wi-Fi can now become a reality. I also want to commend 

you for promoting competition by reserving spectrum for competitive carriers. It would be an enormous setback for innovation and 

consumers if the incentive auction turns the wireless market into 

a duopoly, dominated by Verizon and AT&T. This auction is the 

best and possibly the last chance the FCC has to invigorate competition. 

I would have preferred if you reserved even more spectrum for 

competitive carriers, but I recognize the pressures you are under 

and your need to secure three votes. 

By the way, you may hear arguments today from Republicans on 

this committee that you lack the authority to promote competition. 

These claims are nonsense and contradict the express language of 

the statute. 

Last week you also launched the FCC’s third attempt in 8 years 

to protect the open Internet. You didn’t hit this one out of the park, 

but you didn’t need to, either. You made a wise decision to solicit 

comment on a wide range of options. As I wrote you, the time has 

come to end the legal gymnastics and stop the lobbying games 

being paid by the big broadband providers. In 2010, Verizon, 

AT&T, and Comcast pled with the FCC not to use its undisputed 

authority under Title II of the Communications Act, and then after 

FCC did what they wanted, Verizon sued the agency for lacking 

authority when the FCC agreed with the company. This time, you 

need a different approach. You should use your Title II authority 

as a backstop authority to protect the open Internet. If you want 

to proceed under Section 706 as your main legal theory, that is 

fine, but you shouldn’t water down the open Internet rules to fit 

Section 706. Instead, you should get the substance right and invoke 

Title II as an independent basis of authority. 

The FCC has already lost two rulings in court over the open 

Internet. You don’t have to choose between weak rules and a weak 

legal case. You can issue strong rules and have a strong legal case 

if you use a belt-and-suspenders approach to the next rule-making. 

11 

I look forward to exploring this issue with you further in the 

question period. 

In the meantime, I would yield the balance of my time to my 

friend and colleague, Congresswoman Matsui. 

Ms. MATSUI. Thank you very much, Ranking Member Waxman, 

for yielding me time, and welcome, Chairman Wheeler. The FCC 

certainly has a lot on its plate. The Commission is considering net 

neutrality rules, rules on the broadcast incentive auction, the 

AWS–3 auction, USF and E–Rate reforms and two very significant 

mergers. I am confident the FCC will be able to demonstrate that 

it can walk and chew gum at the same time. 

This Subcommittee should also do its part. For one, I join in calling for the chairman to hold oversight hearings on the two proposed mergers between Comcast and Time Warner and on AT&T 

and DirecTV. Those are some of the largest mergers in our Nation’s 

telecommunications history. 

Americans, including many in my district of Sacramento are seeing the trends toward consolidation, content impairing deals and 

how they hear phrases like paid prioritization and wondering what 

is going on. What does all this mean for them, for competition and 

for the economy? It has been encouraging that so many Americans 

are speaking up in support of protecting an open Internet. I was 

one who thought the FCC should have taken more time to deliberate on what net neutrality rules the Commission should propose. 

But we are where we are. The proposal has certainly proved over 

the last few weeks it is still far from perfect. I support a ban on 

paid prioritization deals. We can’t afford a two-tiered Internet system. 

I look forward to hearing from you today, and I yield back the 

balance of my time. 

Mr. WALDEN. The gentlelady yields back the balance of her time, 

and with that, you have heard from us or at least a few of us up 

here, Mr. Chairman. And now we are delighted to have you here, 

and we look forward to your opening statement and comments. And 

thank you again for the work you are doing. Go ahead. 

STATEMENT OF HON. TOM WHEELER, CHAIRMAN, FEDERAL 

COMMUNICATIONS COMMISSION 

Mr. WHEELER. Thank you, Mr. Chairman, and members of the 

committee. As you have pointed out, it has been about 6 months 

since we last sat down, and what I wanted to do was to highlight 

some of the things we have done in that period and then engage 

in a dialogue with you with whatever topics that you would like to 

address. 

As has been evidenced by a lot of these comments up here, one 

of the principal responsibilities of the Commission is dealing with 

the spectrum crunch, and we have taken a significant step forward 

in terms of getting more spectrum out to the market. We had the 

H–Block auction which raised $1.5 billion for 10 megahertz spectrum. We have opened a new, 100 megahertz swath in the 5 

gigahertz band which is already being referred to as ‘‘gigabit-WiFi’’ because of the incredible through-put that it enables. We have 

begun a proceeding on spectrum sharing at 3.5 gigahertz, and we 

announced yesterday that in accord with the mandate of this ComVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
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mittee and Congress to auction off AWS–3 spectrum, that we will 

begin the auction on November 13, and we will finish as per your 

mandate February—we will license by February 22, 2015. 

We have also, as some of the Committee had noted, established 

a new set of mobile spectrum holding rules which have been 

praised by everybody from public interest groups to small operators 

to large operators, as was commented on by Mr. Waxman, ‘‘Hitting 

the ball out of the park.’’ And we have begun the incentive auction 

process. You mandated us, as you have said, with a non-trivial 

task, and we have taken the first important steps to that. 

On the question of Universal Service and what is going on there, 

we have fulfilled the pledge that I made to this Committee last 

time we were together to eliminate the infamous Quantile Regression Analysis, and we are seeking comments on what its replacement should be. 

We have funded the Connect America Fund to provide 

connectivity to 5 million more Americans who do not have access 

to broadband today. That is about 1⁄3 of the total, and a significant 

bite out of that. And we are seeking input on multiple additional 

issues, a through-put standard. Should we—as technology increases 

and bandwidth increases, do we need to think about higher bandwidth that is supported by the Connect America Fund? How do we 

best deal with the mobile component of broadband delivery in Connect America and how best to support broadband for rate-of-return 

carriers? Those are all proceedings that we have under way. 

We have made some significant strides also in the area of public safety. We took a good chunk out of the FirstNet $7.5 billion with 

the H-band auction. I expect, obviously, that the AWS–3 auction 

will do more, and I wouldn’t be surprised if we show up at the incentive auction having met the requirement, or at least taken a 

huge bite out of the requirement, for funding FirstNet. 

We had rule-making on text-to-911. You know, phones aren’t 

used just for talking anymore but also texting. And so, if you want 

to text to an emergency service provider, we had a rule-making on 

that. The major carriers stepped up and literally in the last couple 

of days, they all met their goals for the implementation on that, 

which is a terrific step forward. And we have also issued a Further 

Notice on location accuracy, because as wireless usage increases, 

and particularly, as it replaces wire line connections inside and as 

GPS usage has increased, there has been a fascinating reality that 

location accuracy has actually declined. And we have got a Notice 

going on, how do we address that, because that is literally a matter 

of life and death. 

As you mentioned, we began the 2014 Quadrennial Review on 

media issues with an expedited delivery date. We closed a loophole 

that was being exploited to get around the ownership rules using 

Joint Services Agreements, and we brought competition back to the 

retransmission consent negotiations. 

We have also continued to press on the reform issues that so 

many of you and I share in common as being important. Last time 

we were together I told you we stood up a task force to deal with 

this. That task force came back with 154 recommendations. About 

3⁄4 of those are now well along their way to being in process. They 

kind of break into two parts: there are procedural issues that you 

13 

might associate with the Administrative Procedure Act and things 

like this, and there is also just how you make the agency more efficient. 

And last week, as many have discussed, we opened a Notice of 

Proposed Rulemaking on preserving and protecting the open Internet. It is important to recognize that there are no protections for 

an open Internet in place today. The January court decision affirmed the Commission’s authority under Section 706 to deal with 

the open Internet and identified what I call a ‘‘roadmap’’ for how 

to achieve that. And what I proposed is a method that follows that 

roadmap. 

I understand that there is a great debate on this issue. I heard 

the debate here this morning between those who say there is no 

need and those who say it ought to be a regulated utility. What we 

have tried to do is to follow the court’s direction, the roadmap, the 

blueprint, and to come up with a proposal that stops blocking, that 

prohibits anything that degrades a consumer’s access, including 

prioritization, that asks a broader question about prioritization as 

to whether it should be banned outright, and if so, how, and then 

engages in the discussion that we have heard already this morning 

about Title II versus 706 and collecting a broad scope of learned 

information on that. 

I have consistently said that there is only one Internet. There is 

not a fast Internet and a slow Internet. There is not a special services Internet. There is one Internet, and when the consumer buys 

access to the Internet, they are buying access to the full Internet. 

And that is what our rules attempt to protect. 

This has become a debate about legal approaches. It is a healthy 

debate. It is a debate that our Notice of Proposed Rulemaking furthers with multiple requests for input. But my position has been 

similar to that of the Consumer Federation of America and that is 

that we ought to explore the powers that are granted in the ’96 

Act, specifically Section 706, keep asking how Title II fits in, but 

develop a regulatory policy that looks forward, not backward, because what we need is a regulatory plan for the 21st Century. And 

I look forward to discussing that with you, Mr. Chairman, and 

members of the Committee. 

[The prepared statement of Mr. Wheeler follows:] 

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Mr. WALDEN. Mr. Wheeler, Chairman, thank you for being here. 

We appreciate your work and your willingness to come and spend 

some time with us and respond to our questions. 

I want to pick up on the Middle Class Tax Relief Act which, as 

you know, was designed to create a forum where broadcasters could 

volunteer their spectrum up for auction for mobile broadband use. 

It has never been done quite like proposed, and we all knew that 

going in. But it seemed like a good balance. The critical term in 

all of this was that the broadcasters would volunteer to put their 

spectrum up. They wouldn’t be forced into it. That was the agreement. Yet many of the actions that we have seen coming out of the 

Commission would lead some to believe that the FCC might be bullying broadcasters into giving up spectrum without providing hard 

data and clear models so that the broadcasters can thoroughly and 

thoughtfully deliberate and choose to participate or not in this 

first-of-a-kind auction. 

Let me tell you what I am thinking here—for example, the joint 

sales agreements that are now outlawed. These agreements essentially offer broadcasters a viable business model in small markets 

that would otherwise suffer from lack of service. You are considering increasing the attribution value of UHF stations such that 

more broadcasters could end up in violation of the national cap 

under the Broadcast Ownership Rule. And the FCC has failed to 

process broadcasters’ petitions for allocation changes from VHF to 

UHF even though the petitions were filed prior to the Middle Class 

Tax Relief Act. 

And finally, you are seeking to use the modified version of OET– 

69. I am hearing about this to repack broadcasters. This will likely 

result in reduced coverage for broadcasters that choose to stay in 

the business, making the business itself less viable. So the very 

people you are trying to incentive—to put spectrum up so that it 

would be available for auction, I think are concerned about where 

the Commission is headed in a number of areas. 

Can you explain to me how these actions will actually encourage 

broadcasters to participate in this auction? 

Mr. WHEELER. Thank you, Mr. Chairman. You know, I think the 

goal here that we have been trying to follow is not to discourage 

or to encourage but to follow through with our responsibilities, and 

that means enforcing and updating our rule—— 

Mr. WALDEN. Do you think any of the things I have just cited 

encourage broadcasters to participate more? If you don’t have 

broadcasters showing up with spectrum—— 

Mr. WHEELER. So as I said, Mr. Chairman, I don’t think that— 

we have an important, as you said, an important and historic role. 

This is an incentive auction. 

Mr. WALDEN. I am aware of that, yes. 

Mr. WHEELER. What we have tried to do in the Mobile Spectrum 

Holdings Rule, for instance, is to encourage broadcasters—encourage, I am sorry, wireless carriers to buy which creates the incentive. The interesting thing, there was a report by one of the Wall 

Street analysts last week who said we expect the greatest risk to 

this auction, broadcasters not showing up, just dropped. Because 

the fact that AT&T suggested that they are ready to bid between 

$9 and $18—— 

27 

Mr. WALDEN. Right. 

Mr. WHEELER [continuing]. Billion for 20 to 40 megahertz, this 

analyst said should send positive signals to broadcasters. So 

our—— 

Mr. WALDEN. All right but—— 

Mr. WHEELER [continuing]. Goal is to create this marketplace, 

and we are not trying to take regulatory action—— 

Mr. WALDEN. All right. Well—— 

Mr. WHEELER [continuing]. In unrelated areas that would—— 

Mr. WALDEN. But you are taking lots of regulatory actions, and 

it does have an effect on the marketplace. I mean those two are 

fact, the quadrennial review not complete, new decisions being 

made on ownership. Without these things are out there. If we don’t 

have these broadcasters coming to the table voluntarily, there 

won’t be spectrum available. 

So I want to steal a line from the distinguished gentleman from 

Michigan, and this one I refer to as Mr. Dingell, to see if I can get 

to sort of some yes or noes here. Will you commit that the FCC will 

not score television stations based on their enterprise value? 

Mr. WHEELER. On their enterprise value? That is not our intention, sir. 

Mr. WALDEN. So that is a no. Or that is a yes, actually, that you 

will commit that you will not score. Is that correct? 

Mr. WHEELER. Yes. 

Mr. WALDEN. Yes. You will commit the FCC will ensure that 

broadcasters’ costs to reallocate are covered by the $1.75 billion relocation fund? 

Mr. WHEELER. We believe that that fund will be adequate. 

Mr. WALDEN. OK. 

Mr. WHEELER. That is what Congress told us to spend, period. 

Mr. WALDEN. And will you commit to completing frequency coordination with Canada and Mexico before the auction? 

Mr. WHEELER. I think the issue there is what is the term ‘‘complete?’’ As you know, on the DTV transition, it never came down 

to actual signing on paper, but we understood where each other 

was. And I am very confident that we will be at that kind of a 

point. 

Mr. WALDEN. Because that is critical. And will you commit to revoking only those low-powered TV and translator licenses that are 

necessary to complete the auction? 

Mr. WHEELER. Yes. 

Mr. WALDEN. Thank you. And I think I am out of time. So with 

that, I will now yield to the gentlelady, my friend from California, 

Ms. Eshoo. 

Ms. ESHOO. Thank you, Mr. Chairman. A lot of things to discuss, 

but I want to bore down or bore into some of the particulars on 

your recent proposal relative to the Internet on net neutrality. 

I have argued, many advocates for net neutrality have argued, 

that paid prioritization represents a fundamental departure from 

the Internet as we know it, just kind of restating what is obvious. 

But I think that when you have hundreds of thousands of people 

communicating from across the country to you on it, that it is important to raise. 

28 

Now, as a policy, not as a legal question, do you think that paid 

prioritization should be blocked outright? 

Mr. WHEELER. So I have said, Congresswoman, that I don’t believe there ought to be haves and have-nots—— 

Ms. ESHOO. No, no, just answer my question. 

Mr. WHEELER [continuing]. That—— 

Ms. ESHOO. Just tell me. Do you think that it should be blocked 

outright? 

Mr. WHEELER. We have asked that question in the rulemaking, 

and what I have said is that I believe that under Section 706, anything that is anti-competitive or anti-consumer is competitively unreasonable and therefore can, and should be, blocked. And that becomes the trigger with how you deal with paid prioritization. 

Ms. ESHOO. Yes. Now, what happens—— 

Mr. WHEELER. And on the question, per se, that you have asked, 

we specifically asked, how and whether. 

Ms. ESHOO. Now, what happens if the FCC determines if there 

is no way to create an outright ban on these paid agreements 

under 706? Where does that leave you? Where does that leave the 

country? 

Mr. WHEELER. So when the court gave us our instructions, they 

talked about what they called a ‘‘virtuous cycle,’’ and that is that 

that content drives the need for conduit which then creates the opportunity for content and that this cycle is what is our responsibility to protect. And that’s what 706 authorizes us to protect. 

And so what my proposal is is that we take them up on that and 

we say if there is something that interferes with that virtuous 

cycle, which I believe paid prioritization does, then we can move 

against it. 

Ms. ESHOO. All right. But now let us move over to Title II. Title 

II is described—it depends on who is describing it. It is either a 

scourge—it has been compared to the early railroad regulations in 

our country—to being the flip side, the savior title. I talked about 

in my opening statement about one of the imprimaturs of the Internet has been consistent innovation, and while there are those 

that—and I understand why people would move to Title II because 

they want the Internet protected and these values, they are worth 

protecting. But I also believe that there is room in Title II for 

heavy-handed regulation. And I don’t think that—well, let me put 

it this way. I think that we need a light but strengthful legal touch 

in this because the values are so essential, and people across the 

country and in the world—I mean, I am hearing from people from 

different parts of the world as well—are calling for these protections. 

How would you envision, how would you handle constraint under 

Title II—— 

Mr. WHEELER. Well—— 

Ms. ESHOO [continuing]. In terms of being the chief regulator? 

Mr. WHEELER. So as you know—— 

Ms. ESHOO. Have you give thought to this? 

Mr. WHEELER. Pardon me? 

Ms. ESHOO. Have you given thought to this? 

Mr. WHEELER. Yes, ma’am. 

Ms. ESHOO. OK. Go ahead. 

29 

Mr. WHEELER. And as you know—— 

Ms. ESHOO. As some people say, share it with me. 

Mr. WHEELER. As you know, Title II—there is nothing in Title 

II that prohibits paid prioritization. As a matter of fact, we have 

all kinds of paid prioritization—— 

Ms. ESHOO. You are worrying me by bringing that up first. But 

anyway, go ahead. 

Mr. WHEELER. So the question, because it goes to your—I think 

the root question of yours, which is, ‘‘How do you forebear from 

that,’’ OK? And so it is possible to go through and say, ‘‘Yes, we 

will not do this, we will not do this, we will not do this.’’ In the 

wireless context, interestingly enough, Congress created wireless as 

a common carrier, but then specifically said, ‘‘But this doesn’t 

apply, and this doesn’t apply, and this doesn’t apply, and this 

doesn’t apply.’’ We can do that as a Commission as well. It has 

been proposed that that is an approach to take. 

There are also those who throw up their hands in great concern 

over that because they say, ‘‘OK, well, this Commission may do this 

but what about the next Commission?’’ And you can’t bind a future 

of Commission by making those kinds of determinations. 

So what we have done in this NPRM is to ask the specific question about ‘‘Here is Section 706, here is Title II, let us compare 

them and contrast them with each other and tell us what the 

pluses and minuses and the best ways to get through this are.’’ 

And I think that leads us to the kind of answer that you are asking 

for today. 

Mr. WALDEN. The gentlelady’s time is expired. We will go now 

to the gentlelady from Tennessee, Ms. Blackburn, the Vice Chair 

of the Full Committee, for her questions. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and Mr. Wheeler, 

we thank you for taking the time to come and be with us. 

Mr. WHEELER. Thank you. 

Mrs. BLACKBURN. You have got a feisty term going over there at 

the FCC, and in Tennessee we would say you are kicking up a little 

dust, and it is causing concern. Many of our content creators have 

a tremendous amount of concern about your approach, and many 

of our healthcare innovators who are looking at apps and telemedicine concepts and things of that nature are also expressing concern. 

And I think that probably your actions have inserted a good bit of 

uncertainty into the innovation sector that is looking at how we 

best utilize all things Internet for quality of life and access for economic development, for healthcare, for innovation. 

And I have got just a couple of simple questions for you. First 

of all, on cost-benefit analysis—and I thank you that last night 

your team sent a letter over to us on that question. But what concerned me was that in the letter you say that this is just a tool. 

Cost-benefit analysis is just one of many tools that would go into 

your decision, and your NPRM does not include an initial cost-benefit analysis. And your predecessor, Mr. Genachowski, in this committee, came before us and assured us he was going to use this, 

and I am actually going to read you his statement that he gave to 

us. He said, ‘‘During my tenure, I brought particular focus to this 

process including by directing the early involvement of our chief 

economist in the analytical process of rule-making and by having 

30 

FCC staff consult with the staff of the Office of Information and 

Regulatory Affairs on best practices in conducting cost-benefit analysis.’’ 

And I think that it is an incredibly important component of this 

to look at what the cost of net neutrality rules would be to the consumer and also to industry. So I want to know from you, are you 

going to give us a commitment right now that you will conduct a 

thorough and extensive cost-benefit analysis of the actual cost to 

the consumer and to industry on these rules? 

Mr. WHEELER. Thank you, Ms. Blackburn. I agree that cost-benefit analyses are crucial to decisionmaking, and in this rule-making, we specifically ask what are the costs of one approach or another and what are the benefits, one or another, so that we can collect that information and have that kind of analysis. I agree with 

the importance of cost-benefit analysis. 

Mrs. BLACKBURN. OK. Let me ask you this also. You know, the 

Commission’s funding really comes from those that are regulated 

by the FCC, but we have some that are not—they are impacted by 

this but they are not regulated in paying those fees. 

So in the net neutrality context, for example, companies like 

Google and Netflix want the FCC to act on their behalf and petition or visit the agency, if you will, in support of those efforts, but 

they free-ride because they are not paying the fees and bearing 

that part of the regulatory burden. So since they seem so ready and 

willing to rely on regulation to help them with their business models, how would you recommend that those entities share in the 

cost, pay their part of the cost of funding the agency? 

Mr. WHEELER. With all respect, that is above my pay grade. That 

is a decision that this Committee and the Congress can make and 

setting those rules as to—— 

Mrs. BLACKBURN. I am asking what your—— 

Mr. WHEELER [continuing]. Who we can collect from. 

Mrs. BLACKBURN [continuing]. Recommendation would be. They 

come and they lobby you, and they are pushing the net neutrality 

rules. And while they may like what you are saying because they 

want you to step in, we have a lot of people out there who are paying the fees that are not in favor of what you are doing, and we 

have a lot of innovators who are not in favor of what you are doing. 

And your door has the name chairman on it. So I am asking, what 

is your perspective? 

Mr. WHEELER. So our effort in all of this is to represent the 

American people, not Company A or Company B. We have been 

told by the Congress from whom we can collect regulatory fees, and 

we do. If there is a decision that we should collect regulatory fees 

from somebody else, that is something we obviously will take. If 

there is a decision that we should expand regulatory authority over 

other entities, that is obviously something we should do. But that 

is a decision that is out of our hands. 

Mrs. BLACKBURN. I yield back. 

Mr. WALDEN. The gentlelady yields back. The chairman recognizes the gentlelady from California, Ms. Matsui, for her questions. 

Ms. MATSUI. Thank you, Mr. Chairman. Mr. Chairman, I would 

like to understand, given the success of the Internet in the absence 

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lieve would speed the deployment and adoption of broadband Internet access services? Given that paid prioritization agreements 

would be used as a barrier of entry to start-ups and small business, 

what prioritization arrangements specifically would be better for 

the Internet than the no prioritization norm we have today? 

Mr. WHEELER. What we are trying to do in this item is to say 

that anything that affects that virtuous cycle that the court talked 

about and I talked about before, is not appropriate, is unlawful, 

and that would include paid prioritization. Now, the court told us 

to look at this on a case-by-case basis. We have asked the question 

in the rule-making as to whether we should look at it generically 

and say it is all out, and we are soliciting comments on that. 

But you know, the concept of paid prioritization, when I buy 

Internet access, I am buying the full pipe. I am buying access to 

everything that is out there. And if somebody comes along and 

says, ‘‘oh, no, you can’t get this unless you pay more,’’ that is unreasonable, and should be banned. If somebody comes along and 

says to a content provider, ‘‘You can’t get on unless you pay more,’’ 

that is unreasonable, and that would not be permitted. 

Ms. MATSUI. OK. Well, as for my part, other than public safety, 

I believe paid prioritization should be banned. 

I also think another concern here is a last-mile equivalent we are 

seeing appearing. The fact that there is so much uncertainty with 

paid prioritization is troublesome. If this concept moves forward, 

we could inadvertently block the next Google or Amazon from the 

market without even knowing it. I am concerned that your hands 

may be tied here. Even if the Commission wanted to ban anti-competitive paid prioritization deals, you may not have the authority 

or the tools to do so. 

Chairman Wheeler, if you were to explain to my constituents 

what is occurring in the market right now with the two mergers, 

content peering agreements and now paid prioritization could be legitimized under a commercially reasonable standard, what would 

you tell them, not just what it means for them but also for competition and for economy as a whole? 

Mr. WHEELER. I would tell them that I felt that paid 

prioritization was commercially unreasonable and therefore could 

be dealt with. And on the question of peering, that that is a separate issue that the Commission needs to look at and will be looking 

at. But I would emphasize that I am a strong supporter of the open 

Internet, and I would also tell them a story that when I was an 

entrepreneur, I was shut out of cable systems because they were 

closed networks. And I would come with a new product and 

couldn’t get on. And then when I was a venture capitalist before 

taking this job, that the companies that I was backing, had to have 

access to the Internet, could only succeed if they had access to the 

Internet. 

So I would say to them that I believe in an open Internet. I have 

experienced closed networks and the harm they cause to innovation 

and that I want to protect and preserve an open Internet. 

Ms. MATSUI. You know, I think this is a very critical time. When 

I have ordinary people practically off the street coming to me and 

asking me about all these things they have heard because people 

today really depend on the Internet, ordinary citizens, the entreVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
32 

preneurs who are concerned about this and who else we might not 

know out there. So it is very concerning to all of us that there is 

a potential that we may have a situation where we won’t have an 

open Internet. 

And I would also like you to consider some of these mergers. I 

mean, we feel like we are kind of in the Wild West of the digital 

economy now, and now with mergers coming forward—but can you 

commit to us these large mergers that are before us, they may be 

different from each other, but can you commit to us here that the 

FCC will carefully scrutinize these deals with a focus toward public 

interest? 

Mr. WHEELER. Without hesitation and with complete affirmation. 

Ms. MATSUI. OK. Thank you. Mr. Chairman? 

Mr. WALDEN. The chair now recognizes the former chairman of 

the Full Committee, Mr. Barton, for his questions. 

Mr. BARTON. Thank you, Mr. Chairman, and I want to echo the 

last question you lasted, Chairman Wheeler, about low-power television. You and I are working on a bill hopefully to give them some 

protection. We understand under current law they don’t have 

standing when they repackage, but we hope to give them some at 

least priority or help if and when we do do these repackaging of 

the spectrums. So I want to commend you for that last question. 

I have listened, Chairman Wheeler, to my friends on the Democratic side repeatedly talk about the open Internet and whether 

you should try to regulate it under Section 706 or Title II. I think 

you are asking a false question. The Internet is open. The question 

is what does the FCC do in terms of monitoring to make sure that 

it stays open? 

And the analogy I am going to use is not perfect, but I think it 

is instructive and educational. The airways that we fly back and 

forth from Washington to our districts are open, but they are regulated and monitored for a number of reasons by the FAA. If I call 

up American Airlines and I say I want to go from Washington 

Reagan to DFW and they quote me a price, let us say it is $350 

one way. Well, when I show up with my ticket, I get one seat on 

that plane. I don’t get to take 100 of my friends and put them on 

the plane with me because I happened to buy the ticket first and 

show up first. 

So it is obvious that it would be great for $350 if I could fill the 

plane. But we allow the airlines to price by volume. You want one 

ticket? It is $350. You want two tickets? It is $700. Maybe if you 

want to buy the whole plane, they do give you a discount. It is only 

$250. But we don’t let the first person to buy the ticket use the 

whole plane for $350. 

And for all the bold talk about open access, what people are really trying to do is, you know, I want to pay a minimum price and 

get all this broadband and I want to download everything from 

Netflix and I don’t want to pay if I download every movie they rent 

or vice versa. Netflix pays a basic price, and they can service 10 

million people instead of whatever it would be. 

So you know, the broadband providers who have spent billions 

and billions of dollars and have networked this country and provided access through the competitive market principles are not 

going to somehow all of a sudden decide as long as the FCC under 

33 

your chairmanship make sure that it stays a competitive model. 

They are going to continue to provide an open Internet, but they 

may want to provide based on volume of use some sort of a pricing 

system that allocates if it is in a limited spectrum. 

I see no reason to try to shoehorn some sort of a regulatory approach into either Title II or Section 706. You know, explain to me 

why my approach which is what we have been doing which works 

is the wrong approach? 

Mr. WHEELER. Let me see if I can respond to both parts of your 

question. First, , as I said to the Chairman, we did not want to 

move those whoon LPTV don’t have to be moved as a part of it. 

We also believe that there are opportunities to go to digital and the 

new efficiencies that that brings, just like it did in the Class A stations. And thirdly, we are opening a new rule-making to specifically 

deal with that because we agree with the importance of low power 

and translators. 

To the second part of your question, let me take the Chairman’s 

hat off and put my consumer hat on for a second because two 

weekends ago I called my ISP and increased my capacity because 

I wanted faster through-put. And they said for another $10 a 

month, we will give you another, what turned out to be like, 20 

Meg. That is a marketplace transaction. That is something that is 

accepted now. That is not something that is part of the open Internet rules. 

What the open Internet rules are trying to say is that when I buy 

that capacity, I have bought that ride to every place on the Internet, that somebody can’t turn around and say, ‘‘Oh, but you can’t 

say that,’’ or somebody can’t turn around and say, ‘‘Well, you can 

deliver that, Tom, but you have got to pay me an extra fee.’’ 

And so the concept of the open Internet is that I have bought this 

broad pathway, and I have the right to use it unfettered on an 

open basis and that is what we are trying to deliver in this rulemaking. 

Mr. BARTON. I am not trying—my time is expired. I am not trying to oppose that, but if you want—you are looking at it from the 

consumers’ standpoint, and I accept that, that everybody should 

have access. But if you are a provider of content, you should be 

willing to pay more based on the number of items you are going 

to put at any given time on the open Internet so that everybody 

has access to it. Because if you have a constrained pipeline, somebody has to make a decision how you put things into the pipeline, 

whether it is the airplane, whether it is the airwaves or the Internet. 

With that, Mr. Chairman, I yield back. 

Mr. WALDEN. The gentleman yields back. The chair now recognizes the former chairman on the Democratic side, Mr. Waxman, 

for his questions. 

Mr. WAXMAN. Thank you, Mr. Chairman. Chairman Wheeler, I 

commended your leadership earlier in my opening statement about 

the spectrum auction, so I want to ask questions about a different 

subject and that is net neutrality. 

Mr. WHEELER. Yes, sir. 

34 

Mr. WAXMAN. I commend you for tackling this issue and for seeking comment on a broad range of issues. But I have serious concerns about some proposals that have been discussed. 

You have said that there would be presumption against 

broadband providers like Verizon, AT&T and Comcast, entering 

into arrangements that give exclusive advantages to their affiliates. 

Is that right? 

Mr. WHEELER. Yes, sir. 

Mr. WAXMAN. OK. What I don’t understand is why this presumption against exclusive arrangements would be limited to affiliates. 

Suppose Netflix entered into an exclusive arrangement with AT&T 

or Comcast for faster speeds for its videos that block competitors 

like Amazon Prime from getting similar services. I think that 

would be a serious threat to competition and an open Internet, yet 

your proposal does not create a presumption against these exclusive arrangements. 

Why would you allow any exclusive arrangement that guarantees 

some content providers faster speeds than competitors can access? 

Mr. WHEELER. Thank you, Mr. Waxman. This goes back to this 

virtuous cycle that the court talked about. You know, it was interesting. Yesterday in the Wall Street Journal there was an article 

that interviewed a bunch of infrastructure manufacturers about the 

impact of net neutrality, and they flat-out said that if you offer fast 

lanes for some, you are going to degrade service for others. I think 

that is at the heart of what we are talking about here. That would 

be commercially unreasonable under our proposal. 

Mr. WAXMAN. OK. The problem with exclusive arrangements is 

that they would let some companies block their competition from 

similar advantages. In markets where there is no or only limited 

choices of broadband providers, that would stifle openness in competition. I just want to say to you that I am opposed to any form 

of paid prioritization. Paid prioritization divides the Internet into 

the haves and the have-nots, and it will entrench the big companies at the expense of start-ups. My understanding is that you 

have asked comment on a multi-factored test for determining when 

paid prioritization is permissible and when it would be prohibited. 

My concern is that this will create a lot of ambiguity and a lot of 

litigation. I believe right lines would be much better for the market 

and for innovation. 

So I am going to ask you to consider a presumption against all 

paid prioritization as you develop final rules. Will you agree to consider this option? 

Mr. WHEELER. Absolutely, and we have asked in the NPRM specifically whether and if so, how do you accomplish it. So that is a 

ripe debate that is in the NPRM right now, sir. 

Mr. WAXMAN. My understanding is that the reason you have proposed a complicated, multi-factored test is concern about the court 

ruling, and I agree that if you are limited to acting under Section 

706, your options could be limited. But if you are not limited to 

Section 706, you could establish a presumption against paid 

prioritization under Title II. And that is why it is so important for 

you to use your Title II authority as backstop authority. You don’t 

have to settle for weak open Internet rules if you exercise your full 

powers, and I am glad you are looking at that possibility. 

35 

Let me close by thanking you for seeking comment on the backstop proposal in the proposal adopted last week. I am committed 

to working with you to ensure the Commission adopts strong and 

open Internet protections for consumers and innovators while encouraging continued investment in the online content and services 

we all rely on and enjoy today. I think it is important that we get 

the substance right. We have tried three times, we meaning you at 

the FCC, because of the concern that the consumer have full access 

to what is on the Internet and full access to be able to use the 

Internet to its greatest maximum potential. And I would hate to 

see that net neutrality in any way be diminished if we have an opportunity under the law as we look at it to make sure that we get 

the substance right. 

Mr. WHEELER. Thank you, Mr. Waxman. 

Mr. WAXMAN. Thank you. Thank you, Mr. Chairman. 

Mr. WALDEN. The gentleman yields back his time. I now turn to 

the distinguished gentleman from Ohio, the vice chair of the Subcommittee, Mr. Latta. 

Mr. LATTA. Well, thank you very much, Mr. Chairman, and 

again, Chairman Wheeler, thanks very much again for being here. 

There has been some discussion on Title II, and I would like to follow up on some of that questioning. 

The central premise of Title II regulation has always been that 

the regulation was a substitute for competition. And two parts for 

the question then. What types of findings has the Commission 

made to justify entertaining the idea of Title II regulation of the 

Internet? And then do you believe the FCC should have to make 

a specific showing that of a market failure before imposing rate 

regulation or reporting requirements that are the precursor to rate 

regulation? 

Mr. WHEELER. So again, these are the kinds of questions that we 

have tried assiduously not to decide on but to ask about in this 

rule-making. We are going to have to make a decision on exactly 

those questions at some point in time, but what we want to achieve 

is a record that gives everybody the opportunity to opine on that 

so that we can be appropriately informed. 

Mr. LATTA. Well, let me ask, what is your timeline on that then? 

Mr. WHEELER. So we have got 60 days for comments and then 

45 days for reply comments. 

Mr. LATTA. OK. So are you saying then that you are not ruling 

out rate regulation? 

Mr. WHEELER. I am saying we have asked the question about 

Title II and the full panoply of Title II, yes, sir. 

Mr. LATTA. OK. Well, let me ask you this. What have you been 

hearing from the communities thus far, especially when you are 

saying that you are going to be asking those questions? What have 

you been hearing out there? 

Mr. WHEELER. Well, we have heard very little on the record thus 

far. There has been a great outpouring of people speaking to us 

through the press, people speaking to us through letters and this 

sort of thing. And as I indicated at the outset, there are two diametrically opposed positions. One is that you should not do anything and the other is that it should go all the way to being regulated like a public utility. And our job is to find that which is best 

36 

for consumers and best for encouraging investment in the Internet 

which itself is best for consumers. 

Mr. LATTA. Let me go on with this question. While you have resolved some of the issues in the 5 gigahertz rule-making, there are 

a number of issues outstanding that have the potential to open up 

another 195 megahertz of spectrum for unlicensed use. What is the 

FCC’s and your plan for tackling that open issue? 

Mr. WHEELER. In 5 gig? 

Mr. LATTA. Right. 

Mr. WHEELER. So there is—you actually think about 5 gig in 3 

bits. The first bit we have dealt with, that is the lower end of 5 

gigahertz. In the middle component of 5 gigahertz, there are lots 

of national defense kinds of activities, radar and this sort of thing. 

And the question is, how can you work out sharing arrangements 

there, and we are working with those parties. 

On the upper end is where you have spectrum that has been 

identified for intelligent traffic, ITFS, kinds of activities, and that 

is based around the 802.11 standard. There are strong feelings 

about the need to protect that. I believe that it is possible to work 

together to meet both sets of needs since it is based around a common 802.11 standard. 

Mr. LATTA. And in my remaining time, I want to ask this last 

question. The FCC’s 2011 Universal Service Transformation Order 

requires phone companies to set minimum prices that they can 

charge the consumers if the provider wants to continue receiving 

the same amount of funds from the USF program to support the 

high cost of its business. So as a result, many rural consumers, a 

lot that I represent out there, will see the rate floor go from $14 

to about $20.46. And while the Communications Act requires rural 

rates to be reasonably comparable to rates in urban areas as affordable, reasonable comparable does not necessarily mean that the 

rural rate should be exactly the same as the urban rate when the 

rural customer might be able to call only a few thousand people locally while an urban customer can call many times more than that. 

Should the rate be the same in the rural areas where the average income is significantly lower, then it might in fact not be as 

affordable. The rate floor continues to be a concern for many of our 

telecommunications providers in my district and others servicing 

rural America. While I understand that the FCC has agreed to 

phase-in the increase at $2 per year and postpone that start date 

until after 2015, can you explain why the FCC interpreted the reasonably comparable rates to mean exactly the same rates between 

urban and rural areas considering the smaller population of rural 

calling areas and the fact that what is affordable in the largest 

urban areas is not what is also affordable to consumers in the 

rural? 

Mr. WHEELER. Thank you. I am glad you asked that question. It 

is an important question. So as you stated, we are supposed to 

make sure that things are reasonably comparable. The reason for 

that is to make sure that the subsidies that some Americans are 

paying to deliver service to other Americans don’t end up being 

subsidies that some Americans are paying to reduce the bills of 

other Americans but to overcome the high cost of getting to them. 

37 

In some instances, it has been, unfortunately, the former. In 16 states there are situations where some consumers are paying $5 a 

month for telephone service because they are being subsidized by 

people in your district and other districts. We need to get our arms 

around that. So what we have done is to say, OK, step one goes 

into effect January 15. Then what we are going to do is—and that 

can’t be more than $2 by the way. And then what we are going to 

do is go back out with another survey that hits the kind of granularity you were talking about in terms of service and including long 

distance and all these kinds of things so that we have a better understanding of exactly what comparable means, and then look at 

that issue again. 

Mr. LATTA. Thank you. Mr. Chairman, my time is expired, and 

I yield back. 

Mr. WALDEN. The gentleman yields back. The chair now recognizes the chairman emeritus of the committee, the gentleman from 

Michigan, Mr. Dingell. 

Mr. DINGELL. Mr. Chairman, I thank you for your courtesy. I 

commend you for holding this hearing. I would like to welcome our 

old friend, Mr. Wheeler, back; fine public servant, and we are looking forward to good things from him. 

Mr. Chairman, at last week’s open meeting, the Commission 

adopted a number of big-ticket items including a new net neutrality NPRM and draft rules for the upcoming incentive auction 

of broadcaster spectrum. Concerning the former, I commend you for 

your efforts to keep the Internet open and will be watching the 

matter closely as it goes forward. It is my hope the Commission 

will work with this committee to ensure that any final action it 

takes to conform to its statutory authority, especially concerning 

Title II, reclassification. 

Now, with respect to the incentive auction, I am interested in 

what the Commission intends to do about treating broadcasters 

fairly. My questions will require a simple yes or no answer. 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. Mr. Chairman, I would like to begin with a parochial matter. Section 6403(b)(1) of the Middle Class Tax Relief and 

Job Creation Act specifies that the Commission may, subject to 

international coordinates along the border with Mexico and Canada, reassign and relocate and reallocate broadcast frequencies. Is 

that correct? 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. Now Chairman Wheeler, in the Commission’s July 

2013 response to my letter of inquiry about the reverse auction, 

Gary Epstein, head of the Commission’s Incentive Auction Task 

Force stated the following. The language used in Section 6403(b)(1) 

of the Act is ‘‘identical to that used by the Commission in describing its handling of the earlier DTV transition in which the Commission adopted our proposed allotments for these stations subject 

to our continuing negotiations with Canada, notwithstanding the 

broadcasters’ requests to the contrary.’’ One here could reasonably 

assume based on the statement that the Commission may reassign 

and reallocate broadcast frequencies pursuant to the Act while in 

negotiations with Canada and Mexico are still ongoing. Is that correct? 

38 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. I am going to ask you to submit for the record how 

you are going to assure protection to the broadcasters and the 

viewers in that process. 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. Now, Mr. Wheeler, does the Commission believe 

that concluding negotiations with Canada and Mexico prior to commencing the reverse auction will give broadcasters, particularly in 

border regions, greater certainties and likely to increase their willingness to participate in such auction? Yes or no. 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. Now, Mr. Wheeler, does the Commission expect to 

conclude negotiations with Canada and Mexico prior to commencing the reverse action next year? Yes or no. 

Mr. WHEELER. The expectation is it is the goal. 

Mr. DINGELL. You may not make it is what you are saying. 

Mr. WHEELER. It is the goal, and I answered you in your previous question—— 

Mr. DINGELL. Will you notify this committee as soon as that becomes likely or dangerous? 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. Now, in this matter, Mr. Chairman, I would like 

to state for the record that it is my understanding based on exchange with counsel at the Energy & Commerce Subcommittee on 

Communications and Technology, December 1, 2011, markup of the 

act that border negotiations are to be completed before the Commission reassigns broadcast channels. I hope that Chairman 

Wheeler will honor that understanding. I hope, Mr. Chairman, you 

understand I have great apprehensions about that because of the 

impacts it could have on the broadcasters and also on my constituents. 

Mr. WHEELER. Mr. Chairman, this is—I share your deep concern 

about this, not only because of the very legitimate concern you 

have about your constituents and other Americans getting service 

along the border but also that the cantilevering effect, if you will, 

as spectrum allocation then goes into the middle of the country. 

I can assure you this is an incredibly high priority. I can also assure you that our Canadian colleagues have been very forthcoming 

and very helpful. 

Mr. DINGELL. I would like to have this submitted for the record 

in response to correspondence. Now, Mr. Chairman, I note that the 

Commission proposes to use a method called ‘‘scoring’’ to set individual prices for each broadcast station participating in the reverse 

auction. Is that correct? Yes or—— 

Mr. WHEELER. It is one of the things we are considering. We 

have not made the final decision yet. 

Mr. DINGELL. There are others? 

Mr. WHEELER. We are looking at others. Scoring—— 

Mr. DINGELL. I am going to ask that you submit in response to 

correspondence a proper answer on that particular point. 

Mr. WHEELER. Yes, sir. 

Mr. DINGELL. Now, Chairman Wheeler, is the Commission concerned that scoring as opposed to competitive bidding will decrease 

39 

broadcasters’ willingness to participate in the reverse auction? Yes 

or no. 

Mr. WHEELER. No. 

Mr. DINGELL. Chairman Wheeler, in general, do you intend to 

work in good faith with broadcasters as the Commission refines the 

rules for reverse auction in order to see to it that their needs are 

met as the act specifies to the best of your abilities? Yes or no. 

Mr. WHEELER. Absolutely. 

Mr. DINGELL. I want to quote Admiral Rickover, who once observed, ‘‘The devil is in the details but so is salvation.’’ I am hoping 

that you are going to see that the salvation is there and not just 

that we are going to find ourselves amidst trouble because of carelessness, not by you, but by some of your overenthusiastic and lessthan-competent predecessors. 

I thank you, Mr. Chairman, and I yield back. 

Mr. LATTA [presiding]. The gentleman’s time is expired and has 

yielded back. The chair now recognizes the gentleman from Illinois, 

Mr. Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman, and Chairman Wheeler, welcome. I am going to try to get this through three pretty 

quick points if I can. As you know, there is a lot of concern on this 

side of the dais on this Title II debate. 

Mr. WHEELER. Yes, sir. 

Mr. SHIMKUS. And the basic premise is, for me, how do you build 

out? We want more, not less. Does a regulated monopoly 

incentivize more build-out, more pipelines? Or does a competitive, 

capital-intensive incentivize market-driven process? I believe the 

second. We have gone from copper to cable, coaxial cable, satellite, 

cellular, fiber, a lot of different ways for data to now flow, and we 

want to encourage that. And I think only—I kind of like the idea 

of incentivizing people who want to use more, making them pay 

more, to incentivize those who carry so someone may want to build 

out more. So that is where I kind of where I come from. My position is more pipes, not less. More pipes, not regulated pipe. Competitive markets versus controlled markets. 

Because here is an example of a recent—on May 16, a Wireline 

Competition Bureau released a public notice seeking comment on 

state regulation of dial-up Internet traffic. Dial-up? I mean, this is 

a dinosaur. It is hardly used. 

You want to talk about uncertainty for the state and for the providers when we are still in this process more than 15 years after 

the FCC first discussed the treatment of dial-up, we are now to 

this process? That is just kind of a statement. That doesn’t create 

certainty. Would you agree? 

Mr. WHEELER. Well, what we are trying to do, Mr. Shimkus, is 

to create an environment that assures consumers and those who 

rely on the Internet that there is openness, while at the same point 

in time encouraging investment and—— 

Mr. SHIMKUS. Well, let us just go back. I get that. But this is 

dial-up. 

Mr. WHEELER. So if we are dealing with the dial-up issue, I 

mean, that is really—that is a different topic—— 

40 

Mr. SHIMKUS. Well, it is but it is not because it is the whole debate about certainty, and we actually have a dinosaur application 

that—why are we even—— 

Mr. WHEELER. So we still have 40 percent of our consumers on 

dial-up telephone lines. One of the challenges that we have is, how 

do we evolve that into an all-IP environment which would be an 

Internet-like environment? And one of the things that I have said 

to this Committee is that we believe that this IP transition is a 

crucial part in helping to make sure—— 

Mr. SHIMKUS. OK. I get it. I am going to try to move—— 

Mr. WHEELER. OK. Sorry, sir. 

Mr. SHIMKUS. And one deals in both of our sweet spot is kind of 

the public service, 911—— 

Mr. WHEELER. Yes, sir. 

Mr. SHIMKUS [continuing]. The Spectrum Act called for the creation of the Do Not Call Registry and the automatic dialing issue. 

The Commission keeps saying there is not enough money to do 

this. I would ask you to check into that. I think there is a lot of 

money in the FCC because obviously, this automatic dialing freezes 

up lines and it is a public safety concern, and I would hope that 

we would work together to try to—you would take this—— 

Mr. WHEELER. I would look forward to that, sir. 

Mr. SHIMKUS [continuing]. Under consideration. 

Mr. WHEELER. Let me get back, and I will come—— 

Mr. SHIMKUS. And you know, myself and the ranking member 

have been better involved in these issues—— 

Mr. WHEELER. Right. 

Mr. SHIMKUS [continuing]. As you have in the early days also. 

The last thing I want to, from rural America, is kind of there 

seems to be a de facto freeze on this shared service agreements, 

and this is in the broadcast sector, as you know, the local. When 

you represent 1⁄3 of the State of Illinois as I do now, 33 counties, 

these shared agreements are now helping to provide—and we have 

got real-world cases—better local service to the local folks than 

less. And I guess the basic question in my last minute is, what is 

your plan to ensuring that the FCC action on television transfer 

application is predictable, consistent, fair and timely? 

Mr. WHEELER. Thank you, Mr. Shimkus. What we have done is 

to put out a Public Notice on how we look at transfers, and I consider this to be a procedural reform because the way it used to be 

was broadcasters would come together in some kind of a merger 

situation, and they would come to the Commission which was a 

black box that was constantly changing—‘‘Well, we will look at it 

this way, we will look at it that way.’’ And what I wanted to do 

was to say, ‘‘OK, what are the things that we will look at?’’ So that 

everybody has notice, everybody understands, and it is not a black 

box. And that is the process that we have now established to be 

able to make those kinds of decisions. 

Mr. SHIMKUS. Thank you. I know my time has expired. I appreciate it if you would keep me in mind as these things move forward. It would be helpful. 

Mr. WHEELER. Yes, sir. Thank you. 

Mr. LATTA. The chair now recognizes the gentlelady from Colorado, Ms. DeGette, for 5 minutes. 

41 

Ms. DEGETTE. Thank you, Mr. Chairman. I want to follow up, 

Chairman Wheeler, on this discussion about the open Internet 

NPRM. Leading up to the Commission’s vote last week, there was 

a robust public exchange among ISPs and edge providers and others about the impact of paid prioritization on their business models, and as Ms. Matsui said, we have been hearing from a lot of 

our constituents about this as well. Now, you talked very briefly a 

few minutes ago about what the FCC is doing in its review process 

to look at the effect of paid prioritization on consumers’ broadband 

bills. I was wondering if you can comment about what you think 

the proposed open Internet rules will have on access to new and 

innovative content on line? Because that is one reason why we are 

concerned about these proposed rules. 

Mr. WHEELER. They each should be encouraging of new and innovative programming because of the fact that it assures that they 

will be able to reach the consumer unfettered and without having 

to pay special fees. 

Ms. DEGETTE. And what impact do you think that the rules will 

have on average broadband speeds, network investments and overall quality of service? 

Mr. WHEELER. That is a terrific question. 

Ms. DEGETTE. Thank you. 

Mr. WHEELER. I am glad you asked it. You know, one of the fascinating things is that in 2010, when the open Internet rules were 

first proposed, since then there has been hundreds of millions of 

dollars of broadband investment made. So the rules don’t seem to 

have a chilling effect. And speeds have been doing this, going up. 

And this is what the court was talking about when they talk about 

this virtuous cycle because everything—in the Internet ecosystem, 

everything adds to everything else. 

Ms. DEGETTE. So what do you think that the new rules, what effect will they have on these issues? 

Mr. WHEELER. I believe—— 

Ms. DEGETTE. You just talked about what has been happening. 

Mr. WHEELER. Yes, we are—— 

Ms. DEGETTE. What about your rules? 

Mr. WHEELER. We believe that the rules that we have designed 

will continue to encourage investment in broadband, continue to 

encourage increases in through-put, and as a result continue to encourage innovation from edge providers. 

Ms. DEGETTE. And so are you saying also then average 

broadband speeds will increase? 

Mr. WHEELER. Yes, ma’am. 

Ms. DEGETTE. And overall quality of service will increase? 

Mr. WHEELER. Yes, ma’am. They need to. 

Ms. DEGETTE. All right. OK. One last thing no one has raised yet 

is the issue of industry consolidation, and this year we have seen 

two major merger proposals in the telecom industry. Now, clearly 

the industry is going through a period of significant technological 

and economic change, and some folks think that consolidation is 

the best approach to this. 

So all things being equal, do you think industry consolidation is 

good or bad for the consumers? 

42 

Mr. WHEELER. So I read the other day that this is probably—in 

the last decade the biggest year for telecom mergers. And what we 

are doing is opening a record on each of them, and we will make 

that decision based on the record that is developed for each—— 

Ms. DEGETTE. So you don’t have an opinion at this point? 

Mr. WHEELER. I would not want to prejudge the record. 

Ms. DEGETTE. OK. And as you know, Congress has recognized 

the importance and unique character of the telecommunications 

marketplace by giving the FCC the authority to review mergers 

under the public interest standard. Do you think the conditions the 

FCC placed on the Comcast/NBC U merger were effective at promoting the public interest? 

Mr. WHEELER. Oh, wow. That is something that, a decision that 

my predecessor made. I know that it had an impact. My goal is to 

look at the record that is presented before me and my colleagues 

and make a decision based on that. 

Ms. DEGETTE. Do you think it promoted the public interest? Yes 

or no. 

Mr. WHEELER. I think that there were multiple things in it that 

promoted the public interest. 

Ms. DEGETTE. And what other lessons do you take away from the 

Commission’s previous attempts to promote the public interest by 

placing conditions on mergers as you go forward? 

Mr. WHEELER. That it is an important role that the Commission 

has. You know, there is a lot of discussion as to why should there 

be any authority at the FCC to look at public interest obligations. 

I strongly believe that there is a big difference between the kind 

of statutory rigidity that the Justice Department is required to look 

at mergers with and the kind of broader public interest issues that 

you have raised that the statute asks the FCC to look at. 

Ms. DEGETTE. Mr. Chairman, I would just ask if you could supplement your testimony with some specific takeaways that this has 

given you. 

Mr. WHEELER. Great. 

Ms. DEGETTE. Thank you very much. Thanks, Mr. Chairman. 

Mr. LATTA. The gentlelady yields back. The chair now recognizes—— 

Mr. WALDEN. Would you yield a second? 

Mr. LATTA. The chair recognizes the chairman. 

Mr. WALDEN. I just wanted to clarify one thing, make sure I 

heard it right. 

Mr. WHEELER. Yes, sir. 

Mr. WALDEN. Did you say 40 percent of Americans are still using 

dial-up for Internet access? 

Mr. WHEELER. No, I am talking about dial-up phone service at 

large. 

Mr. WALDEN. All right, because I was thinking it is more like 3 

percent. 

Mr. WHEELER. No, dial-up phone service at large. 

Mr. WALDEN. Thank you much. 

Mr. LATTA. Thank you for clarifying that, sir. The chair now recognizes the gentleman from Nebraska for 5 minutes, Mr. Terry. 

43 

Mr. TERRY. Well, it is good to know that my 82-year-old is in 

those 3 percent. That makes him very elite. I am trying to talk him 

out of that, but that is a work in progress. 

Mr. WHEELER. We all remember those days when we were 

thrilled to get 56 KB, right? 

Mr. TERRY. So switching gears just a little bit, I want to ask 

about quantile regression analysis progress, and I do think that 

you have probably captured its deficiencies better than anyone else 

has, and I appreciate that work. I was glad to see the Commission’s 

follow-up by repealing the QRA formula. 

Mr. WHEELER. Yes, sir. 

Mr. TERRY. So congratulations. I appreciate that. I am curious on 

your thoughts of how it should be replaced, and if you could walk 

me through what factors are going to be used in any decision-making and timetables and process. 

Mr. WHEELER. I respect the question, but I can’t really answer 

it right now because we are in the process of—there are several 

proposals. We are in the process of looking at what the best components of each are, and I don’t want to hip shoot here, but we do 

have proceedings under way to say, ‘‘OK. What is it we replace 

QRA with?’’ 

Mr. TERRY. Where are we within the process of those? 

Mr. WHEELER. I think that we are probably heading into something that you would see before fall. 

Mr. TERRY. Before fall? 

Mr. WHEELER. Early fall. 

Mr. TERRY. OK. 

Mr. WHEELER. Football season. 

Mr. TERRY. Well, I don’t want to get distracted. 

Mr. WHEELER. Well, if you joined the Big 10—— 

Mr. TERRY. Do that when we play McNeese State, and I would 

appreciate it. 

Mr. WHEELER. Yes, sir. 

Mr. TERRY. For the rest of you, that was humor. Now, let me go 

to a broadcast question since we succinctly dealt with one I thought 

would take all of 5 minutes. The spectrum bill that was authorized 

and incentive auction and passed through the committee was a bipartisan bill. Unfortunately, the order that recently removed the 

FCC was not bipartisan, and some Commissioners, particularly Republicans, stated that the order treats TV broadcasters that choose 

not to participate in the auction unfairly, and that has me concerned. Congress set aside the 1.75 to reimburse broadcasters 

forced to move. Part of the incentive auctions are aimed to fully recover their expenses. Why did the FCC not adopt the number as 

its repacking budget and ensure that broadcasters would not have 

to go out of pocket when forced to the FCC to move? 

Mr. WHEELER. Thank you. Congress said $1.75 billion is the max 

that can be spent on repacking. We think that will be sufficient. 

There have been broadcasters who have expressed a concern that 

it might not be sufficient. So we have said, ‘‘OK, we don’t think 

that’s going to happen, but we will put in place a process that will 

have a structure in place if and when that should happen.’’ Sir, I 

don’t expect that we are going to get there. 

Mr. TERRY. All right. I will yield back my time. 

44 

Mr. WHEELER. Thank you, sir. 

Mr. LATTA. The gentleman yields back, and the chair now recognizes the gentleman from Utah, Mr. Matheson, for 5 minutes. 

Mr. MATHESON. Thanks, Mr. Chairman, and Mr. Wheeler, 

thanks for your testimony. I appreciator your candor and your articulate way you answer questions. 

Mr. WHEELER. Thank you, sir. 

Mr. MATHESON. I just want to commend you on your efforts to 

open up more spectrum for unlicensed uses. The FCC took an important step last month by opening up the 100 megahertz spectrum 

for unlicensed uses in the 5 gigahertz band, and I am pleased to 

see in your testimony that the FCC is actively participating in ongoing efforts to free up additional unlicensed spectrum in the 5 

gigahertz band. Can you provide an update on where things currently stand with resolving the technical issues in the ITS band 

currently used for vehicle-to-vehicle communications and the parts 

of the band used by the DOD for military radar? 

Mr. WHEELER. Yes. So as we talked earlier, there are three slices 

to 5 gigahertz. There is the lower slice that we took care of. The 

middle, as you suggest, is DOD. We are having ongoing discussions 

with them. I have been personally involved in those discussions 

about a wide range of spectrum issues including this. There are 

strongly held beliefs on both sides, sir. I continue to believe, however, that people of good faith can find answers if you sit at the 

table long enough, and that is the goal. 

Insofar as the high band in 5 gig, yes, that is intelligent transportation, which offers such great opportunities. We have seen the 

Google smart car and all this sort of thing. The thing that is really 

encouraging is that that is an 802 type of standard. It is not a dissimilar reality, however, where we need to make sure that people 

are sitting around the table looking for commonalities rather than 

looking for differences. 

Mr. MATHESON. Something we ought to do around Congress a little more. 

Mr. WHEELER. But you have a little experience. You have a little 

experience. 

Mr. MATHESON. It’s an editorial—on my part, yes. 

Mr. WHEELER. But that’s the goal of what we are trying to do 

here. 

Mr. MATHESON. Do you have a timeframe for when this additional spectrum could be freed up? 

Mr. WHEELER. I wish I did. I would be misleading you, sir, if I 

gave you a date right now. 

Mr. MATHESON. I understand. Another issue I wanted to mention, the administration’s Connect Ed Program—— 

Mr. WHEELER. Yes, sir. 

Mr. MATHESON [continuing]. The goal to bring 100 megabit 

broadband to every school in the United States. To the extent that 

this initiative is implemented through the E–Rate program, what 

can the Commission do to maximize efficiency and get the most 

bang for the buck? 

Mr. WHEELER. Wow. Thank you. Great question. There were 

multiple challenges in that. One is that we need to spend our 

money, the people’s money, on 21st Century high-speed broadband 

45 

solutions, not 20th Century solutions like dial-up telephone service 

and long distance. Right now about half of the $2 billion, $2.4 billion that is being spent is spent for old stuff. 

Mr. MATHESON. Not today? 

Mr. WHEELER. Today. Today. Second part is that we have to design a system that helps schools and library administrators find 

their way through the maze that is telecom. We put them in those 

jobs to educate students, not to be telecom wizzes. So we are trying 

to develop a process that says, here is what you ought to be paying. 

Here is what somebody next door is paying. Here is like situated— 

so that they can go in and understand where their bargaining position is. We are going to be talking about being able to have longer 

contracts because buying it on a monthly basis as we all know is 

the worst way to buy. So let us talk about several years. We are 

going to be encouraging consortia so that you can buy in bulk and 

get better prices, and I just think that there are a myriad of things 

that we can do to get more efficiency out of the existing bucks, and 

we intend to do that. 

Mr. MATHESON. That is great. Does the FCC plan on using the 

national broadband map to identify fiber that is already in place 

in a given community so it could be leveraged toward these Connect Ed goals? 

Mr. WHEELER. Absolutely, and we have now taken over ownership of the broadband map, so yes, sir. 

Mr. MATHESON. OK. I appreciate that. I will yield back, Mr. 

Chairman. 

Mr. LATTA. Well, thank you very much. The gentleman yields 

back the balance of his time, and the chair now recognizes the gentleman from New Jersey, Mr. Lance, for 5 minutes. 

Mr. LANCE. Thank you very much, and good afternoon to you. I 

believe that some of my colleagues on the other side of the aisle 

would prefer a Title II reclassification, and if the Commission were 

to decide to proceed in that direction, I am concerned that it might 

trigger a lot of ill-fitting regulations that might not make sense in 

the context of these services. 

In your opinion, Chairman, would the process of going through 

forbearance to separate the wheat from the chaff, could it be a 

messy exercise and might it lead to more years of litigation and uncertainty is my real concern, sir? 

Mr. WHEELER. Thank you, Congressman. That is one of the 

things that gets teed up in the NPRM when we ask about Title II 

versus Section 706. And I presume that that will be exhaustively 

discussed in the responses. And that is exactly the kinds of questions that we are asking. 

Mr. LANCE. Thank you. One concern has been raised about the 

proposed net neutrality rule, making the protections that would be 

afforded companies who use a carrier who is providing the same 

service as another carrier. For example, the large carriers are beginning to bundle services that go well beyond phone service, the 

Internet and television, to include smart home services such as 

temperature control, home health monitoring, which of course is 

important to another subcommittee of this committee, as well as 

alarm services such as monitoring of home intrusions and fires, 

video surveillance or personal emergency response systems. What 

46 

protections will the FCC provide to ensure that a carrier does not 

give its service provider a preference over a company using them 

as a broad-based carrier? 

Mr. WHEELER. I am not sure I exactly understand what—your 

concern is will there be preferences—— 

Mr. LANCE. Yes. 

Mr. WHEELER [continuing]. Among providers of those services? 

Mr. LANCE. Yes, Chairman. 

Mr. WHEELER. That is contrary to the concept of an open Internet. 

Mr. LANCE. Can you assure us and through us, the American 

people, that that will not be the case as these other services are 

provided moving forward? 

Mr. WHEELER. Let me give you an example personally. 

Mr. LANCE. Yes, sir. 

Mr. WHEELER. I just switched out ADT in my home security system for another company, and I was able to access both of them 

over the Internet and both of them over my mobile device. And 

there should be no interference with my ability to move from ADT 

to the other provider. 

Mr. LANCE. Thank you. And that is the goal of the Commission 

and you will assure us that that is how we will proceed moving forward? 

Mr. WHEELER. It is open. There needs to be open access for all 

providers. 

Mr. LANCE. Well, thank you. I look forward to working with you. 

I understand you are a proud graduate of Ohio State. 

Mr. WHEELER. You bet. Yes, sir. 

Mr. LANCE. Please be gentle with Rutgers now that Rutgers has 

entered the Big whatever-it-is, the Big 16 or whatever it is. 

Mr. WHEELER. It is the Big 10 that can’t count. 

Mr. LANCE. The Big 10 that can’t count. I defer back to the chairman the balance of my time, a proud representative from Ohio. 

Mr. LATTA. Well, thank you very much for the gentleman yielding back the balance of his time. The chair now recognizes the gentleman from North Carolina, Mr. Butterfield, for 5 minutes. 

Mr. BUTTERFIELD. Thank you very much the gentleman for yielding time, and thank you, Chairman Wheeler, for your service and 

thank you for your testimony today. 

Mr. WHEELER. You are welcome. 

Mr. BUTTERFIELD. I especially thank you for your clarity. I told 

you that the first time that I met you, and whenever I hear you 

speak, it is unambiguous, at least until the subject of your home 

security system comes up. And then you are a little ambiguous on 

who the new provider is. But thank you so very much. 

Mr. Chairman, in the Communications Act, Congress mandated 

that the Commission ensure diverse participation in media and 

telecom, and that includes participation of minority and womenowned businesses. The quote from the statute basically says that 

the mandate is ‘‘to promote economic opportunity and competition 

by disseminating licenses among a wide variety of applicants including small businesses, rural telecoms and businesses owned by 

members of minority groups and women.’’ 

47 

It seems to me that the response of the Commission to judicial 

criticism of the FCC’s inaction in this area and the lack of meaningful study in progress as well as the low level of minority and 

women-owned participation in media and telecom licensing, that 

the Commission it seems to me is not committed to these diversity 

goals. And if I am wrong about this, I would ask that you correct 

me. 

On May the 14th, members of the Congressional Black Caucus 

including Congressman Rush and myself, addressed these diversity 

concerns in a letter to you. I suppose the letter may not have made 

its way to your desk yet, but I ask that you look at it very carefully 

when you do. 

Question, what precisely do you need beyond the congressional 

directives and judicial criticism to get the Commission to make 

progress in creating opportunities for diverse communities? 

Mr. WHEELER. Thank you, Congressman, and I got the letter this 

morning, so thank you. 

Mr. BUTTERFIELD. OK. 

Mr. WHEELER. First of all, I agree that we have a mandate to 

have a broad swath of opportunity for all Americans to participate 

in all aspects of telecommunications. I can assure you that that is 

a goal of mine. Now, let us talk about some specifics. Number one, 

I think what we did on the JSAs in the broadcast space actually 

opens up opportunities for minority and small operators. That is 

why it was supported by more than a dozen representative minority groups. 

Secondly is we are going to move on the AWS–3 auction to make 

sure that there are appropriate steps taken to assure that minorities can participate through waivers and other kinds of processes 

in that auction. 

Thirdly, we are going to have, and I should pause in all of these 

to call out Commissioner Clyburn who has been the constant pusher on all of these issues. There will be rules for the incentive auction that will create bidding credits for appropriate designated entities. And I very much take to heart, both as an institutional responsibility and as a personal responsibility, the language that you 

read. 

Mr. BUTTERFIELD. And so when the spectrum is auctioned, you 

are making a commitment that diversity will be an overriding concern of the Commission? 

Mr. WHEELER. So what we want to do is make sure that there 

are opportunities for designated entities to get bidding credits so 

that, for instance, they can bid with 75-cent dollars against AT&T 

and Verizon’s 100-cent dollars. 

Mr. BUTTERFIELD. All right. Let me get this last one in if I can, 

Mr. Chairman. In light of the demographic changes occurring in 

our country and the growing number of mergers in the communications industry, how is the Commission encouraging companies to 

partner with diverse businesses in the secondary market? 

Mr. WHEELER. We have been doing that, both formally and informally, there are great opportunities when there are transactions 

for minority companies. Green Telecom, for instance, comes to 

mind which is now operating spectrum, I believe, for both AT&T 

and Verizon, which they purchased as a part of some settlements 

48 

with the Commission. And those kinds of opportunities are important and worthwhile. 

I also believe that there can be new opportunities in the broadcast space, particularly after the auction in terms of being able to 

share spectrum and offer other kinds of services. 

Mr. BUTTERFIELD. Thank you, Mr. Chairman. 

Mr. LANCE [presiding]. Thank you very much. The chair recognizes the gentleman from Kentucky, Mr. Guthrie. 

Mr. GUTHRIE. Thank you, Mr. Chairman. Thank you for coming 

today. I know you had a busy week, so your time is appreciated. 

My colleague from California, Ms. Matsui, and I have spent a lot 

of time on spectrum, spectrum issues, and we founded Congressional Spectrum Caucus—— 

Mr. WHEELER. Yes, sir. 

Mr. GUTHRIE [continuing]. With the goal of looking with different 

ideas of how we can move forward on spectrum. And I appreciate 

the efforts that you have done to move the incentive auction forward, and I have a couple of questions about the guard bands in 

the 680 megahertz band. 

It appears to me that the band plan for spectrum cleared in the 

broadcast incentive auction carefully considered the importance of 

maximizing license spectrum and adhered to the technically reasonable standard set by Congress for creating a duplex gap, and I 

applaud the Commission for its work in this regard. 

Two questions. One, how do you foresee going forward with unlicensed spectrum in the duplex gap? As you know, it will be important for those who have been on adjacent license spectrum to have 

assurance there will not be interference. And are you confident the 

FCC will have technical guidelines to provide assurance to those 

who bid for license spectrum, there will be no interference in the 

duplex gap from—— 

Mr. WHEELER. Yes, sir. I think you just—the answer to both— 

identified technical standards. And so for instance, we are going to 

have a technical standards proceeding for wireless mics and others 

who would be using the unlicensed spectrum, so yes, sir. 

Mr. GUTHRIE. OK. Thank you. And we have been using social 

media to reach out to interested Americans, and we said we are 

here representing the American people. And one came from Kelly 

on Facebook, and Kelly asked this question. Well, Kelly submitted 

through Facebook, user name Kelly, who would like to ask you the 

question about your plans for future spectrum policy. And can you 

give Kelly a brief answer to her question about future spectrum 

policy overall? 

Mr. WHEELER. Thank you, Kelly. The answer is that, they are 

not making it no more. And so what we have to do—I believe that 

we are today on the cusp of the new horizon on spectrum policy 

with two things that we are doing. One is the incentive auction 

that you all created because when you boil everything down, it ultimately comes to economics. And if you can address the other person’s economics, you can probably go a long way to solving your economics issue. And that’s what the auction does. 

The other component is spectrum sharing, and the days of ‘‘Here, 

this is all yours, you can use it,’’ are over. And fortunately, digital 

allows that kind of sharing. Think about going into a Starbucks 

49 

and everybody is sharing that Wi-Fi spectrum. You put those two 

together, and that is I think the answer to Kelly’s question as to 

where is spectrum policy going. And we are in the middle of making both of those work right now, which is why what we are doing 

is so terribly important. 

Mr. GUTHRIE. Yes, to use a metaphor, it is a very simple metaphor compared to a complex physics in this, but we don’t have special highways for ambulances or fire trucks. We get out of the way 

when they need to go down the highway. So sharing that, that is 

kind of a simple way to look at the metaphor. 

There is something in one of your statements—and I am putting 

on my hat as a former state legislator, I was the state Senator in 

Kentucky before here, and there are some convincing concerns of 

places like Utah and Oregon where there has been municipal 

broadband deployed—— 

Mr. WHEELER. Right. 

Mr. GUTHRIE [continuing]. In the projects that failed in areas 

where there were competitive providers. And these projects have 

resulted in putting millions of dollars of taxpayer funds in municipal bonds, proper tax and sale and franchise taxes at risk. And I 

believe the iProvo was sold to Google for a dollar and leaving city 

taxpayers on the hook for repayment of tens of millions of dollars. 

My understanding isfive states or so have passed laws saying 

that cities can’t do this because the states usually—— 

Mr. WHEELER. About 20 states. 

Mr. GUTHRIE. Like in our area, if something happens to a city, 

the state is on the hook for it as well. And I believe in your prepared, written testimony, you have said that you believe the FCC 

can do prevention in this area over the state law? I wanted you to 

clarify that. 

Mr. WHEELER. Yes, sir. 

Mr. GUTHRIE. And why you think Washington could have a better view of this than Frankfort, for example, in Kentucky? 

Mr. WHEELER. So there about 20 states that have put some kind 

of restrictions in place. And I can see it through just exactly the 

opposite end of the telescope, with all due respect, that if the citizens of a community want to organize through their local government to say, to bring competition in broadband provision, they 

should not be inhibited. 

Mr. GUTHRIE. Not be inhibited by their elected—— 

Mr. WHEELER. They should not be inhibited by the fact that the 

incumbents have been urging the adoption of legislation that would 

ban it. And if we believe in competition, we ought to let competition 

flourish. So what I have said is that I am following again Judge 

Silverman’s comments in his dissent, nonetheless, in the open 

Internet case in which he said if there is ever an example where 

706 would apply, it is in the ability to say to states, you cannot get 

in the middle of this ‘‘virtuous cycle’’ and prohibit consumers from 

being able to have access to a competitive service. 

Mr. GUTHRIE. So your protection is the governments are doing 

that because of incumbents or because they don’t want to be on the 

hook for an iProvo type situation? 

Mr. WHEELER. So the—again, I go back to first principles, that 

is, this is a decision that ought to be made by the people of the 

50 

community and that—but if they want to take the risk, if they own 

it themselves—but you don’t have to own it yourself. It is also— 

the gentleman from Utah has left, but for instance, in Utah, there 

is a group of cities that have banded together to solicit bids for 

somebody else to own that they would have a participation in, that 

kind of structure. If the people say, ‘‘That is what we want, we 

want this kind of competition,’’ then I think they ought to be encouraged to get it. And competition has clearly been shown to be 

the best tool. 

Mr. GUTHRIE. Well, I don’t disagree with you on that, but my 

time actually is expired. I know the chairman is ready to gavel me 

down, so I will yield back. Thank you. 

Mr. LANCE. Thank you very much. The chairman would never do 

that to the gentleman from Kentucky. The chair recognizes the 

gentleman from Vermont, Mr. Welch. 

Mr. WELCH. Thank you very much, Mr. Chairman. Mr. Wheeler, 

I have five questions. We have 5 minutes, so we can go licketysplit. 

Mr. WHEELER. Yes, sir. 

Mr. WELCH. The first thing, Bob Latta and I started the Rural 

Caucus. We so appreciated you coming in. Enormous concern in 

rural America that we get access to the Internet. It is essential for 

our future. Net neutrality is a big deal. That is the big topic. You 

have been getting comments. There is an enormous amount of concern that if we make the wrong decision, the big guys are going to 

get the fast lane, the little guys, many in rural America, are going 

to get the breakdown lane. 

Can you give us some reassurance that at the end of this process 

we are going to have access on equal terms for folks in rural America to the Internet? 

Mr. WHEELER. You want a quick answer? 

Mr. WELCH. Yes. 

Mr. WHEELER. Yes. 

Mr. WELCH. And that is the sentence. You can give a full sentence to reassure all of us, especially rural America—— 

Mr. WHEELER. I should. 

Mr. WELCH [continuing]. That we are going to be driving in the 

fast. 

Mr. WHEELER. There is one Internet. There is not a fast Internet, 

there is not a slow Internet. There is not an urban Internet, there 

is not a rural Internet. There is one Internet. Everybody ought to 

have open, equal access to the capacity delivered by the Internet. 

Mr. WELCH. OK. Thank you. Now, getting the Internet, rural 

America is spread out, and the investors want to put their money 

where they can make their money. We all understand that. That 

was true for electricity, but we have got to get that Internet out 

into rural America so we can be part of the modern economy. And 

we have a Universal Service Fund with the Mobility Fund. We 

need to have that, and I am wondering if you could comment on 

the status of that and what we need to do to make sure that the 

funds are there to build out that broadband. 

Mr. WHEELER. Specifically on mobility? Here is the interesting 

question that gets raised by mobility. Broadband wireless is LTE. 

It is being built out across America. Recently just one of the major 

51 

carriers announced a new initiative in rural America with LTE. 

The question becomes that we are wrestling with is should we subsidize something if it is already happening and that prudent fiscal 

responsibility suggests probably not? 

Mr. WELCH. Well, I got three more questions—— 

Mr. WHEELER. OK. 

Mr. WELCH. So we want to work with you on that to make it rational and not have us investing in things that aren’t working but 

invest in things that are going to help rural America get—— 

Mr. WHEELER. Yes. That is where we are trying to get to. 

Mr. WELCH. All right. Third, we have got to work with you and 

your entire commission, the Republicans and the Democrats, and 

when you came into our Rural Working Group, you explained a 

couple of problems you had, ancient IT and also procedures where 

I guess it is easier to hire a lawyer than an engineer. 

Mr. WHEELER. Yes. 

Mr. WELCH. I am a lawyer, so maybe I would like that. But I 

wouldn’t be very much use to you. What are the things that this 

committee can advocate to help your entire Commission, Rs and Ds 

who want to do the job, so you have the tools you need to do it? 

Mr. WHEELER. Thank you for asking. Our IT infrastructure is 

worthy of the Smithsonian. I came from a business background. 

The things that you cannot do that are common sense in the business world, the fact that we are still using computers that have 

known cyber risk associated with them, the fact that we can’t organize a consumer complaint process on line for American consumers 

because our IT system isn’t up to it is ridiculous. So we have serious problems there. 

And the issue of lawyers versus engineers, far be it from me to 

take a side on that, but we do need more engineers, sir. 

Mr. WELCH. OK. Thank you. 

Mr. WHEELER. And economists. 

Mr. WELCH. Right. 

Mr. WHEELER. And economists. 

Mr. WELCH. OK, well, I would like our committee to work with 

you on that. 

Next, Section 706, there is a lot of concern about whether you 

have the sufficient authority under that section in order to give you 

the rule-making power to guarantee the outcome being net neutrality. Can you comment on that? Do you still feel that that is sufficient and the court gave you a roadmap forward? 

Mr. WHEELER. I think that we do have sufficient authority, and 

when the court talked about this virtuous cycle and they said anything that interferes with that virtuous cycle is a violation of 706, 

that is a very broad grant of authority. 

Mr. WELCH. OK. My last question in 26 seconds, retrans consent 

and blocking online content. We have seen that in the broadcast 

area where there is a dispute and people can’t get access to the signal. Now that is starting to migrate into the online content. Is this 

the beginning of the cablization of the Internet? 

Mr. WHEELER. Sir, I think it is the right question. Our authority 

goes to retransmission consent, good faith negotiations, and program access. I think there is reason to be concerned when because 

I happen to subscribe to an ISP who is in a dispute with a program 

52 

provider, that the program provider blocks all access from IP addresses coming from that ISP, I think that is something that is of 

concern and that we all should worry about. 

Mr. WELCH. OK. I yield back. Thank you very much, Mr. Wheeler. 

Mr. WHEELER. Thank you, sir. 

Mr. LANCE. Thank you very much. The chair recognizes the gentleman from Kansas, Mr. Pompeo. 

Mr. POMPEO. Thank you, Mr. Chairman. Thank you for being 

here today. I don’t want to spend a lot of time on net neutrality. 

We have different views. I view it as nothing more than a price 

control. I think we have seen how that works in creating supply, 

and I think it is a very dangerous path that you are headed down. 

I do want to ask a couple of process questions related to that. 

Have you spoken to anyone at the White House or OMB in the last 

month regarding net neutrality? 

Mr. WHEELER. Only to keep them appraised. They have been assiduous in their recognition that we are an independent agency. 

Mr. POMPEO. And did you call them or did they call you? 

Mr. WHEELER. I called them. 

Mr. POMPEO. And has anyone else on your staff spoken to folks 

at the White House or OMB in the last month in addition—— 

Mr. WHEELER. Well, the answer is I am not sure. On this issue, 

I don’t know, but I can assure you from my discussions with everybody, from the President on down, the recognition of the independence of our agency, and I will go further and assure you that never 

have I or to my knowledge anyone on my staff felt any pressure 

to decide any issue. 

Mr. POMPEO. I appreciate that. Thank you. I want to follow up 

on something Representative Guthrie was saying. You believe the 

FCC has the power to preempt state laws to ban competition from 

community broadband? 

Mr. WHEELER. Yes, sir. 

Mr. POMPEO. Under Section 706? 

Mr. WHEELER. Yes, sir. 

Mr. POMPEO. Do you believe that states have the same authority? 

Mr. WHEELER. The issue that I believe is do we have the authority to preempt? That raises the question of what is the authority 

of the state, and I think we have preemptory authority. I think we 

will probably end up having this answered in court. 

Mr. POMPEO. I just read the statute. The states have the same 

authority that the FCC does. The language is identical. It says 

whatever authority it is, you have and they have. 

Mr. WHEELER. Well, in state Commissions. 

Mr. POMPEO. Right. 

Mr. WHEELER. Well, yes. 

Mr. POMPEO. The states—— 

Mr. WHEELER. It says that we have preemptory authority over 

state Commissions. 

Mr. POMPEO. So state commissions have the same authority that 

you do? You would agree with that? 

Mr. WHEELER. No—— 

Mr. POMPEO. It is a simple statute. I mean, it just says the same 

thing. 

53 

Mr. WHEELER. No, I think that it says that both of us have authority but that we have preemptory authority on this issue, and 

I think that is what Judge Silverman was saying in his dissent in 

that Verizon case. 

Mr. POMPEO. Right, in that law, dissent. Well, the FCC’s media 

bureau recently issued new and they call them processing guidelines for broadcast transactions, and these broadcast—it talks not 

only about future broadcast transactions but also pending applications. I have three questions with respect to that. First, how many 

applications have been singled out for close scrutiny since the new 

guidelines have been issued? How many have been approved in 

those 2 months? And when might those broadcasters see the resolution of their applications? 

Mr. WHEELER. I don’t know the answer to any of those three off 

the top of my head, but I will be happy to get it for you for the 

record. 

Mr. POMPEO. OK. You can understand these are pending applications submitted under a set of rules. You have now moved the goal 

posts on them. 

Mr. WHEELER. Yes, sir, I understand your point. What we are 

trying to do is not move the goal posts but to open up the process 

so that everybody knows what the rules are. 

Mr. POMPEO. But that is what you did. That is what you did. You 

changed the rules with respect to applications already submitted 

under a preexisting set of standards. But I don’t know how you 

could describe that as anything but moving the goal post. 

Mr. WHEELER. With all respect, sir, we had a series of transactions that were in place, and in the decisions on those transactions, we said, ‘‘Note, going forward there will be a new look at 

what financial structures are in transactions, not in these transactions that we are approving.’’ Then we put out a Public Notice 

that said here is how we are going to open up this black box, and 

here is what is going to be going on. And it is that standard. So 

there was notice as a part of a decision that was not affected. Then 

there was notice through a Public Notice. And now those that the 

Bureau is reviewing are subject to both of those. 

Mr. POMPEO. And my last 20 seconds, with net neutrality there 

are also cyber security issues. Do you plan to explicitly give network providers liability protections in their efforts to protect their 

network from cyber security as part of your rule-making for net 

neutrality? 

Mr. WHEELER. It was not considered as a part of the rule-making 

to have that. 

Mr. POMPEO. Mr. Chairman, I yield back my time. 

Mr. LANCE. Thank you very much. The chair recognizes the gentleman from New Mexico, Mr. Lujan. 

Mr. LUJAN. Mr. Chairman, thank you very much. Chairman 

Wheeler, thank you so much—— 

Mr. WHEELER. Mr. Lujan. 

Mr. LUJAN [continuing]. For being here as well. Chairman 

Wheeler, 2 weeks ago this committee added my amendment calling 

on the FCC to conduct a study on reforming the designated market 

area system to the STELA reauthorization bill. As you know, 

DMAs are currently defined by a map drawn by Nielsen, a for-profVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
54 

it marketing research company based upon the reach of television 

broadcast antennas. This network of antennas is based upon technology deployed back in the ’40s and ’50s. Americans could have a 

multitude of viewing options via technology such as cable, 

broadband and wireless Internet, but current DMA rules prevent 

the viewership of much of that content. 

I believe that a system embraced by these technologies could revitalize television broadcasting with new affiliates reaching viewers 

who have more in common than their placement on Nielsen’s old 

map. It is my hope that the Commission takes this study seriously 

and brings the policy into the 21st Century, Mr. Chairman, so I 

hope that we might be able to work—— 

Mr. WHEELER. Thank you for your leadership on this, Mr. Lujan, 

and I assure you that we will take it seriously. 

Mr. LUJAN. Thank you, Mr. Chairman. And Mr. Chairman, it 

wasn’t too long ago that a company would not allow access to another company’s apps. There was a question a few years ago with 

AT&T and Facetime in an Apple product. 

Mr. WHEELER. Yes, sir. 

Mr. LUJAN. As I talk about fixed versus mobile, they defended it 

by saying it was allowed under the FCC’s net neutrality rules. 

Granted, this was under 3G. Section 62 of the proposal suggests 

the no blocking rule was applied in different standard to mobile 

broadband Internet access, and mobile Internet access service was 

excluded from the unreasonable discrimination rules. We are seeing mobile getting faster now and with the new spectrum options, 

even faster than fixed. I appreciate and I agree with you that we 

are talking about one Internet with open and equal access. With 

my colleagues in rural areas, I have shared with you before if there 

is a conversation about taking phone calls with bandwidth capabilities as well as streaming of content on airplanes, in rural America 

we should be able to get the same treatment. I don’t understand 

why we are not there yet. But nonetheless, it is coming. 

So I am hopeful that as we have this conversation, that we are 

able to have equitable treatment. I know that as I read in the proposal that there are elements of asking for a look into this—— 

Mr. WHEELER. Right. 

Mr. LUJAN [continuing]. In the rule, but I am certainly hopeful 

that this will be treated with the same scrutiny and level of attention and again, as I talked about an old, antiquated rule within the 

’40s and ’50s, we talked about dial-up, that this is another area 

that we are going to have equitable treatment as well, especially 

with new gigabit access as well. 

Mr. Chairman, in another area I know that there is a number 

of my colleagues who join me in their concern for recent reports of 

interconnection deals, particularly the one between Comcast and 

Netflix. You stated that peering is not a net neutrality issue, that 

there is a matter of the open Internet and there is a matter of the 

Internet connection among the various disparate pathways that become the Internet. And while I understand that net neutrality refers only to the behavior of Internet service providers blocking or 

throttling the speeds of certain Web sites, my question is how is 

interconnection an agreement that essentially throttles content 

substantially different? 

55 

Mr. WHEELER. Thank you, sir. That is a very good question. You 

can think of the Internet in three parts, actually four parts. There 

is somebody like Netflix getting on the Internet and then riding socalled middle-mile providers to a ‘‘peering point,’’ which is just a 

fancy word for interconnection, where they then have access to 

Comcast, Verizon, whoever the case may be. 

The consumer buys from their computer up to the peering point. 

Traditionally, peering has been an ‘‘I will take mine, you take 

yours,’’ back and forth kind of a thing. And for free. That has 

begun to change over time. 

Mr. LUJAN. Mr. Chairman, if I may, I apologize. My time is going 

to elapse, and maybe what I will do is—if we could get that into 

the record. All that I would add is once upon a time peering agreements didn’t have an exchange of money. People found a way to 

work with each other—— 

Mr. WHEELER. Exactly right. 

Mr. LUJAN [continuing]. And I am hoping that we can get some 

certainty with the treatment of fixed versus mobile, in that area. 

And lastly I would like for the record, if there is any way that you 

might be able to provide us more specifics and details with what 

has been talked about as commercially reasonable—— 

Mr. WHEELER. Good. 

Mr. LUJAN [continuing]. As well as we talked about not putting 

smaller companies at a disadvantage. I apologize to cut you off, Mr. 

Chairman. I could always sit and visit with you. And the last thing 

that I would say is President Obama is in support of an open Internet, and I would encourage you to speak with him. So thank you 

very much for that as well. 

Mr. WHEELER. Let me just—Congressman, so am I. 

Mr. LUJAN. Thank you. 

Mr. LANCE. Thank you very much. The chair recognizes the gentleman from Louisiana, Mr. Scalise. 

Mr. SCALISE. Thank you, Mr. Chairman, for having the hearing, 

and thank you Chairman Wheeler for being here today and answering our questions. I know as we look at the potential changes 

that have been proposed, a lot of us that want to continue to maintain a free and open Internet want to make sure that we are going 

about it the right way. I know I have got some concerns with the 

fact that the FCC would even consider going the Title II route in 

terms of reclassifying broadband. A lot of us had reached out to our 

constituents to have them also give us suggestions on things that 

they would like to ask you as well. And a lot of the comments that 

we got, I know that I got in my district, were just concerns about 

maintaining that open Internet and keeping the government out of 

regulating it and trying to make sure that the government doesn’t 

impede the ability for the innovations that we have seen, which 

have been so dramatic and revolutionized not only the country but 

revolutionized the entire world. And it is a lot of innovation that 

is made in America, and we want to continue to see that innovation 

thrive. 

When you look at going into the reclassification, and it is a proposal that is out there, I know, like I said, I have got concerns 

about that. But in your written statement you assert that the private sector must play the leading role in extending broadband netVerDate Nov 24 2008 13:32 Apr 08, 2015 Jkt 037690 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-146 CHRIS
56 

works to every American. If it were to be reclassified under Title 

II, who would pay for extending those networks if they are subject 

to common carrier regulations? 

Mr. WHEELER. Private sector. 

Mr. SCALISE. But then when you look at the Title II route, would 

the FCC have the authority to regulate broadband pricing? 

Mr. WHEELER. So in the vastness of Title II, that is conceivable. 

One of the reasons that we are asking for Title II versus Section 

706 comments in this proceeding is to be able to specifically zero 

in on what are issues such as that, what are the—— 

Mr. SCALISE. So you think you may have the ability to regulate 

broadband pricing? Is that something you think would be an open 

possibility for the FCC? 

Mr. WHEELER. Should a full Title II regime be chosen, which it 

has not been, we are proposing—— 

Mr. SCALISE. But you are making the proposal. 

Mr. WHEELER [continuing]. Section 706. 

Mr. SCALISE. Right. 

Mr. WHEELER. No, we are not—what we are doing is we are proposing Section 706 as the approach and then we have asked questions about Title II. And these are the kinds of issues that come 

up, will come up in that discussion and that are going to warrant 

serious consideration. 

Mr. SCALISE. But if you deem them telecommunication services, 

because that puts broadband into a different realm than it is today. 

It is not there right now. If you do choose to try to put it there, 

would state public utility—in our state we have got a public service 

commission—would those state public service commissions and 

other related entities in the states be able to regulate broadband 

at that point? 

Mr. WHEELER. So what we have proposed is not Title II. It is 

Section 706. What we have asked is for a discussion of Title II and 

those kinds of issues. But our proposal, for which I have taken a 

lot of heat, is not Title II. I have said—— 

Mr. SCALISE. You don’t have to go forward with the proposal. 

Mr. WHEELER. I have said—— 

Mr. SCALISE. You can stop taking the heat right now. 

Mr. WHEELER. No, I said that Title II was on the table, that we 

are looking to look at Title II, and Mr. Waxman has a specific proposal where he thinks that Title II ought to be a backup, and that 

is a proposal that is important and worth considering. But the proposal that we made is Section 706. 

Mr. SCALISE. Let me ask you this because it seems like a oneway street where you are just targeting this toward Internet service providers. There are a lot of content carriers out there, too—a 

lot of members have used the Netflix example or, Google and other 

content providers that also have a play in this realm, that you 

seem to just be targeting this toward Internet service providers. 

And so I am not sure if there is some axe to grind there, but it 

just seems like it is a one-sided approach that you are taking even 

in the review. And I wouldn’t recommend going down that road for 

any of these folks. But I just wanted to point that out. 

And one last thing, because I know I am running out of time, in 

a February report, the FCC, some of your staff I know in a working 

57 

group, recommended eliminating some of the reports that are out 

there, the Orbit report, the International Broadband report, the 

Modifying Video Competition report and cable prices—some of 

those things. I have got a piece of legislation we have passed out 

of the Full House twice now, bipartisan, I think was unanimous 

earlier—in this Congress called the FCC Consolidated Reporting 

Act which really tries to take a broad view and to eliminate a lot 

of the outdated reports, to streamline the reporting process. Something that I think you have seen bipartisan support to do in the 

House. We are trying to get the Senate to take that up. I am not 

sure if you have got a comment on what you think should happen 

there, if that is something you are supportive of generally, especially as it relates to the bipartisan bill in the House trying to 

move through the Senate to ultimately become law, to streamline 

the processes as your staff has suggested. 

Mr. WHEELER. So, on the Senate side, it is Senator Heller who 

has been—— 

Mr. SCALISE. Yes. 

Mr. WHEELER [continuing]. Pushing on this, and I know that he 

and Senator Rockefeller are talking about it in terms of their package of legislation over there. 

I definitely agree that there is a plethora of reports and that we 

are spending a lot of time that could be better organized, shall we 

say. 

Mr. SCALISE. Including competitiveness in the telegraph industry, which is still on the books which we are trying to get rid of 

in this bill. But I appreciate that and anything you can do to help 

us advocate for the advancement. I do think that is one area where 

we found a lot of bipartisan support in the way it passed the 

House. Hopefully we can get the Heller bill moved through the 

Senate as well and get that to the President’s desk. 

Mr. WHEELER. Thank you, sir. 

Mr. SCALISE. Thank you very much for your time, and I yield 

back the balance of my time. 

Mr. LANCE. Thank you very much, Mr. Scalise. I do not see any 

member on the Democratic side. Mr. Kinzinger of Illinois is recognized. 

Mr. KINZINGER. Thank you, Mr. Chairman, and thank you for 

being here today with us. I know it is a long day. 

Mr. WHEELER. Thank you for your patience, Mr. Kinzinger. 

Mr. KINZINGER. Yes, you are welcome. I might be the end. Wow. 

But we have a lot of big issues that we want to talk about. I am 

just going to hit a couple right now. I would like to talk to you a 

little—I know it was touched earlier about the E–Rate program. I 

am a big supporter of the intentions of this program and especially 

its modernization. And I appreciate the Commission putting on the 

recent workshop on this issue. I have a few concerns I want to address. I represent a rural district with a number of very small 

schools and libraries, and over the past few months I have reached 

out to a lot of these entities and asked them what their concern 

is and asked them about their participation or their lack of participation in the program to see what concerns or issues they have 

with the program itself. 

58 

The number one problem raised in these conversations was the 

complexity involved in both applying for and eventually receiving 

the funding necessary to move forward in implementing new technology in their facilities through the E–Rate program. 

In hearing this, I actually looked into the issue a little further 

and found out that the basic application for funding is 17 pages 

long. And with additional technologies not deemed necessary, it can 

run even longer, i.e., Wi-Fi. I would actually probably rather punch 

myself in the face than be the guy that has to fill this out. 

So the complexity of the application process has actually caused 

a number of these schools to spend money on outside consultants 

to help guide them through this process, and this is money that is 

no longer being spent on our students and automatically puts many 

smaller rural schools at a disadvantage as they don’t have the 

funds necessary to pay these outside consultants essentially leaving individuals in a technological desert, if you will. 

As the Commission continues its efforts to modernize the E–Rate 

program, what are your plans to simplify the application process 

for these small and rural districts? And also, will you commit to 

working to address the issues faced by these schools who have routinely told me that they simply cannot afford to pursue these 

funds? 

Mr. WHEELER. Congressman, I share your shock and dismay. We 

are going to fix it. 

Mr. KINZINGER. Good. All right. Do you have an idea of a timeframe? How long? This is easy. We are going home. 

Mr. WHEELER. Yes, it is going to be part of our E–Rate modernization program that we are bringing forward. There are actually a series of things that we are going to begin administratively 

even before that rule-making takes place. It is—yes, sir. 

Mr. KINZINGER. All right. 

Mr. WHEELER. How do we get online? It becomes an interesting 

challenge. So here we are talking about broadband access for 

schools and libraries, and we have a 17-page paper process. 

Mr. KINZINGER. Right. 

Mr. WHEELER. So, unfortunately, it is not something you can 

solve just like this because as I indicated I think to Mr. Welch, we 

have awful IT systems. But what I would like to get to is for your 

schools, and all schools and libraries, to be able to get online, to 

make their filing, to be able to track that filing and where things 

stand and to do it less frequently than annually. 

Mr. KINZINGER. Right. Well, I appreciate that. I want to touch on 

one other quick issue in the short amount of time, and again, 

thank you for your consideration with the E–Rate issue. I am concerned with the process and policy rationale used to change the 

FCC’s treatment of broadcast JSAs for the purpose of the broadcast 

ownership rules. The decision to count TV JSA’s ownership has the 

effect of tightening ownership restrictions without the comprehensive review of the ownership rules that is required by statute, and 

your analysis seemed to lack an appreciation for the public interest 

benefits fostered by JSAs. 

In Rockford, for instance, an area I represent, without these 

agreements, the Fox station produces actually a Hispanic news 

cast, and they have said that they will not be able to produce that 

59 

Hispanic news cast, for instance. While I don’t believe my local TV 

station should have to fight for a waiver, and we can have a broader issue on the whole discussion in general, I do want to say in 

light of your rule, are you going to make sure that these stations 

can take advantage of waivers and will there be clear, transparent 

standards for applying for waivers in this process? 

Mr. WHEELER. Thank you, Congressman, because you have 

raised a really important point about waivers. The reality as to 

why we had to deal with JSAs is there was becoming a cottage industry in this town, down on K Street, of lawyers figuring out creative ways to get around the ownership rules that the Commissions 

had in place forever. And JSAs were a favorite way of doing that. 

What we have said is that you have to have attributable ownership as you indicated but that there is a waiver process to address 

exactly what you are talking about in Rockford. And yes it is an 

expedited process. And it is a situation, unfortunately, where the 

process took over and perverted the underlying rules and the basic 

concepts of ownership. 

Mr. KINZINGER. And we can have that broader discussion when 

I have more time. My time is expired. But I will say, I have heard 

a lot of concerns from local TV stations even in my district, and I 

hope that, you know, while we disagree with the rule, I hope that 

you make it very clear how they can apply for these waivers and 

how they can get this taken care of. 

Mr. WHEELER. Yes. Thank you. 

Mr. KINZINGER. Mr. Chairman, I yield back. And thank you. 

Mr. LANCE. Thank you very much. On behalf of Mr. Matheson 

and of myself, thank you, Chairman Wheeler, for your testimony 

this morning. We look forward to working with you in the future, 

and he hearing is now adjourned. 

[Whereupon, at 1:04 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. LEE TERRY

I would like to state for the record that I oppose the reclassification of broadband 

services as Title II telecommunications services. We are fortunate to see wireline 

broadband speeds continue to increase, whether over cable or telecommunications 

networks. A regulatory framework set up in the 1930’s to ensure every consumer 

receives the same voice service for a reasonable price is ill-suited for a communications platform that we rely on to deliver varied services from video and voice to 3– 

D printing. I should note that I am concerned about the proposal to use Section 706 

as well, and believe that however the Federal Communications Commission proceeds, it should be done very, very carefully. That said, there is no viable path forward with Title II, and I believe that should be crystal clear. 

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