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H.R. 5353, THE INTERNET FREEDOM 

PRESERVATION ACT OF 2008 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS AND 

THE INTERNET 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

May 6, 2008 

Serial No. 110–112 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

JOHN D. DINGELL, Michigan, Chairman 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

J. DENNIS HASTERT, Illinois 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff 

GREGG A. ROTHSCHILD, Chief Counsel 

SHARON E. DAVIS, Chief Clerk 

DAVID L. CAVICKE, Minority Staff Director 

(II)

(III) 

SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

EDWARD J. MARKEY, Massachusetts, Chairman 

MIKE DOYLE, Pennsylvania 

Vice Chairman 

JANE HARMAN, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

BARON P. HILL, Indiana 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

HILDA L. SOLIS, California 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

J. DENNIS HASTERT, Illinois 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSELLA, New York 

GEORGE RADANOVICH, California 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

JOE BARTON, Texas (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 10 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 11 

Hon. Mike Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 13 

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

opening statement ................................................................................................ 14 

Hon. Jane Harman, a Representative in Congress from the State of California, opening statement .................................................................................... 15 

Hon. Mike Ferguson, a Representative in Congress from the State of New 

Jersey, opening statement ................................................................................... 16 

Hon. Hilda L. Solis, a Representative in Congress from the State of California, opening statement .................................................................................... 17 

Hon. Charles W. ‘‘Chip’’ Pickering, a Representative in Congress from the 

State of Mississippi, opening statement ............................................................. 18 

Hon. Lois Capps, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 19 

Hon. Mary Bono Mack, a Representative in Congress from the State of 

California, opening statement ............................................................................. 20 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 21 

Prepared statement .......................................................................................... 22 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 22 

Hon. Bart Stupak, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 23 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 24 

Hon. George Radanovich, a Representative in Congress from the State of 

California, opening statement ............................................................................. 25 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 114 

WITNESSES

Walter B. McCormick, Jr., president and chief executive officer, United States 

Telecom Association ............................................................................................. 26 

Prepared statement .......................................................................................... 27 

Michele Combs, vice president, communications, Christian Coalition of America .......................................................................................................................... 29 

Prepared statement .......................................................................................... 32 

Mitch Bainwol, chairman and chief executive officer, Recording Industry Association of America ............................................................................................. 36 

Prepared statement .......................................................................................... 38 

Steve Peterman, executive producer, Hannah Montana, Writers Guild of 

America, West ...................................................................................................... 42 

Prepared statement .......................................................................................... 43 

Kyle McSlarrow, president and chief executive officer, National Cable & Telecommunications Association ................................................................................ 45 

Prepared statement .......................................................................................... 47 

Scott Savitz, chief executive officer and founder, shoebuy.com ........................... 62 

Prepared statement .......................................................................................... 64 

Christopher Yoo, professor of law, founding director, Center for Technology, 

Innovation and Competition, University of Pennsylvania ................................ 66 

Page

VI 

Christopher Yoo, professor of law, founding director, Center for Technology, 

Innovation and Competition, University of Pennsylvania—Continued 

Prepared statement .......................................................................................... 68 

Ben Scott, policy director, Free Press .................................................................... 70 

Prepared statement .......................................................................................... 73 

SUBMITTED MATERIAL

H.R. 5353 .................................................................................................................. 2 

Wall Street Journal editorial entitled, ‘‘An Alternative to Network Neutrality,’’ dated April 12, 2008 .............................................................................. 116 

The American Conservative Union, et al., letter of May 6, 2008 to Mr. Markey ......................................................................................................................... 118 

Conservative coalition, letter of March 10, 2008 to Members of Congress ......... 120 

National Association of Realtors, letter of May 6, 2008 to the Subcommittee ... 121 

Jean M. Prewitt, president and ceo, Independent Film & Television Alliance, 

letter of May 6, 2008 to Messrs. Markey and Upton ........................................ 122 

(1) 

H.R. 5353, THE INTERNET FREEDOM 

PRESERVATION ACT OF 2008 

TUESDAY, MAY 6, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TELECOMMUNICATIONS

AND THE INTERNET, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:30 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Edward Markey 

(chairman) presiding. 

Members present: Representatives Markey, Stearns, Doyle, 

Upton, Harman, Ferguson, Solis, Pickering, Capps, Walden, Bono, 

Eshoo, Shimkus, Stupak, Green, Radanovich, Deal, Gonzalez, and 

Terry. 

Staff present: Amy Levine, Tim Powderly, Mark Seifert, Colin 

Cromwell, David Vogel, Philip Murphy, Neil Fared, and Garrett 

Golding. 

Mr. MARKEY. Welcome to the Subcommittee on Telecommunications and the Internet. Today’s hearing is on legislation offered 

by myself and my subcommittee colleague, Mr. Pickering, from 

Mississippi, entitled ‘‘H.R. 5353, The Internet Freedom Preservation Act of 2008.’’ 

[H.R. 5353 follows:] 

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OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. Since the beginning of this Congress, indeed since 

our first subcommittee witness, the inventor of the World Wide 

Web, Sir Tim Burners-Lee, testified, we have held a series of hearings that have given us a glimpse of the future of the Internet. We 

heard testimony from Chad Hurley, the founder of YouTube, as 

well as from top executives from TiVO, Real Networks, Sling 

Media, and others. 

The commercial success of many of these companies and their future business plans are predicated upon openness in the Internet’s 

architecture and the freedom to innovate that has marked the 

Internet since its inception. Sir Tim, the inventor of the World 

Wide Web, urged us to ‘‘make sure the Web itself is the blank 

sheet, the blank canvas,’’ something that does not constrain the innovation around the corner. 

The wonderful thing about the Internet, Sir Tim also reminded 

us, is that no one needs to ask anyone’s permission to innovate, to 

get their voice heard, to launch a new service or business enterprise. In this sense, it is the most level playing field for commercial 

opportunity ever invented, and its worldwide scope has offered help 

to foster community and cultural communications across the planet. 

Yet now we are faced with a choice. Can we preserve this wildly 

successful medium and the freedom it embodies, or do we permit 

network operators to fundamentally alter how the Internet has historically functioned? Do we retain a level playing field, Sir Tim’s 

blank canvas or entrepreneurial entry? Or do we allow the imposition of new fees and the artificial creation of slow lanes and fast 

lanes for content providers on the Internet? 

Some people might ask, well, at $500 a share, why can’t Google 

pay for special treatment? The reality is that at $500 a share, 

Google can afford to pay. Yet the reality is that this is precisely the 

wrong question to ask. Instead, the question is whether Larry Page 

and Sergei Brin, the two young founders of Google, could have paid 

when they were mere grad students launching their idea. Same 

question for Jerry Yang at Yahoo! back in the late ’90s or Jeff 

Bazos at Amazon.com or Mark Andresin who invented the mosaic 

browser, which later became Netscape, when he was at the University of Illinois at Urbana, Champlain in the early ’90s. That is the 

question to ask. 

And the answer, of course, is no. Those inventors and entrepreneurs could not have created the companies that have become 

part of Internet lore if they had had to pay cable or phone companies large sums of money up front just to get access to consumers. 

This debate is not over whether carriers can or cannot perform 

network management. It is not about whether carriers can fight piracy or spam or help parents control content. It is not about whether some network traffic, such as emergency communications, can be 

prioritized. Neither is it about whether network neutrality is synonymous with copyright theft. 

In each one of the instances that I just mentioned, it is not any 

of those things. And the legislation only extends Internet freedom 

11 

principles to lawful content, not unlawful content and not unlawful 

activity but only to lawful content. And so this whole idea that this 

legislation helps piracy is 100 percent wrong. It is a red herring. 

We should actually put an aquarium out here. There are so many 

red herrings floating around to mislead about what the intent of 

net neutrality is. It does not protect piracy at all, and I just wish 

people would stop saying it. 

The question is whether, in the name of network management, 

policymakers permit carriers to act in unreasonable anti-competitive fashion. In a more perfect network, there would be such massive bandwidth to render these issues moot. In a more perfect marketplace, there would be four or five high speed broadband competitors offering consumers ample choice. 

But until then, I strongly believe that we should enshrine basic 

principles of openness and fairness and ensure that the FCC is a 

cop on the beat, able to ensure these principles are upheld in the 

marketplace. In this way, we can preserve the best of what the 

Internet is, even as it evolves. 

The bill is quite straightforward. It establishes overarching principles rather than regulations to guide policy in this area. It then 

requests an examination of the market and current practices, requires the FCC to hold several broadband summits around the 

country to solicit suggestions and opinions. And finally, task the 

FCC with reporting the results and any recommendations back to 

Congress. 

I believe that this is an eminently reasonable path to pursue, 

and I thank all of our witnesses for coming today to give us their 

views on the bill. I thank you, and with that, the time of the chair 

has expired. And I recognize the gentleman from Florida, Mr. 

Stearns, for an opening statement. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, and thank you, Mr. Chairman. I 

think this is a very important hearing. H.R. 5353 is far-reaching; 

although, it is just a study. And I think it is vitally important that 

we have a hearing. And I appreciate the witnesses here, and I look 

forward to their opening statements and the questions we might 

ask. 

Now, this bill, H.R. 5353, is billed as just a study; however, my 

colleagues, a closer examination demonstrates that it is more than 

just about a study. First, it establishes a specific broadband policy 

by amending Title I of the Communications Act to make it the policy of the United States of America to prohibit ‘‘unreasonable interference from or discrimination by network operators.’’ It then requires the FCC to launch a proceeding into whether that policy has 

been violated. 

Under this legislation, the FCC would have to commence a proceeding, not merely an inquiry but a proceeding, thus giving the 

FCC a green light to engage in rulemaking without further congressional action. 

Now, this sort of procedure would cause numerous problems, in 

my opinion. Most troubling, of course, is that no one can agree on 

what constitutes unreasonable interference and discrimination. Yet 

12 

the bill provides no definitions, does not require examination of the 

status of competition before even imposing new restrictions. This 

bill creates vague and undefined regulations that frankly would 

chill investment and innovation at a time when there is tremendous growth. 

Why would we seek to regulate a marketplace that is already advancing vigorously? You know, I think a lot of us remember the 

Ronald Reagan quote. If I moves, we tax it. If it is successful, we 

regulate it. And if it fails, we subsidize it. 

My colleagues, the Internet is booming. North American commu- nication providers invested in an estimated $70 billion in infrastructure just last year alone. And in the U.S. today, there are 

nearly 1,400 broadband providers competing to serve American 

consumers. The marketplace has never been more competitive. 

Why would we want to mess with success? Why would we regulate 

a rousing success into a potential failure? 

Furthermore, this legislation does not allow for legitimate network management. Some proponents of network regulation believe 

that the networks that comprise the Internet should be treated no 

differently than telephones or even as we go back to the railroads 

or old time waterways. That view of the Internet does not provide 

comport with today’s reality. 

Today, Internet traffic has grown exponentially. Thirteen years 

ago, a loyal cadre of hobbyists sent e-mail to each other and engaged in some rudimentary Web surfing. Now, more than a billion 

people use the Internet to view and exchange audio and video files 

as well as play interactive games that involve sophisticated graphics. 

In addition, the Internet is rapidly replacing traditional telephone and cable lines as a means of conducting voice conversation 

and distributing movies and other video programming. Network operators need to be able to manage Internet traffic, especially with 

bandwidth intensive video traffic, in order to ensure that the consumers just simply continue to enjoy the Internet experience. 

Without network management, we would be faced with network 

congestion that would make rush hour on the 14th Street Bridge 

look like a Sunday drive in the country. For instance, if you were 

watching a single high-definition movie over the Internet consumes 

as much bandwidth as a Web surfer who loads 35,000 Web pages. 

At the current rate of growth, in the year 2010, 20 typical U.S. 

households will use as much Internet capacity as the entire world 

did in 1995. 

Broadband networks will need to be sophisticated and agile, imposing network regulation either through legislation or at the FCC 

would prevent broadband providers from legitimately managing 

their networks. 

Most importantly, there does not appear to be any need for this 

regulation. Broadband competition is increasing and coming from 

new medias such as wireless and satellite. Broadband prices are 

falling as speeds offered by providers are rising. Regulation would 

simply stifle the investment necessary to prepare for the continued 

growth in Internet traffic. 

So in closing, common carrier principles such as nondiscrimination might have made sense for waterways, railroads, and teleVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
13 

phones. But if you want a 21st Century communications media, we 

should not rely on the old ways to achieve regulatory modeling. 

Thank you, Mr. Chairman. I offer my time. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Pennsylvania, Mr. Doyle. 

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman. Mr. Chairman, think 

about it. The Internet is the First Amendment come alive. Our 

media is no longer a one voice to many listeners. Instead, media 

begins with me, and I get to choose what I do, what I see, what 

I listen to, and what I read. The cost of a printing press or TV station no longer holds the speaker back from sharing their message 

with the world around us, the world that exists online. I think that 

all parties testifying here today would agree that the state of the 

Internet is very different today than it was a decade ago or even 

during the debate over the franchising bill. 

As the Internet has changed, so have the reasons that my friends 

base their opposition to net neutrality. First they said it would be 

impossible to define that neutrality, much less write regulations 

about it. And secondly, that net neutrality was a solution in search 

of a problem. 

Both of these presumptions are now wrong. When this issue 

came up 2 years ago, Congress was told that there are too many 

definitions about what net neutrality is. Today, the largest telecommunication company in the world, AT&T, is living under a 

workable definition of net neutrality that all parties agreed to 

when they merged with Bell South. There, the FCC wrote a definition that works for all sides. It was a big win for consumers, for 

innovators, and other entrepreneurs, and for AT&T. 

And Congress was told that net neutrality is a solution in search 

of a problem. That too is no longer the case. We have documented 

cases now where network operators are telling consumers how they 

can and how they cannot fill the pipe they’re buying with the content they want. 

Wi-fi routers, telecommuting into their office, voice-over-theInternet calls, peer-to-peer file sharing of legal, licensed content, 

including video programming are all examples of things that have 

been limited by Internet providers. 

Now, it is true that consumers are uploading more content on the 

Internet and broadband companies offer slower upload speeds than 

download. But instead of investing in faster speeds, some have 

tried to limit uploads based on a particular kind of service. They 

claim that they need to manage congestion, to manage their networks, and I agree with that. Clearly they are managing their networks now. Some of that management is a good thing. Viruses and 

spam need to be eliminated. 

But the question is, can they be managed in a way that doesn’t 

hurt a particular protocol or application or content provider? I believe they can. That is net neutrality. 

I believe this problem is misframed. Some people want the conversation to be about how they can manage Internet scarcity. We 

14 

should be talking about how to achieve abundance with the principles that made the Internet great. Anti-trust law is inadequate 

to deal with this question. A network operator could choose not to 

offer a small competing company better service and force it to take 

them to court, spending years in a protracted legal battle. 

Instead, Mr. Chairman, the time has come for rules of the road, 

for predictably for those who own networks and for those who innovate on those networks. Mr. Chairman, I thank you, and I yield 

back. 

Mr. MARKEY. Gentleman’s time has expired. The chair recognizes 

the gentleman from Michigan, Mr. Upton. 

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

Mr. UPTON. Thank you, Mr. Chairman. I would first like to 

apologize to the panel and my colleagues that I will be unable to 

stay for this entire hearing due to an Energy and Air Quality Subcommittee hearing where I serve as ranking Republican, which will 

begin very soon. I do feel strongly about the issue, and I want to 

make an opening statement before I depart. 

I don’t quite understand why this is a legislative and not an 

oversight hearing. I think we can all agree that we have succeeded 

in our congressional oversight role. We first heard about the issue 

over 8 years ago, and there is no solid evidence of consumers being 

blocked from any content or application on the web. 

And the very few times that consumers have been troubled rightly so with something, the issue has been resolved without imposing 

regulations or legislation indicating that the market forces indeed 

work. A mix of market forces, consumer demand, and oversight 

from this body has allowed the Internet economy to flourish. 

One Web site, YouTube, took up the same bandwidth in ’07 as 

the entire Internet did in 2002. That is an amazing story, and just 

as amazing is the network’s ability to keep up with demand. There 

is competition at all levels of the Internet, and broadband employment and use continues to grow. Our hands-off policy is working. 

Some say this bill just creates a study. Well, that is not quite 

true. It codifies network neutrality into the Communications Act 

and only then tells the FCC to study the implications. This bill 

takes us down a dangerous path. Adopting legislation like this now 

will short circuit the evolution of the Internet in my view. And to 

meet the growing capacity demands of advanced Internet services 

and applications, carriers need the flexibility to experiment with 

different business models as well as to manage network congestion 

and quality of service in the short term while they invest and innovate in the long term. 

But as soon as we attempt to legislate or regulate, technology 

will evolve much too quickly for the policymakers to keep pace. The 

old axiom if it ain’t broke, don’t fix it certainly applies here. The 

proponents of H.R. 5353 claim that the bill is just trying to restore 

nondiscriminatory requirements to the Internet. But we have been 

told that the Internet was built on principles of nondiscrimination 

and that network operators were required to abide by nondiscrimination requirements prior to 2005. 

15 

Well, that is not quite accurate. Internet backbone services have 

never been regulated. They interact based on private peering relationships that are not subject to FCC or any other regulation. And 

cable and satellite broadband providers have never been subject to 

regulations. Wireless broadband services don’t even really get off 

the ground until ’05 and have never been regulated either. 

Yet despite the unregulated environment, the sky has not fallen. 

Quite the opposite. Consumers are enjoying revolutionary technology, and the market will continue to evolve and deliver what 

consumers expect in service. Advocates of network regulation argue 

that all they really want to do is turn the clock back to before the 

FCC’s decision in ’05 that classified wireline broadband Internet 

access services as information services. 

Proponents of H.R. 5353 do want to turn back the clock. They do, 

but not to how the Internet was regulated in 1995. They want to 

turn back the clock to the 19th Century, when waterways and railways operated under common carrier requirements. That defies 

common sense if we are trying to foster a 21st Century communications medium. 

We hear a lot about how the world came to an end when the 

FCC declared in ’05 that wireline Internet access services were information services just like cable modem services. Well, that is 

based on a fundamentally faulty premise, that the Internet operated under a nondiscrimination regime from its inception until ’05. 

That would be news to Internet backbone providers, which have 

never been subject to FCC regulation. It also would be news to 

cable modem and satellite broadband providers, which were not 

subject to FCC regulation. 

Sweeping, nondiscrimination requirements would be new, and 

they would be bad for network management and broadband deployment. I think that everyone here today would argue that a consumer-driven model has worked quite well thus far. Folks have 

come to expect unfettered access, and they will tolerate nothing 

less. 

In closing, I would like to make one final point. While I clearly 

oppose this legislation, I do applaud you, Mr. Chairman, for distinguishing between legal and illegal content. I yield back. 

Mr. MARKEY. Thank you. I very much appreciate that. 

Mr. UPTON. First base. 

Mr. MARKEY. Well, I appreciate that. It is like the difference between unlawful and illegal. Many people don’t know unlawful is 

when there is an actual statute or regulation that has been passed 

against something, and illegal is a sick bird. 

Ms. UPTON. Yeah. 

Mr. MARKEY. That is an old fourth grade joke. The chair recognizes the gentlelady from California, Ms. Harman. 

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. HARMAN. Thank you, Mr. Chairman. I was educated in Massachusetts, but sometimes some of this stuff just flies by me. 

Mr. Chairman, I am proud to be a cosponsor of your bill. I think 

it is better than the last version of your bill, which I also cosponsored. And I want to salute you for working closely with Mr. PickVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
16 

ering, an estimable member of our committee, and making this a 

bipartisan issue. This committee is bipartisan, and I think our best 

legislation comes when we act in a bipartisan fashion. So I salute 

you for that. 

Like most participants in the net neutrality debate, I believe that 

not all network management is bad. In Los Angeles, our freeway 

networks are hopelessly congested, and on-ramps have traffic lights 

to control the flow of cars and trucks. These traffic meters reduce 

congestion and are in the public interest, but they do not keep motorists from driving a car of his or her choice and from going anywhere that motorist wants to go on the freeway. 

I am skeptical that market forces alone can preserve the open vibrant and always improving Internet that everyone wants. Government should have a role in ensuring that network operators do not 

discriminate among content providers or especially against particular content. I deplore piracy of copyrighted material and the 

spam epidemic, as has been mentioned by several colleagues. I am 

also concerned about network security and the need to protect communications for public safety purposes. 

But the challenge is to strike the appropriate balance. I therefore 

thank you for assembling this diverse panel of experts, for changing your legislation so that it is information-driven and will give 

us a better understanding of this marketplace and this technology. 

And I look forward to learning with you and other members of the 

Committee about how to get this balance right. Thank you, Mr. 

Chairman. 

Mr. MARKEY. The gentlelady’s time has expired. The chair recognizes the gentleman from Nebraska. I do not see him. Chair recognizes the gentleman from New Jersey, Mr. Ferguson, for an opening statement. 

OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. FERGUSON. Thank you, Mr. Chairman. Thank you and Mr. 

Stearns for holding this hearing on the Internet Freedom Preservation Act. Welcome to our witnesses, many of whom are well known 

to us. This panel represents a real strong cross section of interests 

in the industry, and we look forward to hearing the various perspectives. 

Anytime the subject of net neutrality comes up, I can’t help but 

think of a few years back and a hearing of this committee as well. 

And with all due respect to my friend, Mr. Doyle, I have a different 

view of his characterization of the last couple of years. At the time, 

witnesses were asked—we went right down the row. Everyone was 

asked if they could define net neutrality, and everybody had a different answer to that question. To a person—nobody could provide 

a clear and definitive answer to the subcommittee. 

And in the years since then, instead of really trying to truly define net neutrality and determining whether and how any problem 

might actually exist, advocates have attempted to broaden the 

scope of this term and have started using these hot button tag lines 

that would probably make any PR firm proud. 

17 

Unfortunately throughout the process, some Internet service providers focused on consumer satisfaction have been scapegoated, not 

only by interest groups but by the FCC, which seems determined 

to pursue regulation in lieu of private sector solutions. Responsible 

network management necessary on shared networks to ensure the 

flow of network traffic has been opportunistically mischaracterized 

as calculated ISP interference. 

And now with unprecedented broadband investment, industry, 

innovation, and consumer consumption, we have before us a piece 

of legislation that is an attempt to expand the potential of 

broadband that can actually stifle deployment. Ignoring a healthy 

broadband market, this legislation exacts a prescription that is 

simply not needed. And the side effects could be crippling to innovation and to investment and ultimately to the services provided 

to our constituents. In the face of undeniable free market growth, 

this committee should refrain from inserting the hand of government into the equation. 

But looking at the draft of this legislation, it seems that it attempts to go in precisely the opposite direction. Many of its principles effectively constitute a dangerously over-broad legislative 

dragnet that can frankly do much more harm than good. 

It is my recommendation that before legislating in this area, the 

committee carefully consider the consequences of imposing a government solution where, frankly, it is unwarranted. 

And finally I would like to touch on the problem of Internet piracy, which goes hand-in-hand with many of the network problems, 

and the providers are responsibly trying to solve. I know, Mr. 

Chairman, your reference of having an aquarium of red herrings. 

This is not a red herring. This is a very serious problem, and the 

problems of piracy are being felt in a very direct and a very substantial way by a major segment of our economy. 

Internet piracy has devastated America’s creative industries, and 

it has adversely affected economic growth in the process. Incidentally, most of the congestion piracy causes results from the same 

peer-to-peer downloads that have made the job of network operator 

so difficult. I encourage the content industry and the ISPs to continue to work together in the private sector to reduce and eliminate 

the availability of illegal content or unlawful content that confuses 

consumers, attracts viruses, and ultimately hurts an important 

growth engine of our economy. 

Thank you again, Mr. Chairman, for this hearing. I look forward 

to hearing from our witnesses. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Texas, Mr. Gonzalez. The chair recognizes the gentlelady from California, Ms. Solis. 

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. SOLIS. Thank you, Mr. Chairman, and thank you, Ranking 

Member Stearns for holding this important meeting. Net neutrality 

is crucial to the future of the Internet. The question of whether we 

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trality and fairness in network management is central to the evolution of the Internet. 

Over the past few years, we have seen incredible growth in the 

use of the Internet for a host of applications. This includes telemedicine, telecommuting, online education, and entertainment with 

video and music applications. 

Net neutrality and network management have become even more 

relevant as we rely more and more on Internet in our daily lives. 

Questions of unfair practices by Internet service providers, especially when dealing with peer-to-peer file transfers, has raised serious concern. 

As a member of the Los Angeles delegation, piracy of entertainment including music and video files are harmful to our local workforce and economy. While we should not underestimate the importance of stemming the flow of pirated material online, we also need 

more transparency of management practices that affect all constituents, not just those who download pirated songs or video. For 

example, high bandwidth applications in areas such as telecommuting, online education, telemedicine, are very important to many 

of my constituents. These applications will grow, as you know, in 

the coming years. We need to know how such traffic will be treated 

or prioritized by Internet service providers to ensure that these and 

other positive but not necessarily profitable uses are not negatively 

impacted. 

We also need to ensure that the innovation that has driven the 

Internet continues unabated. New and diverse innovators should 

have as level a playing field as possible with incumbent and more 

established Internet companies. And net neutrality is key to posturing diversity online. 

As policymakers, we need to find the balance between keeping 

the Internet traffic moving and promoting innovation, while also 

ensuring transparency in network management practices that benefit all users. I would like to thank the witnesses for being here 

today, and I look forward to hearing your comments. And I yield 

back the balance of my time. 

Mr. MARKEY. The gentlelady’s time has expired. The chair recognizes the gentleman from Mississippi, Mr. Pickering. 

OPENING STATEMENT OF HON. CHARLES W. ‘‘CHIP’’ PICKERING, A REPRESENTATIVE IN CONGRESS FROM THE STATE 

OF MISSISSIPPI 

Mr. PICKERING. Thank you, Mr. Chairman. And what I would 

like to do today is to put today’s hearing in context, the history 

that this committee has had dealing with and confronting this 

issue, what we have seen in the private sector, and the principles 

as we go forward on this legislation. 

The Internet has been a great American success story, probably 

one of the greatest examples of free market capitalism that we 

have ever seen in the entire history of the world. And it has been 

driven by a number of principles that characterize it. One, it has 

been private-sector led. It was not regulated by the government, 

and this Congress has taken a position that we would not tax 

Internet. So no taxation, openness, private-sector led. 

19 

Commissioner Powell back in the early days of the Bush administration set out principles for how we would see network neutrality and define network neutrality. Now, Commissioner and 

Chairman Powell is probably one of the most recognized free market advocates, de-regulatory advocates. But he saw the purpose of 

having an open network so he set the principles out. 

It has been maintained by another Republican chairman, Kevin 

Martin. And this committee last year, in the last Congress, excuse 

me, as we have laid out the COPE Act, we reaffirmed in that legislation network neutrality principles. In fact, we codified them, and 

in some of the negotiations, we had agreed to do a proceeding much 

further than where this bill is. This bill does codify those principles 

first expressed in most part by Chairman Powell, then reaffirmed 

by Kevin Martin. And it has been a successful approach of setting 

what the principles are and then being able to have enforcement 

on a case-by-case basis. 

Now there are some who question whether the FCC has the authority to enforce on a case-by-case basis these principles of network neutrality, the principles of openness, which have given us 

the greatest free market capitalist example and telecommunications policy in this century. 

So I think that this legislation is very helpful that it says very 

clearly we will codify these principles, but I do not want the government intervention and regulation to try to define in a very intrusive way some type of regulatory framework on network neutrality. The case-by-case is working. 

If we call for, and this bill does call for, additional hearings and 

comments from around the country, I believe it is a good way to 

have accountability, as we see the context of pretty intense concentration of the industry of telecommunications. Are we going to 

maintain a private-sector led openness for the Internet and for consumers and a bedrock of the freedom that everybody can get anything on the Internet that they so choose? Or will we see exclusives 

on content? We are now seeing exclusives on devices in the telecommunications industry and the iPhone. What does it take for one 

step to say we are not only going to have an exclusive arrangement 

on a device, but we then do exclusives on content? And then upsetting the great principle of openness and freedom that we have had 

on the Internet. 

So that is why we want to send a very strong signal that we do 

not want government intervention. We do not want government 

regulation, but we want the private sector to continue to take the 

leadership role in keeping an open policy and an open business 

model. And that is my purpose of joining with Chairman Markey 

on this legislation. And I thank you, Mr. Chair. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentlelady from California, Ms. Capps. 

OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. CAPPS. Thank you, Mr. Chairman, for holding this important 

and much anticipated hearing and for introducing your bill, to our 

witnesses for appearing today and their testimony, which we will 

enjoy hearing. 

20 

I expect that today we are going to hear many versions of what 

it means to have a truly open and neutral Internet. Like many of 

my colleagues, I understand that some form of reasonable network 

management is to be expected. However, I also believe that nondiscrimination is paramount to ensuring free speech and commerce 

online. And that is why I support H.R. 5353 and its provisions to 

guard against discrimination and degradation of content. 

The Internet is an incredible communications tool that has forever changed access to information and connectivity throughout the 

world. But it is also a tool for economic, social, and civic empowerment. So this hearing, to me, is about more than bytes and traffic. 

It is about more than packets and networks. It is about preserving 

the ingenuity and genius of this incredible platform, this touchstone of American innovation. 

So I look forward to the testimony of our witnesses, and thank 

you again, Mr. Chairman, for holding this hearing. 

Mr. MARKEY. Gentlelady’s time has expired. The chair recognizes 

the gentleman from Oregon, Mr. Walden. 

Mr. WALDEN. Thank you, Mr. Chairman. I am going to waive my 

opening statement and issue an early apology. We have a competing hearing on energy downstairs. So I will be back. 

Mr. MARKEY. The gentleman may reserve. The chair recognizes 

the gentlelady from California, Ms. Bono. 

OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. BONO MACK. I thank the chair. It is not necessary for me 

to give a list of examples of how the Internet has impacted our 

lives. We have all heard these stories before on this committee. Additionally, we are also all aware of the discussions surrounding network neutrality or network management or whatever title that 

each opposing side has tried to give the issue to gain an edge while 

making their argument. 

This issue was highlighted in the hearings leading up to and the 

subsequent markup of the COPE Act in 2006, and the general talking points have not changed significantly since that time. What is 

clear to me is that H.R. 5353 would increase the government’s 

hand in regulating the Internet. Both sides of this discussion make 

interesting points; however, like most arguments which turn political, the volume increases and each side begins to speak past one 

another. I think this is largely the case with the debate before us 

today. It is also why I continue to feel advocating for strong, intellectual property protections needs to remain at the forefront of all 

discussions related to the Internet. 

I have been very outspoken about ISPs and their efforts to crack 

down on illegal downloading. Additionally, it is widely understood 

the theft of digital creations online, whether it be a movie, software, or a song, has a terrible impact on our economy. In short, 

digital piracy results in a loss of American jobs. 

I approach the issue at hand, as I do most technological discussions, by asking myself what is best for the creators of content and 

the protection of intellectual property rights online. Today illegal 

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ally. It has also begun to take its toll on ISP networks. That is why 

I am pleased that ISPs and creative interests are acting in concert 

to take steps to combat online piracy. 

Can more be done by ISPs? Of course. Can the creative community do more? Yes. However, at a time when industry is beginning 

to address this issue, I think it would be remiss for us as a body 

to interfere in these efforts. I think this bill would do that. 

I would also like to express my concerns of relying on the FCC 

to combat piracy. We ask the Commission to do a lot. In my opinion, sometimes they get it, and other times, they don’t. Regardless, 

most of the time, decisions take a while. In that context, I don’t see 

how the FCC would be organizationally able to successfully combat 

something as complex as online piracy with an appropriate level of 

effectiveness. 

I look forward to hearing the discussion today. Additionally I will 

closely follow the level of cooperation between ISPs and content 

creators in the fight against online piracy. While I am currently 

hopeful that industry can work together to tackle this problem, I 

will continue to ask what is best for the creators of content and the 

protection of intellectual property rights online. 

Again, thank you, Mr. Chairman. And I yield back the balance 

of my time. 

Mr. MARKEY. The time of the gentlelady has expired. The chair 

will now recognize the gentlelady, Anna Eshoo. 

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

Ms. ESHOO. Thank you, Mr. Chairman, for having this hearing. 

Welcome to the distinguished panel of witnesses. And I want you 

to know, Mr. Chairman, that I am proud to be a cosponsor of this 

legislation and like legislation that was in the last Congress. 

I think that all of my colleagues have made very interesting 

points. I think Mr. Pickering’s description of what the Internet is, 

what it represents, the enormity of it, the extraordinary changes 

that the Internet has brought not only on businesses but people in 

their personal lives, an entire education system, the blue chip reputation of the United States of America being the inventor of this, 

all of the technologies that are a part of it, the effect that it has 

had on our intelligence community. As a member of the House Intelligence Committee, and certainly Ms. Harman who served on 

that committee with distinction, we understand this and appreciate 

it in a very, very special way. 

Now, what has made it successful? If there were choke points in 

the beginning, we wouldn’t be able to say what we are saying, what 

we all acknowledge. And so this effort is very clearly, very simply 

and profoundly to keep it the way we just described it. I think that 

were it not this powerful tool in so many ways, in all of its manifestations, people wouldn’t be laying claim to or want to keep or cut 

off some parts of it for themselves. I don’t have anything against 

the companies and the people that are engaged in this and help 

with the broadband. 

But we know—actually this room wouldn’t be filled with most of 

the dark suits that are here today were it not for the fact that 

22 

there are huge dollars involved in this. And I want people to be 

able to make money and enjoy the market, but I think that it needs 

to be kept open. Open, open, open, accessible, accessible, accessible. 

It is not. 

We know that it is not. There are all kinds of fancy words, but 

we want to keep it open. That is what this effort is about. It is the 

hallmark that really created the Internet or has made it successful 

and revolutionized the country and the world in the process. So I 

think that we have newfound problems with this. And if that were 

not the case, we wouldn’t have the stakeholders here to kind of defend where they are. All good people, but we need to go back and 

appreciate what the democratization of the Internet was founded 

on. And that is what this effort is about. 

And so I look forward to the debate. I think that this is a smart 

bill, and the language that the legal counsel draws up, I think it 

is consistent with the values of our country. And that is why it is 

as powerful as it is. We have the most powerful principles, and I 

think they need to be a part of this effort too. 

So thank you, Mr. Chairman. Look forward to the testimony and 

the debate. 

[The prepared statement of Ms. Eshoo follows:] 

STATEMENT OF HON. ANNA G. ESHOO

Mr. Chairman, thank you for drafting this important legislation and for holding 

another hearing on preserving free and open communications networks. 

Openness of the Internet has actually been its hallmark since it was created— 

the ability of any person anywhere in the world to reach out and access any content 

that someone else has made available on the Web. The openness of the Internet revolutionized business, it changed our economy, and it has transformed our everyday 

lives. 

Despite this history of openness the FCC has allowed carriers to begin ‘‘walling’’ 

in the Internet. They want to control which sites consumers will be able to download 

music from, where they will be able to watch live video and which blogs will have 

full access to the best service. This threatens the very existence of today’s Internet. 

That’s why Net Neutrality legislation should be enacted. 

The bill would establish for the first time a broadband policy for the country 

which includes the freedom to access the Internet without discriminatory interference and to promote open networks and access to applications and devices. The 

policy also would prohibit network owners from degrading content. This policy mirrors the same non-discriminatory rules which have always existed for our telephone 

networks and for the Internet prior to 2005. 

If enacted, the bill would require the FCC to examine whether carriers are blocking access to lawful content, applications, or services. 

Similar to the media ownership town hall meetings, the bill would mandate that 

within 1 year of enactment, the FCC must conduct eight broadband summits 

throughout the country. The purpose of the summits would be to bring together consumer advocates, small business owners, local governments, unions, academia, etc. 

This is a well crafted bill that if enacted would preserve the Internet the way it 

was conceived, open, open, open, accessible, accessible, accessible. Thank you, Mr. 

Chairman for holding this important hearing. 

Mr. MARKEY. The gentlelady’s time has expired. The chair recognizes the gentleman from Illinois, Mr. Shimkus. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Thank you, Mr. Chairman. I am going to be brief, 

but I disagree with a lot of what my colleague has said. I have two 

23 

issues. One is who manages the pipe and who makes a determination over lifesaving telemedicine information versus a movie 

download. Issue one. 

Two, the FCC has a process. There is very limited complaints, 

and there is a dispute resolution process right now. I said two, and 

really three is—in rural America we need broadband. This delays 

broadband rollout to rural America. And the example we can use 

is the auction, the most recent auction in which we didn’t get the 

value from the spectrum based upon the FCC putting open access 

as part of the criteria. There will be some who will disagree with 

that, but I truly believe that is what has happened. 

And so if you want to make sure that you can have an availability of lifesaving telemedicine over a movie download in those 

critical times, if you want to deploy broadband to areas—I still 

have areas that have dialup in my congressional district. This process does not help rural America get to equality. We want to talk 

about equality, let us talk about equality for the people to access 

the World Wide Web at a high speed and not put additional constraints on it. Thank you, Mr. Chairman, I yield back. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Michigan, Mr. Stupak. 

Mr. STUPAK. Mr. Chairman, I will waive as I will be bouncing between the two hearings, and I want to use the extra time for questions. 

[The prepared statement of Mr. Stupak follows:] 

STATEMENT OF HON. BART STUPAK

Thank you, Chairman Markey, for holding this hearing on H.R. 5353, the ‘‘Internet Freedom Preservation Act of 2008′′. 

This legislation would ensure that all lawful content on the Internet, no matter 

where it comes from, no matter where it goes, is treated equally by network providers. 

Hospitals in Northern Michigan depend on equal access to high speed broadband 

networks to provide healthcare through the Upper Peninsula Telehealth Network 

(UPTN). 

The Upper Peninsula Telehealth Network represents 42 sites consisting of 10 

Critical Access Hospitals, 4 community hospitals, a tribal health center, a summer 

camp for handicap children, and many other healthcare facilities. It has significantly improved access to health care, provided education opportunities for health 

professionals, and increased overall efficiency of healthcare in the Upper Peninsula. 

These Upper Peninsula hospitals would have difficulty affording any additional 

charges to ensure that they have the same reliable access to high speed broadband. 

I support keeping the Internet open and ensuring that everyone has access to 

whatever lawful content they choose. However, there are challenges that we need 

to address to ensure open and equal quality access to all users. 

Peer-to-Peer file sharing applications have proven to be powerful tools that slow 

down the network, using significant amounts of bandwidth to the detriment of other 

users. In addition, with the increase in distribution speeds, piracy has also grown. 

Not only is copyright law being violated, but excessive amounts of bandwidth are 

also consumed in the process. This reduces the quality of service for other users of 

the network. 

In order to confront these abuses, network providers need flexibility to manage 

their networks. 

Congress also needs to take into account the capacity constraints that currently 

exist. 

The Internet is a limited resource in constant need of private investment to expand. Since its founding, Internet usage has grown exponentially. Today, over 1 billion people in the world use the Internet. 10 million new people are logging on every 

month. 

24 

More music is sold today on iTunes than CDs. 90.4 billion e-mails were sent daily 

in 2007. Today, YouTube alone consumes as much bandwidth as the entire Internet 

did in the year 2000. 

To keep up with this demand, private companies have been investing billions of 

dollars to provide faster connections to the network and expand its capacity. Private 

companies that are investing significant amounts of capital to provide a service 

should be able to seek fair compensation for it. 

Congress must be sure that in recouping these investments, network providers 

are not restricting access to healthcare providers and other critical non-profit institutions that depend on reliable broadband access can continue at fair and reasonable prices. 

Chairman Markey, thank you again for holding today’s hearing. I look forward to 

working with you to address these challenges to ensure open and equal quality access to all users. 

Mr. MARKEY. Gentleman’s time is reserved. The chair recognizes 

the gentleman from Texas, Mr. Green. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman. And like my colleague 

from Michigan, I will be bouncing between the two, but I don’t 

know if I will be back in time to do my questions so I will give my 

statement. 

First, I want to thank you for holding the hearing on the Internet Freedom Preservation Act. Today’s panel represents a broad 

range of interests, and I look forward to hearing from the witnesses 

about the effects of the legislation if it becomes law. 

One of the main goals of this subcommittee is to promote the expansion of broadband deployment. The benefits of broadband are 

far-reaching, and just as important is the ability of end-users to access the content and the services they are choosing. The FCC has 

successfully promoted and maintained open and nondiscriminatory 

practices and taken action when necessary to investigate and address alleged violations with its openness principles. 

I strongly support the network openness principles adopted by 

the FCC in 2005 and feel the commission, as well as network operators, have adhered to these principles and successfully addressed 

issues that were not in line with the four principles. Last week, the 

Communication Workers Union of America sent a letter to members of our subcommittee expressing concern that, among other 

things, this legislation goes beyond the FCC’s broadband policy 

statement and does not take into account the need for reasonable 

network management. 

At the FCC hearing at MIT earlier this year, the FCC Commissioner Copp stated the FCC’s job is to figure out when and where 

to draw the line between discrimination and reasonable network 

management. I share these concerns as some network management 

practices are necessary to ensure the maximum number of consumers have quality broadband service. And I hope to hear the 

views from today’s panel on the language of Section 3 with regard 

to nondiscriminatory network management practices. 

Use of network management practices is not exclusive to public 

network operations in the U.S. Internet to schools use management 

practices and network operators in Japan, which offer the highest 

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ing, scheduling, marketing, marking, labeling, parsing, replicating, 

prioritizing, modifying, metering, policing, collision avoiding, packet 

resetting, and packet rescinding are all necessary traffic management practices that allow triple-play services, voice, data, and 

video, to be delivered reliably with efficiency over converged networks. Limiting the flexibility of network operators to respond to 

traffic and congestion issues by doing this would limit them from 

providing them the quality services the vast majority of users experience. 

It would also impede investment in network infrastructure, 

which we explored in previous hearings, and much needed in this 

country to expand availability and speed of broadband service. The 

companies that would build these networks would be less likely to 

make these investments. They are not able to manage traffic on 

them to ensure that the vast majority of their customers are experiencing quality services. At a time when we need to be encouraging this investment, I want to make sure that we do not take 

steps that will hamper it. 

Mr. Chairman, I strongly support the efforts to maintain the 

open Internet and the FCC policy on the principles, and Congress 

and the FCC should ensure that no legal Internet application service or content receives discriminatory treatment from network operators. But I am concerned this legislation may be too broad and 

will not allow for efficient management. And again I look forward 

to the hearings and look forward to our continuing consideration of 

the bill. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from California, Mr. Radanovich. 

OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. RADANOVICH. Thank you, Mr. Chairman and Mr. Ranking 

Member. Market forces react more quickly and strongly than any 

government regulation could hope to do, and they are more effective. And that is why I don’t see a need for the regulation before 

us today. In other words, the current system works, and we do not 

need to try to fix what is not broken. 

We have seen the Internet come so far since its inception to 

places and uses that no one could have predicted and at a volume 

that was unimaginable. It would have been irresponsible for Congress to try to regulate the Internet based on what it looks like 

when it was created or based on where they thought it would go. 

And that is why Congress showed great foresight by resisting the 

urge to constrain the Internet with regulation that they deemed 

appropriate at that time. And instead recognizing its unique potential and allowing it to flourish within the free market. 

The Internet today is a direct result of that decision. It would be 

just as irresponsible for us to act today, particularly given a lack 

of evidence of a need for such action. No one here can really know 

what the Internet is going to look like 10 years from now, but what 

we do know is that it will not reach its unimaginable potential if 

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icy. The Internet of tomorrow will be a direct result of how we proceed on this issue today. 

And I would like to thank the witnesses for being here today and 

especially to discuss this legislation with us. And I do look forward 

to a productive hearing. Thank you, Mr. Chairman. 

Mr. MARKEY. The gentleman’s time has expired.The chair recognizes the gentleman from Georgia, Mr. Deal. The gentleman waives 

his time. So the chair sees no other members seeking recognition 

at this time. 

So we will turn to our very distinguished panel, and we will 

begin by recognizing Mr. Walter McCormick. Mr. McCormick is the 

president and chief executive officer of the United States Telecom 

Association, an organization consisting of the Nation’s largest 

phone companies. We welcome you back, Mr. McCormick. Whenever you are ready, please begin. 

STATEMENT OF WALTER MCCORMICK, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, UNITED STATES TELECOM ASSOCIATION 

Mr. MCCORMICK. Thank you, Mr. Chairman. Mr. Chairman, 

Ranking Member Stearns, members of the subcommittee. Thank 

you for the opportunity to appear before you today. The United 

States Telecom Association represents broadband service providers, 

manufacturers, and suppliers. As such, we are committed to 

broadband investment and deployment, to increased broadband 

penetration, and to bringing the full promise of broadband to all 

Americans. 

And what extraordinary promise that is. Broadband is bringing 

consumers new competition and choice in entertainment. It is advancing the economy. It is creating new jobs, particularly in rural 

areas. It is improving the environment through telecommuting. 

Broadband is bringing new innovations to healthcare. It is improving education, and broadband is improving personal security and 

emergency response. 

So broadband deployment is important, vitally important. Speaker Pelosi recognized the importance of broadband deployment at 

the beginning of this Congress in announcing an innovation agenda. And I know, Mr. Chairman, that broadband deployment is an 

objective of yours. Indeed, your initiative early in this Congress to 

map where broadband is and is not available in an effort to help 

target investment to where it is most needed is in direct furtherance of this goal. 

But H.R. 5353, in amending the Communications Act to establish 

a national broadband policy, does not establish a national policy 

that calls for broadband deployment. Nowhere does it call for increased investment or expanded penetration. And in fact, the language in this bill raises the kinds of uncertainties that could chill 

investment. 

Mr. Chairman, we have three concerns with this bill. Our first 

concern is that it has been the longstanding practice of this subcommittee to study first and to legislate second. This bill takes the 

opposite approach. It establishes a national broadband policy first 

and then directs a circumscribed study aimed at determining 

whether this new policy is being met and how best to enforce it. 

27 

We believe the study should come first, and in that regard, there 

has been much work done by expert federal agencies and departments that is worth the subcommittee’s review and analysis before 

legislating—work by the FCC, by the FTC, and work by the Department of Justice. 

Indeed, the FCC currently has underway three separate proceedings on network practices, and in the past few weeks, the commission has held public hearings in Boston and at Palo Alto. As a 

result we respectfully suggest that this legislation is premature. 

The FCC in particular should be allowed to continue its examinations, conduct its work, and conclude its proceedings before Congress considers legislating. 

Our second concern is that the terms used in the bill are ambiguous. Until the FCC defines what is and is not unreasonable and 

discriminatory with a high degree of precision, an exercise that 

may well lead to protracted litigation, those who are designing, 

constructing, and managing networks and those who are developing applications do so at some risk. 

Our third concern is that this ambiguity, this uncertainty, this 

risk, will chill innovation, investment, broadband deployment, and 

job growth. This is something that our nation can ill afford. The 

weak state of the economy is front page news, yet one of the bright 

spots is broadband. There is growth in this sector with an estimated $70 billion invested in advanced communications infrastructure this past year. 

Mr. Chairman, very creative people are taking the potential of 

broadband and turning it into incredible life-enhancing tools. Congress should be careful to do no harm to avoid taking the creativity 

and innovation and investment that is occurring and putting it all 

in limbo while the government argues over the meaning of words. 

Instead, let us keep the investment and ingenuity flowing. 

I thank you for the invitation to join you and to share our perspective. 

[The prepared statement of Mr. McCormick follows:] 

STATEMENT OF HON. WALTER B. MCCORMICK, JR. 

Chairman Markey, Ranking Member Stearns, Members of the Subcommittee: 

Thank you for the opportunity to appear before you today. 

The United States Telecom Association represents broadband service providers, 

manufacturers, and suppliers. Our member companies provide broadband on a fixed 

and mobile basis, and offer a wide array of voice, data and video services. You might 

say that ‘‘we are broadband’’ in that we design, build and, manage the advanced 

networks that make broadband communications possible. 

As such, we are committed to broadband investment and deployment, to increased 

broadband penetration, and to bringing the full promise of broadband to all Americans. 

And what extraordinary promise that is. 

• Broadband is bringing consumers new competition and choice in entertainment; 

• It is advancing the economy; 

• It is creating new jobs, especially in rural areas; 

• It is improving the environment, through telecommuting; 

• Broadband is bringing new innovations to healthcare, like those in your state of 

Massachusetts, through the Connected Health Initiative; and in Virginia, where 

through broadband, ICU nurses who could only watch three patients at a time can 

now monitor the health of up to 50; 

• It is improving education, by allowing students who are ill to continue to participate in classes through broadband connections so that they do not fall behind; 

28 

• And broadband is improving personal security and emergency response, with innovations like the ‘‘Be Safe’’ program—again in Massachusetts—which is now operating at schools throughout the state, and provides first responders with on-site access to detailed, individualized information about local school schematics when lives 

are at stake and every second counts. 

So broadband deployment is important. Vitally important. Speaker Pelosi recognized this at the beginning of the 110th Congress by announcing an ‘‘Innovation 

Agenda’’ calling for increased broadband deployment. The 170-member Congressional Internet Caucus recognized this in making its number one objective ‘‘promoting the growth and advancement of the Internet.’’ The House Republican HighTech working group recognized this in its call ‘‘to remove regulatory barriers, and 

to promote new technologies to help make broadband more affordable for all Americans.’’ It is clear that bringing broadband to every American is a bipartisan objective. And we know, Mr. Chairman, that broadband deployment is an objective of 

yours. Indeed, your initiative early in this Congress to map where broadband is and 

is not available, in an effort to help target investment to where it is most needed, 

is in direct furtherance of this goal. 

But H.R. 5353, in amending the Communications Act to establish a national 

‘‘Broadband Policy,’’ does not establish a national policy that calls for broadband deployment. Nowhere does it call for increased investment, or expanded penetration. 

And, in fact, the language in this bill raises uncertainties that could chill investment, and bring to a grinding halt the development of creative and innovative uses 

of broadband that today are showing extraordinary promise. 

What does the bill language mean when it calls for the adoption and enforcement 

of protections against unreasonable discriminatory favoritism for content based 

upon its source, ownership, or destination? Would it be ‘‘unreasonably discriminatory’’ for a network operator to construct and manage its networks to assure the reliability of a healthcare application? A personal security application? What is and 

is not allowed? No one will, or can, know until the FCC defines these terms. And 

how is this to take place? Prospectively, through rulemaking? Retroactively, through 

adjudication? 

Mr. Chairman, we have three concerns with this bill: 

Our first concern is that it has been the longstanding practice of this Subcommittee to study first, and legislate second. This bill takes the opposite approach. 

It establishes a national broadband policy first, and then directs a circumscribed 

study aimed at determining whether this new policy is being met and how best to 

enforce it. We believe the study should come first. And in that regard, there has 

been much work by expert federal agencies and departments that is worth the Subcommittee’s review and analysis before legislating: •The FCC currently has underway three separate proceedings on network practices, and in the past few weeks the Commission has held public hearings in Boston 

and Palo Alto. The Chairman of the FCC recently told a Senate Committee that the 

Commission has the authority to address any network management practices that 

violate the broadband principles that the Commission has already adopted to ‘‘preserve the open and interconnected nature of the public Internet.’’ 

•The Federal Trade Commission has conducted an extensive investigation into 

the state of broadband competition and determined that the marketplace is moving 

toward more, not less, competition in broadband services, and it warned against 

‘‘the unintended side effects’’ of legislation. 

•The U.S. Department of Justice recently echoed the findings of this Federal 

Trade Commission report in its own filing of comments with the FCC. 

As a result, we respectfully suggest that this legislation is premature. The FCC 

should be allowed to continue its examinations, conduct its work, and conclude its 

proceedings before the Congress considers legislation. 

Our second concern is that the terms used in the bill are ambiguous. For example, 

the new national policy would prohibit ‘‘unreasonable interference from and discrimination by network operators.’’ Unreasonable and discriminatory in the eyes of 

whom? As previously stated, until the FCC defines what is and is not ‘‘unreasonable’’ and ‘‘discriminatory’’ with a high degree of precision, an exercise that may well 

lead to protracted litigation, those who are designing, constructing and managing 

networks, and those who are developing applications, do so at some risk. 

Our third concern is that this ambiguity, this uncertainty, this risk will chill innovation, investment, broadband deployment, and job growth. 

This is something that our nation can ill afford. The weak state of the economy 

is front page news. Yet, one of the bright spots is broadband. There is growth in 

this sector, with an estimated $70 billion invested in advanced communications infrastructure this past year. This is an extraordinary sum. By way of comparison, 

when President Kennedy committed the United States to landing a man on the 

29 

moon in ten years, the government spent approximately $10 billion per year—in today’s dollars—on the Apollo program. When President Eisenhower committed the 

Nation to building an Interstate Highway System, the government spent approximately $25 billion per year—in today’s dollars. This past year, broadband service 

providers invested approximately $70 billion. And, this is private sector investment, 

not taxpayer funds. 

This investment has broad benefits. A new report by Connected Nation suggests 

that just a modest 7% increase in U.S. broadband adoption could create 2.4 million 

new American jobs and generate $134 billion in annual economic stimulus. 

There is much that we can do together. Congress can enact the Rural Utilities 

Service reforms that are part of the Farm Bill that would accelerate the deployment 

of broadband in unserved areas; it can advance public-private partnerships like 

those in the Connected Nation program which, in Kentucky, led to an increase in 

broadband penetration from 60% to 94% in just 3 years; and it can provide for 

broadband mapping along the lines of your legislation, Mr. Chairman. Indeed, the 

Committee’s leadership on this issue has already resulted in the FCC voting to improve its approach to data collection by putting in place a system to gather more 

and better targeted information on broadband adoption. 

Mr. Chairman, very creative people are taking the potential of broadband and 

turning it into incredible, life-enhancing tools—remote medical monitoring, online 

education, and new applications for first-responders. Congress should be careful to 

do no harm—to avoid taking the creativity and experimentation and innovation and 

investment that is occurring and putting it all into limbo while the government argues over the meaning of words. Let’s not say to these innovative and creative 

thinkers: ‘‘Hold on a minute, let’s just slow down until the government has the 

chance to get a handle on all this and can develop a national policy to govern the 

management of the Internet.’’ Instead, let’s keep the investment and ingenuity flowing. 

Mr. Chairman, I thank you for the invitation to join you and to share our perspective. We look forward to working with you and the members of the Committee on 

policies aimed at bringing the full promise of broadband to all Americans. 

Mr. MARKEY. Thank you very much, Mr. McCormick. Our second 

witness is Ms. Michele Combs, who is the vice president for communication for the Christian Coalition of America. The Christian 

Coalition is the largest conservative grassroots organization in the 

United States. We welcome you. 

STATEMENT OF MICHELE COMBS, VICE PRESIDENT, 

COMMUNICATIONS, CHRISTIAN COALITION OF AMERICA 

Ms. COMBS. Thank you, Mr. Chairman, and thank you, distinguished members of the committee. I also want to thank the chairman and Representative Pickering for their leadership in introducing H.R. 5353, The Internet Freedom Preservation Act and for 

standing up for millions of Americans who don’t want to see the 

Internet turned into something more like cable television. 

Use of the Internet has allowed the Christian Coalition to amplify the voices of millions of hard-working, pro-family Americans 

in a way that has revolutionized their ability to be heard and to 

engage in the political process. 

Consequently, the reason the Christian Coalition supports net 

neutrality is simple. We believe that all organization, such as the 

Christian Coalition, should be able to continue to use the Internet 

to communicate with our members and with the worldwide audience without a phone or cable company snooping in our communications and deciding whether to allow a particular communication to proceed, slow it down, block it, or offer to speed it up only 

if the author pays to be on the fast lane. 

Unfortunately, in the last 6 months, we have seen network operators block political speech, block content, and block the most popVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
30 

ular applications on the Internet. In every incident, the network 

operators have claimed that these actions were for network management purposes. 

As you know, in October 2007, the news organization Associated 

Press reported that Comcast was blocking consumers’ ability to 

download the King James Bible using a BitTorrent technology. It 

has also been pointed out that Comcast’s behavior just so happens 

to block access to video distribution applications that compete with 

Comcast’s own programming. 

If Comcast were to create a Christian family channel, would the 

FCC allow it to block access to a competing product from the Christian Coalition that was distributed by a BitTorrent application? I 

have heard the cable companies argue that network neutrality 

rules would prevent them from protecting consumers from child 

pornography and other illegal content. I am not a network engineer, but it is my understanding that every major net neutrality 

proposal would allow the network operators to block illegal content. 

No one I know opposes that. 

The cable company’s argument is disingenuous, and frankly it offends me as I respectfully suggest that it ought to offend you. Right 

now, the cable companies are not subject to a network neutrality 

regulation. Yet child pornography continues to be available over 

the Internet. Why should we believe that network neutrality would 

impede their ability to block this content when they aren’t even 

stopping it now? 

The cable companies aren’t making stopping illegal content a priority. What is worse, they are using network neutrality as an excuse for their inaction. Let us remember it was the King James 

Bible that Comcast blocked which caused the current controversy. 

At the FCC field hearing in Palo Alto 2 weeks ago, one witness 

noticed that if Comcast removed just two pay-per-view pornography 

channels and allocated that space for the public Internet, it would 

solve their so-called bandwidth problems. 

Why do you think the pornography industry has not supported 

net neutrality? I suggest the answer is that the pornography industry knows it will be able to pay premium prices to be on the fast 

lane with exceptional quality of service provided by the cable industry. You know who won’t have the deep pockets to compete in 

this non-neutral world? Non-profit family organizations like the 

Christian Coalition. 

The Christian Coalition does not seek burdensome regulations. 

We generally believe that less government is better than more government, and we do not believe that government should censor 

speech. But let us be clear. Right now, the telephone and cable 

companies are investing and using the exact same censorship and 

content discrimination technologies that are being used by the Chinese government to censor speech. 

In fact, the Chinese government is currently using these same 

technologies to block the Christian Coalition speech from being received by its citizens. The FCC should make it clear that it will not 

allow cable and phone companies to use these technologies to block 

the lawful speech rights of the Christian Coalition and others. 

Increasingly, faith-based groups are turning to the Internet to 

promote their political rights and to engage in what Ronald Reagan 

31 

called the hard work of freedom. We should not let the phone and 

cable companies interfere with that work. Thank you. 

[The prepared statement of Ms. Combs follows:] 

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Mr. MARKEY. Thank you, Ms. Combs, very much. Our next witness is Mitch Bainwol. His is the chairman and chief executive officer of the Recording Industry Association of America. RIAA members create, manufacture, and distribute 90 percent of the sound 

recordings produced or sold in the United States. We welcome you, 

sir. 

STATEMENT OF MITCH BAINWOL, CHAIRMAN AND CEO, 

RECORDING INDUSTRY ASSOCIATION OF AMERICA 

Mr. BAINWOL. Thank you, Mr. Chairman, Ranking Member 

Stearns, members of the subcommittee. I appreciate the opportunity today to share our perspective. The music industry is in the 

midst of profound change. The digital era has produced huge losses 

yet affords opportunity for our brightest days. Music powers the 

most popular TV, ‘‘American Idol,’’ the most popular games, ‘‘Guitar Hero,’’ and the most popular device, the iPod. 

Content is king. Speedy gadgets are literally empty without 

tunes. During these past 2 years, the acquisition of music has 

jumped 15 percent. But even as music becomes even more central 

to our lives, the legal share of acquisition has plummeted from 56 

percent to 42 percent. Imagine that. It is pretty sobering. Less than 

half of our music is acquired legally. 

The digital age is one where consumers want more and more 

music but are paying for less and less. The consequences of digital 

theft are real. Thousands of American job losses, hundreds of talented artists forced out of the business because investment capital 

is drying up. Half of the glorious songwriters in Nashville showed 

out of their love for creativity, all at a time when people want more 

and more music. 

It is ironic, but no matter how you slice it, digital piracy has produced brutal human and creative consequences that make this debate anything but academic. Back in 1999, we hit a sales high of 

$14.6 billion, all physical. Physical sales last year totaled only $8 

billion, down 45 percent. Digital sales—downloads, subscriptions, 

and mobile—generated $2.4 billion last year, making up about a 

third of our physical loss. So far in 2008, the physical digital net 

is down another 5 percent. 

Clearly our future will be more complex than a model that relies 

on plastic or unit sales. Increasingly our economic foundation will 

be augmented by performance royalties and by payments for access 

to music through subscription services, mobile platforms, and potentially, ISPs. And that is why your hearing today is so significant. 

We are heartened by your examination of these issues and the 

emerging consensus recognizing that Internet freedom is not synonymous with the Wild West in which the taking of our property 

is accepted or, at best, ignored. 

Your distinction between lawful and unlawful, legal or illegal activity, must be the cornerstone about private market discussions 

that we will have with folks on this panel and public policy. 

It wasn’t that long ago that ISPs used piracy to drive broadband 

growth. In amazingly transparent language, we saw advertising effectively encouraging the purchase of broadband to steal music. But 

many ISPs thankfully are in a different spot. They want to address 

37 

the congestion problem that piracy yields and to work more closely 

with content to provide rich legal offerings with an amateur subscriber base. 

While we are seeing signs of cooperation from many ISPs, others 

would just as soon pretend that congestion was not fundamentally 

a problem directly connected to theft. Some prefer to cure congestion with greater efficiency, solving their problem but compounding 

ours. And some go so far to say that they can be smart about dealing with spyware and viruses but need to stay dumb when it comes 

to pirated music. 

If I leave you with one concept, this is it. The Internet ought not 

be a place where chaos in the name of freedom is allowed to reign 

supreme. Rather, the Internet should be a place where freedom coexists comfortably with respect for property, with a respect for 

order. Order means safety on the Internet. It means legitimate 

commerce. It means tools for parents raising their kids. It means 

consumers enjoy the high speed that they purchase without degradation because someone is downloading illegal porn. 

We are at a vital crossroads for the creative industry. We prefer 

to work out these matters in the private marketplace with our 

business partners. We have begun to do so, but we are literally 

running out of time. Certainly the Markey-Pickering bill is one way 

to get ISPs to focus on the piracy problem. Its distinction between 

lawful and unlawful content is a necessary predicate to any discussion about network neutrality and network management. 

We applaud you, Mr. Chairman and Congressman Pickering, for 

making this distinction the touchstone of your bill. Since we continue to believe, at least for now, that our marketplace solution 

with the ISPs is viable and certainly can be devised and implemented more quickly and flexibly than a regulatory proceeding, we 

think that the bill is a touch premature. We hope that the deliberations today on this legislation will help spur meaningful discussions and commitments to address the debilitating piracy challenge 

that we face. Thank you again for your leadership and for the opportunity to testify. 

[The prepared statement of Mr. Bainwol follows:] 

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Mr. MARKEY. Thank you, Mr. Bainwol, very much. Our next witness is Mr. Steve Peterman. He is a three-time Emmy winner and 

the executive producer of the very popular television show ‘‘Hannah 

Montana.’’ He testifies today on behalf of the Writers Guild of 

America, West. We welcome you, sir. Whenever you are ready, 

please begin. 

STATEMENT OF STEVE PETERMAN, EXECUTIVE PRODUCER, 

HANNAH MONTANA, WRITERS GUILD OF AMERICA, WEST 

Mr. PETERMAN. Thank you, Chairman Markey, Ranking Member 

Stearns, Vice Chair Doyle, and the distinguished members of the 

Telecommunications and Internet Subcommittee. Yes, I am the executive producer, one of the executive producers of ‘‘Hannah Montana.’’ I am also a member of the Writers Guild, and I am here 

today to explain why ensuring an open online marketplace is critical to this country and why the Writers Guild of America supports 

H.R. 5353, The Internet Freedom and Preservation Act. 

When I began my writing career 20 years ago, you could watch 

‘‘Roseanne’’, ‘‘Cosby’’, ‘‘Cheers’’, ‘‘The Wonder Years’’, and the series 

that I was lucky enough to be one of the original writers on: ‘‘Murphy Brown.’’ Those shows were considered smart, funny, sometimes 

touching, and even thought provoking. And they were all made by 

independent production companies. Unfortunately, in the years 

since then, those companies have disappeared. The unraveling of 

the financial interest and syndication rules which began in 1992 

has allowed for the greatest consolidation of media we have ever 

seen. 

Instead of a rich marketplace of ideas, today we have seven conglomerates controlling nearly all of the information and content 

that we see. Because this small group now acts as producer, studio, 

and network, there has been an inevitable stifling of creativity and 

diversity. And because they maintain a chokehold over distribution, 

there has been nowhere else for the creative community to go until 

the Internet. 

It is now abundantly clear that the Internet is the new television. Today you can watch episodes of almost any series you 

want, anytime you want, on your computer or your phone. And tomorrow you will be downloading first-run movies. We in the Writers Guild are determined not to repeat the old media experience. 

During our recent strike, many writers became interested in creating original content for the Web. Some have already signed deals 

with new media providers, while others aren’t even waiting for a 

deal. They are posting original content for free for the sheer joy of 

being able to work without getting notes from 30 executives with 

no sense of humor. 

Because, unlike the current studio system, the Internet makes it 

possible for content creators to retain both ownership and control 

of the quality of what they create. The Internet also provides the 

American public with a virtually unlimited menu of news, information, and entertainment content from which to choose. 

But all of these bold new possibilities rely on net neutrality. In 

order for writers to reintroduce diversity back into media and entertainment, we must have a level playing field on an Internet 

without gatekeepers, a system that is not at the mercy of those 

43 

who control distribution and who seek to leverage that control to 

create a fee system or worse, as we currently experience, to own 

and control content. 

I commend the FCC and Chairman Martin for their diligent 

work to hold ISPs accountable to the policy principles as adopted 

by the commission in 2005. ISPs should not have the unilateral authority to disable program applications or to block or discriminate 

against access to legal Web sites, especially without appropriate 

transparency to content providers and consumers. 

I also strongly support codifying these principles into the law of 

the land as H.R. 5353 would do. Only with a federal law will we 

have the legal standing to demand that the Internet remain the 

open and vibrant marketplace that it is today. And when we talk 

about an open marketplace, we do not mean a thieves’ marketplace. The Guild, believe me, recognizes piracy as a major problem. 

Just look for ‘‘Hannah Montana’’ on YouTube. You will find more 

than 110,000 results, most of which were stolen and none of which 

provide any income to me, the other writers on the show, or the 

studio. 

The two bills that have been introduced during this session of 

Congress, Senate Bill 215 introduced by Senators Dorgan and 

Snow, and H.R. 5353 introduced by Chairman Markey and Congressman Pickering, specifically reference the right of consumers to 

access lawful content. Piracy is and should remain illegal. I applaud the work of the Motion Picture Association of America, the 

networks, the Copyright Alliance, and everyone else working to ensure creators and copyrights are protected. 

But the solution is not establishing new rules that may prevent 

writers and other content creators from competing at all. The Internet from its inception has been about innovation, and I am confident that innovative technology and innovative strategies will 

help to confront the problems of piracy. 

In conclusion, I have been incredibly blessed in my career. I grew 

up in a working class family in Milwaukee. My parents ran a momand-pop restaurant. They took out loans to send me to Harvard, 

hoping I would become a lawyer. I terrified them by becoming an 

actor and then a writer, but my dad lived long enough to see me 

win an Emmy. And now I am on a show that has made my 16-yearold son say Dad, you have made me a legend. And that is very cool. 

I want other writers to have the same opportunities I had, and 

even more importantly, I want my son and his children to have free 

and open access to the greatest repository of information in the history of the world. Thank you very much. 

[The prepared statement of Mr. Peterman follows:] 

STATEMENT OF STEVE PETERMAN

Thank you Chairman Markey, Ranking Member Stearns, Vice Chair Doyle, and 

other distinguished members of the Telecommunications and the Internet Subcommittee. 

My name is Steven Peterman and I’m an executive producer and one of the writers of the Emmy-nominated series ‘‘Hannah Montana.’’ I’m also a member of the 

Writers Guild of America, West. I’m here today to explain why ensuring an open 

online marketplace is critical and why the Writers Guild of America supports H.R. 

5353, the Internet Freedom and Preservation Act. 

44 

When I began my writing career twenty years ago you could watch ‘‘Roseanne,’’ 

‘‘Cosby,’’ ‘‘Cheers,’’ ‘‘The Wonder Years’’ and the series on which I was lucky enough 

to be one of the original writers: ‘‘Murphy Brown.’’ These shows were all considered 

smart, funny, sometimes touching and even thought provoking. And they were all 

made by independent production companies. 

Unfortunately, over the years since, those companies have disappeared. The unraveling of the financial interest and syndication rules, a process that began in 

1992, has allowed for the greatest consolidation of media we have ever seen. Instead 

of a rich marketplace of ideas, today we have seven conglomerates controlling nearly 

all of the information and content we see. Because this small group now acts as producer, studio and network, there has been an inevitable stifling of creativity, and 

diversity, and because they maintain a chokehold over distribution there has been 

nowhere else for the creative community to go. They’ve been the only game in town. 

Until the Internet. 

It is now abundantly clear that the Internet is the new television. Today you can 

watch episodes of almost any series you want, any time you want, on your computer 

or phone. Tomorrow, you’ll be downloading first-run movies. And we in the Writers 

Guild are determined not to repeat the ‘‘Old Media’’ experience. 

During our recent 100-day strike, many writers, became interested in creating 

original content for the Web. Some have already signed deals with new media providers, while other aren’t even waiting for a deal, they’re posting original content 

for free, for the sheer joy of being able to work without notes from thirty executives 

with no sense of humor. Because unlike the current studio system, the Internet 

makes it possible for content creators to retain both ownership and control of the 

quality of what they create. The Internet also provides the audience—the American 

public— with a virtually unlimited menu of news, information, and entertainment 

content from which to choose. 

But all of these bold new possibilities rely on ‘‘net neutrality.’’ In order for writers 

to reintroduce diversity back into media and entertainment, we must have a level 

playing field on an Internet without gate keepers; a system that is not at the mercy 

of those who control distribution, and who seek to leverage that control to create 

a fee system or, worse, as we currently experience, to own and control content. 

I commend the FCC and Chairman Kevin Martin for their diligent work to hold 

ISPs accountable to the policy principles adopted by the Commission in 2005. ISPs 

should not have the unilateral authority to disable program applications or to block 

or discriminate against access to legal Web sites, especially without appropriate 

transparency to consumers, content providers, and the general public. I also strongly 

support codifying these principles into the law of the land, as HR 5353 would do. 

Only with a federal law will we have the legal standing to demand that the Internet 

remain the open and vibrant marketplace of ideas it is today. 

But when we talk about an open marketplace we don’t mean a thieves marketplace. The Guild recognizes that piracy is a major problem. I’ve experienced this 

first hand—just look for Hannah Montana on You Tube; you’ll find more than 

110,000 results, many of which were stolen, and none of which provide any income 

to me, the other writers of the show, or the studio. The two bills on Internet preservation that have been introduced during this session of Congress—Senate Bill 215, 

introduced by Senators Dorgan and Snowe, and H.R. 5353 introduced by Chairman 

Markey and Congressman Pickering, specifically reference the right of consumers to 

access lawful content. Piracy is and will remain illegal. I applaud the work of the 

Motion Picture Association of America, the networks, the Copyright Alliance, and 

everyone else working to ensure creators and copyrights are protected. 

But the solution is not establishing new rules that may prevent writers and other 

content creators from competing at all. 

The Internet, from its inception, has been about innovation, and I am confident 

innovative technology and innovative strategies will help us confront the problems 

of piracy. 

I’ve been incredibly blessed in my career. I grew up in a working class family in 

Milwaukee. My parents ran a ‘mom and pop’ restaurant. They took out loans to 

send me to Harvard hoping I’d become a lawyer and I terrified them by becoming 

an actor and then a writer. But my dad lived long enough to see me win an Emmy 

and now I’m on a show that has made my 16-year-old son tell me, ‘‘Dad, you’ve 

made me a legend.’’ I want other writers to have the opportunities I had. But even 

more importantly, I want my son and his children to have free and open access to 

the greatest repository of information in the history of the world. 

In conclusion, we have seen this movie before. We content creators live everyday 

with the effects of the repeal of the financial and syndication rules and the resulting 

consolidation of the Nation’s media outlets. Unless content creators and consumers 

have the freedom to create and access lawful content and services without discrimiVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
45 

nation by the Internet service providers who, like the television networks in Old 

Media, have a chokehold over distribution, we will be doomed to repeat our own history. We need rules that protect both creators and consumers, and ensure that the 

Internet is a level playing field for all; that consumers have the freedom to choose 

the content and services they want; and that the Internet remains the diverse, independent, vibrant and competitive marketplace of voices and visions that it is today. 

Thank You. 

SUMMARY OF STATEMENT: 

Over the past 15 years, due to the unraveling of the financial and interest and 

syndication rules, the country has experienced the largest consolidation of media in 

its history. The media conglomerates have become ‘vertically integrated’—meaning 

they control both the production and distribution of the country’s news and entertainment content. This consolidation has stifled creativity and diversity in the entertainment industry and has left content creators with virtually no opportunities for 

owning their content. Writers and other content creators are excited by the possibility of producing new content directly for the Internet, where they may own and 

control the content they create. However, in order for them to be able to compete, 

they need an open online marketplace, free from gatekeepers that may use distribution in order to own, control or favor specific content or content providers. 

Mr. MARKEY. Thank you, Mr. Peterman, very much. Our next 

witness is Mr. Kyle McSlarrow. He is the president and chief executive officer of the National Cable and Telecommunications Association, an organization consisting of the Nation’s largest cable 

companies. We welcome you back, Mr. McSlarrow. Whenever you 

are ready, please begin. 

STATEMENT OF KYLE MCSLARROW, PRESIDENT AND CEO, 

NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION 

Mr. MCSLARROW. Thank you, Mr. Chairman, Ranking Member 

Stearns, distinguished members of the subcommittee. I think this 

may be the sixth time I have been before the subcommittee to talk 

about net neutrality, and ordinarily it would be difficult to find 

something new. But Internet regulations is the gift that keeps on 

giving and it morphs from year to year. 

Mr. Chairman, before I took this job representing the cable industry and no, my son does not think I am a legend for that. Before 

even I appeared before many of you to engaged in spirited discussions about energy policy, I and about 15 or 20 others founded an 

Internet startup. It was out in Silicon Valley late 1999 into 2000. 

And the idea was to create a destination site, a social networking 

site, that probably would be a less sophisticated version of what we 

now think of as a MySpace or a FaceBook. 

And this was a world, of course, that was completely a dialup 

world. And at the time, the last thing in the world we were worried 

about was whether or not the cable companies were going to block 

our ability to launch an Internet startup and reach our putative 

customers. 

In fact, we were cheering the cable industry on because we knew 

at that time that the cable industry was the only industry in America that had launched a huge infrastructure upgrade to deploy 

broadband nationwide. We just wanted it to go faster, and we 

wanted people to adopt broadband more quickly. 

At about the same time, of course many of you will remember, 

immediately with the advent of cable’s rollout of broadband, came 

calls for Internet regulation. Back then it was called open access. 

46 

And the FCC wisely, in my view, under then Democratic chairman 

Bill Canard, refrained from regulating cable. A couple years later 

in 2002, a Republican chairman, Michael Powell, affirmatively in 

the cable modem decision made it a Title I information service and 

thus not subject to economic regulation, a decision that was upheld 

by the Supreme Court in 2005 in the Brand X decision. 

I say all this because I think every one of you, in one form or 

another, has recognized that the Internet and broadband has been 

a huge success story. And everybody’s vision is how do we keep it 

going. It is not irrelevant, as Mr. Upton and others have pointed 

out, that during that entire period—and I think we need to fix on 

this point because others will tell you a different story—cable’s 

broadband service has never been regulated and has provided the 

platform now joined by the telephone companies and wireless providers that has enabled the creative genius of all these applications, services, and Web sites that we enjoy. 

So I think as we think about what the next steps are—and I 

don’t dispute the policies that people have talked about and the vision. All of that, I think, reflects our business and what we want 

our consumers to experience as Internet, high-speed Internet, consumers. The question is what do we do about regulation. 

Mr. Chairman, as you pointed out in your opening statement, the 

distinction between lawful and unlawful content is an important 

one. And as I say in my written testimony, I recognize that. I congratulate you for that. 

It is interesting that out of the billions of transactions that have 

taken place on the Internet, there are four episodes that people cite 

to of malfeasance. One was swiftly dealt with by the FCC. Two of 

them, so far as I could tell, actually had nothing to do with Internet access. And the fourth, which I am happy to get into in more 

detail during the Q and A, involves peer-to-peer networking, which 

is a huge challenge. And I am not in the least bit defensive about 

it. I think it is a very complicated subject, but none of those, and 

certainly none of those in the aggregate, suggest to me, given the 

success that we have had to date, that this is the time to change 

course in a regulatory direction. 

I think what I like about the bill is the concept of having a study, 

doing the analysis, and then reporting back to Congress. That part 

of the bill seems to me an eminently sensible approach. And I 

thank you for your time, Mr. Chairman. 

[The prepared statement of Mr. McSlarrow follows:] 

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62 

Mr. MARKEY. Thank you, Mr. McSlarrow. Our next witness is 

Mr. Scott Savitz, who is the chief executive officer of Shoebuy.com, 

the Nation’s fastest growing online retailer for footwear. Mr. Savitz 

founded Shoebuy after serving as a director at Bank Boston Roberts and Stevens. We welcome you, sir. 

STATEMENT OF SCOTT SAVITZ, CEO AND FOUNDER, 

SHOEBUY.COM 

Mr. SAVITZ. Thank you. Good morning, Chairman Markey, Mr. 

Stearns, and the members of the subcommittee. My name is Scott 

Savitz. I am the CEO of Shoebuy.com The good thing about doing 

Shoebuy is my kids are fans, but my wife thinks I am a legend, 

which is pretty cool. At any rate, we are proudly headquartered in 

Boston, Massachusetts. And we are now part of the IAC family of 

businesses, which has grown in recent years to own and operate 

over 60 brands, including Ask.com, Match.com, Citysearch, Evite, 

and many others. 

I appreciate you inviting me here today to share our company’s 

story and to discuss the importance of preserving an open Internet 

and its implications for future entrepreneurship and innovation. 

Mr. Chairman, as you probably already know, the Internet is a 

major growth engine for the overall economy and continues to propel innovation and empower individuals. In a slowing economic environment, online retailing continues to look strong and has to date 

been an impressive growth story. 

Excluding online travel, in 2007, U.S. online sales grew 21 percent to $175 billion and are projected to total $204 billion in 2008. 

One million companies worldwide now rely on the Internet economy for more than 50 percent of their revenue. 

I can tell you firsthand that my business fundamentally depends 

on an open Internet. We rely on consumers having unfettered access to our site and for us to be able to reach consumers whenever 

and wherever they live. 

We must therefore preserve consumers’ rights to access content 

and service, on a nondiscriminatory basis without interference from 

network operators. What is at stake in the net neutrality debate 

is nothing less than the future growth on the Internet economy, innovation, entrepreneurship, and consumer choice. 

Mr. Chairman, in April 1999, we started Shoebuy.com, which is 

now one of the world’s largest sites for shoes. Our initial business 

plan and strategy would have been quite different had there not 

been an open Internet. In a world where network operators would 

function as gatekeepers, we would have faced the prospect of first 

negotiating to buy access to consumers. So instead of having to 

raise immense institutional capital early on to gain access to consumers, we were able to bring a better mousetrap to the market 

by relying on hard work, savvy marketing, fiscal prudence, and a 

certain amount of luck. 

At the heart of our success is Shoebuy’s focus on providing the 

best in class consumer experience. Through dedication to the customer in our ability to keep marketing and overhead costs low, we 

have been to offer consumers the most popular brands available 

anywhere at great prices with free shipping and free returns. 

63 

With this concept and our dedication to the customer experience, 

Shoebuy has continued to grow and prosper. Shoebuy currently has 

over four-and-a-half million visitors a month, and what just started 

off as four people working out of 200 square foot office today employs 140 Bostonians. 

We have grown our business to include partnerships with over 

500 brands representing over 600,000 products, or what equates to 

over $3 billion in inventory available for purchase on the 

Shoebuy.com site. This is the equivalent of putting over 15,000 

shoe stores within the reach of each consumer visiting 

Shoebuy.com. Said another way, the Shoebuy site now offers 

enough footwear to outfit the entire population of Massachusetts. 

As part of our commitment to consumers, we continue to innovate and improve our offerings and capabilities. Notably, it was reported that Shoebuy is one of the Internet’s top ten most visited 

apparel and accessory shopping sites. We were recognized by eTail 

as the number one eTailer for fulfillment, fulfilling at 99.6 percent 

with an average ship time out the door 1.3 days. And Shoebuy was 

lauded by BizRate as one of the top eTailers in the country for outstanding service, one of only three companies to win this award 5 

years in a row. We continue to look for ways to provide customers 

with a better experience in order to maintain our status as an industry leader. 

However, Mr. Chairman, without an open and neutral platform 

on which to innovate, where consumers’ needs and demands are 

paramount, our business may not have flourished or even begun. 

We rely on the Internet to enable our customers to access the 

Shoebuy site independent of barriers or gatekeepers. Shoebuy collaborates with an assortment of marketing partners, which includes both very large advertising and media companies as well as 

thousands of small marketing affiliates. 

These partners likewise depend on the Internet to remain a freeflowing medium. Each is integrated virtually with Shoebuy over 

the Internet and needs open access to continue the creativity and 

innovation behind their endeavors. Similarly, the Internet serves 

as a mediating platform to bring together product and other content from a diverse mix of over 500 brand partners ranging from 

global corporations to small entrepreneurial ventures. Unfettered 

access allows these diverse partners to all work with Shoebuy to 

serve the consumer. For consumers who are paying for Internet access, they have every right to expect to be able to choose the lawful 

content and services they want. 

And to suggest that Internet companies are free-riding on others’ 

investments is simply belied by the facts. Shoebuy and its colleague 

companies pay network operators millions of dollars a year for 

Internet access, proportionate to the amount of traffic coming to 

their sites. Further, it is because of the vast investment made to 

the incredible array of content and services offered online that consumers are enticed to purchase broadband access in the first place. 

Ultimately, a consumer’s enjoyment of the Internet has been and 

should remain based on their choice, not the consequence of a deal 

that a Web site makes with a network operator to receive enhanced 

treatment or prioritization. 

64 

If this is permitted, future entrepreneurs cannot be assured of 

having the same opportunity that we did in that 200 square foot 

office in Boston. Net neutrality from my perspective is someone 

who has been the little guy with the idea in 1999, to the CEO of 

one of the fastest growing Internet retailing sites, comes down to 

protecting innovation, opportunity, and consumer choice. 

Mr. MARKEY. If you could summarize. 

Mr. SAVITZ. Yes. In conclusion, I can tell you I sincerely believe 

maintaining an open Internet that rewards innovation and entrepreneurship is essential to stimulating economic growth and our 

ability to compete in international markets. I appreciate you having us here today, and I certainly do believe that the qualities of 

this legislation looks to do is certainly how we were able to go from 

being a small idea to reaching a worldwide marketplace in a fairly 

short period of time. 

[The prepared statement of Mr. Savitz follows:] 

STATEMENT OF SCOTT SAVITZ

Good morning Chairman Markey, Mr. Upton, and members of the Subcommittee. 

My name is Scott Savitz. I am the Chief Executive Officer of Shoebuy.com, which 

is proudly headquartered in Boston, Massachusetts. Shoebuy is part of the IAC family of businesses. IAC is the New York City headquartered Internet company which 

has grown in recent years to own and operate over 60 brands including Ask.com, 

Match.com, Citysearch, Evite, ServiceMagic, CollegeHumor, RushmoreDrive.com, 

Zwinky, and many others. Thank you for inviting me here today to share our company’s story and to discuss the importance of preserving an open Internet and its 

implications for future entrepreneurship and innovation. 

I. INTRODUCTION 

Mr. Chairman, the Internet is a major growth engine for the overall economy and 

continues to empower individuals and propel innovation. In a slowing economic environment, online retailing continues to look strong and has to date been an impressive growth story. Excluding online travel, online sales grew 21% last year to $175 

billion and are projected to total $204 billion in 2008. One million companies worldwide now rely on the Internet economy for more than 50% of their revenue. It’s the 

universality and openness of the Internet that’s made such growth possible. 

I can tell you first hand that my business fundamentally depends on an open 

Internet. We rely on consumers having unfettered access to our site and for us to 

be able to reach consumers whenever and wherever they live. 

We must, therefore, preserve consumers’ rights to access content and services on 

a non-discriminatory basis, without interference from network operators. What’s at 

stake in the net neutrality debate is nothing less than the future growth of the 

Internet economy, innovation, entrepreneurship, and consumer choice. 

II. SHOEBUY.COM: ENTREPRENEURSHIP WITHOUT PERMISSION 

Mr. Chairman, in April of 1999, we launched Shoebuy.com, which is now one of 

the world’s largest sites for shoes. Our initial business plan and strategy would have 

been quite different had there not been an open Internet. In a world where network 

operators would function as gatekeepers, we would have faced the prospect of first 

negotiating to buy access to consumers, much as cable channels have had to run 

the gauntlet to gain carriage. So instead of having to spend capital early on to simply gain access to consumers, we were able to quickly bring a better mousetrap to 

the market by relying on hard work, savvy marketing, fiscal prudence, and a certain 

amount of luck. 

At the heart of our success is Shoebuy’s focus on providing the best in class experience for the customer. Through dedication to the customer and our ability to keep 

marketing and overhead costs low, we have been able to offer consumers the most 

popular brands available anywhere, at great prices, with free shipping and returns. 

With this concept and our dedication to the customer experience, Shoebuy has 

continued to grow and prosper. Shoebuy currently has over 4.5 million visitors per 

65 

month, and what started off as just four people working out of a 200 square foot 

office, today employs 140 Bostonians. 

We have grown our business to include partnerships with over 500 brands representing 600,000 products, or what equates to $3 billion in inventory available for 

purchase. This is the equivalent of putting over 15,000 shoe stores within the reach 

of each consumer visiting Shoebuy.com. To give you a more vivid example, we now 

offer enough footwear to outfit the entire population of Massachusetts. 

As part of our commitment to consumers, we continue to innovate and improve 

our offerings and capabilities. Notably, Hitwise reported that Shoebuy is one of the 

Internet’s Top Ten most visited apparel and accessory shopping sites. We were recognized by eTail as the ‘‘#1 e-tailer’’ for fulfillment at 99.6%, with an average ship 

time (out the door) of 1.3 days. And Shoebuy was lauded by BizRate as one of the 

top eTailers in the country for outstanding service—one of only three companies to 

win this award 5 years in a row. We continue to look for ways to provide customers 

a better experience, better service and better prices. 

However, Mr. Chairman, without an open and neutral platform on which to innovate, where consumers’ needs and demands are paramount, our business may not 

have flourished or even begun. We rely on the Internet to enable our customers to 

access the Shoebuy site independent of barriers or gatekeepers. Shoebuy collaborates with an assortment of marketing partners, which includes very large advertising and media companies as well as thousands of small marketing affiliates. 

Our partners likewise depend on the Internet to remain a free-flowing medium. 

Each is integrated virtually with Shoebuy over the Internet and needs open access 

to continue the creativity and innovation behind their endeavors. Similarly, the 

Internet serves as a mediating platform to bring together product and other content 

from a diverse mix of over 500 brand partners, ranging from global corporations to 

small entrepreneurial ventures. An open Internet allows these diverse partners to 

seamlessly work with Shoebuy in serving customers. 

Our customers, similarly, have every right to expect to be able to reach our store. 

Consumers pay for broadband access and should be free to choose the lawful content 

and services they want. Shoebuy and its colleague companies, likewise, pay network 

operators millions of dollars a year for Internet access proportionate to the amount 

of traffic coming to their sites. So to suggest that Internet companies are free-riding 

on other’s investments is simply belied by the facts. To the contrary, it is because 

of the vast investment made in the incredible array of content and services offered 

online that consumers are enticed to purchase broadband access in the first place. 

Ultimately, a consumer’s enjoyment of the Internet has been, and should remain, 

based on their choice, not the consequence of a deal that a Web site makes with 

a network operator to receive enhanced treatment or prioritization. 

If this is permitted, future entrepreneurs cannot be assured of having the same 

opportunity to do what we did in that 200 square foot office in Boston. Net neutrality, from my perspective, as someone who has been the ‘‘little guy’’ with the idea 

in 1999, to the CEO of one of the fastest growing Internet retailing sites, comes 

down to protecting innovation, opportunity and consumer choice. 

III. CONCLUSION 

Maintaining an open Internet that rewards innovation and entrepreneurship is 

essential to stimulating economic growth and for our ability to compete in international markets. If it were not for this type of open platform, Shoebuy would have 

been even further challenged in its efforts to emerge 9 years ago. We might not exist 

today had it not been for some basic non-discrimination principles, and we would 

certainly not have been able to compete as we have against some of the largest retailers in the shoe industry. With the Internet as a frictionless space for 

connectivity, Shoebuy is able to bring maximum efficiency to streamlining supply 

chains and to satisfying the needs of its customers. 

I want to thank the Chairman and Representative Pickering for their leadership 

in introducing H.R. 5353, the ‘‘Internet Freedom Preservation Act.’’ It is my understanding that this legislation codifies a policy of promoting openness, competition, 

and innovation for consumers on the Internet. Certainly, these are the very qualities 

that have allowed Shoebuy to reach a worldwide marketplace in only a few short 

years. My colleagues at IAC and I look forward to continuing to work with Congress 

and the FCC to ensure we preserve an open Internet. Thank you. 

* * * * * * * 

66 

Mr. MARKEY. Thank you, Mr. Savitz, very much. Our next witness is Christopher Yoo, who is a professor of law and communications at the University of Pennsylvania Law School. He has written 

extensively on telecommunications policy matters and also clerked 

for the United States Supreme Court. We welcome you, sir. 

STATEMENT OF CHRISTOPHER YOO, PROFESSOR OF LAW, 

FOUNDING DIRECTOR, CENTER FOR TECHNOLOGY, INNOVATION, AND COMPETITION, UNIVERSITY OF PENNSYLVANIA 

Mr. YOO. Thank you, Mr. Chairman, Ranking Member Stearns, 

members of the subcommittee. I am grateful for the opportunity to 

be here before you today. In my testimony, I would like to highlight 

two larger themes that are often overlooked in the network neutrality debate. 

First, the Internet is undergoing a fundamental transformation. 

During the Internet’s early years, the Internet employed a fairly 

uniform technology to connect a fairly uniform group of end users 

who were running a fairly uniform set of applications. Specifically, 

the Internet relied almost exclusively on technologies developed by 

telephone companies to enable university-based researchers to 

share e-mail and text files. 

All of that has begun to change. The Internet has become a mass 

market phenomenon that now reaches over 70 percent of all American adults and a growing number of people worldwide. As a result, 

Internet traffic has growth at a breathtaking rate, expanding almost 50 percent each year for the past several years. Internet traffic is not only growing in terms of size but also in variety and sophistication. 

During the Internet’s initial phase, the primary applications 

were e-mail and Web browsing. For these applications, delays of a 

fraction of a second were virtually unnoticeable. The current Internet is increasingly dominated by more sophisticated applications, 

such as streaming media, online gaming, telemedicine, and virtual 

worlds, which are much more bandwidth intensive and much less 

tolerant of delay. The most important development is the deployment of IP video, which some expert estimate will cause traffic to 

grow at a rate of 90 to 100 percent a year. 

Network providers are pursuing a number of strategies to meet 

this rapidly increasing demand. Verizon is investing $23 billion to 

make its file system available to roughly half of its subscriber base. 

This system can support upload and download speeds up to 20 

megabytes per second. AT&T is pursuing a different strategy, committing $6.5 billion to deploy its U-verse based system, which is 

centered on a telephone technology known as VDSL to 60 percent 

of its service areas. These developments have forced cable companies to respond with Comcast investing additional billions to upgrade portions of its network to DOCSIS 3.0, capable of supporting 

download speeds of up to 50 megabytes per second. Thus, technologies now vary widely from provider to provider, and because 

these technologies are not being deployed throughout any one provider service area, technologies even vary among the different geographic areas served by a single network provider. 

But perhaps the most important and often overlooked development is the emergence of wireless as a major broadband competVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
67 

itor. The most recent FCC data revealed that wireless has skyrocketed from having no subscribers at the beginning of 2005 to 

controlling 35 million subscribers and 35 percent of the market for 

high-speed lines as of June 2007. Published reports indicate that 

wireless broadband has continued to grow rapidly since that time. 

The result is that the broadband industry is becoming increasingly competitive. Even network neutrality proponents can see that 

an increase in competition undercuts the justification for regulatory 

intervention. The industry also employs a wider variety of technologies than ever, with each technology being susceptible of different problems and different solutions. These considerations underscore the problems associated with any one-size-fits-all solution 

to the Internet. 

Each provider must make decisions that involve difficult tradeoffs based on their best guess of what the future will bring. The 

difficulty of anticipating which of these solutions will prove best in 

each context is underscored dramatically by the AOL/Time Warner 

merger. When it was announced in 2001, many regarded the walled 

garden approach in which AOL gave preferential treatment to its 

own proprietary content as a profound threat to the Internet. These 

threats never materialized, demonstrated most eloquently by Time 

Warner’s announcement that it was selling off AOL at a loss of 

over $200 billion. 

My second point is to draw on the lessons of past regulatory efforts to impose access mandates similar to network neutrality. 

These past regulatory efforts have found that interconnection and 

nondiscrimination mandates only work when the interface and the 

product being regulated is relatively simple. As the Supreme Court 

recognized in its Trinko decision, the situation is quite different 

when the product and interface are complex. When that is the case, 

disputes over access are likely to be highly technical and extremely 

numerous given the incessant complex and constantly changing 

interaction between providers. 

Thus, in order to protect against what the court called a death 

by 1,000 cuts, any regulator would have to undertake a fairly comprehensive oversight of essentially all facets of the business relationship between the parties. The challenge of doing so would be 

particularly demanding in industries like broadband, which are undergoing rapid technological change. This has led many commentators to conclude that any attempts to mandate access to such complex technologies are likely to prove futile. 

Indeed, past efforts to impose similar access regimes, such as the 

controversy over protocol conversion and vertical switching services 

under the computer inquiries, leased access to cable television networks, and unbundled access to network elements under the 1996 

Act have become bogged down in incessant controversies and litigation. 

These problems demonstrate the potential dangers of regulatory 

intervention and underscore the importance of making sure that 

the scope of intervention is commensurate with the scope of the 

problem. It bears noting that the OECD, the Federal Communications Commission over multiple occasions over the past 2-and-ahalf years, the Justice Department, the Federal Trade Commission, 

and leading Internet gurus David Farber and Bob Kahn have conVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
68 

cluded that the factual record does not justify the type of regulatory intervention that proponents seek. 

Mr. MARKEY. Mr. Yoo, if you could summarize this. 

Mr. YOO. There is a long history of the Internet adjusting to 

solve these problems by itself. The better solution is to pursue what 

I suggest, is what I have called network diversity in which providers are permitted to experiment with different approaches and 

let the choices of the consumers control the outcome. A case-bycase—— 

Mr. MARKEY. OK, thank you. 

Mr. YOO [continuing]. After-the-fact approach would strike a better balance. 

[The prepared statement of Mr. Yoo follows:] 

STATEMENT OF CHRISTOPHER S. YOO

Mr. Chairman, Ranking Member Stearns, Members of the Subcommittee, I am 

grateful for the opportunity to appear before you today. In my testimony, I would 

like to highlight two larger themes that are often overlooked in the network neutrality debate. 

First, the Internet is undergoing a fundamental transformation. During the Internet’s early years, when the National Science Foundation initially supported civilian 

backbone services, the Internet employed a fairly uniform technology to connect a 

fairly uniform group of end users who were running a fairly uniform set of applications. Specifically, the Internet relied almost exclusively on technologies developed 

by telephone companies to enable university-based researchers to share e-mail and 

text files. 

All of that has begun to change. The Internet has become a mass market phenomenon that now reaches over 70% of all American adults and a growing number 

of people worldwide. As a result, Internet traffic has grown at a breathtaking rate. 

From 1990 to 2002, the total volume of Internet traffic doubled each year except 

for 1995 and 1996, when the volume experienced an eight- or nine-fold increase each 

year. Starting in 2003, Internet traffic has grown roughly 50% to 60% each year, 

but even that rate still poses more than its share of challenges. 

Internet traffic is growing not only in terms of size, but also in sophistication. 

During the Internet’s initial phase, the primary applications were e-mail and Web 

browsing. For these applications, delays of a fraction of a second were virtually 

unnoticeable. The current Internet is increasingly dominated by more sophisticated 

applications such as streaming media, online gaming, telemedicine, and virtual 

worlds, which are often much more bandwidth intensive and much less tolerant of 

delay. The most important development is the deployment of IP video, which some 

experts estimate will cause that traffic to grow once again at a rate of 90% to 100% 

each year. 

Network providers are pursuing a number of strategies to meet this rapidly increasing demand. Unlike the initial transition to broadband, which only required reconditioning existing cable and telephone technologies, the new strategies require 

significantly greater capital investments. Verizon is investing $23 billion to make 

its FiOS system available to roughly half of its subscriber base. This system can 

support upload and download speeds of up to 20 MB. AT&T is pursuing a different 

strategy, committing $6.5 billion to deploy its new U-verse system based on a telephone-based technology known as VDSL to 60% of its service area. These developments have forced cable companies to respond, with Comcast investing additional 

billions to upgrade portions of its network to DOCSIS 3.0. Thus, technologies now 

vary widely across providers and even across any particular provider’s service area. 

But perhaps the most important and most often overlooked development is the 

emergence of wireless as a major broadband competitor. The most recent FCC data 

reveal that wireless has skyrocketed from having no subscribers as of the beginning 

on of 2005 to controlling 35 million subscribers and 35% of the market for highspeed lines as of June 2007. Published reports indicate that wireless broadband has 

continued to grow rapidly. 

The result is that the broadband industry is becoming increasingly competitive. 

Even network neutrality proponents concede that an increase in competition undercuts the justification for regulatory intervention. 

69 

1 Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 414 (2004). 

2 Christopher S. Yoo, Beyond Network Neutrality, 19 HARV. J.L. & TECH. 1, 39-45 (2005), 

available at http://ssrn.com/abstract=742404; Christopher S. Yoo, Network Neutrality and the 

Economics of Congestion, 94 GEO. L.J. 1847, 1896-97 (2006), available at http://ssrn.com/ 

abstract=825669. 3See, e.g., Paul L. Joskow & Roger G. Noll, The Bell Doctrine: Applications in Telecommunications, Electricity, and Other Network Industries, 51 STAN. L. REV. 1249 (1999); Gerald R. 

Faulhaber, Policy-Induced Competition: The Telecommunications Experiments, 15 INFO. ECON. 

& POL’Y 73 (2003). 4OECD Report, Internet Traffic Prioritisation: An Overview 5 (Apr. 6, 2007), available at 

http://www.oecd.org/dataoecd//43/63/38405781.pdf. 

The increasing heterogeneity of Internet usage has further increased the uncertainty of the business environment. For the past several years, the Internet appeared to have been shifting from a client-server architecture, in which files are 

hosted in central locations and downloaded to end users, toward a peer-to-peer architecture, in which files are stored throughout the network. For the past several 

years, peer-to-peer traffic exceeded client-server traffic. Last year, thanks to new 

download-based applications such as YouTube, client-server traffic once again regained the upper hand. 

These developments underscore the challenges posed by the uncertainty of the 

technological environment. A network designed around a client-server allocates 

bandwidth asymmetrically, with more capacity committed to downloads than to 

uploads. A network designed around a peer-to-peer architecture allocates download 

and upload bandwidth more evenly. 

Network providers must thus make decisions that involve difficult tradeoffs based 

on their best guess of what the future will bring. These considerations underscore 

the problems associated with any one-size-fits-all solution to the Internet. The network now consists of very different transmission technologies, each of which is susceptible to different problems and different solutions. In addition, the number of potential solutions is vast, including building additional bandwidth, storing content locally, and network management. 

The difficulty of anticipating which of these solutions will prove best in each context is underscored dramatically by the AOL-Time Warner merger. When it was announced in 2001, many regarded the ‘‘walled garden’’ approach in which AOL gave 

preferential treatment to its own propriety content as a profound threat to the 

Internet. These threats never materialized, demonstrated most eloquently by Time 

Warner’s recent announcement that it was selling off AOL at a loss of $200 billion. 

My second point is to draw on the lessons of past efforts to implement access mandates similar to network neutrality. Past regulatory efforts have found that such 

interconnection and nondiscrimination mandates only work when the interface and 

the product being regulated is relatively simple. As the Supreme Court recognized 

in its Trinko decision, the situation is quite different when the interface is complex. 

When that is the case, disputes over access are likely to be ‘‘highly technical’’ and 

‘‘extremely numerous, given the incessant, complex, and constantly changing interaction between providers.’’ 1 Thus, in order to protect against ‘‘death by a thousand 

cuts,’’ any regulator would have to undertake comprehensive oversight of essentially 

all facets of the business relationship between the parties. The challenge of doing 

so would be particularly demanding in industries like broadband, which are undergoing rapid technological change. 2 This has led many commentators to conclude 

that any attempts to mandate access to such complex technologies are likely to 

prove futile. 3 Indeed, past efforts to impose similar access regimes, such the controversy over protocol conversion and vertical switching services under the Computer Inquiries, leased access to cable television networks, and unbundled access to 

network elements under the 1996 Act, have become bogged down in incessant controversies and litigation. 

These problems demonstrate the potential dangers of regulatory intervention and 

underscore the importance of making sure that the scope of intervention is commensurate with the scope of the problem. It bears noting that the OECD, 4 the FCC (on 

70 

5 AT&T Inc and BellSouth Corp Application for Transfer of Control, Memorandum Opinion 

and Order, 22 FCC Rcd 5662, 5724-27 pp. 116-20 & n 339, 5738-39 pp. 151-53 (2007); Applications for Consent to the Assignment and/or Transfer of Control of Licenses, Adelphia Communications Corporation, Assignors, to Time Warner Cable Inc, Assignees, et al, Memorandum 

Opinion and Order, 21 FCC Rcd 8203, 8296-99 pp. 217-23 (2006); Verizon Communications, Inc 

and MCI, Inc Applications for Approval of Transfer of Control, Memorandum Opinion and 

Order, 20 FCC Rcd 18433, 18507-09 pp. 139-43 (2005); SBC Communications, Inc and AT&T 

Corp Applications for Approval of Transfer of Control, Memorandum Opinion and Order, 20 FCC 

Rcd 18290, 18366-68 pp. 140-44 (2005); Appropriate Framework for Broadband Access to the 

Internet over Wireline Facilities, Report and Order and Notice of Proposed Rulemaking, 20 FCC 

Rcd 14853, 14904 p. 96 (2005). 6 Ex parte Filing of the Department of Justice, Broadband Industry Practices Before the FCC, 

WC Docket No. 07-52 (filed Sept. 6, 2007), available at http://www.usdoj.gov/atr/public/comments/225767.pdf. 7Federal Trade Commission, Staff Report on Broadband Connectivity Competition Policy 10, 

11 (June 2007), available at http://www.ftc.gov/reports/broadband/v070000report.pdf. 8David Farber & Michael Katz, Hold Off on Net Neutrality, WASHINGTON POST, January 

19, 2007, at A19; Andrew Orlowski, Father of Internet Warns Against Net Neutrality, THE 

REGISTER, Jan. 18, 2007, available at http://www.theregister.co.uk/2007/01/18/kahn—net—neutrality—warning/ (quoting co-developer of TCP/IP Robert Kahn). 9 Broadband Industry Practices, Notice of Inquiry, 22 FCC Rcd 7894 (2007). 

10See Kara Rowland, FCC Set for Airwaves Auction, WASH. TIMES, Jan. 16, 2008, at C8 

(quoting FCC Chairman Kevin Martin as calling network neutrality regulation unnecessary). 11 Yoo, Beyond Network Neutrality, supra note 2; Network Neutrality and the Economics of 

Congestion, supra note 2; Christopher S. Yoo, Would Mandating Broadband Network Neutrality 

Help or Hurt Competition? A Comment on the End-to-End Debate, 3 J. ON TELECOMM. & 

HIGH TECH. L. 23 (2004), available at http://ssrn.com/abstract=495502. 12Madison River Commc’ns, LLC, Order, 20 FCC Rcd 4295 (2005). 13Written Statement of Kevin Martin, Chairman, Federal Communications Commission, Before the United States Senate Committee on Commerce, Science and Transportation 4-5 (Apr. 

22, 2008), available at http:// hraunfoss.fcc.gov/edocs—public/attachmatch/DOC-281690A1.pdf. 

multiple occasions over the past two and one half years), 5 the Justice Department, 6

the FTC, 7 and leading Internet gurus David Farber and Bob Kahn 8 have concluded 

that the factual record did not justify the type of regulatory intervention that network neutrality proponents seek. The FCC’s current Notice of Inquiry was haled as 

an opportunity for network neutrality proponents to demonstrate the types of harms 

wrought by the absence of mandated network neutrality. 9 The proceeding only 

turned up a few isolated instances that do not appear to support broadscale regulatory intervention. 10

On the other hand, the Internet has a long history of adjusting to these types of 

problems by itself. Indeed, many examples to which network neutrality proponents 

point, such as network providers’ initial resistance to virtual private networks 

(VPNs) and home networking equipment such as WiFi routers, are better regarded 

examples of how the private decisions of consumers and network providers can solve 

such problems without regulatory intervention. Comcast’s recent accommodation of 

BitTorrent and Pando and Verizon’s recent commitment to open networks represent 

more recent examples of the same phenomenon. 

The better solution is to pursue what I have called ‘‘network diversity,’’ in which 

different providers are permitted to experiment with different approaches and to let 

the choices of consumers control the ultimate outcome. 11 A case-by-case, after-thefact approach would appear to strike a better would balance that preserves room 

for experimentation while simultaneously ensuring that any problems that may 

emerge will be addressed. The FCC’s enforcement action against Madison River 12

and Chairman Kevin Martin’s recent testimony before the Senate Commerce Committee 13attest to the agency’s readiness to play this role. 

Mr. MARKEY. Thank you, Mr. Yoo, very much. And our final witness is Mr. Ben Scott. He is the policy director for Free Press. He 

testifies today on behalf of Free Press, Consumers Union, Public 

Knowledge, and the Consumer Federal of America. We welcome 

you back, Mr. Scott. 

STATEMENT OF BEN SCOTT, POLICY DIRECTOR, FREE PRESS 

Mr. SCOTT. Good morning, Mr. Chairman, members of the committee. I much appreciate the opportunity to testify today. As many 

of you know, for years the preservation of network neutrality has 

been a prior issue for consumer groups like mine. That is because 

71 

the consumer experience with the future of the Internet rides on 

this policy decision. 

As you have heard today, two competing visions for that future 

stand before you. Will we embrace the openness that has shaped 

the Internet to the present day, or should we permit network owners to move to a closed system of content control, which we have 

had in cable television? It is a virtual clash of civilizations. 

For consumers, this clash is about the rights of Internet users to 

seek and share the content of their choice online. Of course, net 

neutrality has been hotly debated by legions of lobbyists and millions of Americans. But in the last 3 years, Republicans and Democrats here in the Congress and at the FCC have actually come together on a few basic points. I have analyzed this history in my 

written testimony. 

First, almost everyone agrees that consumers are entitled to access the lawful content applications and devices of their choice, and 

second that it is reasonable to establish these as principles in the 

law. FCC put this in a policy statement, and Congress has tried to 

codify it in numerous ways over the years. 

This leads me to conclude that it is no longer a question of 

whether consumers will have laws guarding an open Internet but 

how those laws will be crafted. We strongly support this bill for rising to the occasion. This bill simply places these agreed-upon consumer rights at the base of the Communications Act. It clarifies the 

authority of the FCC to protect Internet users from discrimination, 

and it tells the agency what rights Congress wants consumers to 

expect in an open Internet marketplace. 

It is a modernization of the principles that have long been in the 

Act. There are no regulations in this bill, simple and clear. However as we have heard today, this debate if often muddied by issues 

that are legitimate but not germane to the bill. I have a few fish 

for your aquarium, Mr. Chairman. 

First, as you mentioned, the copyright issue. Net neutrality does 

not protect online piracy on peer-to-peer networks or anywhere else 

on the Internet. Neither this bill nor any bill in the history of this 

debate would have protected illegal activity. Not piracy, not child 

pornography, not spam, not viruses, none of it. 

Second fish: misconceptions about peer-to-peer users. A small 

percentage of peer-to-peer users have been vilified as bandwidth 

hogs that force network owners to block consumer choice. Frankly, 

I have never heard of an industry complaining so loudly about people so eager to use their products. And sure, of course, networks 

should be able to manage traffic by heavy users, but that doesn’t 

provide an excuse for blocking every user from running a particular 

program. 

It is important to point out that p-to-p services do not use more 

bandwidth than consumers have already paid for, and they have 

paid hefty monthly bills. The Wall Street Journal reports that 

Comcast earned an 80 percent profit on its cable modem service. 

I would like a business like that myself. Actually lots of p-to-p programs are totally legitimate. They are used by ABC.com, PBS, and 

NASA to name a few. But probably the best example is Skype, a 

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nection. Today it has over 300 million users in 28 different languages. This is the kind of popular innovation that this bill is designed to promote. 

Now, the consequences of ignoring this bill are sharpening in 

clarity. There is an urgency here. Network neutrality was supposedly a solution in search of a problem, and yet over the last 2 

years, the problems keep bubbling up. Right now, Comcast is under 

investigation at the FCC for blocking Internet applications. This, I 

suggest to you, is a bellwether case. FCC Chairman Kevin Martin 

has said he will enforce his network neutrality principles. The 

cable industry says that although they have always supported the 

FCC’s principles, they reject the FCC’s authority to enforce them. 

In other words, they were for net neutrality before they were 

against it. 

The Comcast case may well end up in court where the market 

will endure more years of uncertainty. It would be far better if 

Congress passed this bill and settled the question. Make no mistake, this is a compromise bill. It is reasonably by almost any 

standard. I would prefer something stronger, but I think this bill 

represents a significant step in the right direction. 

What amazes me is that it has not attracted broader support. 

The middle ground that opponents of net neutrality have called for 

is right here in this bill, and now they appear unwilling to stand 

on it. 

Internet policymaking is premised on a simple idea: we will remove regulations from network operators, but we will draw a line 

to protect consumers in the access to an open Internet. Today we 

test this theory. A duopoly market of phone and cable companies 

will not discipline itself. This is a clear moment for Congress to act 

and pass The Internet Freedom and Preservation Act. The future 

of the Internet for everyone depends upon it. I thank you for your 

time, and I look forward to your questions. 

[The prepared statement of Mr. Scott follows:] 

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Mr. MARKEY. Thank you, Mr. Scott, very much. And now the 

chair will turn to recognize himself for a round of questions. And 

I will just begin by noting that 2 years ago this subcommittee voted 

for Mr. Barton’s COPE bill, then the Republican chairman of this 

committee, which codified the FCC’s net neutrality principles by 

authorizing the FCC to enforce them. The legislation Mr. Pickering 

and I offer similarly codifies overarching principles and then tasks 

the FCC to conduct an examination to access what is happening in 

the marketplace, to conduct field hearings, and to report back to 

Congress. 

This process will permit the FCC to see whether the principles 

can be fulfilled through competition, through regulation, or through 

case-by-case enforcement. But the notion that codifying principles 

is the same as establishing regulations is no more true here than 

it was when the Barton bill authorized enforcement of the FCC 

principles 2 years ago. 

So let me begin with you, Mr. Scott. Let us talk about network 

management and how reasonable management can be employed. 

Your concern is that if network management effectively trumps the 

Internet freedom, something very valuable about the Internet is 

lost in that management process as opposed to legitimate management that the large companies can engage in. Please explain. 

Mr. SCOTT. Well, let me start by saying that we are not opposed 

to network management. I don’t think anyone on the pro net neutrality side is opposed to network management. Network management has happened for years. It happens every day in every network. 

What is different about this particular case that is before the 

FCC is network management that selects a particular piece of content or application and chooses to block or degrade that particular 

piece of content irrespective of the time of day, irrespective of the 

size of the file, irrespective of whether that user is a heavy user 

or a light user. That is the kind of targeting and the kind selectivity and the kind of choice making by the network operator that 

we think should be left with the consumer. 

Mr. MARKEY. OK, great. Mr. Savitz, do you agree with that analysis? 

Mr. SAVITZ. I would agree with it 100 percent. I mean I think 

the whole—exactly as Mr. Scott said. We don’t—I don’t disagree 

whatsoever with blocking unlawful content. I don’t—we don’t disagree at all with managing capacity. It would just be anything that 

sort of discriminates against origin source or destination and 

makes it sort of an unequal playing field that doesn’t allow somebody to create a business like we were able to create. That is what 

would bother us. 

Mr. MARKEY. OK, Mr. Peterman, do you agree with that analysis? 

Mr. PETERMAN. Yes, absolutely. 

Mr. MARKEY. OK, Ms. Combs? 

Ms. COMBS. Yes, I do. 

Mr. MARKEY. Yes, you do. And Mr. Bainwol? 

Mr. BAINWOL. I am reflecting. 

Mr. MARKEY. OK. 

Mr. BAINWOL. I am a reflexive kind of guy. 

89 

Mr. MARKEY. I will come back to you. Mr. McSlarrow, in your 

testimony, you support the fair and open assessment of the FCC 

of network providers, and you acknowledge that the approach differs from other proposals that prescribed regulatory outcomes. And 

I thank you for noting the distinction. 

Mr. Bainwol, you and Mr. McSlarrow both highlight that the 

Internet freedom principles only are accorded to consumers and entrepreneurs for lawful content, and I want to thank you both for 

seeing that in the bill and for saying that in your testimony. 

Mr. Peterman, you also have an interest in fighting piracy. If you 

could, please give us your take on how support for network neutrality and fighting piracy are not mutually exclusive principles 

and why it is essential to your industry that piracy is fought vigorously and that this legislation would not inhibit that at all. 

Mr. PETERMAN. Absolutely. We have examples. Last year, the nature of our show is we produce our episodes, and then the Disney 

Channels holds those episodes for a lot of the season, unlike adult 

programming where you generally have a new episode every week. 

As many of you who have kids know, your children have an amazing ability to watch the same show over and over and over. This 

is wonderful for me, and it is wonderful for Disney because it 

means that the same number of episodes that could last in a much 

shorter amount of time can be extended over a whole season. 

We had a stockpile of episodes that had not aired yet, and somehow some of those episodes, the discs that contained those episodes 

made their way to private citizens. And those episodes, before they 

were on the air, were on YouTube. We are very opposed to piracy. 

What we are fighting for is the ability to own and control our content, and obviously piracy works directly against that. But we believe that this bill does not in any way inhibit the attempt to stop 

piracy. And we believe that innovation will continue to find alternative ways to protect copyrights. 

Mr. MARKEY. Thank you, Mr. Peterman. My time has expired. 

The chair recognizes the gentleman from Florida, Mr. Stearns. 

Mr. STEARNS. Thank you, Mr. Chairman. You mentioned the 

Barton bill 2 years ago that we passed. That bill was called the 

COPE Act. I just would probably point out that it only gave the 

FCC authority to enforce the four principles that were in the bill. 

It did not authorize a rulemaking. This bill not only authorized a 

rulemaking, it goes further and beyond the four FCC principles. 

And so, Mr. Chairman, if it turns out that you are supporting the 

COPE Bill, we would be very happy to move the entire COPE Bill 

in this Congress with you as a chairman. 

That being said, Mr. Chairman, I ask unanimous consent to put 

into the record an editorial by the Wall Street Journal, April 12, 

entitled ‘‘An Alternative to Network Neutrality.’’ 

Mr. MARKEY. If that is the editorial attacking me by the Wall 

Street Journal editorial page—yes, it is. With great pride, I ask 

unanimous consent that it be placed in the record. I think on that 

day they actually had two editorials attacking me, the Wall Street 

Journal editorial page. 

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

Mr. STEARNS. OK. Well, thanks for your magnanimous support 

here. I also ask unanimous consent, the two letters from various 

90 

groups be included with the record from the American Conservative Union, the National Taxpayers Union, Freedom Works, Citizens Against Government Waste, and Americans for Tax Reform, 

if I could, Mr. Chairman. 

Mr. MARKEY. Without objection. 

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

Mr. STEARNS. And I would say to Ms. Combs that we have that 

is going into the record is a letter talking about network management is critical to stop pornographers and pedophiles from having 

unfettered access to consumers’ Internet connection, and this is 

signed by Gary Bower, the president of American Values; David 

Keen, of course, the president of the American Conservative Union; 

also the Catholic Family and Human Rights Austin Ruse; the 

Catholicvote.org; Traditional Family and Property, Mr. Preston 

Knoll; and then Derek Hunter, Media Freedom Project. So there 

obviously are some disagreements here. 

They feel that network management is important. When you look 

at this debate and the difficulty understanding what net neutrality 

means, but I think after listening to Mr. Scott and others here, Mr. 

Peterman, that network management is fully understood. I am reminded of the Supreme Court’s decision that in a theater, you don’t 

have freedom of speech. You can’t yell fire. So there is a sense of 

network management even with freedom of speech. 

And so Ms. Combs mentioned that Comcast would not allow the 

downloading of the King James Version Bible. You know obviously 

if you were in a situation where your business and somebody was 

downloading peer-to-peer telemedicine, some x-rays, and some critical things that were needed for doctors for cancer research on a 

patient, you would have to make that decision if somebody was 

downloading Herodotus’ 13 volumes of history. Or in this case, you 

can get a free copy of the King James Bible in any hotel, motel 

room in the country. And they might have to make this network 

decision just like in a theater—a person is network managed not 

to yell fire when there is no fire. 

So my question is for Mr. McSlarrow. Isn’t network management 

just simply like putting up a yield sign at an intersection? Periodically, we know as we come across the 14th Street Bridge, you know 

how much traffic there is, and sometimes one lane works over into 

another. But traffic in one direction—if you have all this traffic, 

don’t you have to make a decision for network management? And 

you might answer the Christian Coalition’s concern about this King 

James Version in which she said that it was discriminated against. 

Mr. MCSLARROW. I mean—it is interesting in the same way, I 

guess, everybody has decided we are against illegal content being 

distributed, everybody says they are for network management. And 

then here we have a case, as was mentioned before, where you had 

essentially an artificial test of whether or not you could upload a 

King James Bible from one computer to another as if, and apparently they didn’t, they didn’t understand that peer-to-peer networks are by definition many multiple sessions across hundreds, 

even thousands or tens of thousands of PCs around the country or 

even the world. 

The test was designed for failure. All you had to do was put the 

King James Bible on any Web hosting service that you get with 

91 

any broadband provider service, and you can stream it. You could 

do it today. So the point is no one was blocking a particular content. That is absurd. 

There is a legitimate issue that at times of peak congestion, and 

different operators—and it is hard for me to get into a specific company’s case. Different operators do it differently. But in general, at 

times of peak congestion, they will manage the traffic. The vast 

majority of that traffic is going to be peer-to-peer, and it is not irrelevant that the vast majority of the peer-to-peer traffic will in 

fact be pirated content. So it is, in my view, a reasonable method 

of not just managing the traffic but more importantly ensuring that 

all the other consumers you are serving get a superior experience 

perhaps to delay imperceptively some of the uploads. We are not 

even talking about downloads. But the real point here is I am not 

going to hang my hat on saying that the way someone does it today 

is absolutely, 100 percent the best way. The real point is the private sector is actually working together to see if we can do all of 

these things better. 

Mr. STEARNS. OK. In the Wall Street Journal, in your article, the 

government’s role here, as far as I understood it, is not to tell— 

but rather, to make sure consumers have alternatives to—now, to 

handle this, what we talk about here, from here to here, don’t you 

think there is a possibility that—staggering rate of information 

that is effective to the broadband? 

Mr. SCOTT. Here is how I think it should work. You can address 

people who are using high bandwidth by reducing the speed on 

that connection in a uniform basis agnostic to what is coming out 

of that connection, whether they are downloading a YouTube video 

or downloading peer-to-peer. 

What is interesting about this particular case is that it was directed at a particular application regardless of whether that application was being used for a large file or a small file. Regardless of 

whether that user was a heavy bandwidth user or a light bandwidth user. That is the kind of network management, the specific 

targeting, that we are talking about that is inappropriate. 

Mr. DOYLE [presiding]. The gentleman’s time has expired. The 

chair now recognizes himself for 5 minutes. I would just say to my 

friends that say that this bill promulgates rules. You know my 

reading of the bill doesn’t say anything about promulgating rules. 

It is a proceeding to conduct an assessment, conduct field hearings, 

and issue a report to Congress within 90 days. I mean, the FCC 

can do a rulemaking any time it chooses. It doesn’t need Congress 

to do a rulemaking. So I don’t know where that comes from. 

Mr. McSlarrow, I want to talk—and maybe Mr. McCormick too— 

a little bit about the bandwidth hogs for a moment. These are people who really like your service and use a lot of it. And I understand Comcast has an acceptable use policy which allows the company to cut off service to customers who use the Internet too much. 

Now, they say that it is just 1⁄100 of a percent of their 11.5 million 

residential high speed Internet customers that fall into this category. 

So if there is that tiny number that are bandwidth hogs, why 

would a broadband provider use a method that limits access to 100 

percent of its customers regardless how much bandwidth they are 

92 

using or how little bandwidth they are using? Maybe Mr. 

McSlarrow first, and you could comment, Mr. McCormick. 

Mr. MCSLARROW. Thank you. The answer is they wouldn’t. We 

should be very clear here. All of these applications, whether it is 

BitTorrent, e-docking, intelli, or others, are applications that are 

used by our customers. There are cases at times of peak congestion 

where some of that traffic and the upstream, in order to ensure 

that the other customers aren’t slowed down, might be delayed. 

But they can still use the service. And in most cases, it won’t even 

be noticeable to them. 

I think the point you raised is a perfectly valid one. There are 

different ways of trying to manage traffic. One could be just to 

focus on the individual user, and indeed Comcast has announced 

that they are going to move to a protocol agnostic network management system. 

But I think it is still the case that even if you do that, you 

haven’t actually solved the problem of peak congestion, and it is 

really that—I think when you talk to the engineers, it is that problem that is the most challenging one. And I am certainly no engineer, I really—the point here is that the engineers are experimenting today and ought to be trying to figure this out. 

Mr. DOYLE. Mr. McSlarrow, I understand though that the founder of—the MIT professor David Reed and others at the Boston field 

hearing say that their tests show that Comcast engage in these 

practices all of the time, not just during certain times. Now, do you 

have any new evidence to that point? 

Mr. MCSLARROW. No, I am just repeating what has been stated 

publicly by Comcast. 

Mr. DOYLE. Let me ask another question. I want to talk about 

the peer-to-peer because it seems that a number of panelists here— 

Mr. Bainwol, Mr. McSlarrow, Mr. McCormick, Mr. Yoo—you are 

each seeking broad authority to manage network traffic the way 

you see fit. And in a recent instance, we saw managing and limiting a particular kind of traffic: peer-to-peer. So this is just a simple question. How much of the traffic on the Internet is peer-topeer file sharing? Maybe start with Mr. Yoo. Percentage wise. 

Mr. YOO. Published estimates vary, but many are on the order 

of 80 to 90 percent. 

Mr. DOYLE. Eighty to 90 percent? 

Mr. YOO. At peak times, which are the key times. 

Mr. DOYLE. Yes, how about you, Mr. McCormick? 

Mr. MCCORMICK. I know as a rule of thumb, about 20 percent of 

users utilize about 80 percent of the Internet. 

Mr. DOYLE. You are saying 80 percent, and you are saying 20 

percent? 

Mr. MCCORMICK. Twenty percent of users. 

Mr. DOYLE. So you are saying 20 percent of total Internet use is 

peer-to-peer file sharing? 

Mr. MCCORMICK. No. 

Mr. DOYLE. Eighty percent? 

Mr. MCCORMICK. We have to provide that to you—— 

Mr. DOYLE. I see. Mr. Bainwol. 

Mr. BAINWOL. I have seen reports anywhere from 60 to 80 percent, but let me make one other point here. We do not believe that 

93 

there should be an effort to go protocol-specific in terms of network 

management. So we would not suggest that that approach should 

be taken. But it is also important to note that when you look at 

a program or a protocol like LimeWire, I have seen a study where 

98 percent of the searches on LimeWire are for pirated material, 

OK, are for copyrighted material, 98 percent. I mean, that is profound. And of the files that are available to be searched, it is something like 92 percent. So while we shouldn’t be protocol specific in 

terms of our approach with network management, we should also 

understand in a pragmatic way that there are certain protocols 

that are particularly troublesome in terms of piracy. 

Mr. DOYLE. Well, I think the point that I want to make is, Mr. 

McCormick, at your trade show last year, a company called Elacoil 

released a study that said that HTTP is approximately 46 percent 

of all traffic on the network and that peer-to-peer continues a 

strong second place at about 37 percent of local traffic. We saw an 

old study from Sprint, 2005, and I grant you that is very old data, 

that said less than 6 percent with regular Web traffic clocking in 

at more than 50 percent of the flow. 

But I think it is important that when people say that a kind of 

Internet traffic is choking the network and that traffic happens to 

present a competitive threat to the ISP for other services, I think 

policymakers deserve to know how much choking is really going on. 

And it seems to me that when we are looking at—we are talking 

about this peer-to-peer file sharing as the big culprit, it is not the 

majority at least from the most recent studies we have seen that 

is causing the choking. 

I see that I have gone past my time, so I will enforce my rules 

and cut myself off and yield the floor to my good friend, Mr. Pickering, for 5 minutes. 

Mr. PICKERING. Mr. Chairman, thank you. I am going to ask a 

few questions, but I am also going to try to make a case for the 

legislation and why it is the reasonable middle ground and why, 

from a Republican point of view, it is the best ground on which to 

stand. As Mr. Yoo talked about, the emerging marketplace and 

technologies, I happen to agree with him that regulation of the 

Internet and an open access or common carrier would be way too 

complex. And to get into that type of granular regulation would be 

litigious and would create mass uncertainty in the marketplace. 

I do believe, however, a case-by-case approach, as Mr. Yoo outlined, is the right way to do this, and it is working today. And it 

is keeping us from having problems. When problems arise, they are 

knocked down pretty quickly. So the case-by-case where there is a 

dispute over whether the FCC has the authority on a case-by-case 

basis to enforce network neutrality principles adopted by Republican commissions. 

And so to clarify that and to give us the authority on a case-bycase basis and to maintain the openness and the principles of network neutrality, this legislation is needed. And this legislation is 

not different from the COPE Act in any substantive form. In some 

ways but not of any significance. 

It calls for a comment and hearings around the country so that 

we have the accountability, the transparency, and the democracy 

around the greatest freedom that we have known economically and 

94 

technologically of this century, the Internet, and the openness that 

we have had. And so this bill is the right way to do a case-by-case, 

clarify the authority, and maintain a discussion over what type of 

business models we are going to see in the future. 

However, I disagree with Mr. Yoo that to allow different business 

models to be adopted would be a good thing, and this is why. And 

this is my question. Mr. Savitz, let us say one of the bell companies 

or one of the cable companies would strike an exclusive deal with 

the Bigfoot Shoe Company and they were to say, we will give preferential or exclusive access on our networks to the Bigfoot Shoe 

Company. What would that do to small businesses like you? 

Mr. SAVITZ. It would be amazingly hurtful. I mean, right now we 

would be the Bigfoot that would be buying it, and I don’t even want 

us to do it because it would just stifle the next guy and all the terrific entrepreneurial and innovation. When we started Shoebuy, 

that was during the crazy capital markets funding. People took a 

ridiculous amount of money. 

We had a competitor out there, boot.com, I remember. They were 

spending money any way they could. It was a terrible consumer experience, but they went through $150 million in cash. They would 

have easily, no question, spent $3 million, $4 million, $5 million to 

buy preferential slotting treatment. Consumers would have had a 

terrible experience. They probably would have thought buying 

shoes online didn’t work. So no question we think that that would 

be terrible for innovation and—— 

Mr. PICKERING. And if we replicated that across every sector of 

commerce on the Internet, how destructive would that be to what 

has been the most successful model of innovation, entrepreneurship, investment, expansion of business exponentially over the last 

10 years if we went to a Wal-Mart model on the Internet—if that 

is a fair comparison—that you can only shop in one place. You get 

the—— 

Mr. SAVITZ. Gut-wrenching. I wouldn’t be here today. I would 

move on, and I have already done my gig. But I think the Internet 

is just—I am very passionate about it because it has been an amazing open platform that we have seen a lot of incredible things. You 

know, you listen to Mr. Peterman. He finds ways to communicate 

with this incredible base of very passionate Hannah Montana fans 

through the use of the Internet. 

Instead of looking at it as an obstacle, the people that are very 

innovative, that are very passionate about their consumer and the 

consumer experience and communication are finding ways to do 

terrific things. 

Mr. PICKERING. The other thing that I wanted to bring out in the 

bill that why I believe it is a better bill from current policy for the 

network operators is that for the first time, the legislation addresses the issue of network management and clarifies that reasonable 

network management is allowable. Today we do not have that in 

law, and, Mr. McSlarrow, I know that as you look and, Mr. McCormick, as your companies look, at network management, it is a real 

issue. It is a legitimate issue. 

And so this bill allows for the reasonable network management 

practices, and I see in the private sector, the industry-led groups, 

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tices, best practices, that is exactly what this bill is intended to encourage so that there is not government regulation or intervention. 

And, Mr. McSlarrow, would you say that the legislation does, for 

the first time, help on the issue of network management? And if 

not, do we need to do something more in the bill to give you greater 

comfort and certainty that network management practices and private sector initiatives that you are now doing are encouraged? 

Mr. MCSLARROW. Well, I would be comforted if you struck everything before the study, but I am guessing that is not on the agenda. I mean, yes, I take the point we have an exception for reasonable network management, and yet the very fact that we just had 

this exchange and that we have had this debate about whether or 

not our ability to manage peer-to-peer traffic is being called into 

question tells me everything I need to know. With the best of intentions, it is a phrase. It is just going to be subject to litigation and 

people going to the FCC or here, and in the absence of a definable, 

real, and present problem, I don’t know why we would go down 

that path. 

Mr. PICKERING. Mr. Chairman, I will yield back. I don’t know if 

we will have a second round. But, Mr. McSlarrow, if you do have 

any suggestions on network management, I do appreciate what you 

are doing on network management, clarifying the private sector 

practices. 

Mr. MARKEY. Thank the gentleman. Chair now recognizes the 

gentleman from Texas, Mr. Gonzalez, for 8 minutes. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. And I am 

glad Mr. Pickering used the example of an exclusive relationship 

that may well endanger an enterprise such as Mr. Savitz’s because 

I actually see a greater threat elsewhere developing, and I want to 

get into that. And it is about management and such. 

I don’t think this piece of legislation is necessary. It is premature. If this committee does its work, if the FCC does its work, 

why would we need to do something by way of legislative mandate 

which takes it out of our hands and our oversight duties? And I 

don’t think that is really necessary. 

This whole argument has been couched in terms of access, openness, little guy, little consumer, Internet user, the blogger, the 

small businessman. I don’t think that is what it is about at all. It 

really is about the big guys in this fight. And I am going to go and 

I will ask Mr. Savitz: is your concern access to the Internet, or 

should your concern really be where you are positioned when someone conducts a search and hits ‘‘shoes’’? I think that should really 

be your predominant concern. 

And what I will do now, because I am going to read from ‘‘The 

Search’’ by John Battelle, which is probably 3 years old. Many of 

you probably have already read it, but it is very instructive. And 

I will read from it now. Neil Moncrief couldn’t afford to have a bad 

quarter. In fact, even a bad month made things a bit tense at 

home. Running your own business is like that. When things go 

south at the office, you take it home with you. As a small businessman, Moncrief lived on the edge of profit and loss. A bad month 

means avoiding his local banker, putting off home and car payments, and having less meat on his family’s table. But Moncrief is 

proud of what he has achieved. He built a small e-commerce comVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00101 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
96 

pany. I think it was toobigshoes.com. Survived the nuclear winter 

of 2001, 2002 and emerged with enough cash flow to take care of 

his family. Moncrief has search engines to thank for that cash flow, 

Google in particular. Thanks to the traffic that Google drove to 

Moncrief’s online storefront, Moncrief no longer worked for ‘‘The 

Man.’’ Moncrief is one of tens of thousands of merchants who have 

taken to the Web since the Internet became a global phenomenon. 

For every household brand built during the bubble’s infamous 

glory, EBay, Amazon, Expedia, thousands of Neil Moncriefs toiled 

in relative obscurity, building the Web’s bike shops and insurance 

agencies and its button merchants and stroller stores. These digital 

cousins of strip mall America are the very beating heart of the 

United States economy. Small business writ large across cyberspace. 

Do you think Amazon has got scale? Do you think EBay is huge? 

Mere drops in the bucket. Amazon’s 2000 revenues were around 

$2.76 billion, but the Neil Moncriefs of the world taken together 

drove more than $25 billion across the net that same year according to U.S. government figures. That is the power of the Internet. 

It is a beast with a very, very long tail. The head, EBay, Amazon, 

Yahoo, may get all the attention, but the real story is in the tail. 

That is where Moncrief lives. 

But while the Web may offer access to hundreds of millions of 

customers, you still have to let them know you exist. When folks 

went looking for something, they usually started at a search engine, and through some combination of luck, good karma, and what 

seemed like fair play, when folks punched ‘‘big feet’’ or similar key 

words into Google, Neil’s site came up first. 

The best part, Moncrief had never purchased an advertisement. 

All those search engine referrals were organic. We were the right 

answer for the search, so why buy an ad? In the third week of November 2003 to be precise, the phones stopped ringing. The orders 

stopped coming in. For 2 weeks, Neil Moncrief didn’t know what 

hit him, but he began to wonder maybe Google was broken. The 

very thought seemed ludicrous. Google broken? But a quick search 

on Google confirmed his suspicion. Twobigfeet.com was no longer 

the first result for ‘‘big feet’’ on Google. In fact, it wasn’t even in 

the first 100 results. 

In short, Google had tweaked its search engine algorithms, something the company does quite frequently. But this time Google’s 

modifications, which were intended to foil search engine spammers, 

had somehow sideswiped Moncrief’s site as well. What Google 

giveth, Moncrief learned the hard way, Google can also take away. 

It was then that Moncrief realized that while he may have 

stopped working for the man, he was now working for a far more 

capricious overlord who had no idea he even existed. 

In short, Google had updated its indexes to penalize what the 

company viewed as spam, people gaming their sites so they ranked 

higher. And lots of folks, including Neil, were caught in the crossfire. Neil was an unfortunate casualty of a much larger war, an 

arms race of sorts fought over relevance, power, and money. And 

I am not complaining about Google doing that. It is just that I believe they had to manage their own service product and network. 

Google will have to determine though, if you think of their role, 

97 

what should come first when someone is looking for, for instance, 

hip-hop. Who gets first in such a system? Who gets the traffic, the 

business, the profits? How do you determine all the possibility, who 

wins and who loses? 

But Google, more likely than not, will attempt to come up with 

a clever technological solution that attempts to determine the most 

objective answer for any given term, and I think that is admirable. 

Perhaps the ranking will be based on some sort of page rank, 

downloading statistics, and lord knows what else. But one thing for 

sure, Google will never tell you how they arrive at that. 

Now, that is not such a bad thing. And I know it is going to take 

my whole 8 minutes, but I learned from Mr. Markey never ask a 

question that does not include the answer. The real problem comes 

in when Google then starts entering certain relationships with 

other individuals and that advertising is then tied to search engines. And that leads me, of course, to probably the latest article 

that I saw with Yahoo and Google, which is very interesting. It 

says ‘‘Yahoo Incorporated’’—this is from May 2, Wall Street Journal. ‘‘Yahoo Incorporated could announce an agreement to carry 

search advertisements from Google Incorporated within the week. 

While a broad search ad pack would likely attract intense antitrust scrutiny, the oppositions Google and Yahoo are discussing include a non-exclusive arrangement. In other words, how do you get 

around the scrutiny of antitrust and such? I don’t know what this 

would be. The basis of such an arrangement would be a real-time 

option system that would choose the most lucrative ads for any 

given consumer query.’’ 

Lucrative. I am not real sure what they mean by that, and I 

think they are going to expand, but wouldn’t you be concerned, as 

a small businessman just starting out, where is your placement? It 

is not going to happen with organic search, is it? You are going to 

have to subscribe to some sort of ad service, most probably provided by Yahoo and Google, which comprise about 72 to 73 percent 

of all searches in the United States, which are directly tied in to 

whatever ad product. Do you feel that that should be a real concern? 

And maybe while we are addressing the five principles of the 

Internet and the architecture, maybe we ought to also be addressing the openness, accessibility, and the freedom of how it operates 

when it comes to search engines and what is truly driving and financing the Internet, and that is advertisement revenues. 

Mr. MARKEY. The gentleman’s time has expired, but the witness 

can answer the question. 

Mr. SAVITZ. I will tell you that for individuals like the one that 

you described that does not or cannot afford to do a lot of advertising, they are going to have to really rely on blogs and small individual entrepreneurial shopping sites and other things to get their 

word out. And my fear, what worries me and why I am here today, 

is that we have things like slotting fees and other things. Those 

very people that they would have to rely on as an individual to get 

the word out will be regulated to the slow lane. 

Mr. MARKEY. All right, the gentleman’s time has expired. The 

chair recognizes the gentleman from Illinois, Mr. Shimkus. 

98 

Mr. SHIMKUS. Thank you, Mr. Chairman. Nice job downstairs. I 

always wonder when we agree who is messing up, who is wrong. 

Mr. MARKEY. We are going to start the gentleman over again. 

Just so everyone understands what is going on, because it is hard 

for people to understand the way the committee is organized. 

Downstairs simultaneously this committee has jurisdiction over 

Energy and over Telecommunications, and it is broken into two 

separate subcommittees. So right below this hearing right now, 

there is another hearing going on on the impact that biofuels, cornbased biofuels, being put into gasoline tanks, is having on the price 

of food and any impact on the environment. So about half of the 

members of this subcommittee are also members of that subcommittee. So the members are running back and forth between 

the two subcommittees as the hearings are transpiring. 

And while Mr. Shimkus do not agree on the issue before this 

hearing on net neutrality, we do agree upon the issue of biofuels 

and how that issue should be handled. And so that is what he is 

referring to so that everyone can understand because there has 

been about eight members who have made reference to the other 

hearing. 

With that, the gentleman is recognized for 5 minutes for his 

questions. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I also want to kind of 

clear up—my colleague, Mr. Pickering, mentioned in his questioning that current law does not allow network management. But 

that is not the case. And I would like to quote a policy statement 

from the FCC where they state, ‘‘Accordingly, we are not adopting 

rules in this policy statement. The principles we adopt are subject 

to reasonable network management.’’ So just to get that on the 

record. 

Mr. PICKERING. Would the gentleman yield? 

Mr. SHIMKUS. Sure. 

Mr. PICKERING. Is that in policy, or is that in statute? 

Mr. SHIMKUS. That is a policy statement by the FCC. 

Mr. PICKERING. Does the policy have—— 

Mr. SHIMKUS. Dated—— 

Mr. PICKERING. Will the gentleman yield? 

Mr. SHIMKUS [continuing]. September 23, 2005. 

Mr. PICKERING. Does the policy have the same—— 

Mr. SHIMKUS. Are you going to give me some of your time? 

Mr. PICKERING. Yes. 

Mr. SHIMKUS. Are you filibustering me, Mr. Pickering? I am reclaiming my time. Mr. McCormick, why is it so important that 

broadband providers be able to manage their networks and 

prioritize Internet traffic in the absence of government regulation? 

Mr. MCCORMICK. Mr. Shimkus, various applications have different requirements. Some applications are ordinarily sensitive to 

latency, for example, VoIP is sensitive. We had a situation where 

video screening on this—certain healthcare applications. This legislation says that it would adopt and enforce protections to guard 

against any unwritten discriminatory favoritism by network offers 

based on scores for tests. Massachusetts General Hospital has a 

telemedicine application that requires for its integrity that it receive a certain quality of service. 

99 

So it is important to be able to manage it. 

Mr. SHIMKUS. And I appreciate that. That is part of my opening 

statement, the concern about a couple things, prioritization, buildout, more pipes, latency issue, especially for telemedicine, which is 

really applicable, and we would like to get it further developed in 

rural America. 

Mr. McSlarrow, can you talk about the importance of network 

management for your members, as many cable companies are relatively new entrants into the broadband market? And how would 

this legislation affect small cable providers’ decision to enter into 

this market? 

Mr. MCSLARROW. Sure. The broadband deployment by the cable 

industry is really a decade old. And, as you point out, there are 

many rural areas where we are still trying to build out those 

broadband networks. What is seamless to the consumer when they 

sit down at a computer and you have an always-on broadband experience, on the other side of that computer is the wild, wild west. 

And you have got a network manager who is dealing with spam. 

And just to give you a scale of it, one of my companies defeats a 

billion spam e-mails every 2 days. You have got botnet armies that 

have taken over millions of PCs that are engaged in all kinds of 

illegal transactions. You have got just the ordinary give and take, 

legal but nonetheless challenging problems of congestion. And 

someone is managing that for you. And so it is hard to break it 

down at any one time, but suffice it to say it is a fairly complex 

engineering challenge. And somebody is doing that all the time, 

and the good news is a consumer doesn’t think twice about it, nor 

should they. 

Mr. SHIMKUS. Yes, it is a great point because for me to have 

teenagers in this era and how they consume electronics and how 

they get information. The YouTube phenomenon is amazing, but, 

Mr. McCormick, you testified about the bandwidth consumed by 

YouTube versus—YouTube consumed as much bandwidth as the 

entire Internet consumed in 2000. What would happen in a regime, 

an FCC regime like is being proposed in this legislation? 

Mr. MCCORMICK. Well, again the most important thing is to have 

further investment in broadband buildout, further enhancements to 

broadband infrastructure. And what we are seeing today is that it 

is the very growth of applications that is fueling Internet buildout 

and construction. 

So what we don’t want to have is a situation where the government chills that kind of innovation in an investment by creating 

uncertainty in the marketplace. 

Mr. SHIMKUS. And, Mr. Bainwol, you wanted to chime in on one 

of the questions that I don’t know who asked. But I had a question 

first. Talk about the recording industry and your response to this 

legislation, and then if you would have a chance to respond to—— 

Mr. BAINWOL. Sure, we are in a situation over the last few years 

that comes close to crisis. As I spoke to in the opening statement, 

our sales are down nearly 50 percent during this new digital age. 

But we don’t view the digital age as one that is going to trap us 

forever. I mean there is enormous opportunity out there if we make 

the right judgments. 

100 

And I guess my plea to you and to this committee is that we approach these issues with a sense of balance. Openness is a vitally 

important concept. Innovation is a vitally important concept, but 

what is happening right now today on the Internet is a trampling 

of our property right. And the property right concept is so central 

to the American experience of capitalism and is so central to our 

economy that to set up a set of judgments that excludes and ignores what is happening in terms of the violation of our property 

right is the wrong way to proceed, which is why I applaud Chairman Markey and Congressman Pickering for clearly and directly 

articulating that unlawful activity can be dealt with by way of network management. 

The trick though is what are the forms of network management 

that are going to be used? I am not a techonologist. And will those 

forms of network management, whether you trip over somebody’s 

concept of net neutrality. And that is my concern. We have got to 

find a way to lock down, to provide balance and debate, to deal 

with the property right, but to do it in a fashion that is respectful 

to balance. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentlelady from California, Ms. Solis. 

Ms. SOLIS. Thank you, Mr. Chairman, and I will be brief. I just 

wanted to ask Mr. Scott his opinion—we talked a lot about fairness, the bigger fish eating the smaller fish so to speak, as my father would say. Can you please explain to us what net neutrality 

regulations—how that would either encourage or prevent Internet 

innovation? 

Mr. SCOTT. Sure, it is relatively straightforward. The Internet, as 

it has developed, has operated in a nondiscriminatory manner. 

That means that the market power of those who offer you Internet 

access, the DSL line into your house or your cable modem into your 

house, they can’t use their market power to discriminate in the 

marketplace for content and services. 

And as a result, we have had the greatest free market experiment in the history of capitalism on the Internet. It has been extraordinarily successful. There are no barriers to entry. Anybody in 

their dorm room can have a great idea and become a billionaire. 

We have a problem when the market power from the wires begins to get transferred over into the market of content and services, 

and that market gets distorted. And in that context, deregulation 

is synonymous with cartelization. You are handing over the keys 

to that free market to those few market players who have control 

of the wires. And that is what kills innovation, and that is why an 

openness has been such a successful premise. 

Ms. SOLIS. My last question is both for Mr. Peterman and Mr. 

Bainwol. Could you please describe how you envision network management assisting and protecting against privacy of copyrighted 

material? And do you believe regulations about lawful Internet 

traffic would have an effect on those efforts? 

Mr. PETERMAN. Would you repeat the last part of that question? 

Ms. SOLIS. Do you believe regulations about lawful Internet traffic would have an effect on those effects? And that is protecting 

against privacy of copyrighted material. 

101 

Mr. PETERMAN. Obviously I think—well, I will speak for my—we 

are both very much invested in protection of copyright. That is one 

of the reasons that the guild is in favor of the openness. There is 

an enormous amount of work being done on privacy and on control 

of copyright—piracy, sorry. And we just feel that once again we 

don’t want to use the piracy issue. We don’t want that to be an excuse for limiting our access to the Internet as a means of communicating with an enormous new audience. 

Obviously everybody seems to recognize this is an enormous, 

money-making, profoundly important economic and informational 

generator for this next century. Everybody here is in agreement 

with that. What seems to be the question is all right, how do we 

balance the protection of peoples’ interest in making money with 

the consumers’ interest in having an open market? 

We believe that fighting this bill in the name of preventing piracy is not an accurate way to help the industry. We think that 

there are constant innovations going on in piracy technology. Now 

there is ad-imbedded products that are involved in this. We feel 

that that is the way to do it, not to inhibit in any way the access 

that has made this the money generator that, as Ms. Eshoo said, 

is the reason why everybody is here today. We want to keep it the 

way it has been because it is working so extraordinarily well. 

Mr. BAINWOL. And I am obviously focused on the unlawful piece 

of this equation, and the question here is how do we most urgently 

address this question. And my fear is that legislation will take 

time. It will take time to process, to pass, to do the study. And we 

have a problem that is right now, and the best way to address that 

problem is for us at the table—the ISPs and content—to get together in a private way with a sense of urgency and a sense of commitment to results to deal with this. And you deal with it by a way 

of graduated notice programs and by way of technology, whether it 

is filtering or watermarks. 

That discussion has to take place, and it has to be results oriented. And if it is not results oriented, then I am going to be back 

here, and I am going to say members of this committee, we need 

your help because there is a sense of urgency that has to be responded to. 

Ms. SOLIS. Thank you. Thank you, Mr. Chairman. 

Mr. MARKEY. Would the gentlelady just yield briefly? She has 35 

seconds left. Would the gentlelady yield? Yeah. 

Ms. SOLIS. Yield, yes. 

Mr. MARKEY. Yes, again I just want to make it very clear that 

on copyright protection, we all agree. There is no debate on this 

committee at all on vigorous 100 percent enforcement of copyright. 

Whether it is software developed in Silicon Valley or in my district 

for business use, whether it is some recording artist, some television show, a movie, we want it to be protected: copyright. 

But when the means of conduit change, when you move from 

radio to television to cable now to the Internet, we have to be constantly making sure that it is not used in an anticompetitive way 

against content, against copyright-protected content. So distinguish 

between content protection, we all agree it is 100 percent. And then 

competition, new means of conduit, carrying it, that sometimes can 

lead to anticompetitive activity against content, that doesn’t have 

102 

an affiliation with the large telephone or cable companies. That is 

the distinction, and I just want to clarify that once again for the 

record. 

The chair recognizes the gentleman from Mississippi—I am 

sorry, the chair recognizes first—I did not realize the gentleman 

from Mississippi had already been recognized. The chair recognizes 

the gentlelady from California, Ms. Capps. 

Ms. CAPPS. I thank you, Mr. Chairman, and I am overstaying my 

time, my own limit. So I am going to restrict myself just to one 

question. This is a very interesting panel, so I want to thank you 

all. 

Mr. Yoo, as you know, innovation on the Internet evolves at such 

rapid pace, oftentimes leaving policymakers and even Internet 

service providers playing catch-up. Looking toward the future, do 

you ever see a time when the supply of broadband access will be 

able to keep up with demand? Or do you believe that to currently 

be the case? 

Mr. YOO. The deployment rates suggest that we may see it keep 

up with demand in the backbone. They are adding tremendous 

services in the core. The big problem is in what we call the last 

mile, whoever provides the connection locally. We are seeing increasing diversity of providers in the wireless space, and the 700 

megahertz auction is going to add some new providers in that 

space. 

The big problem is no one can foresee the future perfectly, and 

everyone will configure even local—even if there is extra bandwidth, they will build it where they think the people are going to 

be. They are going to guess right sometimes. They are going to 

guess wrong sometimes. 

And YouTube, we talked about, is now 20 percent of all Internet 

traffic, and no one saw that coming. And it is very difficult for 

them to be perfect in terms of adding capacity because no one is 

that good. So sometimes you end up using other techniques to deal 

with the fact that you have actually done your best, but you have 

misestimated the demand. 

Mr. MARKEY. I thank the gentlelady, but if I may just reclaim 

the—just finishing out the balance of the gentlelady’s time. Actually no one saw it coming, that is that YouTube would consume so 

much, except for Chad Hurley, except for the kid who invented it, 

except for the kid that said hey, look at that aperture, look at the 

Internet, look at this wonderful thing that I might be able to do. 

So except for this proverbial kid in the garage who comes up with 

the idea that revolutionizes this entire industry, you are right. No 

one for sure saw it at a big telephone company or a big cable company. That is 100 percent for sure. 

And it is not to say that that is a bad thing because they have 

a role. They have a very important role to play. But the innovation 

historically comes from the proverbial kid in the garage, this young 

graduate student or even younger that is always thinking about 

how to create new ways of providing content over the means of conduit that is being created. 

So I just, again, want to make it clear that we are trying to protect young Chad Hurley, young Mark Andresin. OK, and the whole 

point is that the innovation is driven by these millions of kids that 

103 

are all at home, that are manipulating, thinking about these technologies every day. And at the same time, we want to protect the 

copyright of any content which is produced. All right, but we don’t 

want it to get managed out of existence. 

The chairman of AT&T sat here in 1978 in a hearing—I have 

been here for 32 years on the committee. And we were then debating whether or not someone should be able to go to a store and buy 

a phone that wasn’t a black, rotary dial phone and to plug the 

phone into the wall. And the chairman of AT&T said here, my 

goodness, if that ever happened up in Boston, it could bring down 

the whole phone system of Boston if someone could go to a phone 

store and buy a phone rather than rent it from us for $3 a month, 

which my mother, Mrs. Markey, rented that black, rotary dial 

phone for $3 a month for 40 years. Paid about $1,200 to rent the 

black, rotary dial phone. 

And AT&T, the old AT&T, the Bell Labs AT&T, even though 

they had already won like three or four Nobel prizes, in theory, 

when you said can someone buy a phone and plug it into the phone 

jack in the living room. No, it will bring down the whole system. 

Network management principles, they explained to us, are very important. We just can’t have anyone making a phone and anyone 

plugging it into the wall because it would ruin our network management. 

How long will it take you before you figure that out so people can 

buy other phones? And he said well, about 10 more years. And so 

I said, Mr. Chairman, we have got to break up AT&T. If it takes 

you 10 years to figure out how people can buy a different phone 

except that which is leased as a black, rotary dial phone in the living room. 

So network management has always been used by the big companies, always, from the very beginning. It is a principle. That is one 

of the underlying principles of the big communications companies, 

that network management is used as the first argument against innovation, against the consumer having more choices. And so that 

was actually the hearing at which I began my efforts to break up 

AT&T, and it was just me and one other member of this committee, 

by the way, back then, long ago and far away. There are a couple 

people in the room who remember that. 

Mr. PICKERING. Mr. Chairman, could you yield just a second? 

Mr. MARKEY. Go ahead, sir. 

Mr. PICKERING. Which president broke up AT&T? 

Mr. MARKEY. Actually, this is scary, OK, to think that it was 

Ronald Reagan—— 

Mr. PICKERING. Thank you. 

Mr. MARKEY [continuing]. That broke it up. And which shows 

again the bipartisan nature of this whole issue, OK. It is competition versus openness, innovation. Let me recognize now the 

gentlelady from California, Ms. Eshoo. 

Ms. ESHOO. Thank you, Mr. Chairman. Thank you to all the witnesses. I think that it is healthy to be able to look at all of this 

with some sense of humor. You know it is professional humor, but 

it is some humor about our past and our resistance to things. And 

then when we look at it from—going fast forward a couple of decVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00109 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
104 

ades later, we realize that where some of the louder voices stood, 

that it was really kind of ridiculous. 

When Mr. Markey gives the description of the black phone that 

was really reliant. I mean that thing worked. Now our phones are 

like retractable pens. They don’t work. We pitch them out. We get 

another one. But we are where we are, and I think that in some 

ways we are so much enjoying the success of what we built that 

we say because we built it and it is so successful that we don’t need 

to protect that in some way. 

And so I think, Mr. Chairman, that we that support this effort 

have a pretty tall challenge. I am going to be real frank. In the last 

Congress, we had 152 cosponsors, I believe. We are starting out in 

this one, and the argument is still that there isn’t anything that 

is broken, everything is terrific, and nothing needs to be done. 

And there are some of us that say, you know, the ingredients 

that made this so successful really need to be protected and that 

there are some things that are somewhat disturbing about what is 

going on. So I would like to just ask a couple of questions. 

First, Mr. McCormick, do you believe that the broadband policy 

principles adopted by the FCC are enforceable? You do? 

Mr. MCCORMICK. Congresswoman Eshoo, the Supreme Court has 

made it clear that the FCC has authority to take action against 

anyone who violates—— 

Ms. ESHOO. No, not whether it can be or not, but do you think 

that they are enforceable? 

Mr. MCCORMICK. I believe—— 

Ms. ESHOO. You do? 

Mr. MCCORMICK [continuing]. The FCC has authority to take action. 

Ms. ESHOO. There was nondiscriminatory language in the Communications Act. Why is this legislation menacing to you when you 

see what the outcomes of that language are from the Telecom Act? 

Mr. MCCORMICK. That particular language dealt with monopoly 

era on communications. It did not apply more broadly to others 

who are offering broadband service. It did not apply to the Internet 

backbone. It did not apply to cable service. It did not apply to 

broadband over power line. It did not apply to satellite-provided 

broadband. And so what we have is a very competitive atmosphere 

today. We have, like in your district, over two dozen broadband 

providers. And we think that that competitive marketplace is consistent with what has made the Internet great. 

Ms. ESHOO. Except the people that are opposed to the legislation 

aren’t very comfortable that there is enough competition and that 

the little guys not be able to break into it. That is where, I think, 

we have the debate, and I don’t know whether this more targeted 

legislation has the ability to be non-menacing to people that have 

really already made up their minds and voted a certain way before. 

I think that is the issue that is before us really. I hope that we can 

be successful because I think everything isn’t perfect in this paradise that is being described by some. 

The well-respected professor and technology expert, Larry Lessig, 

was before the Senate recently, and I think he used a very interesting analogy. And that is that he described the Internet infrastructure a lot like the electrical grid and said Sony and Panasonic 

105 

are invited to develop new technologies that use the network and 

that they don’t need permission from network owners. And the network doesn’t ask whether the TV is made by Sony or RCA. 

Now, by no means is the network free. Neither is the grid. We 

all pay an electric bill, and we pay for what we consume. Why is 

broadband access different than this description? Who would like 

to weigh in on that? 

Mr. MCCORMICK. Well, I will try it. I don’t know of any situation 

where there is an inability on the part of the consumer to access 

any lawful Web site. So—— 

Ms. ESHOO. Well, I think that we have some problems, and I 

think that Mr. McSlarrow maybe can say something about this and 

the BitTorrent situation. Is that not cause for concern? I am not 

trying to penalize anyone. I mean, around here what counts is big. 

So the bigger the outfits, the more influence they have with a big 

legislative body. Have you done many important things? I mean 

the investments that cable is invested is extraordinary. 

But I want new outfits to be born. I want to see a lot of babies, 

not just parents. So is BitTorrent not a chip in the armor of this? 

Mr. MCSLARROW. I don’t think so. I think the interesting thing 

is that peer-to-peer networking is a relatively new phenomenon in 

a marketplace that itself is relative immature. I mean, we are talking a decade, and to the average consumer who wants to use peerto-peer technologies, they do, and they don’t even notice any network management taking place. 

But what is happening right now is that ISPs, peer-to-peer applications companies, other technology services, are all talking about 

how you can do peer-to-peer in a way that consumes less bandwidth, that is more user friendly, and I think there is actually a 

cause for celebration that in the private sector, those conversations 

are taking place in the absence of regulation. 

Ms. ESHOO. Well, I can see where we are. Everybody is sticking 

to their own story essentially, and so, we have to bring about some 

kind of meeting of the minds because I think if we don’t, then there 

will be a degradation and a continuation of some manifestations of 

degradation. 

Is it 100 percent or 80 percent? No, and I don’t think anyone is 

pretending that that is what it is. But there are cases of degradation, and I think it always ends up being in the interest of growing 

and larger companies to be tempted to protect what they have and 

not let another foot in the door. I think it is just the nature of the 

animal. And so we need more cosponsors. We are going to work on 

that. I thank everybody for being here. 

Mr. MARKEY. I thank the gentlelady, and, of course, the 

gentlelady has been a national leader on all of these issues 

throughout her entire career. And we thank her for being here. 

And now we turn and recognize the gentleman from Michigan, Mr. 

Stupak. 

Mr. STUPAK. Thank you, Mr. Chairman. Mr. McSlarrow, sorry I 

have been bouncing back and forth because I have been upstairs 

there. But do you believe the FCC has the authority to address the 

discrimination issues on the Internet? 

Mr. MCSLARROW. I think it is ambiguous. I think the Supreme 

Court and the FCC have asserted Title I ancillary authority, and 

106 

it is clearly broad although not unlimited. But they haven’t actually passed or enacted a rule doing something like that today. 

Mr. STUPAK. OK, you stated that 5 percent of the customers use 

anywhere between 50 to 90 percent of the total capacity of a 

broadband network. Can you tell me how you came up with that? 

Mr. MCSLARROW. Well, it is one estimate, and there are many. 

But they are all roughly in that range. Some actually are worst 

case scenarios where you are talking about 1 percent of consumers 

using the vast majority. I know in one example I went out to one 

of my operators, a mid-size operator serving about a million customers, and the number of people who consume over 50 percent of 

bandwidth and over 70 percent at peak congestion times is small 

enough that they are on a first-name basis with these people. So 

I mean it differs obviously network by network, but there is this 

disparity between the number of users, particularly at peak congestion, and the bandwidth consumers. 

Mr. STUPAK. Mr. Savitz, how are the costs to host your business 

online determined? And how has that changed since 1999 when you 

first started? 

Mr. SAVITZ. I am sorry. I didn’t hear. Can you say that question 

again? 

Mr. STUPAK. How is the cost determined for you to be on the 

Internet? 

Mr. SAVITZ. How is the cost determined? Well, as you continue 

to grow scale, you have to increase infrastructure. When you have 

to—it becomes an expensive value proposition in terms of what we 

have to invest to be able to have Internet access, which is why 

when I talked about before during my testimony to say that the 

people on the other end aren’t making tremendous investment. We 

are absolutely making an unbelievable amount of investment. It is 

an extremely costly proposition that you have to be able to succeed 

with the consumer to make it at all make sense. 

Mr. STUPAK. Well, you said you started in ’99. You had just a few 

employees, and you have greatly expanded. How have your costs 

done the same just to be accessed on broadband? 

Mr. SAVITZ. Well, the beautiful thing about the—our costs have 

exponentially increased disproportionate to our revenue growth. So 

the costs have scaled, but because of the innovation and disability 

of this open platform, you are actually able to generate business in 

the sense that, at Shoebuy.com, we do over $1 million per employee. 

Mr. STUPAK. What was it in ’99 then per employee? 

Mr. SAVITZ. Well, we actually formally launched the site in January 2000, so it was a terrible metric at that point. 

Mr. STUPAK. Well, the point being you invested, but yet you saw 

return on it, right? 

Mr. SAVITZ. Yes. Again, that is why I am here today. It is fairly 

incredible to think that by being very scrappy and innovative and 

entrepreneurial, we were actually able to get enough visibility and 

get out there and actually market the value proposition of Shoebuy 

to get enough visitation and enough transactional performance that 

we were able to scale now, at the present point of time we get over 

4.5 million visitors a month. 

107 

Mr. STUPAK. OK. Now, Professor, do you think it is possible to 

establish some simple baseline expectations of nondiscrimination 

for the Internet that does not interfere with good networking management but preserves consumers’ right to access content? 

Mr. YOO. Past experience does not give the tremendous variety 

of technologies. Wireless, cable, telephone are so different. They are 

subject to congestion in very, very different ways, but it is very, 

very difficult for them to manage that. It also depends on how 

much traffic is being generated. It is not even technology based, 

just on the local conditions. 

And the one thing that I wanted to say in this hearing is that 

one thread that came up in some of the filings is it is also very different for rural providers. Is that because they only have a very 

limited of bandwidth that if they can’t discriminate a little bit between—basically it is video. If they can’t dial back video a little bit, 

one person downloading video soaks up the entire bandwidth for 

everybody. 

And so when we are talking about protecting the little people, little proprietors, in the attempt to create competition in the space, 

many of the rural providers will fall on the other side because they 

need those sorts of ability to discriminate because determining 

what is good discrimination and bad discrimination and what is 

cost justified and not cost justified, an antitrust law and an FCC 

law has been extremely difficult, and when the product is complex, 

almost unworkable. 

Mr. STUPAK. I want to ask you a question I asked Mr. 

McSlarrow. As a law professor, what is your view of the FCC’s ability to enforce policy and discrimination on the Internet? 

Mr. YOO. As of now, the Supreme Court has indicated that they 

have the authority. The FCC by its own statement said we are not 

promulgating rules, and that can be reasonably interpreted as they 

have not as yet exercised that authority. They have an ongoing proceeding right now asking for all the examples, and they have indicated on five occasions that they are willing to enact rules if they 

get the record. But the record wasn’t there yet in 2005, and the 

order and the merger clearances. 

What is fascinating to me about the Bell South merger clearance 

is they did make one exception. They put in the network neutrality 

rules, but they said we will make an exception for IPTV. Why? Because we needed them to compete with cable, and without the ability to channelize that or without Comcast’s ability to separate out 

its voice traffic, it can’t cross-compete with the other types of providers. 

Mr. STUPAK. Well, do you believe the FCC, through its ancillary 

authority, have the right to combat any perceived violations of its 

policy statement even though they really haven’t exercised the authority? 

Mr. YOO. On a proper record with proper notice and comment 

and an explanation of how it fits with the past decisions or whether 

they are breaking with them, I believe they have the authority. It 

is just a question of whether they properly exercise it in accordance 

with administrative law. 

Mr. STUPAK. OK. All right, let me ask this question if I may 

then. You mention how the predominant use of the Internet has 

108 

gone between a peer-to-peer architecture and because of YouTube 

is returning to a client server architecture. You also say that this 

provides, and I am quoting now, ‘‘uncertainty for the business environment,’’ but in order for either architecture to flourish, wouldn’t 

open access be necessary? 

Mr. YOO. It raises a whole bunch of problems. If you are in a 

peer-to-peer architecture, you allocate upload and download speeds 

more symmetrically than you do if you are just downloading. If you 

are downloading, all you are sending up are Web site addresses, 

these little short pieces of code, and you have taken down tremendous files. 

Second, in the world before, where you have a Web site, you usually count the bits that the Web site puts out—in answer to your 

question to Mr. Savitz—on a 5-minute basis, and you charge them 

based on their highest volume over a 30-day period, using the 95th 

percentile volume. You don’t get the absolute peak because there 

are little spikes. You just tail them off. And that is how we have 

counted it. So if a Web site downloaded 100 times, it created 100 

times of downloads. 

In a peer-to-peer world, you can download once, store it among 

end users, and yet serve 100 downloads on the user side with only 

generating one payment on this side. So if you move to a peer-topeer world, you need to start metering the end user side because 

they are now generating congestion that we were previously capturing on the server side that we can’t capture anymore, which is 

not just a question of regulation. It is a question of business models. It is usage sensitive pricing. Some of the models that Time 

Warner began to experiment with, but it has—profits on objections 

from Mr. Scott and some other people in the community about the 

concerns in the network neutrality space. 

My point is it is a very complex problem. They are going to have 

to redesign the architecture of the network based on a bet whether 

peer-to-peer or filing sharing is going—downloads are going to win. 

They are going to have to redesign their business models, and they 

are going to have to remanage their networks in very different 

ways and put the meters in different places. 

Mr. STUPAK. Thank you. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Nebraska, Mr. Terry. 

Mr. TERRY. Thank you, Mr. Chairman. I enjoyed seeing your 

presence for a few minutes downstairs in the other hearing. I tried 

to reduce the issue into kind of one statement, one simple statement, and what I concluded is can we expect continued innovation 

and development of and within the Internet under an additional 

regulatory scheme, no matter how benevolent the scheme may 

sound. So, Mr. McSlarrow and Mr. McCormick, I have two kind of 

simple questions. 

One is, is there becoming such a problem with reduced access or 

discrimination, bad practices within the Internet, that the sky is 

falling, we have to have a new regulatory scheme? And will a regulatory scheme enhance or retard development and uses within and 

of the Internet? Mr. McCormick, you have been silent since I have 

been here. Why don’t you go first? 

109 

Mr. MCCORMICK. Well, thank you very much, Congressman. The 

Internet is full of innovation. As I said in my statement, for health 

care, for education, it is improving the environment, it is improving 

personal security. Each of these applications has different network 

requirements. We believe that there should be no preemptive prohibition against innovative business plans, partnerships, and use of 

the network. 

And there is, at this point, no suggestion that any of the companies that I represent are in any way acting in a way that is not 

in conformance with the policy principles articulated by the FCC. 

So we think that this new language does create uncertainty, and 

we don’t know when it says ‘‘guard against unreasonable discriminatory favoritism of content based upon source or destination,’’ how 

does that impact a health care application? How does that impact 

a personal security application? Those are applications that we are 

working, through network management, that do have different requirements for both source and destination. So we think that this 

is regulatory, and it would show investment and innovation. 

Mr. TERRY. Mr. McSlarrow, your thoughts? 

Mr. MCSLARROW. I have to confess to a certain amount of frustration as much as I am glad to reprise my usual role as Mr. Markey’s foil. The interesting thing about this is, and I am thinking 

about the ’78 hearing with the chairman at AT&T. That is not the 

world we live in today, and those aren’t the people we represent. 

And I admit full well both cable, telephone back in the monopoly 

era, totally different. But they think differently today. 

And we said several years ago, we want our customers to access 

every Web site, to use every application, to use every service on the 

Internet. We told this committee and your counterpart in the Senate, we want them to be able to attach any device to the network 

so long as it doesn’t harm the network. That is our policy because 

that is what we want our customers to have, and if we didn’t do 

it, in the case of cable, they would go over to Walter’s companies 

and vice versa. 

So the innovation and the investment that Walter just talked 

about is clearly present. But really what this is about is our perspective is we are standing in the shoes of our customers. We want 

them to have a superior experience. And the hard cases where you 

are talking about a few affecting the experience of the many, people have to make judgments. And they could be right or wrong. But 

to your point about whether or not regulation makes it better, I 

just don’t see how that could possibly be the case. 

And that is really the concern here is not the goals, which we 

share, it is the reality of regulation in a space that has been up 

until now unregulated. 

Mr. TERRY. All right, thank you. Mr. Yoo, are there a lot of bad 

practices, discriminatory practices that are occurring today that 

should give rise to a new regulatory scheme and that would be unreasonably discriminatory today? 

Mr. YOO. They opened notice of inquiry, and the FCC has invited 

parties to file. And so this was the moment where the record is 

supposed to be made. And as Mr. McSlarrow has indicated, there 

are basically four examples in the record, two of which really don’t 

involve Internet content. The one example, the Pearl Jam example, 

110 

AT&T was hosting something on its Web site, decided it no longer 

wanted to be associated with that speech. I don’t personally agree 

with the decision, but what most people would say what you actually host on your own Web site is protected. You have discretion 

over that. And I guess my bottom line of that is there are very few 

examples and usually not the kind of volume of examples you 

would need for regulatory limit. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Mississippi, Mr. Pickering. 

Mr. PICKERING. I just wanted a quick follow up question and 

then close, summarize real quickly. Mr. McCormick, do you think 

that the FCC has the current authority on a case-by-case basis to 

enforce their network neutrality principles? 

Mr. MCCORMICK. I think that based upon the Supreme Court’s 

decision in Brand X that the FCC has authority, ancillary authority, to take action against what it would consider to be activities 

that would not be in conformance with its principles. 

Mr. PICKERING. Mr. Yoo, you had summarized in your statement 

that a case-by-case approach could be the best way to proceed. If 

the FCC has the authority, whether that is in dispute or not, but 

if it is clarified and then the outcome of this effort was to strengthen and give certainty that the FCC does have that authority on a 

case-by-case basis, would that be a good outcome? 

Mr. YOO. I think that would be a good outcome. The only question I have about the current legislation is it actually makes a commitment to a set of baseline principles, which could actually interfere with case-by-case decisionmaking to the extent to which we 

had one baseline for one technological reality or be shaped by one 

technology. We have a different technology or a new technology 

come along, and then all of a sudden the baseline is no longer really well designed for that context. 

But the idea of a case-by-case method I support. It is the notion 

of baseline principles that give me pause and trouble. 

Mr. PICKERING. And Mr. McSlarrow, Mr. McCormick, let me just 

ask one question of whether this is a legitimate concern or not. Because I think in the marketplace today, we are not seeing many 

problems, to be honest. We do have concentration occurring in 

cable and telecom and wireless. And the question is as you begin, 

for example, in wireless to have an exclusive Apple with iPhone, 

do you see a business model where you would want to do an exclusive with Yahoo! or Microsoft or content providers? Or if not an exclusive, a preferential agreement that may be with the big record 

producers but not with the independent record producers, or with 

some in Hollywood but not others in Hollywood? Do you all see that 

type of business model being considered, and would it make sense? 

Mr. MCCORMICK. I am not aware of any instance where any of 

our companies are looking at a business model that would, for example disadvantage access to the shoe Web site. 

Mr. PICKERING. But in the future, do you want the option—codifying the principles, does it take away that option from you, and 

does that concern you? 

Mr. MCCORMICK. I believe that if you have a competitive environment, as we do today, where the barriers to investment, in offering 

broadband services are extraordinarily low, that as people are inVerDate Nov 24 2008 10:10 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00116 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-112 CHRIS
111 

vesting in broadband, one of the ways they may capitalize their investment is through innovative partnerships. We are seeing that 

with university networks. We are seeing that with a variety of unlicensed, wireless-based networks, and therefore I think that it 

would be a mistake to preemptively prohibit innovative partnerships that may lead to our goal of increased broadband deployment 

and competition. 

Mr. PICKERING. Thank you, Mr. McCormick. I see that my time, 

and I am about to defer to the chairman. I want to thank you for 

working with me on this legislation. I do think it is the reasonable 

common ground, that it clarifies current policy and principles. I do 

not believe it will lead, and I hope it actually prevents us from having a new regulatory scheme adopted. 

I hope it gives clarity and certainty that this will be the business 

model going forward. And from a principle, philosophical point of 

view, it is the way to maximize freedom, whether it is economic, 

political, or personal, that we have in the Internet. 

And if we can have support from the Christian Coalition to the 

Planned Parenthood, from independent record producers to major 

labels to the writers in the creative community to the small business community, I think that it is a wise and well-reasoned and 

principled, from a freedom point of view, way to go. And it is not— 

if you look at the counterpart on the Senate, Snowe-Dorgan, very 

regulatory, very prescriptive. This is very balanced, and it is consistent with the committee’s work under Republican majority and 

consistent with the Republican commission’s principles adopted. 

And I do think that it clarifies network management or strengthens it, and it clarifies lawful to unlawful uses. And this is a good 

ground upon which to start in this committee of getting the consensus to promote American values and ideals and a good way. 

And I hope that we are successful, Mr. Chairman, in our efforts to 

do. And I look forward to working with you on it. 

Mr. MARKEY. The gentleman’s time has expired, and the chair 

will recognize himself. And just to close the hearing and to say that 

I value my partnership with the gentleman from Mississippi. This 

issue really should not be Democrat, Republican. It should just be 

an evaluation of what is needed in order to ensure that we see the 

innovation out in the marketplace without giving protection to the 

pornography, the piracy, the other practices that legitimately 

should be looked at as areas that are still subject to the traditional 

laws. And I don’t think there is going to be any compromise on 

that. 

But let me just say that Comcast, AT&T, Verizon, and Time 

Warner have 66 percent of the market. And most Americans, 94 

percent of all Americans, only have a choice between their telephone company and their cable company for broadband service. So, 

you know, Mark Twain used to say that history doesn’t repeat 

itself, but it does tend to rhyme. So it is not exactly like 1978, but 

it is something that rhymes with 1978. It is very close to 1978. It 

is a digital duopoly that we have now rather than just one telephone company. But it still is restrictive and unnecessarily so in 

terms of the incentive that we need to create for entrepreneurs, for 

new ides to enter into the marketplace. 

112 

Back then in 1978, as part of network management, AT&T used 

to argue that the cable company should not be able to put their 

wire on top of a telephone pole, that they should have to build their 

own poles across America. Now these poles, because of the financial 

state of the cable industry, would probably have been three feet tall 

right next to the telephone pole back in 1978. So network management, OK, but we want this revolution, the cable revolution. So we 

mandated that for a reasonable charge that the telephone company 

would have to give the cable company access to it. 

When a company called MCI came along and said we have this 

new phone service, AT&T said that is fine, but you will have to dial 

23 digits before you actually reach the phone number that everyone 

has memorized. Network management. Too hard for us to figure it 

out, and we had to, through regulation and laws, make it possible 

for MCI and Sprint and these other companies that we now know 

to be able to compete. Otherwise, network management would be 

used as their block. 

Same thing is true for telephones. Same thing is true et cetera 

et cetera. So here in no way do we want to impose burdens upon 

AT&T, upon Comcast, upon Time Warner, upon Verizon that are 

excessively burdensome. We don’t. But we want to make sure at 

the same time that principles are established that allow the companies that don’t own these wires to be able to innovate and to be 

able to reach millions of consumers across the country while compensating the phone company and the cable company reasonably 

for the use of their wires. That should be the principle. 

And in fact, while the DSL technology sat for years in the laboratories of the phone companies, beginning with the ’96 Act, there 

was a massive deployment because of the kind of Darwinian paranoia inducing principles that were built into the 1996 Act. But everyone abided by those long-standing principles against unreasonable discrimination from ’96 on until the Federal Communications 

Commission reclassified that service in 2005. 

And so that is really what we are talking about. A whole history 

here that kind of changes in 2005, and we have to find a way of 

reconciling this so that we have the smaller voices. We have the 

smaller entrepreneurs who are able to act. 

And by the way, I just want to add, Mr. Yoo, that it wasn’t the 

founders of Google actually who discovered how YouTube would 

work. It was the proverbial kid in the garage. So I want to say that 

as well. Not only AT&T and the cable companies, but also even this 

large company Google didn’t invent it. It was a smaller, entrepreneurial, younger person. And so all of this is central to the longterm well being of our country. 

You know what I have decided to do? Let me just finish here. 

Without objection, a statement of support for the bill from the National Association of Realtors as well as from the Independent Film 

and Television Alliance are entered into the record. I am going to 

give each one of you 30 seconds very quickly to tell us what you 

want us to remember. It can only be 30 seconds because of action 

on the House floor. Let me begin with you, Mr. McCormick, if you 

would tell us what you want the committee to remember. 

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

113 

Mr. MCCORMICK. Mr. Chairman, as you proceed forward, please 

do so in a way that does no harm to innovation and investment. 

Ms. COMBS. We just want to keep the Internet fair and neutral 

and this discriminatory material that—we don’t want any more 

discrimination on the Internet. 

Mr. MARKEY. Mr. Bainwol. 

Mr. BAINWOL. We are going to roll up our sleeves, get to work 

with our colleagues in the ISP community to try to solve the piracy 

problem, and we will report back to you, sir. 

Mr. MARKEY. Thank you, Mr. Bainwol. Mr. Peterman. 

Mr. PETERMAN. The Internet has been an extraordinary opportunity artistically, economically, informationally, educationally. We 

urge you to err on the side of openness, keeping it open, and letting 

opportunity for all flourish rather than concentrating power into 

smaller groups. 

Mr. MARKEY. OK, Mr. McSlarrow. 

Mr. MCSLARROW. We want our customers to do anything and go 

anywhere on the Internet. We think we can do that without government regulation, and we do think that a full examination, as 

you suggested, will show that that is the case. 

Mr. MARKEY. Mr. Savitz. 

Mr. SAVITZ. An open network that is fair and equal for all so 

other entrepreneurs can do what we were able to do at Shoebuy. 

Mr. MARKEY. Mr. Yoo. 

Mr. YOO. There is growing empirical evidence that the kinds of 

openness actually deters investment in networks. And what we are 

seeing is an incredible increase in the variety of uses in the network and technologies. One-size-fits-all threatens all the variety 

and the chances of letting the network evolve. 

Mr. MARKEY. And Mr. Scott. 

Mr. SCOTT. I would say continue your efforts to build consensus 

around these important consumer protection principles. They belong in the law. And as you talk with your colleagues about this 

important issue going forward, ensure them it is a question of 

when and not if we will have rules protecting consumers and the 

free market. And it is not just about how we are going to explain 

to industry why we need consumer protections in the law. It is how 

we are going to explain to the public if we don’t have them in the 

law. That is where I would leave it. 

Mr. MARKEY. I thank you, Mr. Scott. I subscribe to that view. My 

mother always said try to start out where you are going to be 

forced to wind up anyway. So we eventually will have rules, so let 

us try to figure out what they should be. Let us make them reasonable. We already passed legislation 2 years ago on a bipartisan 

basis with the Republican leadership of the committee supporting 

it. The bill that the gentleman from Mississippi, Mr. Pickering, and 

I are cosponsoring with other members of the committee are based 

upon that bill that already passed. 

So it is not something that is radical, and it is not something 

that, in our opinion, would have any undue influence, any improper 

influence on the large carriers. But I think the strength of our position, if I can say this to the gentleman from Mississippi, is that the 

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114 

other bill that we do not support. And that is where they have to 

go if they are going to attack our bill. 

We need to have the principles understood, this debate aired out, 

and for us to pass the legislation. That is our intention, without 

harming the cable industry or the telephone industry. We think we 

can strike that proper balance. We thank this distinguished panel 

for your excellent testimony today. This hearing is adjourned. 

[Whereupon, at 12:40 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

STATEMENT OF HON. JOHN D. DINGELL

Thank you Mr. Chairman. 

One thing is for certain, Mr. Chairman—network neutrality is an issue that is 

here to stay. The last time this Subcommittee considered the issue of network (net) 

neutrality, it was in the last Congress in connection with the Communications Opportunity, Promotion, and Enhancement Act, or the COPE Act. I would note that, 

in the early stages of negotiations on the COPE Act, the Subcommittee was well 

on its way to reaching bipartisan agreement on most key issues, including that of 

net neutrality. But, as I said then, a funny thing happened on the way to the forum. 

The majority elected to go it alone, abandoned the bipartisan approach, and pushed 

through a bill that did not fully address very legitimate net neutrality concerns. 

That bill failed to become law, in part because it did not adequately address net 

neutrality. 

This is the first time we will have a full hearing focused solely on legislation relating to net neutrality, and it is an issue about which I have great interest and harbor 

significant concerns. Over the last several years, the Federal Communications Commission (FCC) has deregulated residential broadband services. As a result, consumers no longer have explicit protections in the Communications Act from discriminatory or unreasonable behavior by broadband network operators. Many maintain that the FCC can use its ancillary authority to ensure that broadband networks 

remain open and fair. The Commission has also adopted a broadband policy statement, but its ability to enforce the principles set forth there has been called into 

question. 

I am pleased that recently, when there have been missteps by network operators 

with respect to ensuring a fair and open Internet, those missteps have been quickly 

corrected. I suspect this is due in no small part to the strong and watchful eye of 

the Congress and others. And while I am encouraged by the course corrections some 

network operators have made, it also suggests that this is an area where we must 

continue to be vigilant. 

Recently, the focus of discussions about net neutrality appears to have shifted. 

While debate at the time of the COPE Act focused on the ability of consumers to 

have unfettered access to the content, applications, and services of their choice, 

today we discuss when and whether network operators can impede that access for 

some consumers to benefit the majority of their subscribers. While I am pleased that 

network operators seem to have accepted that they should not be permitted to interfere with their customers’ access to the world-wide Web, I am concerned about how 

‘‘network management’’ activities can be carried out in a reasonable way that does 

not work to the detriment of consumers and independent content providers. These 

are my concerns, and they are the concerns of the University of Michigan and others 

in my district. 

I hope that the panel addresses a few of the following questions. First, what are 

the reasonable limits of network management? How can we be sure that network 

management is used for worthy pursuits without impeding competition and ultimately harming consumers? Second, what would happen if network operators start 

to not only charge consumers for Internet access, but also to charge the content, application, and service providers that consumers want to reach? What are the costs 

and benefits of such an approach for network operators, consumers, innovation, free 

speech, and new entry by the smallest, newest Internet companies? Finally, what 

is the status of the Commission’s ability to protect consumers? Is its broadband policy statement enforceable? If not, what authority does the Commission have to ensure that network operators do not act to the detriment of consumers? Should that 

authority be made explicit? I remain troubled by arguments made by some that suggest the Commission is powerless to act today should trouble arise. 

115 

Thank you, Mr. Chairman, and I look forward to today’s testimony. 

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