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95–451 2016

REAUTHORIZATION OF THE FEDERAL 

COMMUNICATIONS COMMISSION: THE FCC’S 

FISCAL YEAR 2016 BUDGET REQUEST 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MARCH 4, 2015 

Serial No. 114–19 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

(III) 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

ROBERT E. LATTA, Ohio 

Vice Chairman 

JOHN SHIMKUS, Illinois 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

ANNA G. ESHOO, California 

Ranking Member 

MICHAEL F. DOYLE, Pennsylvania 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

JERRY MCNERNEY, California 

BEN RAY LUJA ́ N, New Mexico 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(V) 

C O N T E N T S 

Page 

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

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

Prepared statement .......................................................................................... 3 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 6 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 6 

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

prepared statement .............................................................................................. 43 

WITNESSES

Jon Wilkins, Managing Director, Federal Communications Commission ........... 7 

Prepared statement .......................................................................................... 10 

Answers to submitted questions ...................................................................... 46 

SUBMITTED MATERIAL

Statement of Consumers Union, submitted by Ms. Eshoo ................................... 45 

(1) 

REAUTHORIZATION OF THE FEDERAL COMMUNICATIONS COMMISSION: THE FCC’S FISCAL YEAR 2016 BUDGET REQUEST 

WEDNESDAY, MARCH 4, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:33 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Shimkus, 

Lance, Guthrie, Olson, Pompeo, Kinzinger, Bilirakis, Johnson, Collins, Cramer, Eshoo, Clarke, and Pallone (ex officio). 

Staff present: Ray Baum, Senior Policy Advisor for Communications and Technology; Leighton Brown, Press Assistant; Andy 

Duberstein, Deputy Press Secretary; Gene Fullano, Detailee, 

Telecom; David Redl, Counsel, Telecom; Charlotte Savercool, Legislative Clerk; Jeff Carroll, Democratic Staff Director; David Goldman, Democratic Chief Counsel, Communications and Technology; 

Tiffany Guarascio, Democratic Deputy Staff Director and Chief 

Health Advisor; Margaret McCarthy, Democratic Professional Staff 

Member; and Ryan Skukowski, Democratic Policy Analyst. 

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

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

Wilkins, from the Federal Communications Commission. We are 

honored to have you with us today. 

We are here today to talk about the FCC’s fiscal year 2016 budget request. Today, as we commence a series of hearings into the 

agency’s reauthorization, I hope to start with the basics and take 

a close look at the Federal Communication Commission’s budget request for fiscal year 2016. This is similar to the hearing we had 

last year on the FCC’s budget request, and I believe fully, as the 

oversight committee, we need to always take this action. This year is a request for $530 million in spending authority 

that, if approved, would be the highest spending authority in the 

history of the agency. When the FCC was last formally reauthorized in 1990, its appropriated budget was a little shy of $117 million. 

2 

Much has changed since the last reauthorization of the commission. The industries and markets, certainly, that the commission 

overseas have, without question, undergone dramatic changes and 

continue to evolve at a rapid pace. But in the intervening years the 

FCC has struggled to reflect the evolution of technology that has 

brought about the integration of voice, video, and data services and 

the significant shifts in consumer consumption patterns that have 

resulted. 

On the contrary, because it is structured in much the same way 

as its governing legislation, the Communications Act of 1934, the 

agency continues to reflect a regulatory scheme predicated on separate titles for specific network technologies and services. Now, this 

siloed scheme is out of touch with the convergence of technologies 

in the modern digital era and deserves reform. Nowhere is the 

Communications Act’s failure of imagination more evident than in 

the FCC’s decision to reclassify broadband service under rules developed to regulate the telegraph’s heyday, by restructuring a regulatory scheme that had been going the way of the single-use copper 

line telephone network it was intended to govern, three FCC commissioners repudiated years of light touch regulation of the Internet under both Republican and Democratic administrations. 

Now, all this is something some of have differing opinions on in 

this subcommittee. Our purpose today is not to delve into the 

issues of net neutrality, but rather to get into the issues of the way 

the agency has operated and the budget they propose. The FCC has requested an increase in its budget to $505 million, including $388 million in budget authority from regulatory fee collections, and $117 million from auction funds. That is an increase 

of $59 million from the fiscal year 2015 appropriation. Specific 

items noted in the request includes the usual pay raises for personnel, but also includes funds for the implementation of the public 

safety answering points do-not-call registry, as required by the 

Middle Class Tax Relief and Job Creation Act of 2012, $3 million 

in costs for the National Broadband Map that the FCC inherited 

from NTIA when it ran out of stimulus funds to pay for it, a $5.8 

million increase in recurring and a $11.7 million one-time increase 

in IT costs, $51 million in additional funds as the agency prepares 

to move or restack as their building lease expiration date approaches. 

One component of the request that resonates in particular, and 

is in addition to the $59 million increase in funding, is a request 

for a $25 million transfer from the Universal Service Fund to pay 

the FCC’s costs related to administration of the fund, raising the 

total increase to $84 million. 

In the past, Congress funded the FCC’s Office of Inspector General with a transfer of USF funds for the purpose of bolstering audits and investigations to address waste, fraud, and abuse in the 

fund following a GAO report, and those funds have been expended 

by the Office of Inspector General over the last several years. The 

request for $25 million is not for audits and investigations by the 

Office of Inspector General which, based on our last hearing, appears to have a rocky relationship with the chairman’s office, but 

to reimburse the commission for the costs of performing the core 

function of implementing section 254 of the Communications Act. 

3 

This is a disturbing proposal, I would tell you from my perspective. 

Mr. Wilkins states in his testimony that recovering these costs 

from the fund will relieve the burden on companies with no relationship to USF that pay fees to the commission. However, this realignment, as it is called, would create a separate funding stream 

for the agency that comes directly out of the pockets of consumers 

to implement and support a subsidy program the size of which is 

determined by the FCC and that has become so large and burdensome that it appears that it has outgrown the FCC’s capacity for 

adequate oversight. It is even more disturbing when we recognize 

the fact that the Universal Service Administrative Company, 

USAC, an independent organization designated to manage the 

fund, already draws in excess of $100 million a year from the fund 

for its administration and oversight, and that the FCC’s Office of 

Inspector General dedicates a portion of its funding to USF audits 

and investigations. According to its last report, USAC had 356 employees at a cost of $41.6 million. 

We have more work to do, obviously. We welcome you here. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

Welcome to this morning’s hearing on the FCC’s Fiscal Year 2016 Budget Request. Today, as we commence a series of hearings into the agency’s reauthorization, 

I hope to start with the basics and take a close look at the FCC’s budget request 

for Fiscal Year 2016—a request for $530 million in spending authority that if approved, would be the highest funding level in the agency’s history. When the FCC 

was last formally reauthorized in 1990, its appropriated budget was a little shy of 

$117 million. 

Much has changed since the last reauthorization of the commission. The industries and markets the Commission oversees have without question undergone dramatic changes and continue to evolve at a rapid pace. But in the intervening years 

the FCC has struggled to reflect the evolution of technology that has brought about 

the integration of voice, video, and data services and the significant shifts in consumer consumption patterns that have resulted. On the contrary, because it is 

structured in much the same way as its governing legislation, the Communications 

Act of 1934, the agency continues to reflect a regulatory scheme predicated on separate titles for specific network technologies and services: this ‘‘siloed’’ scheme is out 

of touch with the convergence of technologies in the modern digital era and deserves 

reform. 

Nowhere is the Communications Act’s failure of imagination more evident than 

in the FCC’s decision to reclassify broadband service under rules developed to regulate the telegraph’s heyday—By resurrecting a regulatory scheme that had been 

going the way of the single-use copper line telephone network it was intended to 

govern, three FCC commissioners repudiated years of light touch regulation of the 

Internet under both Republican and Democratic administrations. This action suggests an agency seemingly illsuited to address the needs of the modern communications ecosystem and aggressively expanding its regulatory ambit to compensate for 

its growing obsolescence. 

During my time as chairman of this subcommittee, we have held several hearings 

focused on oversight of the FCC. The FCC chairman and commissioners have joined 

us multiple times to discuss agency process and the wide range of issues before the 

commission, and just last fall, the Managing Director and Inspector General were 

here to examine the agency’s budget and management. Today’s hearing is an opportunity to continue this work. In many respects, the budget request is like a window 

into the agency itself. By following the money we can identify the agency’s priorities 

and those functions that have evolved to define the agency. 

The FCC has requested an increase in its budget to $505 million, including $388 

million in budget authority from regulatory fee collections and $117 million from 

auction funds—an increase of $59 million from the FY2015 appropriation. Specific 

items noted in the request includes the usual pay raises for personnel, but also includes funds for the implementation of the public safety answering points do-notcall registry, as required by the Middle Class Tax Relief and Job Creation Act of 

4 

2012, $3 million in costs for the National Broadband Map that the FCC inherited 

from NTIA when it ran out of stimulus funds to pay for it, a $5.8 million increase 

in recurring and a $ 11.7 million one-time increase in IT costs, and $51 million in 

additional funds as the agency prepares to move or restack as their building lease 

expiration date approaches. 

One component of the request that resonates in particular, and is in addition to 

the $59 million increase in funding, is a request for a $25 million transfer from the 

Universal Service Fund to pay the FCC’s costs related to administration of the 

fund—raising the total increase to $84 million. In the past, Congress funded the 

FCC’s Office of Inspector General with a transfer of USF funds for the purpose of 

bolstering audits and investigations to address waste, fraud, and abuse in the Fund 

following a GAO report—and those funds have been expended by the Office of Inspector General over the last several years. The request for $25 million is not for 

audits and investigations by the Office of Inspector General—which based on our 

last hearing appears to have a rocky relationship with the chairman’s office—but 

to reimburse the commission for the costs of performing the core function of implementing section 254 of the Communications Act. This is a disturbing proposal. Mr. 

Wilkins states in his testimony that recovering these costs from the fund will relieve 

the burden on companies with no relationship to USF that pay fees to the commission. However, this ‘‘realignment’’ as it is called would create a separate funding 

stream for the agency that comes directly out of the pockets of consumers to implement and support a subsidy program the size of which is determined by the FCC 

and that has become so large and burdensome that it appears that it has outgrown 

the FCC’s capacity for adequate oversight. It is even more disturbing when we recognize the fact that the Universal Service Administrative Company—USAC, an 

independent organization designated to manage the Fund already draws in excess 

of $100 million a year from the Fund for its administration and oversight and that 

the FCC’s Office of Inspector General dedicates a portion of its funding to USF audits and investigations. According to its last annual report, USAC had 356 employees at a cost of $41.6 million. 

This proposed transfer of funds out of the Universal Service Fund alone raises significant questions about the FCC’s budget and the ever increasing size of the Fund. 

Taken in conjunction with the request for the first $51 million of an estimated the 

$71 million in costs for the FCC’s relocation and other proposed increases there is 

much to discuss. We are fortunate to have the individual responsible for managing 

the Commission’s budget and financial programs with us again, Mr. Jon Wilkins, 

the Managing Director of the FCC. It is my hope that our conversations today will 

pull back the curtain and provide the committee and the American people with a 

better understanding of the Commission’s financial and performance goals for Fiscal 

Year 2016 and what the Commission is really up to. 

Mr. WALDEN. I have used up the balance of my time. I now recognize my friend and colleague from California, Ms. Eshoo. 

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

Ms. ESHOO. Thank you very much, Mr. Chairman. And good 

morning to you and to the Members, and to Mr. Wilkins. Welcome. 

Today’s topic is an important one; the FCC’s budget, and we 

again welcome you back to the subcommittee, Mr. Wilkins. 

I noticed that we have some very young people in the audience, 

and it occurred to me, I wonder if they know what we are talking 

about, if they are going to get this. So let us see if we can’t keep 

it at an elemental level so that you understand what the committee 

is doing and why we are here today. It is very important because 

we are reviewing the proposed budget for a very important agency, 

the Federal Communications Commission. 

I think the questions that I would like to see addressed anyway, 

because I think that they are very high import, are the following. 

And that is, will the agency have the necessary staff to carry out 

the world’s first voluntary incentives spectrum auction, along with 

5 

the IP transition, the review of pending mergers, and USF reform. 

These are all topline priorities, not only for the agency, but for this 

committee that has really shaped those policies that are carried out 

by the FCC. So I want to make sure that you have the resources 

to do that. 

Will the agency be able to upgrade its IT infrastructure so that 

public comments on issues that are important to the American people can be filed without crashing your Web site. We saw what happened last year when there were over four million people that 

weighed in, voicing their support for enforceable net neutrality 

rules, and I would like to hear about that, what plan do you have 

and what is built into your budget to handle that. Will the agency 

remain on track to move its headquarters within the next 2 years? 

It is my understanding that by reducing the agency’s footprint, that 

it is estimated that approximately $119 million of taxpayer dollars 

would be saved over 15 years. Now, that may not be the biggest 

number in the Federal Government, but I think anyone that is in 

the room would welcome having $119 million in their checking account over the next 15 years. Finally, will the FCC be able to develop and implement, and I think the chairman raised this, a donot-call registry for telephone numbers used by 911 call centers. 

This is, again, another high priority of ours. Certainly, it has been 

mine, going back to the ’90s. This provision was included in the 

Public Safety and Spectrum Act that we wrote in this committee 

in 2012 to ensure that automatic dialing or robo-call equipment 

does not tie up public safety lines, and unnecessarily divert critical 

emergency resources. 

So I don’t think these are small questions. They are important 

ones, and they track on a parallel track what the subcommittee’s 

priorities and legislation has been, and especially when the agency, 

and this is my understanding, you can confirm it or deny it, that 

the agency is employing today the lowest number of full-time staff 

in 30 years. The agency has to have the tools and the resources to 

fulfill its mission, which means more successful spectrum auctions, 

like the nearly $45 billion, we are so proud of that, we really are 

very proud of that, that was raised earlier this year. 

So whether it is protecting the public interest, promoting competition, enhancing innovation, these are all of the core of the mission of the FCC, and we look forward to hearing your testimony. 

Thank you for your service, and I look forward to your directing answers to us on the questions that I pose. 

And with that, I yield back. Thank you, Mr. Chairman. 

Mr. WALDEN. Gentlelady yields back the balance of her time. 

The chairman recognizes the gentleman from—— 

Ms. ESHOO. I forgot something, Mr. Chairman. May I ask for—— 

Mr. WALDEN. Of course. 

Ms. ESHOO [continuing]. Unanimous consent to submit a letter 

for the record from Consumers Union? It regards the importance 

of the FCC’s IT modernization for American consumers. 

Mr. WALDEN. Without objection. 

Ms. ESHOO. Thank you. 

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

6 

Mr. WALDEN. Now we recognize the gentleman from Ohio, the 

vice chair of the subcommittee on Communications and Technology, 

Mr. Latta, for 5 minutes. 

OPENING STATEMENT OF HON. ROBERT E. LATTA, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

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

Wilkins, thanks for being with us today. 

Oversight of the FCC serves as a critical function in maintaining 

accountability and transparency at the agency. Given the FCC’s integral role in the information and communications technology marketplace, we have a responsibility to ensure that the processes at 

the commission are not wasteful, and reflect a capability to handle 

such significant parts of our Nation’s economy. With that said, today’s hearing represents a valuable opportunity to examine the 

commission’s budget management and spending practices. Additionally, it is important for us to gain a better understanding of the 

challenges facing the agency that contribute to limiting the efficiency of its operations. As a Representative, I take great responsibility in ensuring that taxpayer dollars are spent wisely and effectively. 

I look forward to discussing how Congress can work with the 

commission to ensure the advancement of the communications and 

technology economy in a fiscally-responsible manner. 

And, Mr. Chairman, I yield back the balance of my time. 

Mr. WALDEN. Gentleman yields back the balance of his time. 

Chair recognizes the ranking member of the full committee, the 

gentleman from New Jersey, Mr. Pallone, for 5 minutes. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. I want to thank the chairman and our Ranking 

Member Eshoo for having this hearing, and welcome Managing Director Wilkins. 

We are here today to take a look at the Federal Communications 

Commission’s fiscal year 2016 budget estimates. The FCC has 

broad jurisdiction. It oversees industries that account for approximately 1⁄6 of the economy, and growing, but it also has been operating with the same budget for the better part of a decade now, 

and that does not account for the damage done by the sequester. 

So I should note that the FCC operates with fewer than 1,700 fulltime employees, and I would say that that is certainly a small but 

efficient agency. 

This year, the FCC asked for a $48 million increase in its budget 

authority over last year. The vast majority of that increase would 

pay to move the commission’s headquarters to a new home. Overall, the move would create a smaller footprint for the agency, which 

will save $119 million over the next 15 years. Most of the remaining increase is to upgrade the commission’s aging and creaky information technology infrastructure, which Ms. Eshoo mentioned, and 

that is an update that will net a savings of up to $10 million over 

the next 5 years. This is the same computer system that famously 

ground to a halt under the weight of 4,000,000 Americans writing 

7 

in to voice their opinions about network neutrality, and 4,000,000 

is certainly an eye-popping number when it comes to comments on 

a single proceeding. Modern computers, however, should be able to 

handle that load without blinking. 

Now, together, these temporary budget increases will save the government nearly $130 million in the long run. Rejecting these 

costs out-of-hand would be penny wise but pound foolish, and fortunately, this subcommittee is practiced at reviewing these types of 

budget requests. 

Today’s hearing is actually different than other FCC budget 

hearings for a couple of reasons. First, it is the start of an effort 

to revive an FCC reauthorization process that has been dormant 

for 25 years, with the struggle Republicans have been facing to 

fund the Department of Homeland Security, however, I doubt the 

public wants us to create a brand new funding cliff. Second, the 

timing of today’s budget hearing has raised some eyebrows, coming 

just days after the commission adopted new network neutrality 

protections. And now, that might be a coincidence, and I am hopeful it is because I think we should all agree that this committee 

has a responsibility to conduct a genuine oversight. We must make 

sure the FCC’s dollars go as far as possible, but we should also ask 

whether the commission has sufficient funding to maintain its critical services for the public, and together, it is our job to make sure 

that we strike the right balance. 

And I guess there is nobody else, so I will yield the balance of 

my time. 

Mr. WALDEN. Gentleman yields back the balance of his time. 

As I said in my opening statement, this is an annual process authorization committees are supposed to go through to review budgets, so that is why we are here today. 

And, Mr. Wilkins, we are delighted you could join us today as the 

managing director for the Federal Communications Commission, a 

big duty, and we welcome your testimony and the work you do 

down there. Please go ahead. 

STATEMENT OF JON WILKINS, MANAGING DIRECTOR, 

FEDERAL COMMUNICATIONS COMMISSION 

Mr. WILKINS. Thank you, Chairman Walden, Ranking Member 

Eshoo, members of the subcommittee. I do appreciate the chance 

to be here today to talk to you about our budget request. 

I submitted my written testimony. What I thought I would use 

my introductory time for is just to say a few words about each of 

the four slides that I submitted, because they provide some good 

context for our budget. 

[Slide shown.] 

The first slide. So just taking the historical perspective, the FCC 

does have a two-plus decades record of being a very good fiscal 

steward for the U.S. Government. So the left-hand side of the chart 

shows that we are now closing in on $100 billion of revenue raised 

for the Treasury since 1994, overwhelmingly from our auctions proceeds. Over that same time frame, we have spent less than $8 billion on agency operation. So for the U.S. Treasury, that means that 

8 cents spent on the FCC generates $1, and of course, even that 

8 cents doesn’t come from general revenues, it comes either from 

8 

retained auction proceeds for a very tiny portion of those auction 

revenues, or from our Section 9 reg. fees. 

Now, our budget request for ’16 is significant, and exactly as you said, Chairman Walden, it is for $84 million. I just want to make 

three points about that request. The first one is that the lion’s 

share of that request, 71 percent, is from a management standpoint, these are unavoidable costs; these are not costs that management is, for example, seeking as a new initiative. The bulk of it is 

for the move. Our current lease expires in October 2017, and we 

do have to spend some money to reap the long-term benefits of 

lower lease costs. We are requesting $21 million for IT. The bulk 

of that is to finish the job that we started to truly transform and 

modernize our IT infrastructure. It is by far our most important 

management initiative. It will bring benefits and costs in efficiency 

and in operations. And then the third point, these are the only 

things we are requesting more funds for. In the last several years, 

we have asked for more money from more people, for example. We 

are not doing that. We heard the message and, in fact, over the last 

year we have had a chance to look at our workforce. We think we 

can do the job with the people we have if we can upgrade the IT. 

So it is a big request, but it is really just for these things. 

Now, to put that budget request in context, for the last 6 fiscal 

years, on the left-hand side, the FCC has been essentially flat. Our 

auctions funds was at $85 million for 9 years. It has gone up 2 of 

the last 3 years, specifically for the incentive auctions. We appreciate that, and that work is going well. In our non-auctions area 

though, we have been actually flat in nominal terms. We had a 

very small increase from ’11 to ’12 that was more than offset by 

sequestration, and in real terms, our purchasing power has gone 

down. So we are mainly a people-centered agency. Federal pay increase alone increases our cost by a couple of million dollars a year. 

Our rent goes up a little bit every year. So to put that in context, 

fiscal year 2015, our flat budget was paired up against almost $7 

million of increased costs just for our people and our rent and other 

contracts. That is about 40 to 50 people. In a given year, the FCC 

loses about 100, 120 people, just to retirement and other attrition. 

So what the flat line really means is that for every two people that 

leave the commission right now, we can only replace one. And the 

right-hand side shows the results of that. As Member Eshoo said, 

our staffing is at its lowest, again, in ’15, and our current management plan is for it to go even lower in 2016; more than 100 lower 

than 6 years ago, and more than 200 lower from the 20-year average. 

Finally, IT we think really is the solution to this. There is no 

question that we can use IT to do our work more efficiently, more 

transparently, and to support all the things that Congress wants 

us to do. Over the last year, we have put in place a very strong 

plan. We have actually started to move it down the field. Three 

main areas, infrastructure costs. As of today, we still have over 200 

very expensive large servers sitting in very expensive downtown 

real estate, being serviced by very expensive direct contractors. 

Using some reprogramming money we got last year, we have just 

finalized a contract to move those to an off-site facility. It is the 

first step in moving to a truly low-cost, secure cloud, efficient enviVerDate Nov 24 2008 14:30 Jul 13, 2016 Jkt 037690 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-19 CHRIS
9 

ronment. When you do that, you can improve the way you work 

with data. So at the FCC, we have over 100,000 data objects, including multiple definitions of the same basic thing that, to a business person, seems ridiculous, 40 terabytes of data, very expensive. 

When we have the infrastructure upgraded, we can then essentially put all that data into a similar shared environment that we 

can use much more efficiently. And that then gets to the third 

piece; mission systems. That is where we really saved the most 

money. We right now do most of our software development on kind 

of a custom model. Everything is a, you know, it is a custom renovation, if you will. We want to get to a world where it is, you 

know, it is IKEA, you know, you just have the pieces, it is pretty 

easy to build. When the infrastructure and the data are modernized, we think that we can cut our development costs by 50 to 75 

percent and the times to be shorter. So this is a thing that, from 

a management perspective, we just want to plant our flag. We 

want to be able to do this, and it will allow us to do a lot of things 

more efficiently, and better do what Congress needs us to do. 

And with that, I am happy to take any questions. Thank you 

again. 

[The prepared statement of Mr. Wilkins follows:] 

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Mr. WALDEN. I appreciate that, and I appreciate the leadership 

you have given. I want to go back to this ratio, the 13 times, because $79 billion 

of that actually is from three auctions—— 

Mr. WILKINS. True. 

Mr. WALDEN [continuing]. Correct? You are not going to sit here 

and guarantee me that you are going to return 13 times investment every year, year in and year out. It is really pretty lumpy in 

there. 

Mr. WILKINS. It is lumpy, and—— 

Mr. WALDEN. Yes. 

Mr. WILKINS [continuing]. Actually, until the most recent AWS– 

3 auction, the average was around $2.2 billion a year. 

Mr. WALDEN. Yes. 

Mr. WILKINS. Actually, when you add in $45 billion, that goes up 

quite a bit—— 

Mr. WALDEN. Yes, right. 

Mr. WILKINS [continuing]. But it will be lumpy. That is the nature of auctions—— 

Mr. WALDEN. Yes. 

Mr. WILKINS [continuing]. But on the long—— 

Mr. WALDEN. But the commission itself is not generating 13 

times investment year in and year out. 

Mr. WILKINS. Certainly, it depends on auction proceeds. 

Mr. WALDEN. There you go. I believe you are aware that the committee sent an oversight request to the commission on February 18, 

asking for a set of information related to the commission’s regulatory and administrative processes, that request was signed by me 

and Chairman Upton and Chairman Murphy, motivated by a concern with the variety of lapses that we perceive in the way the 

commission has been conducting its regulatory and administrative 

business. As you may be aware, the due date for that production 

of that information was today, and I was distressed to be informed 

by my staff a little while ago that that apparently is not going to 

be available today, which we had hoped. I don’t know how much 

you have been involved in that matter, but I hope you will convey 

the following message to the chairman’s office, that we understand 

the commission and staff is very busy, we do not intend to pose 

meaningless or trivial obligations, but we do take seriously our 

oversight responsibility. With respect to this specific request, I 

would strongly recommend the chairman’s staff make available 

every effort to comply with our information request by today’s 

deadline. Based on the rigor of the response, we will make every 

effort to work with the chairman and his staff to be fair and reasonable. 

Do you have anything to add to that? 

Mr. WILKINS. No. I absolutely will convey that back to the chairman’s staff when I am back at the commission later. 

Mr. WALDEN. So there have been some issues come up lately I 

wanted to ask you about, given your expansive role there. Does the 

FCC have policies or rules regarding staff use of social media, such 

as Twitter, in their capacity as employees of the commission, and 

do these policies or rules proscribe a recordkeeping and retention 

policy for those communications? 

21 

Mr. WILKINS. So any use of personal, whether it is e-mail or social media, certainly is subject to general Federal Records Act requirements—— 

Mr. WALDEN. Right. 

Mr. WILKINS [continuing]. Including the schedules that we have 

in place. Those rules, as you know, certainly do require if you are 

doing things that are official government business in those environments, it is the responsibility of the employee to bring them back 

into our records environment. 

Mr. WALDEN. All right. Recently, it was reported that a senior 

member of the Greenhill and Company had left his position and 

joined the commission as a volunteer. I have a couple of questions 

here. Could you describe what he will be doing? Didn’t the commission contract with Greenhill to perform work related to the auction? I would like to know about that contract, was it competitively 

bid, was Greenhill the lowest-cost bidder, when was it awarded, 

you know, the basic sort of oversight that we need to do here. What 

can you tell me about this issue involving Greenhill and Company? 

Mr. WILKINS. So let me follow up on the exact details of that contract. Greenhill, as you know, it is an investment firm that we contracted with to do estimates of the value of broadcast licenses—— 

Mr. WALDEN. OK. 

Mr. WILKINS [continuing]. For the spectrum auction, as part of 

that process. 

Mr. WALDEN. Right. 

Mr. WILKINS. The results of their work has been shared with 

quite a few broadcasters around the country. 

Mr. WALDEN. Yes. 

Mr. WILKINS. I think we have found them pretty valuable. In 

terms of that individual, we will follow up with you on the details. 

Mr. WALDEN. Yes, we will have more questions on that for the 

record, but the extent to which you can follow up, and we are trying to get this information back because, you know, the week 

after—when we return after next week, we will have all five commissioners here, and so it would be, I think, helpful for that hearing if we had—— 

Mr. WILKINS. OK. 

Mr. WALDEN [continuing]. Some of this information. And so we 

will follow up with more of the questions related to Greenhill. 

So let me move on to the USF issue because that is one that has 

obviously gotten our attention. It appears that a little less than 1⁄2

of the $25 million in the Universal Service Fund is going to the 

Wireline Competition Bureau, is that accurate? 

Mr. WILKINS. Yes. 

Mr. WALDEN. And is any of that money going to the Wireline 

Competition Bureau? 

Mr. WILKINS. Yes. 

Mr. WALDEN. And for what purpose and what kind of USF work 

does WCB do? 

Mr. WILKINS. Yes. So WCB, of course, are the program owners 

of each of the four main universal service programs. Everything 

from policy development to administration of policies, everything 

from rules to appeals, sort of all of the day-to-day operations of the 

program in the legal sense. 

22 

Mr. WALDEN. And is any of that money going to the International Bureau, and if so, for what purpose and what kind of work 

do they do? 

Mr. WILKINS. No. That should not go to the International Bureau 

unless I am missing some small detail, but no. 

Mr. WALDEN. All right. 

Mr. WILKINS. It is definitely intended to focus on activities related to USF. 

Mr. WALDEN. And is any of that money going to the Office of 

Legislation Affairs? There are other bureaus and offices that are 

slated to get some of this money, correct? 

Mr. WILKINS. No. Just more broadly, we developed that $25 million figure based on the amount of activities related to USF across 

the commission, and it is all activities, it is not just—— 

Mr. WALDEN. Right. 

Mr. WILKINS [continuing]. Audits, for example. A very small portion of that, if there was leg. affairs work-related to USF communications with Congress, for example—— 

Mr. WALDEN. Right. 

Mr. WILKINS [continuing]. I think we would include that. The 

idea was to fully capture the costs related to USF work. 

Mr. WALDEN. All right. I have a couple of other issues for the 

record that I will add to that, but my time has expired. And again, 

I thank you for your testimony and the good work you do. 

And now, I would recognize the gentlelady from California, Ms. 

Eshoo. 

Ms. ESHOO. Thank you, Mr. Chairman, and thank you again for 

having this hearing. It is always an important one, and our oversight is just essential. It is one of the major responsibilities that 

we have in the Congress. 

And, Mr. Wilkins, you are a terrific testifier. 

Mr. WILKINS. Thank you. 

Mr. ESHOO. You were brief in your opening statement, you didn’t 

have to read anything, you are smart, you know the agency, and 

it is very helpful to us because you give very direct answers. 

You testified that the FCC plans a net reduction of 37 full-time 

employees for fiscal year 2016. We know that agencies can essentially cook the books by reducing the number of full-time employees, but then hire them back as contractors. Is that anywhere near 

the case with the agency? Can we just dispense of this as something that is not going to take place? Can you assure us that it is 

not—— 

Mr. WILKINS. Yes. 

Ms. ESHOO [continuing]. Going to? 

Mr. WILKINS. Absolutely. 

Ms. ESHOO. Well, that is good news. 

I want to congratulate the agency on its recent efforts to crackdown on consumer billing fraud. Just last week, the FCC announced a $9 million fine against a company that was illegally billing consumers, and switching their telephone company without the 

consent of the consumers. It makes me really wonder why people 

will do what they do. I guess they think they can get away with 

it, but it is an important function of the FCC. 

23 

So specifically, how does your budget request help the FCC continue this important consumer protection work? 

Mr. WILKINS. Yes. 

Ms. ESHOO. Where is that buried in the budget—— 

Mr. WILKINS. Sure. 

Ms. ESHOO [continuing]. And do you know how much it is? 

Mr. WILKINS. Well, the Enforcement Bureau is around 240 people right now—— 

Ms. ESHOO. Yes. 

Mr. WILKINS [continuing]. But we are not projecting staff increases for any bureau including the Enforcement Bureau. 

Ms. ESHOO. Yes. 

Mr. WILKINS. The Enforcement Bureau, actually, is a great example of how our IT actually can enable more effective use of the 

people that we have. 

Ms. ESHOO. Yes. 

Mr. WILKINS. And it actually relates to process reform. Process 

reform in my office is an internal support exercise. Interestingly, 

the Enforcement Bureau is the first large bureau at the commission that has, what I would call, a real tracking system of how they 

do work. That was put in place in 2012. 

Ms. ESHOO. Yes. 

Mr. WILKINS. We have a new bureau chief there who, I can tell 

you, is very aggressively using that sort of metrics to make sure 

he is deploying his staff on them most important areas, such as the 

ones that you mentioned. 

Ms. ESHOO. Yes. 

Mr. WILKINS. So the way we think about it is, we don’t need to 

add dozens of people to any given bureau to deliver those results. 

We think we have very good people, we just want to use them more 

efficiently—— 

Ms. ESHOO. Yes. 

Mr. WILKINS [continuing]. And we see a lot of opportunities for 

the IT to do that. 

Ms. ESHOO. Right. 

Ms. ESHOO. On the whole issue of IT, I think the chairman 

raised this, you mentioned it in your opening statement, my experience in Congress, both on this committee and as a member of the 

Intelligence Committee, is that the government is really lousy 

when it comes to procurement of IT. People don’t know what they 

are buying. 

Mr. WILKINS. Yes. 

Ms. ESHOO. And I mean you can have a GS–14 and they may 

know the agency really well, but they really don’t know what they 

are buying. People can sell them just about anything. A lot of taxpayer dollars wasted. 

My question to you is, and you started to mention a part of this 

is, what you plan to purchase relative to the IT system to make it 

robust and 21st century and effective, and all of that. Is this being 

built for you, or is it off-the-shelf? 

Mr. WILKINS. Right. Off-the-shelf. 

Ms. ESHOO. Great. That is the best answer you could have given 

me. Nothing to pursue there. That was just what I wanted to hear. 

24 

On the AWS–3 auction, and the near $45 billion that it raised, 

we were very specific about where those dollars were to be applied. 

What I would like to know is when will these funds be available 

for obligation? 

Mr. WILKINS. OK. So we have over $40 billion in our FCC accounted treasury—— 

Ms. ESHOO. Yes. 

Mr. WILKINS [continuing]. For the close of the auction. There is 

the usual post-auction—any disputes, all issues have to be resolved. The licenses then can be issued by the Wireless Bureau—— 

Ms. ESHOO. Yes. 

Mr. WILKINS [continuing]. And then the money can flow to—— 

Ms. ESHOO. So when do you think that money will be obligated? 

Mr. WILKINS. Congresswoman, I can’t give you an estimate, all 

I can say is we are working on it as fast as we can. We know—— 

Ms. ESHOO. No, but I mean do you think it is going to be in a 

year or 6 months, or just some ballpark. 

Mr. WILKINS. I think that the ballpark, it is within a year—— 

Ms. ESHOO. Yes. 

Mr. WILKINS [continuing]. But in this case, obviously, it is a very 

high dollar auction, lots of questions—— 

Ms. ESHOO. Right. 

Mr. WILKINS [continuing]. All I can say is we will move as quickly as we can. 

Ms. ESHOO. OK. There has been a lot of attention given to the 

need for enhanced location accuracy when calling 911 from a wireless phone. Many landline phones in large office buildings still only 

provide the building’s address. Where is the FCC on this? If you 

had to make a 911 call—— 

Mr. WILKINS. Internally? 

Ms. ESHOO [continuing]. Yes. Tell me how it would work. 

Mr. WILKINS. So—— 

Ms. ESHOO. Is it going to work or—— 

Mr. WILKINS. Yes. 

Ms. ESHOO [continuing]. Is it in the works that it is going to 

work, or—— 

Mr. WILKINS. If 911 is called within our facilities, we can identify 

where in the building the call came from. That is an issue in and 

of itself; is it eighth floor, fifth floor, wherever. So we have a process where our security team knows when the call goes out, it goes 

through to first responders, but then we also—— 

Ms. ESHOO. Well, I know what the process is with first responders and all that, but—— 

VOICE. You dial 911. 

Ms. ESHOO. Yes, exactly. You dial 911, but I want to know what 

happens after that. Does the first responders, do they have the 

granular location information—— 

Mr. WILKINS. Yes, our—— 

Ms. ESHOO [continuing]. Do callers need to dial an extra 9 before 

the 911? 

Mr. WILKINS. Yes. Our system, we do dial the extra 9. So we are 

9911. 

Ms. ESHOO. Are you going to fix that? 

Mr. WILKINS. We service a lot of agencies. There is a—— 

25 

Ms. ESHOO. Are you going to get rid of the 9? 

Mr. WILKINS. There are mixed practices out there. And then in 

terms of location, our security team knows where in the building 

the call came from, both tells responders and then also delivers our 

folks there. 

Ms. ESHOO. Yes, well, you are really not behind the 8 ball on 

this. That really needs to be upgraded, and especially that it is the 

FCC. You should be the example, not only for the rest of the Federal Government, but for the entire country, so you need to work 

on that. 

My time is up, Mr. Chairman. Thank you. 

Mr. WALDEN. You are welcome. 

Ms. ESHOO. Thank you, Mr. Wilkins. 

Mr. WALDEN. Thank you, Mr. Wilkins. 

We will now turn to the vice chair of the subcommittee, Mr. 

Latta. 

Mr. LATTA. Thank you, Mr. Chairman. Again, Mr. Wilkins, 

thanks very much for being here, and thanks for your testimony. 

The Inspector General is required to conduct audits of the commission’s financial statements. Did the IG audit the commission’s 

fiscal year 2014 financial statements? 

Mr. WILKINS. Yes. 

Mr. LATTA. Did the audit report a material weakness with regard 

to the Universal Service Fund? 

Mr. WILKINS. Yes. 

Mr. LATTA. Could you describe what those weaknesses were or 

are? 

Mr. WILKINS. Yes. It was a specific material weakness that related to the way USAC, or the Universal Service Administrative 

Company, reconciled its invoice amounts against obligated funds. It 

specifically related to the extent of the invoice deadlines in a particular year, and their systems didn’t automatically report back to 

their obligation system. They actually found the problem. We were 

aware of it before the auditors came in, of course. We told the auditors. So the auditors, quite appropriately, said this is a problem to 

fix, but no money was lost, it actually was a management step that 

was identified. 

Mr. LATTA. So there was no impact on any monies out there? 

Mr. WILKINS. No. No money was lost. 

Mr. LATTA. OK. And did you say has this weakness been corrected and identified? 

Mr. WILKINS. Yes. 

Mr. LATTA. OK. 

Mr. WILKINS. Yes. 

Mr. LATTA. And how far back did that go? 

Mr. WILKINS. That was just from 1 year because they changed 

the invoice system for 1 year. 

Mr. LATTA. OK. And also, I guess to follow up on that, is this the 

same issue that we discussed during your last visit here, and is it 

associated with any new financial system? 

Mr. WILKINS. No, that is our FCC genesis system. This issue you 

are raising was at USAC, which is a separate—— 

Mr. LATTA. OK, and who is the contractor? 

Mr. WILKINS. For our system? 

26 

Mr. LATTA. Right. 

Mr. WILKINS. A company called CGI. 

Mr. LATTA. CGI, OK, thank you. And again, in fiscal year 2016, 

the budget request, it states that the commission is in the process 

of creating a Joint USF Antifraud Taskforce to combine resources 

agency-wide. 

Mr. WILKINS. Yes. 

Mr. LATTA. And I appreciate the effort for a more targeted approach to identify and prevent fraudulent activities within USF, 

however, the agency has requested $10 million for antifraud efforts 

within USF. How was this amount determined for the $10 million? 

Mr. WILKINS. Right. So we think that the need to have that joint 

effort is very important. What we are doing though is redeploying 

resources we have to staff it, whereas a year ago we said actually 

give us more money to hire more people. And I think it is an example of a year in there as the senior management team looking very 

hard at the people we have and where we can be more efficient, 

we said let us use the FTEs we have to do this work, instead of 

asking for more. 

Mr. LATTA. OK. And could you give a specific breakdown of that 

cost, for that $10 million? 

Mr. WILKINS. Yes, so in 2015 we requested $10.8 million for 45 

FTEs, I believe the breakdown was 17 for the Enforcement Bureau, 

I want to say 20 for the Wireline Competition Bureau, another 10 

for my office, and the rest for the IG, I believe. I might be off by 

one or two, but that was the rough breakdown. We are not going 

to have that high of a staffing level so, for example, instead of 

those 17 for the Enforcement Bureau, right now that USF enforcement component of the Enforcement Bureau, it was five people, 

and those are roles that we have filled as people have left. So the 

group will not be as big, but as we have the opportunity to reallocate resources we have, we think we will staff that up because we 

are seeing lots of benefits from what we are doing. 

Mr. LATTA. OK. Well, and additionally, how much of the money 

is expected to be recovered through taxes of the taskforce and other 

antifraud measures? 

Mr. WILKINS. Well, certainly, and I think the IG would agree with this too, $1 of enforcement or oversight in USF tends to generate positive, more than $1 of returns from those activities. Certainly, our reason for creating that effort is because universal service, all those programs have been going through lots of change over 

the last 2 or 3 years, essentially around modernizing it for 

broadband. When you do that, the rules change. Simple compliance 

can be harder for people to participate in it because the rules are 

different. Obviously, USF—and sometimes you have criminal or 

fraud issues, but frankly, compliance with the rules is an important issue for us. Our rules say if you don’t comply with them, you 

shouldn’t get the money. And that is the kind of thing that we are 

really focusing on internally is making sure that there is compliance as the rules change so that the money goes where it should 

go. 

Mr. LATTA. OK. And the commission has also, as mentioned earlier, is requesting over $44 million to move to a new headquarters 

or for restacking. The budget request states that by moving or reVerDate Nov 24 2008 14:30 Jul 13, 2016 Jkt 037690 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-19 CHRIS
27 

stacking FCC headquarters, this process would save the commission up to $119 million over 15 years. Can you explain how the 

commission reached that estimate of $119 million over the timeline 

of 15 years? 

Mr. WILKINS. Yes. So our current fully-loaded lease costs to remain at headquarters is around $40 million, $41 million. The space 

planning that we are doing already with GSA, essentially to bring 

us, I would say, just in line with current federal guidelines, we 

would be reducing that space by around 30 percent. And I think 

GSA—obviously, we are customers of GSA in this process. They 

would also propose probably a lower per square foot. So essentially, 

the idea would be for our lease costs to go down by $11 million to 

$12 million a year over 15 years. You deduct from that though the, 

for example, the $51 million we are requesting now to facilitate 

that move, and the net would be $119 million over the 15 years. 

Mr. LATTA. OK. Thank you, Mr. Chairman. And my time has expired, and I yield back. 

Mr. WALDEN. Thank the gentleman. 

Now recognize the ranking member of the full committee, Mr. 

Pallone, for questions. 

Mr. PALLONE. Thank you. 

Mr. Wilkins, I—Ms. Eshoo started—was talking about this issue, 

but I wanted to follow up. I am very concerned about consumers 

being hit with fraudulent charges on their monthly communication 

bills through scams like cramming. And the FCC has made strides 

over the past year trying to curb this practice, but the question is 

if the FCC’s budget continues to flat line the way it has since 2009, 

will it impact the FCC’s ability to protect consumers from fraud? 

Mr. WILKINS. Yes. If we continue to be flatlined, it will impact 

our ability to delivery all areas of our mission. I think our current 

budget proposal that we can make do with fewer people is based 

on having much better IT to use those people much more efficiently. And in the consumer enforcement area you are describing, 

for example, there is a huge opportunity to use data and analytics, 

using IT to be much smarter about finding areas that we then go 

focus the resources we have instead of just, perhaps, waiting for 

someone to complain. So that is the opportunity we see, but it does 

require the investment. I mean if we are flat lined, there is no way 

we can make the investments nearly as promptly as we want to. 

And I would actually add, if we are flat lined for ’16, in the sense 

of not being able to fund those move costs, that money is going to 

come from somewhere. I mean our lease, after 2017, goes up by $9 

million a year, and nothing else changes, someone has to pay that. 

I mean there really is kind of a downward spiral around this move 

that, everything else aside, really would affect our ability to fund 

anything at a reasonable level. 

Mr. PALLONE. OK. I think you have answered in your response 

the other two questions I had, but let me just look at this a second. 

Again, you talked about the aging computer system that, I guess, 

will eventually slow down your ability to continue these reform efforts. I think you have answered that in terms of what happens if 

you don’t because that is where the bulk of this additional money 

goes to, correct? 

28 

Mr. WILKINS. Yes. I think right now, our cost profile for IT continues to grow because the cost of maintaining things that are 

older and older grows every year. And when I was here in September, I testified that over 1⁄2 our systems are more than 10 years 

old in terms of software, and the software, well, that might as well 

be 100 years, right? The cost to do a software update for something 

that was installed in 2004 is astronomical because almost no one 

else does it. And so it is really that treadmill; if you don’t invest 

to get off the treadmill, it just goes faster and faster, and you run 

faster and faster, and you don’t get anywhere and you are just 

spending more money to essentially, you know, deliver the same or 

worse. 

Mr. PALLONE. And I think you talked about the staff too, that the 

FCC has a historically low number of full-time staff, and whether 

any further reduction in the number of full-time staff would impact 

your ability to carry out your responsibilities. I think you kind of 

answered that too, but if you want to add anything. 

Mr. WILKINS. We think with sufficient IT support, the staffing 

level we propose in ’16 lets us do everything Congress needs us to 

do. 

Mr. PALLONE. OK. All right, thanks a lot. 

Thank you, Mr. Chairman. 

Mr. WALDEN. Thank you very much. The gentleman yields back. 

And the chair now recognizes the gentleman from Illinois, Mr. 

Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you. Mr. Wilkins, welcome. It is good to 

have you back. 

Ranking Member Eshoo talked about the 9911 issue, but Commissioner O’Reilly in a blog post said that it is a simple programming change. And the first question—and this is for, obviously, the 

facility which you are operating out of. Is that your understanding, 

and did you give him that information as far as the headquarters 

itself? 

Mr. WILKINS. Yes. So it would be a programming change for our 

voice-over IP phone system. It would cost some money. Depends on 

if we just did it for our main headquarters facility, or went to all 

of our remote locations. Actually hearing the committee’s interest 

and concern in that, I would be very glad to go back and talk again 

with my IT team and see what else we can do. 

I will say that having looked at it, the one question that we had 

for management is, the people that use our phones are our internal 

people; we don’t have members of the public back in our offices, 

and at some level, they are used to dialing 9 to get out. And so we 

will—— 

Mr. SHIMKUS. Yes. Yes. I guess I would only say, you may have 

guessed, obviously, a lot of people who are outsiders come into 

the—— 

Mr. WILKINS. Yes. 

Mr. SHIMKUS [continuing]. FCC to have meetings, you may have 

bring your kid to work day—— 

Mr. WILKINS. Yes. 

Mr. SHIMKUS [continuing]. These are really terrible stories 

that—— 

Mr. WILKINS. We will be very glad to go back and—— 

29 

Mr. SHIMKUS. And really governments should try to lead as much 

as possible in doing this, and if it is a simple programming then 

we can tell other entities that, hey, it is a simple programming 

issue, and it may cost a little bit but the return on investment over 

time, just for you all leading by example, could be very helpful. 

Mr. WILKINS. OK. 

Mr. SHIMKUS. I would like to then go to a question on, last time 

we had talked about your—talking about the internal reporting 

processes for auction-related expenditures—— 

Mr. WILKINS. Yes. 

Mr. SHIMKUS [continuing]. And reviewing the use of auction 

funds and IT. Have you completed this review? 

Mr. WILKINS. Yes. And so I think—my QFRs or one of our document requests to this committee last year, we specifically broke 

out—wherever we can, we do direct accounting. So a person who 

works on auctions, they literally do their timecode and say I 

worked on auctions. And wherever we can, we do that. An IT contract that is for the new auctions platform, obviously goes to auctions. 

Around $55 million of our current auction spending is directly accounted for. 

Mr. SHIMKUS. Can you provide that stuff to us? 

Mr. WILKINS. Yes. Yes, we will—— 

Mr. SHIMKUS. And the other follow-up—and you are providing an 

audit of these responses and reviews, on the accuracy? Are you—— 

Mr. WILKINS. We are certainly doing ongoing review to make 

sure those costs are accurately reflected. 

Mr. SHIMKUS. And can you provide us some of the ongoing review 

and—— 

Mr. WILKINS. Sure. We will be glad to provide all the information. 

Mr. SHIMKUS. And, I am sorry I am going fast. I want to get to 

the last one. You are also requesting $3 million for the ongoing 

maintenance, improvement costs for the broadband map. As many 

of us know on the subcommittee, who have been here for a while, 

NTIA funded the map through Recovery Act funds or stimulus 

funds. That is correct. Those funds were exhausted, so last year 

FCC became responsible for its cost. So we are trying to figure out 

how that happened. How did we go from NTIA, an agency of the 

Department of Commerce, now where the FCC kind of took control 

of this, and then we are trying—the other question is who made 

that decision? 

Mr. WILKINS. So as you said, NTIA got the funding in the Recovery Act, because the FCC has expertise in it, lot of our processes 

obviously involve collecting broadband data, NTIA set up an interagency contract to fund us to actually do the IT systems, and that 

was the practice until their funding went away. So the idea of 

transferring it to us, I wouldn’t say it was like a preordained it 

transferred to the FCC, it is more of de facto we run it, they can’t 

fund it anymore. We have found it to be a valuable policy tool and 

we would like to keep funding it, but, as you said, it was not funded last year, and right now it is on hold. I mean we are actually 

not investing money to keep upgrading it or operating it in any 

kind of real way. 

30 

Mr. SHIMKUS. But it didn’t rise to the level of a, you know, the 

commission actually making a decision or the chairman saying we 

are going to do this, was this done just internally kind of by default? 

Mr. WILKINS. Right. It was—— 

Mr. SHIMKUS. You got handed the ball and you are—— 

Mr. WILKINS. Yes, well, it was the kind of thing where agencies 

can collaborate on—NTIA had some money, we had some expertise, 

we did the arrangement, set it up that way, and it worked pretty 

well while they had the funding. And now we have to figure out 

if we want to maintain it, where the funding comes from. 

Mr. SHIMKUS. OK. Chairman, my time is over. Thank you very 

much. Thank you, Mr. Wilkins. 

Mr. LATTA [presiding]. The gentleman yields back. 

The chair now recognizes the gentlelady from New York, Ms. 

Clarke, for 5 minutes. 

Ms. CLARKE. Thank you, Mr. Chairman. And I thank our ranking 

member. I thank Mr. Wilkins for coming today to share information with us. 

I am a new member to this committee, and wanted to just ask 

a couple of questions; one is somewhat parochial. I was visited by 

my local regional broadcasters just recently, and they raised a concern about regional office staffing, particularly in the New York region, some concerns about radio piracy, and I was wondering 

whether you have considered looking at these regional offices and 

the staffing levels, and the concerns that these regions have, 

whether you would be addressing that in this budget, and whether 

there is a line item specific to those regional offices? 

Mr. WILKINS. Thank you for that question. So one of the activities we are now undertaking with our most recent budget being 

less than we asked for, is a systematic review of all of our people, 

all of our offices, to find out how we can most efficiently deploy 

with the resources we have. So we are actively looking at that. It 

is not a line item in our budget necessarily—— 

Ms. CLARKE. Yes. 

Mr. WILKINS [continuing]. But we are definitely looking into 

staffing levels in offices like New York, and trying to make sure we 

are making the best use of the people and the money that we have. 

Ms. CLARKE. Just wondering, do you look at perhaps activities 

nationally, and then look at allocation of staff based on, you may 

have a larger problem, say, in a place like New York—— 

Mr. WILKINS. Sure. 

Ms. CLARKE [continuing]. Than you may have in other parts of 

the country, whether it is appropriate to shift staff according to 

need? 

Mr. WILKINS. Yes, I would agree. So the only way that we can, 

especially in that field part of the FCC, the only way we can manage is to find out where is the highest density of need, and how 

can we deploy the people and the resources we have against that. 

So that is absolutely the principle that we are using as we are 

doing this review right now. 

Ms. CLARKE. Very well. Immediately upon taking office, Chairman Wheeler identified FCC process reform as a priority. An intraagency staff working group produced the report on the FCC process 

31 

reform. What progress has been made to implement the recommendations in that report, and could you please explain what 

other steps the commission has taken to improve the FCC’s process? 

Mr. WILKINS. Thank you for that question. That is a very important priority for the chairman. My office is responsible for, I would 

describe as the internal process reform steps. There is a separate 

set of issues around how the commissioners operate that my office 

doesn’t really play a role in. I will give you a couple of examples. 

There are a lot of things on the internal process reform report 

around improving transparency and using metrics to better manage our internal resources. One thing that we just completed, with 

my office as the main implementer, was a new system for consumers to register complaints with the commission. We have a new 

online system, it is a Web site. You have a problem related to your 

phone bills or any other FCC issue, it is actually much easier for 

you as an individual to go and make that complaint. The process 

reform angle is we now have a much easier way to track those 

things, to figure out is the backlog or the volume going up or down 

in given areas, be more transparent about it and manage our resources better. So that is one example. And I would just emphasize 

that the IT investments that we want to make here, that we have 

talked about so far in the hearing, are overwhelmingly about having that model be used in many other areas for process reform improvement, and that is why the chairman is on my back to make 

sure we get the IT right. 

Ms. CLARKE. Very well. And as you know, FCC licenses pay the 

cost associated with the FCC’s operations. It is, therefore, critical 

for the FCC to ensure that its regulatory fees are assessed in a fair 

and equitable fashion. Can you explain the FCC’s efforts to ensure 

fairness in the regulatory fee structure? 

Mr. WILKINS. Yes, and let me answer that with two examples. 

My office actually does the fee proceedings. We just completed one 

last year where we tried to make at least a few areas better. So 

for example, we set a new de minimis standard where a very small 

business, under the old formula, may have had to pay us a few 

hundred dollars and, frankly, spend more money on lawyers and 

filing costs than the money, we just exempted them. So trying to 

make it just less of a burden. 

This also is the USF proposal in our current budget. It is specifically designed so that the parts of the industry that are involved 

in USF are the ones who would support those activities of the commission, and the ones who aren’t involved in USF would not. Under 

our current model, I mean a broadcaster is a good example, broadcasters don’t have anything to do with USF. Part of the regulatory 

fee a broadcaster pays does, in our current model, go to basically 

pay for our USF activities. And given that our costs will go up because of the move for a year or two, we just thought this was the 

exact right time to propose that alignment so that the people that 

pay fees, that sort of pay for things that relate to their business 

or their activity. 

Ms. CLARKE. Thank you very much. 

Mr. Chairman, I yield back. 

Mr. LATTA. The gentlelady yields back. 

32 

And the chair now recognizes the gentleman from New Jersey, 

Mr. Lance, for 5 minutes. 

Mr. LANCE. Thank you, Mr. Chairman. And good morning to you, 

Mr. Wilkins. 

The FCC makes a one-time request of $51 million for restacking, 

and is this similar—for move or restacking. Are a move or restacking equivalent, and which of the two would be less costly? 

Mr. WILKINS. Right. Certainly. So we always use move or restacking because, certainly, our current landlord is eligible to bid 

to retain our lease, and so the restacking would be we would stay 

at the current facility but in smaller space. So we would collapse 

and literally restack where the offices were laid out. And so I think 

it is important from the GSA perspective that we maintain as 

much competition for our lease as possible, so we always maintain 

that. 

The $51 million budget request certainly applies to either one of 

those, because really what that pays for, it pays for internal construction, walls, and these are not exciting things but they are necessary things. So the furniture, and even if we restacked our current location, you would change the footprint because you are going 

to smaller offices, et cetera. And we are committed to those—I 

mean we are committed and, frankly, GSA is going to make sure 

we are committed to those lower lease costs in the long term as we 

talked about. 

Mr. LANCE. Are these competitively bid, or to the lowest responsible bidder, or—— 

Mr. WILKINS. Right. So Congress has to first approve a prospectus. That hopefully will be coming from OMB relatively soon. 

And then an RFP goes out to commercial lessors for the period of 

several months, and people look at our requirements, how much 

space, other things, and there is a competitive bidding process that 

GSA runs and, you know, we try to get the best deal for the taxpayer. 

Mr. LANCE. Well, thank you. At your convenience, we would appreciate if you would provide us with a list of the awardees. 

And—— 

Mr. WILKINS. Certainly. 

Mr. LANCE. We appreciate that, thank you. The budget request 

includes $2.4 million to engage an administrator to manage the 

Broadcast Relocation Fund. 

Mr. WILKINS. Yes. 

Mr. LANCE. Is this going to be awarded through a competitive 

bidding process—— 

Mr. WILKINS. Yes. 

Mr. LANCE [continuing]. As well? 

Mr. WILKINS. Yes. 

Mr. LANCE. Thank you. That ends my question. Anybody on our 

side wants the balance of my time? 

Mr. LATTA. I believe the gentleman yields back. 

Mr. LANCE. I will yield back. 

Mr. LATTA. Thank you very much. 

And the chair now recognizes the gentleman from New York for 

5 minutes, Mr. Collins. 

33 

Mr. COLLINS. See if this is working. It wasn’t last week. Thank 

you, Mr. Wilkins. 

I will begin one real quick question on the rural broadband map. 

Mr. WILKINS. Yes. 

Mr. COLLINS. I represent some very rural counties, and you currently use, if I understand, like the 9-digit zip code. In these counties, your 9-digit zip code is showing as much as 97 percent coverage. The counties knew that was wrong. They did their own indepth study. It is under 50 percent. So I am assuming you are 

aware of the shortcomings in that, and is that what you are trying 

to address so we can actually get a number? 

Mr. WILKINS. Right. Yes, right, the use of the broadband map is 

a tool exactly to facilitate that kind of input and two-way dialogue, 

because you are right, in universal service, for example, we are deploying millions of dollars and it really is supposed to be where it 

is most needed. 

Mr. COLLINS. Where it is needed, which is our counties, and they 

are not getting it because of the 9-digit zip code—— 

Mr. WILKINS. Exactly. 

Mr. COLLINS [continuing]. Methodology. 

Mr. WILKINS. Exactly. And so the broadband map has been used, 

and our hope is to use it as a tool just to make that easy, because 

it is one thing to have some complicated data set to look at, it is 

another thing to see a map of your county which you know—— 

Mr. COLLINS. Is wrong. 

Mr. WILKINS [continuing]. See what the FCC thinks is right or 

wrong, and if it is wrong, to be able to tell us. 

Mr. COLLINS. I think all of us in this day and age would appreciate the more accurate you can get it, the funds can go where they 

actually are needed, which is many of the rural counties. 

So couple of questions on the budget. That is what I have spent 

my life doing, both as a county executive in the largest upstate 

county of New York, where I implemented Lean Six Sigma for the 

first time in a large municipal government. We had over 5,000 employees. I cut 22 percent of the workforce, improved efficiency, improved delivery of service, and those cuts saved $100 million a 

year. So in budgeting, there are two ways of looking at it. Let us 

flat line and add to, and then there is zero-based. And just first 

question, are you familiar with Lean Six Sigma, have you looked 

at it, because as a generality, you can reduce your workforce 22 

percent. 

Mr. WILKINS. Yes. 

Mr. COLLINS. I did it and actually improved service. 

Mr. WILKINS. Yes. I am familiar with Six Sigma. I can tell you 

that in my budget discussion with Chairman Wheeler, you know, 

he and I are both relatively new to the government, from the private sector, and I am familiar with zero-based budgeting. Certainly, Chairman Wheeler’s instructions to me are to find ways to 

be as efficient as possible. You know, in the federal context, you 

know, restructuring your workforce takes more time and energy because there are a number of constraints, and actually what we 

are—— 

Mr. COLLINS. Well, and I had a unionized workforce. 

34 

Mr. WILKINS. Well, and what we are doing now though is consistent with those obligations that we have to follow, how can we 

most effectively restructure. 

Mr. COLLINS. So would it make any sense, and I have done this 

so—to pick a department, to pick a unit that has—I mean you 

might even think some areas where efficiencies would be—and try 

to—I am assuming you have never really tried it. You have never 

brought in master black belts, you have never process mapped, is 

that—— 

Mr. WILKINS. So we are doing some of that work now. I mean 

we are—in some of our areas we are doing—— 

Mr. COLLINS. But using the skill set of Lean Six Sigma, or is it 

just—— 

Mr. WILKINS. Well, not Six Sigma specifically, but using tracking 

information we have and doing more of a zero-based exercise of—— 

Mr. COLLINS. If—— 

Mr. WILKINS [continuing]. What does it really take to do the 

work that is being—— 

Mr. COLLINS. I would love to see if you could provide me just 

some examples. That is my background. 

Mr. WILKINS. Sure. Be glad do. 

Mr. COLLINS. And perhaps even encourage you to consider, even 

on a satellite basis or some small basis, try it and then it can catch 

on, and the savings can just be dramatic. 

Mr. WILKINS. We agree. 

Mr. COLLINS. It is not normally the way government works. 

Mr. WILKINS. Agreed. 

Mr. COLLINS. So another comment, and I am not going to try and 

trick you here, but you implied that because 8 cents in your budget 

brought in $1. You said that. Number one, I would say you are 

kind of taking undue credit for the wildly successful spectrum 

audit that far exceeded your estimates. And so kind of a rhetorical 

question, if we increased your budget $10 million, could you guarantee us $120 million coming back in on top of your current budget? Or if I gave you $100 million, could you guarantee us $1.2 billion coming back? 

Mr. WILKINS. No, I wouldn’t want to say that. I would emphasize—— 

Mr. COLLINS. I didn’t think so. 

Mr. WILKINS [continuing]. Thought that when spectrum auctions 

were created in the mid-’90s, I don’t think anyone expected it 

would lead to the—— 

Mr. COLLINS. Well, my point is, I understand how you did the 

numbers—— 

Mr. WILKINS. Yes. 

Mr. COLLINS [continuing]. But in fairness to us, I think you are 

trying to take credit for some things that were outside of your 

scope, and I know that is a good thing to do but—— 

Mr. WILKINS. Well, our auction staff does do that work. I mean 

that money comes from somewhere. It is because there is an auction staff that runs those auctions. 

Mr. COLLINS. So if we increased your budget by $10 million, could you give us another $120 million—— 

Mr. WILKINS. Well—— 

35 

Mr. COLLINS [continuing]. Coming back? 

Mr. WILKINS. I think that the recent increases for our auction—— 

Mr. COLLINS. No, no, no, on top of your current budget—— 

Mr. WILKINS. Well, I think for auctions, the $11 million that we 

are requesting for our auctions fund probably will generate more 

than $100 million from the—— 

Mr. COLLINS. No, but if I gave you 10 on top of that, could you 

give us another—so if we give you 20, can you give us 240? 

Mr. WILKINS. No, no, clearly, clearly, there is a limiting principle—— 

Mr. COLLINS. OK. Well, I only bring that up because you were 

a little self-serving on that one. 

Mr. WILKINS. OK. 

Mr. COLLINS. OK. 

Mr. WILKINS. That is fair. 

Mr. COLLINS. Thank you, Mr. Chairman. Yield back. 

Mr. LATTA. Thank you very much. The gentleman yields back. 

And at this time, the chair recognizes the gentleman from North 

Dakota, Mr. Cramer, for 5 minutes. 

Mr. CRAMER. Thank you, Mr. Chairman. Thank you, Mr. Wilkins, for being here. Thank you for your—you are very knowledgeable and it is great to have a witness that is both knowledgeable 

and forthcoming. 

I want to just follow up a little bit on where I think Mr. Lance 

was going, and maybe expand it a little, and Ms. Eshoo as well. 

I appreciated your answer to her with regard to, you know, contractors or, you know, former employees coming back as contractors, 

and that was a good answer. But I am missing detail I think when 

I look at the budget request, and I would just say it could be very 

helpful for us, and give us sense of confidence if we could get more 

details about not just the $44.1 million, for the moving and stacking, which I think is a large amount, and I wish I had a local moving company to bid on it, but the $32 million in addition to that 

is pretty vague, to say the least, and I would just really want to 

encourage you, first of all, if you can explain that a little bit, but 

then provide us some detail, again, you know, before the chairman 

and the commissioners visit here. 

Mr. WILKINS. OK. Absolutely. 

Mr. CRAMER. That would be very helpful. 

Mr. WILKINS. Would you like me to—I can—— 

Mr. CRAMER. Please. 

Mr. WILKINS [continuing]. Say a little more? 

Mr. CRAMER. Yes, please. 

Mr. WILKINS. So on the move costs, it is $51 million that is just 

in our budget request. 

Mr. CRAMER. Right. 

Mr. WILKINS. It is split as our usual practice between auctions 

and non-auctions. 

Mr. CRAMER. Right. 

Mr. WILKINS. $51 million. That would be the first of two fiscal 

years where some of that spending is required. The total estimate 

we are getting from GSA is closer to about $80 million, so $50 million would be the larger chunk. 

36 

Just to give you some context, for the amount of square feet that we are talking about for our new lease, that would be about $175 

per square foot, fully loaded, for everything from walls and furniture to the cost to move the stuff. That compares to, let us see, 

GSA gave us three examples, NIH and NLRB both recently did 

moves that were $206 a square foot, so we are a little lower than 

that. Recently, the FTC, which is sort of a similar agency to us in 

terms of—— 

Mr. CRAMER. Sure. 

Mr. WILKINS [continuing]. People, moved about half as many people, it wasn’t their full staff, it was a part of their staff, about 900 

people, total was $75 million over several fiscal years. They had 

some different issues going on, but again, we are talking about a 

similar amount of money for twice as many people. So I am not an 

expert in move costs, but from what GSA has told us, the numbers 

are pretty much in the range that they would typically do with a 

federal agency. The rest of the cost, so exactly as the chairman 

said, total is $84 million, take 51 away from that for the move, that 

leaves you with 33. We have got $4 million for the PSAP system 

and the broadband map, $8 million in inflation and $1 million for 

the IG. We could talk about any one of those, but those are kind 

of—— 

Mr. CRAMER. Sure. 

Mr. WILKINS. Those are what they are. We are left with $21 mil- lion of—we are left with $15 million if you take the PSAP and 

broadband map out. So those are, as Congresswoman Eshoo said, 

that is to buy the off-the-shelf IT infrastructure, instead of having—I mean we literally have 200 giant servers like you would see 

in a movie from 20 years ago, sitting in very expensive real estate 

over here on 12th Street. 

Mr. CRAMER. Yes. 

Mr. WILKINS. I mean that is not how you do IT, certainly in the 

private sector, and you shouldn’t in the public sector now either. 

So we have a—literally, a truck is going to show up to the FCC in 

a couple of weeks and take those suckers out to West Virginia. And 

that is the first step to going to a true cloud environment which, 

for storage and your basic servers, is just the way to do it. So that 

is what those costs are, and we will be glad to give staff follow-up 

on all of the specifics of those contracts. 

Mr. CRAMER. I would be helpful, just because, obviously, details 

are—and information keeps the imagination from getting too far 

astray, if you know what I mean. 

I don’t have anything else, but thank you. I yield back. 

Mr. LATTA. Thank you very much. The gentleman yields back. 

The chair now recognizes the gentleman from Ohio, Mr. Johnson, 

for 5 minutes. 

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

Wilkins, thank you for being here today. 

You have requested $25 million out of the USF fund to reimburse 

the agency for costs of oversight administration of the fund, with 

$10 million of this amount going to the creation of the Joint USF 

Antifraud Taskforce. Do you expect the fund for USF oversight administration to be a one-time disbursement, or do you expect this 

to be an ongoing effort? 

37 

Mr. WILKINS. Right. So we certainly would, if that was granted 

in ’17, then we would have to, in fact, resubmit it and it would be 

reapproved by Congress, if it was approved. I get—— 

Mr. JOHNSON. So it is ongoing, am I understanding that—— 

Mr. WILKINS. Well, I really think it is obviously Congress’ decision, and it is just about this issue of fee-ness to the fee payers. 

Mr. JOHNSON. Yes. 

Mr. WILKINS. And to be clear, the money is the money. Right? 

In other words, those are people that we largely have today. We 

may be reallocating some of our current workforce to that on the 

margin, but those are costs that are right now being paid by our 

fee payers. Out Section 9 fees, they pay it. 

Mr. JOHNSON. What—— 

Mr. WILKINS. That is not going to change a lot. 

Mr. JOHNSON. What is that money going to be used for? The 

budget request says salaries and IT. Is it going to pay salaries—— 

Mr. WILKINS. No. 

Mr. JOHNSON [continuing]. IT or both? 

Mr. WILKINS. No, IT, that is a mistake if that is what it says. 

It is just for the salary and expenses for the people who do USF 

work at the commission. 

Mr. JOHNSON. Prior to this request, how did the agency fund 

these costs? 

Mr. WILKINS. Out of our regular Section 9 regulatory fees. 

Mr. JOHNSON. OK. The FCC acknowledges that it has collected 

just over $90 million in excess regulatory fees, so will the commission or the Administration, as was called for in GAO’s 2012 report 

to Congress, titled Federal Communications Commission regulatory 

fee process needs to be updated, will they provide Congress with 

a proposal to true-up these fees so as to avoid continued growth of 

the uncollected funds? 

Mr. WILKINS. Well—— 

Mr. JOHNSON. Over-collected funds, I am sorry. 

Mr. WILKINS. Sure. I mean it certainly does strike us as a burden 

on our fee pays, and I would love to have the money, but that is 

sort of the—it is outside the FCC’s control. That is certainly something for the Administration to work with Congress on what to do 

with those funds. 

Mr. JOHNSON. All right. As you also know, Mr. Wilkins, the FCC 

is well aware of the legal challenges ahead once the Order is released. There may be reconsideration requests filed at the commission, Motions for a Stay of the Order, and appeals of the Order that 

could go all the way to the Supreme Court. Has the FCC budgeted 

and estimated the potential resources needed and costs of the litigation for this year’s budget request? 

Mr. WILKINS. Yes. So I can—so with regard to open Internet 

issues, my office—I am the budget—I am the green eyeshade guy, 

not the policy guy. I can tell you unequivocally we do not have a 

current plan to add more resources to say Wireline Competition 

Bureau or the General Counsel’s Office. I mean this is certainly an 

important issue that will take staff work, but in terms of my staffing discussions with those office and bureau heads, it is not different than, I would say, the usual large important issues that 

38 

those staff support. So there is no increase in this budget, for example, to support that activity. 

Mr. JOHNSON. OK. Litigating the Title II Order will not be 

costless though. Do you agree that is fair to say? 

Mr. WILKINS. Certainly. Yes. Yes. 

Mr. JOHNSON. Has the commission projected how much the cost 

will be for 2016, ’17, ’18 and ’19? You may have just answered that. 

You haven’t projected that out? 

Mr. WILKINS. No. Our current budget assumes that the litigation 

support that we have in the General Counsel’s Office, for example, 

will be able to handle that. Now, if the office chiefs change their 

minds on that, they would bring it to me, but right now that is our 

plan. 

Mr. JOHNSON. OK. One final question, and if you would please 

for the sake of time, just a simple yes or no. Wouldn’t the commission have saved a significant amount of money if it had let Congress legislate on net neutrality instead of moving forward with an 

ill-fated Title II Order that it knows is going to be litigated for 

years? 

Mr. WILKINS. No. 

Mr. JOHNSON. No. Why? Why do you say no? Cost of litigation? 

Because you just said that it was going to be—— 

Mr. WILKINS. Well—— 

Mr. JOHNSON. The cost of litigation was not going to be negligible, so—— 

Mr. WILKINS. Well, our bureaus and offices that deal with those 

sorts of issues, essentially, these are expert, experienced attorneys, 

or economists, or policy people, and this is their job. Any given 

year, we will have major litigation, we will have major issues, those 

offices are built to do that. And certainly—— 

Mr. JOHNSON. But that litigation is not free. That litigation is 

not free. The taxpayers are paying for that litigation, so the question is wouldn’t it have been more prudent to let Congress work 

with the FCC to get a legislative fix to net neutrality, rather than 

spending taxpayer dollars to litigation something that they know 

is going to be litigated? 

Mr. WILKINS. Well, Congressman, from my office’s perspective, I 

can assure you there is no incremental budget requests that are 

being driven to support that. We have people who do that. Certainly, the prioritization question—— 

Mr. JOHNSON. But they don’t do it for free, that is the point I 

am making. They don’t do it for free. 

Mr. WILKINS. No. 

Mr. JOHNSON. If they weren’t doing that, they would be doing 

other things that are meaningful and useful for the taxpayers, not 

litigating something that they could have precluded by working 

with Congress. Do you see what I am saying? 

Mr. WILKINS. Certainly, the cost of the people to do that—— 

Mr. JOHNSON. OK. 

Mr. WILKINS [continuing]. Will be—— 

Mr. JOHNSON. I yield back, Mr. Chairman. 

Mr. LATTA. The gentleman yields back. 

And the chair recognizes the gentleman from Kansas, Mr. 

Pompeo, for 5 minutes. 

39 

Mr. POMPEO. Thank you, Mr. Chairman. 

Mr. Wilkins, you said in your testimony, ‘‘You are currently examining additional workforce restructuring at all FCC facilities.’’ 

Can you tell me if that includes studying closing field offices? 

Mr. WILKINS. We are doing a thorough review of actually every 

part of the commission, and certainly, the field is part of that review, yes. 

Mr. POMPEO. And are you doing that internally or do you have 

third parties that have assisted you in conducting that review? 

Mr. WILKINS. No, it is as Mr. Collins from New York said, we 

have brought in some management experts to support our internal 

staff in doing that review. 

Mr. POMPEO. Have they provided you with reports? 

Mr. WILKINS. We have been—— 

Mr. POMPEO. Drafts, memos, PowerPoint slides? 

Mr. WILKINS. We do not have a final report yet. We have a final 

report quite soon actually that we would be glad to—— 

Mr. POMPEO. Do you have a draft report, do you have interim reports, do you have anything that you can share with us? 

Mr. WILKINS. They have been sharing their analyses with us as 

we have been going along, and their final report is due, actually, 

next week. 

Mr. POMPEO. Is there recommendation to close field offices? 

Mr. WILKINS. They have made us good recommendations for how 

we can look at the people we have, the real estate costs we have, 

and deliver the mission better. 

Mr. POMPEO. Right. I asked a direct question, you gave a generic 

response. Is there recommendation to close field offices for the FCC 

and relocate people to your headquarters? 

Mr. WILKINS. In the interim analysis they have done, they have 

shown some cost-based ideas that could be consistent with that, but 

there is not a final recommendation yet. 

Mr. POMPEO. And are these savings reflected in the budget that 

you have provided us? 

Mr. WILKINS. No. 

Mr. POMPEO. You said they could show some savings. You have 

seen the interim report, did you assume, yes, we are going to go 

down that path and—— 

Mr. WILKINS. Well—— 

Mr. POMPEO [continuing]. The budget includes it? 

Mr. WILKINS. The answer is as our ’16 budget request does presume, or does project, that our staffing levels drop, we are going 

to look at every possible area we can to most efficiently effect that. 

The default is people retire or leave the commission and we just 

don’t replace them. And we are certainly looking at other areas 

where we can do other sorts of workforce changes, and absolutely 

not just in the Enforcement Bureau field and all across the commission, and that was the chairman’s instruction to me when our 

budget came in where it did. 

Mr. POMPEO. Sure, but my question is what did you do? You had 

interim reports, what did you assume for purposes of your budget? 

Did you assume there would be changes in the lease payments in 

the field offices, locality pay connected to that, there are lots of 

40 

changes, changes in—you might have had engineers there and you 

would have lawyers here—— 

Mr. WILKINS. Yes. 

Mr. POMPEO [continuing]. Tell me what you assumed when you 

put the—— 

Mr. WILKINS. So our budget request, right, is for activities that 

will be taking more than the better part of a year in advance of 

when the budget is done. 

Mr. POMPEO. Yes. 

Mr. WILKINS. So when you are talking about that kind of a future view, all you can do is say we will spend less money on categories such as FTEs. Then, as Congress considers that, we have 

to view our management plan and say, OK, how are we best going 

to make that happen. Will it be through changes at certain bureaus, will it be through other savings? This type of analysis is certainly part of that process, but it was not a preordained, that is 

how we are going to pay for X. We just have to do the management 

work to find out where we save the money. 

Mr. POMPEO. Right. It is just a bit disingenuous because it is not 

always the case that you just let folks go. Sometimes you let an engineer go and you bring a lawyer on, right? And so it is worth 

thinking about how you do that. It is not just a case that you used 

attrition, you have now made policy and programming differences 

that I think are important for us to understand. And I guess what 

I would ask you in closing is, when you get this report, it sounds 

like it will be in the next couple of days—— 

Mr. WILKINS. Yes. 

Mr. POMPEO [continuing]. When you get a copy of this report, 

will you make sure we get a copy as well? 

Mr. WILKINS. As we decide on what to do with those recommendations and other work we are doing, we absolutely will 

share it with—— 

Mr. POMPEO. Right, but even before you decide, when you get the 

report, you have clearly hired a contractor to do a report, and you 

already have documents from this contractor, right? 

Mr. WILKINS. Yes. 

Mr. POMPEO. They have provided you interim reports, that we 

get the interim reports. 

Mr. WILKINS. We certainly will give you the final report. We 

want to make sure—— 

Mr. POMPEO. Can we get the interim reports? 

Mr. WILKINS [continuing]. The interim reports are—— 

Mr. POMPEO. That is a yes-or-no question. Can we just get the 

interim reports? 

Mr. WILKINS. Well—— 

Mr. POMPEO. That is—— 

Mr. WILKINS [continuing]. I think we wouldn’t want to provide 

things that ultimately weren’t what we relied on. 

Mr. POMPEO. Sure you would. Sure, it is OK for us to see them. 

There is no harm in us seeing them. You may make a different decision. 

Mr. WILKINS. We—— 

Mr. POMPEO. Taxpayers paid for these. What is the harm in 

sharing them with the Legislative Branch? 

41 

Mr. WILKINS. Certainly, whatever, of course, things that you request we will provide. 

Mr. POMPEO. Great, thank you. 

I yield back. 

Mr. LATTA. The gentleman yields back. 

And the chair recognizes the gentleman from Kentucky, Mr. 

Guthrie, for 5 minutes. 

Mr. GUTHRIE. Thank you. 

You said replace an engineer with a lawyer. Aren’t you both an 

engineer and a lawyer? So Mr. Pompeo has a good perspective. 

Mr. POMPEO. We yield. 

Mr. GUTHRIE. Not a practicing—I will yield to you, not a practicing lawyer. 

I have a question on spectrum. I have gotten involved with Ms. 

Matsui on the government spectrum. Hopefully free up more spectrum from auctions, so I was just going to tie into that, just some 

budget questions on that. And specifically the process of retaining 

auction revenues and how it works in practice—— 

Mr. WILKINS. Yes. 

Mr. GUTHRIE [continuing]. And I am interested in what happens 

when the FCC is authorized to retain a certain amount to offset 

the cost of the auction administration in a certain year, but auctions in that particular year raise less than the threshold. I believe 

that this happened in 2008-’12, where in no year did the FCC reach 

the $85 million threshold. So my question then, when the auction 

failed to raise more money than the FCC is permitted to retain, 

how is the difference made up to cover the expense of the auctions? 

Mr. WILKINS. Right. So I don’t have the specifics on the year you 

mentioned. We will be glad to provide—— 

Mr. GUTHRIE. OK. 

Mr. WILKINS [continuing]. Anything additional. The general process is, obviously—— 

Mr. GUTHRIE. Yes, the general process I am interested in. 

Mr. WILKINS. Yes. Obviously, Congress sets our cap of revenues 

we are allowed to use, and then there is sort of a separate process 

we have to do with OMB—— 

Mr. GUTHRIE. Yes. 

Mr. WILKINS [continuing]. Around retaining some certain amount 

of auction revenue so that they can then give us those funds as 

Congress sets the cap. So just for example, so right now, I believe 

we have a little bit less than 3 years worth of current auctions program in our auctions account at the Treasury. So we are sort of 

funded through at least the next 2 fiscal years and into the next, 

and then certainly this question of what is retained for future FCC 

use from the AWS–3 auction will be part of that discussion with 

OMB too. 

Mr. GUTHRIE. So can it be carried over from previous years and 

previous auctions, and if so, can you carry over to the future auctions and are there restrictions? 

Mr. WILKINS. Well, OMB will keep the funds in an account, so 

the funds—so the money is there. 

Mr. GUTHRIE. Yes. 

42 

Mr. WILKINS. We certainly only can use what Congress sets our 

cap for, or if we have approval to reprogram funds or if funds can 

be on a know your basis moved from one to the—— 

Mr. GUTHRIE. So they can go from one year to the next, as long 

as they are within the cap. 

Mr. WILKINS. Yes. Our ability to spend the money is just set by 

the Congressional appropriation process. 

Mr. GUTHRIE. OK. But—— 

Mr. WILKINS. The question is the money there is OMB. 

Mr. GUTHRIE. So when it goes above the cap, well, it depends on 

the appropriations process you said. 

Mr. WILKINS. Yes, we—— 

Mr. GUTHRIE. It would revert to the deficit reduction at that 

point. 

Mr. WILKINS. Right. Yes, we can’t go above our cap unless we got 

appropriator approval to do that through a reprogramming or 

something. 

Mr. GUTHRIE. And on a related note, given that there are no significant trenches of spectrum in the auction queue beyond the 

broadcast incentive auction scheduled for next year, and hopefully 

we can do some government auction eventually, and considering 

the request for an increase in the cap on retention and spending 

of auction proceeds, because I believe in this budget request there 

is an increase in the cap on—in the cap on retention and spending 

of the auction fees. 

Mr. WILKINS. Yes, to 117, yes. 

Mr. GUTHRIE. So should we expect the FCC to identify additional 

bands that could be brought to auction during the time after the 

incentive auction, which would require funding to support these activities? 

Mr. WILKINS. Well, certainly our experts in our auctions program 

work with all the different government entities involved in spectrum planning and certainly we want to be in the business of making spectrum available for use, so we will participate in that. And 

of course, the question of what level of auctions is set aside so it 

funds our program, from a management standpoint we try to make 

sure OMB thinks at least a few years ahead so we don’t run out 

of money—— 

Mr. GUTHRIE. Yes. 

Mr. WILKINS [continuing]. And of course, OMB wants to make 

sure the money is used more broadly too, so that is just part of the 

ongoing dialogue. 

Mr. GUTHRIE. Perfect. Well, I appreciate your answers in this 

and your forthrightness. 

And, Mr. Chairman, I yield back. 

Mr. WALDEN. Gentleman yields back the balance of his time. Appreciate his participation in the hearing. 

I am going to yield a minute to Ms. Eshoo who wanted to do 

some follow-up comments. 

Ms. ESHOO. Thank you, Mr. Chairman. I appreciate it. 

The gentleman from Ohio, Mr. Johnson, we weren’t back in the 

room yet, he raised a very interesting point about asking Mr. Wilkins would the FCC not have saved money, essentially, if, in fact, 

there were a legislative approach to the issue of net neutrality. And 

43 

I think it is important to state for the record that, wherever people 

are on this, that is where they are—— 

Mr. WILKINS. Sure. 

Ms. ESHOO [continuing]. But I think that it is important to state 

for the record that broadcasters sued after decisions were taken by 

the Congress. USF, I mean there is a line as long as Independence 

Avenue of people that sued relative to what the Congress did and 

the lawsuits that were filed. Certainly, the incentive auction 

brought forward lawsuits. There was previous action by the Congress on net neutrality, but I don’t think it stands in the same area 

as the 3 that I just mentioned. So there is not a tidy answer to 

this. There just isn’t. It is not one size fits all. Congress takes actions on a daily basis, and people sue. So it is not just one way or 

the other. And I just wanted to get that down for the record. And 

I appreciate your giving me the time. 

And, Mr. Wilkins, I think you have just been a terrific witness 

because you are an effective person at the FCC in terms of the 

work that you do. Thank you. 

And thank you, Mr. Chairman. 

Mr. WALDEN. Thank the gentlelady for her comments. 

And, Mr. Wilkins, as you know, our committee is very interested 

in doing its due diligence here, just as you are at the commission. 

You know we have a lot of questions that we have given you to 

work on, and again, in my opening questions there are some we 

would really appreciate getting the answers to before the five commissioners are here in a little over 10 days. So we appreciate that. 

And we will continue to go back and forth with you on the data 

requests that the committee has had. And again, thank you for the 

work you do down there, and thank you for participating in our 

hearing. 

And with that, we stand adjourned. 

[Whereupon, at 11:53 a.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Today we are starting down the road to reauthorize the Federal Communications 

Commission—a task not undertaken since the first Bush administration. We are 

starting this process with a relatively simple, but important step—an examination 

of the FCC’s Fiscal Year 2016 Budget Request. We have had numerous concerns 

about the commission’s processes and recent actions—leading to aggressive oversight of the FCC. Today’s examination of the agency’s budget request will help bring 

openness and transparency to the nuts and bolts of how the agency executes its mission and where the commission appears to be headed. 

The communications ecosystem that the agency oversees today is one that could 

not have been fully envisioned in 1990. As we look at reauthorization, we must ensure that the FCC is responsive to the marketplace and encourages innovation rather than stand in the way. Demonstrating the need for modernization, the commission majority last week abandoned years of bipartisan light-touch regulation of the 

Internet in favor of heavy-handed, intrusive government regulation. 

On its face, the budget request suggests much more of the same from the FCC, 

with one caveat. If approved, the agency’s funding will exceed the half billion dollar 

mark for the first time. And it proposes to reach these heights by expanding its 

funding sources beyond regulatory fee collections and spectrum auction proceeds to 

include money taken directly from the Universal Service Fund. This is troubling. 

The USF is funded directly by consumers of telecommunications services. On its 

face, it appears that the agency’s solution to the pressing need for fiscal discipline 

is simply to take money out of consumers’ pockets. And while Congress has approved a transfer of funds from the USF in the past, it approved that funding for 

44 

the FCC’s Office of Inspector General and expressly for audits and investigations 

to protect the fund against waste, fraud, and abuse. In contrast, it appears the FCC 

intends this funding to pay for the costs of performing part of its core mission—implementing and administering the Universal Service Fund. 

There are, as we have come to expect, other proposed increases in the commission’s request—more money for IT modernization and $51 million for the agency’s 

new offices. Collectively they represent a request for an $84 million increase in 

funding for the agency. As I have noted before, it is a critical part of this committee’s work to foster a smaller, more nimble government for the innovation age. I 

look forward to the examination of these proposed increases and understanding of 

how the FCC’s request furthers this goal. 

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