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98–157 2016

CONTINUED OVERSIGHT OF THE FEDERAL 

COMMUNICATIONS COMMISSION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 28, 2015 

Serial No. 114–70 

( 

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. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 5 

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 .............................................................................................. 74 

WITNESSES

Tom Wheeler, Chairman, Federal Communications Commission ....................... 8 

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

Answers to submitted questions ...................................................................... 106 

Ajit Pai, Commissioner, Federal Communications Commission .......................... 18 

Prepared statement .......................................................................................... 20 

Answers to submitted questions ...................................................................... 118 

SUBMITTED MATERIAL

Article entitled, ‘‘How the FCC saved me $1800,’’ Forbes, July 6, 2015, submitted by Ms. Eshoo ............................................................................................ 76 

Statement of the American Hospital Association, submitted by Mr. Latta ........ 79 

Letter of July 24, 2015, from Carepayment to the subcommittee, submitted 

by Mr. Walden ...................................................................................................... 89 

Statement of CTIA—The Wireless Association, submitted by Mrs. Blackburn . 92 

(1) 

CONTINUED OVERSIGHT OF THE FEDERAL 

COMMUNICATIONS COMMISSION 

TUESDAY, JULY 28, 2015 

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

The subcommittee met, pursuant to call, at 10:20 a.m., in room 

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

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Barton, 

Shimkus, Blackburn, Lance, Guthrie, Olson, Kinzinger, Bilirakis, 

Johnson, Long, Ellmers, Collins, Cramer, Eshoo, Doyle, Welch, 

Clarke, Loebsack, Rush, Matsui, Lujan, and Pallone (ex officio). 

Staff present: Ray Baum, Senior Policy Advisor for Communications and Technology; Andy Duberstein, Deputy Press Secretary; 

Gene Fullano, Detailee, Telecom; Kelsey Guyselman, Counsel, 

Telecom; Grace Koh, Counsel, Telecom; Tim Pataki, Professional 

Staff Member; David Redl, Counsel, Telecom; Charlotte Savercool, 

Legislative Clerk; Christine Brennan, Democratic Press Secretary; 

Jeff Carroll, Democratic Staff Director; David Goldman, Democratic 

Chief Counsel, Communications and Technology; Ashley Jones, 

Democratic Director of Communications, Member Services and 

Outreach; Lori Maarbjerg, Democratic FCC Detailee; Tim Robinson, Democratic Chief Counsel; 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 want to welcome everyone here 

today, and wish a very good morning to Chairman Wheeler and 

Commissioner Pai. Delighted to have you back before the subcommittee again this year. We appreciate the work you are doing 

at the FCC, and look forward to your testimony, and our opportunities to pursue some issues. At the risk of sounding a bit like a broken record, however, I continue to be concerned with the Commission’s failure to adhere to sound regulatory process. 

For the nearly 5 years that I have had the opportunity to Chair 

this subcommittee, as you all know, I have consistently pushed to 

make the FCC a better, more transparent agency, and yet it seems 

like the chasm between Commissioners deepens over time. When 

the Committee considered process reform legislation a few months 

ago, I had hope we had reached the bottom of that well, that the 

2 

Commission would begin to find its way back to the collegiality and 

honest policy debates and compromises that have characterized it 

since 1934. Unfortunately, that appears not to be the case. And if 

Commissioner Pai’s testimony is any indication, things might actually be getting worse at the Commission, and that is disappointing, 

to say the least. 

With all that is going on at the Commission, and in the world 

of communications, we have much ground to cover in today’s hearing, which likely will necessitate a second round of questioning. To 

get things started, let me highlight five areas of policy concern that 

I, and some other members of this Committee, have. First, the auction. For a successful auction we all know that the sellers and buyers need to fully understand and support the rules. Yet, when it 

comes to the band plan, questions and uncertainty still abound. 

Layered on top is growing concern regarding how the re-pack will 

work, including as it relates to the future of low powered television 

stations and translators. Now, it was never our intent that these 

diverse voices in the marketplace would get fully silenced. And 

then there are the issues of potential interference which have come 

up, which, as we all know, when mishandled, can doom an auction, 

as has occurred in the past. 

Second, the FCC’s action on the designated entity issue raises 

some concerns for many of us. While the FCC majority claims that 

its changes will strengthen the integrity of the program, a goal we 

all share, sadly, I am afraid they simply replace one set of rules 

that were gamed with a new set yet to be gamed. The Commission’s new rules remove the obligation to provide facilities-based 

service, and permit leasing of 100 percent of the spectrum purchased. Now, that sets the stage for sophisticated spectrum 

arbitragers, financed by taxpayer dollars, to participate in the next 

spectrum auction, bringing nothing to the competitive market. The 

Chairman’s advocacy for this outcome is puzzling, given the assurances that the changes would protect the program from ‘‘slick lawyers taking advantage of loopholes in the program to unjustly enrich their sophisticated clientele.’’ 

Third, the Telephone Consumer Protection Act. My colleague 

from New Mexico and I have had serious bipartisan discussions 

about the approach the FCC has taken as it relates to the fundamental nature of democracy and American practical communications in a wireless ago. Beyond that, members of the Subcommittee 

are just beginning to hear from adversely affected users about the 

disruption this new ruling will have on a variety of companies, and 

the consumers they try to serve. 

Fourth, expansion of the Lifeline Program. All one has to do is 

read today’s story in Politico regarding the problems over at the 

Department of Agriculture’s Rural Utility Service to understand 

why it is so essential, before any agency moves to spend money, it 

should have tight control and a budget. Unfortunately for ratepayers, in a party line vote the FCC decided to rush forward to expand the Lifeline Program into broadband with little reform, and 

no limit on the spending. 

Fifth, admit the swirl of controversy that continues to surround 

the actions the Commission takes, let us not lose sight of what is 

not getting done. For example, the AM revitalization proceeding 

3 

has been described by some as grinding to a halt, despite the 

Chairman’s assurances to this subcommittee. The quadrennial review of the limitations on ownership of broadcast properties continues to languish, in open violation of the Commission’s legal obligation. 

Let me close with this. Each member of the Commission is very 

bright, talented, and thoroughly passionate. And yet, as evidenced 

by recent public comments of Commissioner O’Reilly, and the testimony today of Commissioner Pai, it is clear that they believe the 

process at the FCC too often fails to include them in a meaningful 

and substantive way. And we hear similar complaints from stakeholders who feel ignored or shut out altogether. This is neither necessary nor helpful, as the Commission, and all of us in Congress, 

try to work through the complicated issues in today’s rapidly involving communications world. 

And on a final note, on the good news side of things, at least if 

you have the background I have, I am pleased to note that AT&T 

today announced that they reached an agreement to allow FM 

chips in cell phones, making at least the second carrier to do so, 

and we hope that other carriers will follow suit. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

Good morning everyone. Good morning Chairman Wheeler. Good morning Commissioner Pai. Thank you both for joining us this morning. 

At the risk of sounding like a broken record, I continue to be concerned with the 

Commission’s failure to adhere to sound regulatory process. For the nearly 5 years 

that I have chaired this subcommittee, I have consistently pushed to make the FCC 

a better, more transparent agency, only to see the chasm between the Commissioners deepen over that time. When this Committee considered process reform legislation a few months ago, I had hoped that we had reached the bottom of the well. 

That the Commission would begin to find its way back to the collegiality and honest 

policy debates and compromises that have characterized the FCC since 1934. Unfortunately, that hasn’t been the case. And if Commissioner Pai’s testimony is any indication, things might actually be getting worse. This is disappointing, to say the 

least. 

With all that is going on at the Commission and in the world of communications, 

we have much ground to cover in today’s hearing which likely will necessitate a second round of questioning. To get things started, let me highlight five areas of policy 

concern that I, and other members of this Subcommittee, have: 

First, the auction. For a successful auction, we all know that the sellers and buyers need to fully understand and support the rules. Yet when it comes to the band 

plan, questions and uncertainty abound. Layered on top is growing concern regarding how the repack will work, including as it relates to the future of low power television stations and translators. It was never our intent that these diverse voices in 

the marketplace would get fully silenced. And then there are the issues of potential 

interference, which as we all know when mishandled can doom the auction, as has 

happened in the past. 

Second, the FCC’s action on the designated entity issue raises concerns for many 

of us. While the FCC majority claims that its changes will strengthen the integrity 

of the program, sadly they simply replace one set of rules that were ‘‘gamed’’ with 

a new set to be gamed. The Commission’s new rules remove the obligation to provide facilities-based service and permit leasing of 100% of the spectrum purchased, 

setting the stage for sophisticated spectrum arbitragers financed by taxpayer dollars 

to participate in the next spectrum auction bringing nothing to the competitive market. The Chairman’s advocacy for this outcome is puzzling given his assurances that 

the changes would protect the program from ‘‘slick lawyers’’ taking advantage of 

loopholes in the program to unjustly enrich their sophisticated clientele. 

Third, Telephone Consumer Protection Act. My colleague from New Mexico and 

I have had serious, bipartisan discussions about the approach the FCC has taken 

as it relates to the fundamental nature of democracy in America and practical comVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
4 

munications in the wireless age. Beyond that, members of this Subcommittee are 

just beginning to hear from adversely affected users about the disruption this new 

ruling will have on a variety of companies and the consumers they try to serve. 

Fourth, expansion of the Lifeline program. All one has to do is read today’s story 

in Politico regarding the problems over at the Department of Agriculture’s Rural 

Utility Service to understand why it is essential before any agency moves to spend 

money it should have tight control and a budget. Unfortunately for ratepayers, in 

a party line vote, the FCC decided to rush forward to expand the Lifeline program 

into broadband with little reform and no limit on the spending. 

Fifth, amid the swirl of controversy that continues to surround the actions the 

Commission takes, let us not lose sight of what is not getting done. For example, 

the AM revitalization proceeding has been described by some as ‘‘grinding to a halt’’ 

despite the Chairman’s assurances to this subcommittee. The quadrennial review of 

the limitations on ownership of broadcast properties continues to languish in open 

violation of the Commission’s legal obligation. 

And let me close with this: Each member of the Commission is very bright, talented and passionate. And yet, as evidenced by recent public comments of Commissioner O’Rielly and the testimony today of Commissioner Pai, it is clear that they 

believe the process at the FCC too often fails to include them in a meaningful, substantive way. And we hear similar complaints from stakeholders who feel ignored 

or shutout altogether. This is neither necessary, nor helpful, as the Commission-and 

all of us in Congress-try to work through the complicated issues in today’s rapidly 

evolving communications world. 

Mr. WALDEN. With that, I have used up my time, and turn to the 

gentlelady from California. 

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

Ms. ESHOO. Thank you, Mr. Chairman, and good morning Chairman Wheeler, Commissioner Pai. Welcome back to the Committee. 

We are happy to see you, and as I said, we welcome you back. 

Today’s hearing marks the Chairman’s third appearance before 

our Subcommittee in just over 4 months. In fact, the Congressional 

Research Service tells me that the Chairman’s eight appearances 

before Congress this year marks a new record. So congratulations, 

Mr. Chairman. Put that one up on your wall. In the past 14 years 

no FCC Chair has testified more times before Congress in a single 

calendar year, and of course we are only in the seventh month of 

2015. It is our subcommittee’s responsibility to conduct robust oversight, and in so doing we should hear regularly from the Chairman 

and his fellow Commissioners. 

Responsible oversight includes recognition that the FCC—and I 

think that we should be doing this. There are many things to raise 

that are legitimate, at least in the minds of those that raise them, 

but we should include a recognition that the FCC is undertaking 

an unprecedented series of steps to promote competition, enhance 

public safety, and ensure that consumers are protected against deceptive or misleading billing practices. Here are a few highlights of 

the Commission’s work over the past year. Modernize the E-rate 

Program to increase the presence of Wi-Fi in classrooms, and bolster higher capacity Internet connections to the anchor institutions 

in our communities across the country, our schools and our libraries. Raised a record 44.9 billion, with a B, dollars from the AWS– 

3 auction. Repealed the outdated and anti-consumer sports blackout rules which, for 4 decades, 40 years, prevented fans from 

watching games on television when they were not sold out. I think 

there are a lot of people in the country that are really thrilled 

5 

about that. Launched a new consumer help center to streamline 

the complaint process, and improve how consumers interact with 

the FCC. And at this point, Mr. Chairman, I would like to ask 

unanimous consent to place into the record a really terrific article 

from Forbes entitled, ‘‘How the FCC Saved Me $1,800’’. If you 

haven’t read it, everyone should, so I ask—— 

Mr. WALDEN. Without objection. 

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

Ms. ESHOO. Thank you. Freed up 150 megahertz of spectrum in 

the 3.5 gigahertz brand for mobile broadband. Established indoor 

location accuracy rules for wireless calls made to 911. That could 

be a lifesaving step right there. Adopted bright line rules that prevent broadband providers from engaging in blocking, throttling, 

and paid prioritization. Levied a $100 million against a major telecommunications provider for misleading consumers about their unlimited data plans. Pre-empted state laws in Tennessee and North 

Carolina that prevented local communities from deploying 

broadband, which they want to do across the country. 

All of this and more in just one year, and there is much more 

ahead as the FCC prepares to undertake the world’s first voluntary 

incentive auction, and a technology transition to an all IP world 

that preserves the core values of competition, public safety, and 

consumer protection. So I thank both the Chairman and the Commissioner for your continuing commitment to a modern telecommunications marketplace, and I yield the remainder of my time 

to the gentleman from Vermont, Mr. Welch. 

Mr. WELCH. Thank you very much. Welcome, Chairman Wheeler 

and Commissioner Pai. We really appreciate the work that you are 

doing. Just a couple of points. I am very encouraged by the tech 

transitions progress that you have been making. That is going to 

be very helpful to many more businesses that need efficiencies, and 

this is going to be helpful to consumers. I hope you don’t stop 

there. One of my main concerns, I know a concern of many of us, 

is to have competition as much as possible in this area. We really 

do believe that that leads to innovation, and better prices for the 

consumers. So the special access issues continue to be of top concern to me. 

And then finally I would like to just remind you of the bipartisan 

rural working group that Mr. Latta and I have set up, because 

there is so many of us, even if we represent urban areas, that have 

rural districts that have special problems, and oftentimes aren’t the 

big markets, so we want to continue to work with the entire Commission to try to make certain that the rural service is there, and 

will be there, and will be the highest quality. Thank you very 

much, and I yield back the balance of my time. 

Mr. WALDEN. The gentleman yields back, the gentlelady yields 

back. The Chair recognizes the gentlelady from Tennessee, Mrs. 

Blackburn. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and I want to welcome you both. We appreciate that you are here. I will say I disVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
6 

agree with my colleague from California, as she talked about Tennessee. We saw that as stepping on states’ rights, Mr. Chairman, 

and you know that you and I disagree on that. I am pleased that 

you all are here. I know you all saw the CTIA report last week, 

and I am sure you have read the op-ed in today’s paper by each 

of your predecessors, Mr. Janikowski and Mr. McDowell. Getting 

spectrum to the marketplace is where we need to have our focus. 

And rather than getting off into all these tangential issues, your 

focus should be the core of your mission, which is dealing with 

spectrum deployment and usage. And when you look at the expected increase in the wireless arena, it draws more attention to 

this. 

I was thinking, as I was preparing for this hearing, when you go 

back and look at the industrial revolutions that we have had in 

this country, looking at the agricultural and the industrial mechanization revolutions, when you look at technology, information, we 

are almost at a point of being able to say there is this wireless revolution that is going on, because business transactions, health care, 

so many things are going to depend on this spectrum, and we want 

to make certain that you are focused on this. So we welcome you. 

We know that we have to be diligent in this. We look at what 

South Korea is already talking about doing, South Korea, and 

Japan, and the 5G, and recapturing the momentum that at one 

point they had. And we don’t want them to be the world leader. We 

want to be the world leader, and we have got to have you work 

with us on this. 

At this time I yield the balance of my time to Mr. Latta. 

Mr. LATTA. Well, thank you very much, and I thank the 

gentlelady for yielding. And I want to thank Chairman Wheeler 

and Commissioner Pai for being with us again. It is great to see 

you both, and I look forward to your statements, and also to our 

questions today. 

The communications and technology industry is a very productive and dynamic sector of economy. This is largely due to bright, 

innovative minds, and in part because this industry has been lightly regulated, with the ability to grow and evolve to the demands 

of the consumers. Therefore, we cannot afford to overlook the significance of the regulatory policies and how the FCC’s decisions impact the industry’s success. This is why I am concerned with many 

of the actions proposed—by the FCC, and the general lack of transparency, efficiency, and accountability at the agency. I hope today’s 

hearing will provide us with an opportunity to discuss in more detail the Commission’s policies, decisions, and processes. And I 

thank the gentlelady for yielding, and I yield back. 

Mrs. BLACKBURN. Yield back my time. 

Mr. WALDEN. The gentlelady yields back. The Chair recognizes 

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. Thank you, Mr. Chairman, and thank you to 

Chairman Wheeler and Commissioner Pai for coming back here 

today. I know it has been a busy few months since you last testified 

7 

before this Subcommittee, and I appreciate your willingness to 

come and give us an update. 

I am particularly grateful for this opportunity to hear from 

Chairman Wheeler about how he is addressing the priorities of the 

Democratic members of the subcommittee, many of which are 

shared by our Republican colleagues. Our members are champions 

for improving universal access to broadband in the many underserved rural areas of our country. They have also been tireless advocates for the rights of residents of our vast tribal lands, and too 

often those living on tribal lands are unfairly left on the wrong side 

of the digital divide. I hope to hear how the FCC can help our efforts to improve deployment to these areas where the economics 

along are not enough. 

Our members have also been devoted to improving public safety 

communications. This is especially meaningful for those of us 

whose districts were impacted by disasters like Hurricane Sandy, 

who believe that everyone should be able to call for help in an 

emergency, and I hope we hear more about what the Commission 

is doing to make our vision into a reality. 

Our members also share Chairman Wheeler’s commitment to 

competition. That is why we led the charge to overhaul the FCC’s 

designated entity program. Under the new rules that the FCC recently adopted, the program encourages robust participation from 

bona fide small businesses, while allowing innovative business 

models more in line with today’s dynamic wireless market. And we 

have also stood with our Ranking Member Eshoo in her battle to 

free up more spectrum for unlicensed use. These airwaves can 

lower barriers to entry, and allow for more vigorous competition. 

And finally I hope to learn more about what the Commission can 

do to support our work to protect consumers. For instance, I know 

several members of the Subcommittee have been focused on the 

FCC’s recent actions to address robocalls. We all agree that more 

needs to be done to crack down on unwanted commercial calls, and 

I hope to hear what the Commission can do to address the issues 

our members have raised. 

I would like to yield 1 minute each of the time—well, I guess a 

minute and a half to Mr. Doyle, and then a minute and a half to 

Ms. Matsui. 

Mr. DOYLE. Thank you very much, Mr. Pallone, for yielding. 

Thank you, Mr. Chairman, for holding this hearing, and to Commissioner Wheeler and Commissioner Pai, thank you both for being 

here today. 

Mr. Chairman, I would like to recognize the accomplishments of 

the Commission, and of this Chairman. Since Tom Wheeler took 

over as Chairman, the FCC has done much to advance our nation’s 

telecommunications agenda. From establishing the FCC’s open 

Internet order, to keeping the incentive action on track, updating 

the Lifeline Program for the Internet age, and meting out steep 

fines to telecommunication companies that abuse consumers. 

I also want to comment the Chairman for advancing a pro-competitive agenda, both in wire line and wireless service. The Commission’s upcoming vote on tech transitions, its action on special 

access, and the establishment of the spectrum reserve in the incentive auction are all important steps towards preserving and proVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
8 

moting competition. Mr. Chairman, keep up the good work, thank 

you. And I will yield to our colleague, Ms. Matsui. 

Ms. MATSUI. Thank you very much for yielding to me. Welcome 

back, Chairman Wheeler and Commissioner Pai. It is great to see 

you again. I know you have a busy agenda, and I want to briefly 

highlight two priorities that I know we are all interested in. 

The first is making more spectrum available. Spectrum is our nation’s invisible infrastructure of the 21st century. It is critical to 

keep our wireless economy growing. We need to talk about how to 

put more spectrum into the pipeline so we can continue to meet the 

demand. Congressman Guthrie and I have a bipartisan bill to create new incentives for Federal users. We need to continue to explore these solutions. 

The second is making broadband access more affordable. Millions 

of Americans are still on the wrong side of the digital divide. The 

Lifeline Program can, and should, help these Americans get, and 

stay, connected. I know the FCC has started work on these very 

important reforms, but we need to finish the job. 

I look forward to working with the whole Commission as we talk 

about these matters, and hopefully make progress on this. And I 

yield back the balance of my time. Thank you. 

Mr. WALDEN. The gentlelady yields back, the gentleman yields 

back. And I think all time has now expired. So now we will go to 

our two distinguished witnesses, the Chairman of the Federal Communications Commission, Mr. Wheeler. We are delighted to have 

you back. Apparently we are really delighted, because we have you 

a lot, and that is a good thing. And so we welcome you and Commissioner Pai, but Mr. Wheeler, why don’t you go ahead and lead 

off? Yes, it is a modern technology thing. 

STATEMENTS OF THE HONORABLE TOM WHEELER, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION; AND THE 

HONORABLE AJIT PAI, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION. 

STATEMENT OF TOM WHEELER 

Mr. WHEELER. I am tempted to make some comment about being 

national champion of appearances before, but I wouldn’t want—— 

Mr. WALDEN. We can arrange that. 

Mr. WHEELER. I wouldn’t want to go down that route. But in the 

10 weeks—in all seriousness, in the 10 weeks since I was last before this Committee, there has been a lot happening, and I look forward to discussing it with you today. We have made significant 

progress to begin the incentive auction on March 29, 8 months from 

tomorrow, so there is a lot of pressure on here. We have continued 

to grapple with the tech transitions issues that were raised by the 

movement from analog to IP networks. And we have approved one 

merger, with conditions. Another was withdrawn, and a new one 

was added. And then, of course, on top of that, the Appeals Court 

denied the request for a stay for the open Internet rules. 

But one issue which, frankly, caught me by surprise was that 

which was raised by a letter signed by every member of this subcommittee having to do with local number portability, and I wanted 

to report directly to you on that. Our rules require that local numVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
9 

ber portability be ubiquitous, but it looks as though the manner in 

which the industry has set up the system does not fulfill that requirement, and I appreciate this committee bringing this to our attention. Implementation of the rule apparently requires that a mobile carrier have a presence in the home market of the ported 

phone number before the transition can occur. And this is something, of course, that is not possible for smaller regional carriers. 

So the effect of this is that if I were to move from Washington 

to a market served by a carrier not in Washington, and to choose 

that carrier in a competitive choice process, I couldn’t port my 

number. That is contrary to our rules, and I have asked that it be 

fixed. Yesterday I wrote the four major carriers, as well as their 

trade associations, asking that they identify a solution and report 

back within 60 days. I believe the carriers are in the best position 

to fix this, and I look forward to their response. But I do want to 

say to this Committee, after raising this issue in unanimity, that 

if this approach doesn’t fix it with dispatch, we will have to find 

other approaches that do. But I really appreciate the way that this 

Committee called that to our attention, because we had not seen 

that previously. 

On another matter frequently raised by the Committee, I am 

pleased to report that the FCC has completed an exchange of letters with the Telecommunications Agency of Mexico, IFT, to harmonize TV and wireless spectrum on both sides of the border. Mexico is in the midst of its DTV transition, and we, as you know, are 

heading into an incentive auction and relocation of broadcast and 

mobile licenses. Where on the spectrum Mexico places its DTV licenses could, therefore, affect us, and our U.S. licenses, and where 

we place our licenses could affect them. But thanks to the hard 

work of the International Bureau and the Spectrum Auction Task 

Force, and the good faith negotiations of the Mexican IFT, this 

major hurdle has been vaulted. And I want to especially thank my 

counterpart in Mexico, Chairman Contreras Saldivar, and his Commissioners, for their leadership on this matter. To the North, we 

have been making similarly productive progress with our friends 

the Canadians. I believe that once we have a decision next week 

on incentive auction procedures that we will be able to conclude 

that coordination as well. 

And finally, we have had frequent discussions with this Committee about the open Internet rule. Now that the D.C. Circuit has 

put it on an expedited track for judicial review, we are only 6 

months or so away from that ruling, which I know we all have been 

waiting for. So thank you, Mr. Chairman, Ranking Member. I look 

forward to discussing these, and any other issues you may want to 

raise. 

[The prepared statement of Mr. Wheeler follows:] 

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Mr. WALDEN. Thank you, Chairman, appreciate the update. We 

will now go to Commission Pai. We are delighted to have you before the subcommittee again, and please go ahead with your testimony. 

STATEMENT OF AJIT PAI 

Mr. PAI. Thank you, Mr. Chairman. Chairman Walden, Ranking 

Member Eshoo, members of the subcommittee, thank you for inviting me to testify. This hearing comes at a critical time. The FCC 

is making judgments that will shape the communications landscape 

for years to come. I will start with the broadcast incentive auction. 

The FCC is empowered to conduct this auction because of your bipartisan efforts. It is therefore disappointing that this proceeding 

has been run in a partisan manner. Time and again Commissioner 

Mike O’Rielly and I have offered common sense ideas for improving 

auction rules and procedures. Often, we receive no response at all. 

When we do receive a response, it is almost always no. 

Fortunately, it isn’t too late to change course. Broadcasters, wireless carriers, and unlicensed advocates all agree that the Commission’s current band plan is seriously flawed. I stand ready to work 

with these stakeholders, and my fellow Commissioners, to do what 

Congress did when it passed the landmark incentive auction legislation: compromise to find a consensus solution. 

Here specifically is what we should focus on. The proposed band 

plan allows for too much variability, and would put too many 

broadcast stations in the wireless portion of the 600 megahertz 

band. This will both impair spectrum that will be sold in the forward auction, and cause interference between broadcast and wireless services. In my view, the Commission should try to minimize 

band plan variability. If broadcast stations must be placed in the 

wireless portion of the band, they should go in the uplink spectrum, not the downlink, or the duplex gap. And, in order to reach 

a compromise, we also need to make more information public. 

Right now, stakeholders and Commissioners alike are essentially 

being asked to take on faith that, unless we adopt every aspect of 

the Commission’s proposals, the incentive auction will end in an 

apocalyptic failure. But I prefer the Reagan approach: trust, but 

verify. 

Next, I would like to discuss the FCC’s Designated Entity, or DE, 

Program, which has been plagued with abuse. Even though the 

program is supposed to help small businesses, large corporations 

routinely try to game the system. And that is why I was disappointed when the FCC recently voted to make it easier for big 

companies to profit from the program. We were promised FCC action to close loopholes that could be exploited by slick lawyers. Instead, the Commission re-opened loopholes that it had closed on a 

bipartisan basis years ago, loopholes through which a minimally 

competent attorney could drive a truck. Specifically, the FCC paved 

the way for DEs to obtain a 35 percent discount on auctioned spectrum, and then turn around and immediately lease 100 percent of 

it to a large incumbent carrier. 

Now, at the time we were told that opening up new loopholes in 

our DE rules was an ‘‘attack on economic inequality’’, but this assertion is baffling. So let us be clear, those who will profit from 

19 

these new DE loopholes are speculators who are already firmly 

ensconced in the famed one percent. Case in point, under the new 

rules Donald Trump would be allowed to own most of a DE, get a 

taxpayer funded discount on spectrum, and then lease all of that 

spectrum to AT&T or Verizon. So, during the Commission’s deliberations, I made simple proposals to prevent this kind of abuse of 

the DE Program. For example, I proposed that anyone making over 

$55 million a year should be prohibited from owning a DE and getting taxpayer funded benefits. Unfortunately, the majority rejected 

this, and other common sense reforms. 

Shifting gears, when it comes to broadband, as Congressman 

Welch pointed out, too many rural areas are being left behind. Specifically, we are failing areas served by small telecommunications 

carriers. That is because of a quirk of regulatory history. Our rules 

governing these carriers give universal service support only to companies that offer telephone service, not standalone broadband service. That is why I put forward earlier this month a specific plan 

for correcting this historical accident. My plan is based on the principles set forth in a May letter by 115 members of the House of 

Representatives, led by Congressman Kevin Cramer. This group 

urged the FCC to adopt an immediate, targeted solution to the 

standalone broadband problem, and to implement a much simpler 

and straightforward plan for rate of return carriers than was 

adopted for price-cap carriers. 

I humbly submit that is exactly what my plan does. It implements a single page of rule changes to existing universal service 

regulations to solve the standalone broadband problem. These simple amendments would let rural consumers choose broadband as a 

standalone service. It would give carriers the assurance they need 

to increase broadband deployment. And, critically, they would do 

all of this within the existing budget. 

Chairman Walden, Ranking Member Eshoo, members of the subcommittee, thank you once again for inviting me to testify. I look 

forward to answering your questions, and continuing to work with 

you, and your staff, in the time to come. 

[The prepared statement of Mr. Pai follows:] 

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Mr. WALDEN. Thank you, Commissioner Pai. We appreciate your 

testimony as well. 

Chairman Wheeler, as you know, LPTV and translators play an 

important role in providing important information and programming to consumers and businesses, and especially when it comes 

to the translators serving difficult to reach terrain and rural communities. What do you plan to do to minimize the impacts of repacking on LPTV and translators to help ensure that their important programming continues to reach viewers? 

Mr. WHEELER. Thank you, Mr. Chairman, and we share your interest in making sure that this voice continues. As you know, the 

spectrum legislation does not create a re-packing role, a role in repacking, for translators. So the question becomes, what do you do 

about it? So here is what we are going to do. One, there are channels—we are going to help them find channels, if they get displaced 

as a part of the auction. 

Mr. WALDEN. OK. 

Mr. WHEELER. One of the things that is the reality of an auction 

is you don’t really know where the displacement is going to happen, because you don’t know the outcome of the auction. So step 

one is we will work through that. Step two is that we are going 

to begin a rulemaking that will allow for channel sharing by LPTV 

stations. Just as we are counting on channel sharing—— 

Mr. WALDEN. Right. 

Mr. WHEELER [continuing]. In the broadcast auction. And that 

kind of technology should provide the similar kind of solution. And 

thirdly, the rule is constructed in such a way that they don’t have 

to vacate until the wireless carrier, in fact, is ready to turn off service. So there is a significant buffer of time in there. But we believe 

that, as we help them find new channels, and as we have a new 

rule that allows for channel sharing, that that will be able to mitigate the kind of impact that you are concerned about. 

Mr. WALDEN. And aren’t you going to also give them—like in the 

DTV transition there was an opportunity to apply, they got some 

preference to move. 

Mr. WHEELER. I am—— 

Mr. WALDEN. In the application process. I will get back to you. 

Mr. WHEELER. Let me get back to you on—— 

Mr. WALDEN. It was the displacement relief. 

Mr. WHEELER. Yes. We are laying out a whole process that will 

help them through this process in finding those kind of new channels. 

Mr. WALDEN. All right. Thank you. I want to talk about some of 

the financial issues, because you have spoken about them eloquently before the Appropriations Committee, and publicly, and I 

know that you addressed field agents during a recent agenda meeting regarding the issue of closing the field offices. And you seemed 

to take special point that your budget comes from Congress and all, 

which is true. 

And I want to ask Commissioner Pai, is it true that the Enforcement Bureau’s front office management staff has more than doubled size since 2008? 

Mr. PAI. That is my understanding, yes. 

Mr. WALDEN. Is that true, Mr. Wheeler? 

29 

Mr. WHEELER. No, sir. 

Mr. WALDEN. It is not? 

Mr. WHEELER. No, sir. The enforcement staff is now—I can give 

you the exact statistic—20 percent smaller than it was under 

Chairman Martin, and that, since I have come into office, we have 

reduced the front office staff by 14 percent. 

Mr. WALDEN. OK. Yes, we want to follow up, because obviously 

there is a disagreement among you two on this—— 

Mr. WHEELER. Yes. 

Mr. WALDEN [continuing]. Matter. Isn’t it also a fact that the Enforcement Bureau has more vehicles than field agents? 

Mr. WHEELER. Yes, sir. 

Mr. WALDEN. All right. 

Mr. WHEELER. I went to Anchorage—I have been trying to 

visit—— 

Mr. WALDEN. Yes. 

Mr. WHEELER [continuing]. The offices. We have a policy that 

says you have to have two employees in each vehicle—one that is 

driving, and one that is working the equipment. It is like texting 

and driving. We have two people in the Anchorage office, and we 

have two vehicles. 

Mr. WALDEN. Is that—but we are talking—— 

Mr. WHEELER. That—— 

Mr. WALDEN [continuing]. Across the—it is more than just Anchorage—— 

Mr. WHEELER. This was one of the problems that we inherited 

when we walked into the door, that there had been this purchasing. So what we’re trying to do now is reposition those vehicles—— 

Mr. WALDEN. Right. 

Mr. WHEELER [continuing]. So they will be available for the 

strike teams when they come in. 

Mr. WALDEN. And what about—we keep hearing stories that you 

all have cars and drivers, and all that sort of thing at the Commission. Is that true? Actually, I don’t know about you all, I don’t have 

a car and driver, other than my little Prius out there. But is that 

true? Don’t you—— 

Mr. PAI. Mr. Chairman, it is true—— 

Mr. WALDEN. Yes? 

Mr. PAI [continuing]. Although I do try to walk whenever I can. 

Mr. WALDEN. It shows. Yes. 

Mr. WHEELER. And I have got a—— 

Mr. WALDEN. All right. 

Mr. WHEELER [continuing]. Fitbit to try to—— 

Mr. WALDEN. Yes. All right. My time has run out. 

Mr. PAI. It is not my walking, but—— 

Mr. WALDEN. Turn to the gentlelady from—— 

Ms. ESHOO. Thank you. I want to start with Chairman Wheeler. 

I just want to ask my questions, and then you can respond to them. 

And I have—— 

Mr. WHEELER. Yes, ma’am. 

Ms. ESHOO [continuing]. One for Commissioner Pai. You said in 

your opening statement that the upcoming incentive auction has 

‘‘more moving parts than a Swiss watch’’, and I agree. And one exVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
30 

ample is the reserve trigger, which I think is really very, very important. And it is critical that we get it right, because we want to 

ensure that competitive providers have real access to spectrum. So 

can you commit to addressing the concerns of the competitive carriers prior to the start of the auction? So that is my first question. 

My second question is, some of the medical community have suggested that the FCC delay implementation or consideration of its 

technical rules for the use of channel 37 by unlicensed TV white 

space devices. Now, delay is, I think, highly concerning, because 

this is one of the three channels that tech companies say are, at 

a minimum, needed in this band to stimulate and sustain investment in enhanced Wi-Fi. So do you think that your proposal already adequately protects patients, and will prevent harmful interference to hospitals? I could ask a lot of questions, but I think that 

those two are really important. 

And also this year, Mr. Chairman, there have been eight broadcast television blackouts involving almost 30 U.S. cities. Can you 

tell us when the FCC will complete its review of the good faith 

rules, and when we can expect new rules to be put in place to better protect consumers? So those are my questions to you, and a 

quick one to Commissioner Pai. 

I read recently, and he is not here, but—something that Commissioner O’Reilly said, and it is a quote of his, but it does deal with 

the FCC’s governing principles. And he stated that one of the 

FCC’s governing principles should be that the Internet is not a necessity in the everyday lives of Americans. And I know that he 

brought up that it is not even close to being a human right. I don’t 

think that is the jurisdiction of this committee, human rights, but 

it is disturbing to me that we would move away from that, relative 

to a principle, and I wanted to know if you agree or disagree, you 

want to add or subtract from it. So I will go to Chairman Wheeler 

first, and then to Commissioner Pai. 

Mr. WHEELER. Thank you, Ms. Eshoo. Let me see if I can hit 

those one, two, three. 

What we have tried to do is to make sure that there is reserve 

spectrum available. It has never before been done. As Mr. Welch 

and others have pointed out, it is an important component of delivering service to rural areas. The question then becomes, after you 

do that, do you want to create rules that allow people to withdraw 

from the auction early, and not have to pay as much as if an auction had been ongoing? And that is what is being requested. That 

is not what is currently in our proposal. We don’t think that there 

should be a quick out, I have got what I want, let me stop the bidding right now for reserve spectrum. 

Secondly, we have changed, from 180 meters to 380 meters, the 

distance that an unlicensed device would be allowed close to these 

facilities that are using channel 37. That number was arrived at 

as a result of some studies that were done by the medical telemetry 

folks, and so that is why that number was increased. 

There is a failsafe in here, however, and that is, as you know, 

that all unlicensed spectrum has to go through a coordination process that involves a database, where you—— 

Ms. ESHOO. Yes. 

31 

Mr. WHEELER [continuing]. Get permission to use it, if you go 

by—knowing that there is nobody there. If that 380 meters is insufficient in a particular area because of some rare equipment they 

have got that database can be adjusted to say, ‘‘no, you can’t do it 

here.’’ So I think that what we have done, in regard to medical 

equipment, is two-fold. One, to expand the absolute blackout area, 

and two, then to have in there a flexible system that will reflect 

what reality is and shut down if there is a situation that would 

cause interference. 

In regard to your third question, regarding TV blackouts and 

good faith negotiations, we intend to have an NPRM out by September the 4th, as this Committee has told us to do, on that topic, 

and to be discussing exactly what are the full set of issues that 

should be involved in good faith. 

Ms. ESHOO. Yes. 

Mr. PAI. Thank you, Congresswoman, for the question. I embrace 

the FCC’s charge as given by Congress. In fact, the first charge in 

the Communications Act is to make available, so far as possible, to 

all the people in the United States rapid, efficient nationwide communication services. And in the digital age that increasingly, as 

you know, means broadband. And I believe that not only because 

I am a son of rural America, whose parents currently live on the 

opposite side of the digital divide, but I also have seen it as a Commissioner across this country. 

A few weeks ago I was in Dillard, Nebraska, population 287, 

where I visited C and C Processing, a husband and wife owned 

meat processing plant that, 20 years ago, was literally a two-person 

operation, and now, thanks to a broadband connection, they export 

at retail to every state in the country, and around the world. They 

have exported wholesale to Whole Foods and—— 

Ms. ESHOO. So you are saying you disagree with—— 

Mr. PAI. Well, what I am saying is that I embrace different policies to make sure that broadband deployment is as wide and as 

deep as possible. I will leave the semantics for others to debate. I 

am focused on our job, as enmeshed in Section—— 

Mr. WALDEN. The gentlewoman’s time—— 

Ms. ESHOO. Thank you very much. 

Mr. WALDEN. The gentlewoman’s—— 

Ms. ESHOO. Thank you—— 

Mr. WALDEN [continuing]. Time has expired. 

Ms. ESHOO [continuing]. Mr. Chairman. 

Mr. WALDEN. The Chair now recognizes the gentlelady from Tennessee, Mrs. Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. OK, Commissioner 

Wheeler, I want to thank you for your letter dealing with the spectrum auction in small businesses. We got it yesterday, and I may 

come back to you with a couple of more questions on that. You 

know my concern, and I appreciate your responses. All right. I 

think we can all agree that we are for a successful spectrum auction. Everybody agree for that? 

Mr. WHEELER. Yes. 

Mrs. BLACKBURN. OK. I am so happy we are all on the same 

page. Make your day, right? Let us talk about the steps. And, Commissioner, you were just laying out some of the steps you thought 

32 

were necessary. Let us back it up a little bit. And I think when you 

look at the CTIA report that came out—I want to submit that for 

the record, if no one has put that into the record. 

Mr. WALDEN. Without objection. 

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

Mrs. BLACKBURN. OK. I think that the prelude to a successful 

auction, and to the steps that you just articulated, is to know how 

much spectrum that you have. And we know Federal agencies are 

squatting on a lot of spectrum, and that they are not utilizing it. 

They are sitting on it just in case they think they might want to 

do something with it. And when you look at 13 years between the 

auction and the deployment, that is a lot of time. And you look at 

the increased usage that we are expecting, I think that it is dangerous to, first of all, not inventory and know exactly what you 

have got. So, Mr. Chairman, to you, have you inventoried the Federal agencies, and do you know how much spectrum they are squatting on, and what you can recoup? 

Mr. WHEELER. First off, Mrs. Blackburn, I would like to identify 

with exactly what you are talking about. 

Mrs. BLACKBURN. OK. 

Mr. WHEELER. We share the same goals. 

Mrs. BLACKBURN. I am so excited that we agree on something. 

Mr. WHEELER. Well, this is—we could be—— 

Mrs. BLACKBURN. This is a good day. 

Mr. WHEELER [continuing]. Violent agreement as well. 

Mrs. BLACKBURN. Good. 

Mr. WHEELER. You know, I—— 

Mrs. BLACKBURN. Good. 

Mr. WHEELER. When I was President of CTIA, I happened to be 

the guy that negotiated the first deal with the government to repurpose Defense Department spectrum. Here is what I found, as a 

way of answering your question about squatting. The Corps of Engineers, for instance, said they were fully utilizing a piece of spectrum because once a month it took a reading on a dam level. 

Mrs. BLACKBURN. Right. 

Mr. WHEELER. I don’t think that is fully utilizing. So the question we have to work through is how do you encourage Federal 

agencies, and all users, to think in terms of what is full application? So the answer to your question is we know who uses what 

spectrum. The specific use inside that spectrum, however—— 

Mrs. BLACKBURN. OK. 

Mr. WHEELER [continuing]. Is something that the licensee controls. 

Mrs. BLACKBURN. OK. I don’t want to run out of time. Now, if 

you know who has how much spectrum, have you put this into one 

report? Mr. Pai, Commissioner Pai, have you seen a report that 

says this is how much that is out there? Could you quantify a number—— 

Mr. PAI. I have not seen a particular report about how Federal 

users are actually using the spectrum that they have, and I do 

agree—— 

Mrs. BLACKBURN. And how much they have? 

Mr. PAI. And it would be very helpful to have that. 

33 

Mrs. BLACKBURN. I think it would too, before we get too far down 

this road. What I would like to ask you to do is quantify this. And 

you and I know, all of us know, the way you can re-pack this, and 

tighten it up, you can better utilize the spectrum, but these Federal 

agencies—yes, I have got to tell you, we have just done an IG report on wasteful spending, and not following what the IG has 

asked them to do, looking at 4 years of these IG reports. If you 

don’t force the issue, they are not going to take the action. And 

spectrum is a very valuable commodity right now, and we cannot 

allow Federal agencies, through laziness, or lack of creativity, or 

lack of innovation, to squat on this spectrum. 

So, before we get too far afield with the 350 megahertz auction 

and further, I would like for you to come back to us and say, this 

is what each of these different departments has, and this is what 

their utilization is, and this is how we can pull that back and redeploy this into the marketplace and auction it. Because if we need 

a Federal override for something, just like with the AM band, come 

back and do something like that, but don’t let them squat on this 

spectrum. 

Mr. Pai, before my time has run out. I will come back for the second round. Yield—— 

Mr. WALDEN. All right, the gentlelady’s time has expired. We will 

now go to the gentleman from New Jersey, Mr. Pallone. 

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

have three questions in three different areas I want to try to get 

in, so I am going to ask you to respond fairly quickly, if you can. 

You committed that the FCC would complete a proceeding by the 

end of this year to make our wireless networks more resilient—this 

deals with communications and emergencies—and I wanted to 

thank you again for that commitment. Last week former Commissioner Adelstein promised that the tower industry would work 

closely with your staff to install new rules for network resiliency. 

We are approaching the heart of hurricane season, and the third 

anniversary of Sandy is almost upon us, so what is the status of 

the FCC’s proceeding on network resiliency? 

Mr. WHEELER. So we are working with the industry on that, Mr. 

Pallone. It is essential that a tower be able to stand up. I think 

we probably also have to address the backup power issue because 

if you don’t—if the tower is standing, but there is no juice to it, so 

it is not worth anything, so these all fit together into a total package. And I would be happy to do a more detailed response on that, 

if you would like. 

Mr. PALLONE. OK. If you do have something you could update us 

with now, through the Chairman, I would like to maybe have a 

written response, if we could, without objection. 

Mr. WALDEN. All right. 

Mr. PALLONE. Thank you. Then the second question is, with regard to designated entities, in my opening statement I mentioned 

I support your recent decision to modify the FCC’s designated entity rules, and since the rules have passed, however, I have heard 

criticism that just as the FCC closed some loopholes, it opened others. So how do you respond to those critics that question these decisions? 

34 

Mr. WHEELER. I think that we have tightened up the rules substantially, and would be happy to discuss the specific ways in 

which we have done that. I have got to be real careful at how I talk 

about this, because it is a pending proceeding, but if you look at 

what is currently on the record with regard to the DEs and their 

relationship with Dish in the AWS–3 auction, we used a totality of 

circumstances test that had never been applied before to say, we 

don’t think that that is a good idea, at a staff level. That is coming 

to the Commission, so, again, I have to rule on that, so I won’t go 

any further. 

The fact of the matter is that we then took that totality of the 

circumstances and put it into the DE rules in this re-write that we 

just did. So I think that we have shown that there is a total picture 

you have to look at, one, and two, that we have whatever it takes 

to step up and blow the whistle and say, ‘‘that is not right.’’ 

Mr. PALLONE. OK. With regard to the incentive auction and consumer outreach, as we head towards the incentive auction in the 

early part of next year, I become concerned about whether consumers will be prepared for the transition. In many ways, this education effort will be even more difficult than the one we faced with 

the digital TV transition, because we don’t have funding for consumer outreach this time, and we will have to deal with a flash 

cut. 

So I raised this issue with the National Association of Broadcasters, and I can say that they committed to working with us to 

start planning on how best to reach out to consumers. My question 

is, can you commit to working with us and the broadcasters to devise a comprehensive plan to ensure that consumers will know 

what they need to do to continue to watch over the air TV? 

Mr. WHEELER. Yes, sir. 

Mr. PALLONE. OK. You have actually answered all this in 4 minutes, so I will yield back the balance of my time. 

Mr. WALDEN. Well done. 

The Chairman now recognizes the gentleman from Texas, Mr. 

Barton, up next. 

Mr. BARTON. Thank you, Mr. Chairman, and thank you and the 

Ranking Member for this hearing. Thank our two Commissioners, 

the Chairman, Commissioner Pai, for being here. 

I am one of the advocates for low power television, and, as we 

all know, they don’t have any real standing in this repackaging of 

the spectrum, if the mainline broadcasters give it back. But they 

do have a product. They have provided valuable service to the 

country, and I would like to see them helped in some way, if at all 

possible. So my question to both of you, we will start with the 

Chairman, and then Commissioner Pai, what can be done to ensure 

that we still have low power television once this repackaging is 

complete? 

Mr. WHEELER. Thank you, Mr. Barton, and I would like to associate myself with this position that you have taken. Low power is 

an important voice in the community, and translators as well. I set 

up a special meeting with low power operators out at the NAB last 

year, at their big convention, to make sure that I was hearing from 

them, and we were talking about it. I think that there are multiple 

things that we can do inside the statutory constraint that you refVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
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erenced. One is that we will help them find new channels after the 

moving of the—firstly, we don’t know which low powers are going 

to be affected, because we don’t know what is—— 

Mr. BARTON. Right. 

Mr. WHEELER [continuing]. Going to happen in the auction. We 

don’t know what is going to be available for them to move, so we 

don’t know what is going to happen there. So we all have to kind 

of sit in limbo, and watch for that. But then, even beyond that, we 

are going to begin a rulemaking from which we will allow low 

power and translators to share a channel, just like we are allowing 

licensees—broadcast licensees, full power licensees, to share a 

channel. That will take advantage of the benefits of digital, and 

create another path. 

Mr. BARTON. So you do see that there will still be a role for low 

power television? 

Mr. WHEELER. Yes, sir. 

Mr. BARTON. OK. Mr. Pai? 

Mr. PAI. Congressman, I share your assessment, and the Chairman’s assessment, that low power television provides valuable 

service in Texas, Utah, Nebraska, all across this country. And that 

is why I flagged, almost 3 years ago, the importance of making 

sure that, within the statutory constraints, the FCC does what it 

can, in the context of the incentive auction, especially in markets 

where we don’t need spectrum, to help them stay in business. 

My concern is, however, that certain of the policy cuts that we 

are on the brink of making might end up impairing LPTV, and the 

vacant channel proceeding is one example of that, where the FCC 

has said, OK, if there is a vacant channel, or two vacant channels 

available after the incentive auction, then we will reserve those 

from unlicensed uses. And, not to denigrate, obviously, the importance of unlicensed, but nonetheless, this is the TV band that we 

are talking about, and if LPTV stations don’t have a place to go, 

it seems to me that we should do what we can to prioritize their 

staying in business. 

Mr. BARTON. Thank you. Thank the both of you, and with that, 

Mr. Chairman, I yield back. 

Mr. WALDEN. The gentleman yields back. The Chair now recognizes the gentlelady from California, Ms. Matsui, for 5 minutes. 

Ms. MATSUI. Thank you, Mr. Chairman. 

Mr. DOYLE. Mr. Chairman—— 

Ms. ESHOO. Mr. Doyle. 

Mr. WALDEN. I am just going by the list that your staff—— 

Mr. DOYLE. I was here well before the gavel—— 

Mr. WALDEN. Well—— 

Mr. BARTON. I will give my 2 minutes to Mr. Doyle. I had a 

minute 55. 

Mr. WALDEN. I am just going by the list your staff provided, 

so—— 

Ms. MATSUI. I don’t want to get in the middle of this. 

Mr. WALDEN. We will go with whatever you want. 

Mr. DOYLE. You don’t go in order? 

Mr. BARTON. If Mr. Doyle will vote for my bill—— 

Mr. DOYLE. I will yield to Ms.—— 

36 

Mr. BARTON [continuing]. To repeal the ban on crude oil exports—— 

Mr. DOYLE. I am going to yield to Ms. Matsui. Go ahead. 

Mr. WALDEN. I am just going by your list, so go ahead, Ms. Matsui. 

Ms. MATSUI. Thank you very much, and Mr. Doyle, thank you 

very much too. 

Chairman Wheeler, after next year’s incentive auction the FCC 

would have implemented the last auction Congress identified in the 

2012 Spectrum Act, yet consumer demand for wireless services that 

rely on spectrum continues to explode, and we know it takes a long 

time to plan for any new spectrum auction. Mr. Chairman, do you 

agree that we need to create a spectrum pipeline for the next decade? 

Mr. WHEELER. Yes, ma’am. 

Ms. MATSUI. OK. Now, what do you think are the first steps for 

the policymakers to consider? 

Mr. WHEELER. Well, I think that you and Mr. Guthrie have 

pointed a way towards that by providing some Congressional oversight and encouragement in the process. As Mrs. Blackburn indicated, clearly the FCC has a role to say, ‘‘OK, where are the current allocations?’’ But it then goes to the Executive Branch to determine the allocation within—— 

Ms. MATSUI. Yes. 

Mr. WHEELER [continuing]. Specific executive agencies, and to 

answer those questions. I would look forward to working with—and 

we do have a good working relationship with NTIA and—to try and 

address these issues. I think that this is something that both NTIA 

and the FCC can work together on. 

But I also need to be really candid and say that the kind of leadership that you and Mr. Guthrie are showing, that this Committee 

has shown, in keeping the spotlight on, and keeping the pressure 

on, is essential to paying attention to things downtown. 

Ms. MATSUI. Well, we intend to keep the spotlight on, so thank 

you. Congress tasked the FCC with balancing many priorities in 

the upcoming incentive auction, unleashing new spectrum for licensed mobile broadband, protecting consumer access to local 

broadcasting, and creating new opportunities for unlicensed spectrum use. If done right, the FCC can ensure that the incentive auction clears a significant amount of beachfront spectrum needed to 

fuel our wireless economy, while protecting over the air broadcasting, and preserving the chance for unlicensed innovation. 

I know a lot of concerns have been raised, and that the FCC is 

scheduled to make some key decisions at your August meeting. 

Chairman Wheeler, what is the FCC doing to make sure stakeholders can feel confident in the incentive auction? 

Mr. WHEELER. Well, thank you, Congresswoman. The challenge 

of the incentive auction is like a very complex crossword puzzle, except for the fact that there is no picture on the front of the box, 

OK? 

Ms. MATSUI. Yes. 

Mr. WHEELER. And so what we have been trying to do is to make 

sure that, of all the parties that are interested, that they can walk 

away with a solution. It may not be what they have come in and 

37 

asked for. And as a person who used to also go in and ask the FCC 

to do things my way on spectrum auctions, I know it doesn’t always 

have to be that way, but you need to make sure that, for instance, 

as Ms. Eshoo and I discussed for medical devices, that you have an 

answer there, that you have an answer for wireless mics, that you 

have an answer for unlicensed spectrum. And all of these have to 

balance out. And I believe that the item that we are bringing forward contains that kind of balance. Would I like to tweak it here 

or tweak it there, certainly, but you push here, and something—— 

Ms. MATSUI. Yes. 

Mr. WHEELER [continuing]. Busts over here. And so I think that 

the spectrum auction team, headed by Gary Epstein and Howard 

Symons, have done an excellent job in wading through all of this. 

Ms. MATSUI. OK. I am going to ask you too, are we on track to 

see the incentive auction successfully completed next year in a way 

that preserves the goals that Congress intended? 

Mr. WHEELER. Yes, ma’am. 

Ms. MATSUI. OK. I am a longtime advocate for modernization of 

the Lifeline Program. Broadband is a necessity, whether it is applying for a job, growing a small business, or parents helping their 

kids with homework, and I applaud the FCC for starting a rulemaking earlier this year to bring Lifeline into the 21st century. Mr. 

Chairman, what are the next steps for Lifeline reform? 

Mr. WHEELER. I hope that we will have a rulemaking to follow 

up on the Notice of Proposed Rulemaking as soon as comments are 

closed, and we can sift through them and move forward. Let me address an issue that Commissioner Pai was dealing with a moment 

ago. Broadband is the information pathway—— 

Ms. MATSUI. Yes. 

Mr. WHEELER [continuing]. Of the 21st century, and to deny access to that is to deny access to the 21st century. 

Ms. MATSUI. Right. 

Mr. WHEELER. I think we need to have policies that make sure 

that everyone in America has access to that essential pathway of 

the 21st century. 

Ms. MATSUI. I agree with you. Thank you very much, and I yield 

back. 

Mr. WALDEN. The gentlelady’s time has expired, and yields back. 

The Chair now recognizes the Vice-Chair of the subcommittee, the 

gentleman from Ohio, Mr. Latta. 

Mr. LATTA. Thank you very much, Mr. Chairman, and again, 

gentlemen, thanks for being here. Commissioner Pai, if I could 

start my questions with you. We all know that consumers are offered an array of video choices today, and new Internet delivered 

options are also complimented by the growing use of consumer 

apps to watch traditional TV on mobile devices. As a result, it 

seems that more online entertainment options, such as Netflix, and 

other over the top providers have transformed the marketplace. I 

am going to ask these couple questions. With that said, Commissioner, what is your assessment of the video marketplace, and can 

you remember a time when consumers have had so much choice in 

that market? 

Mr. PAI. Congressman, thanks for the question. I can’t think of 

a time when consumers of video services have ever had it better. 

38 

Having grown up in the era of three broadcast stations, and no satellite, and no cable, I can tell you that now, when I can power up 

Crackle on my laptop wherever I want, on whatever device I want, 

it is really a benefit. And I think that is part of the reason why 

I came out a couple weeks ago, and said that I don’t think that the 

FCC needs to regulate so-called over the top video. And that is consistent with what the Digital Media Association, which represents 

Apple, Amazon, Pandora, Sony, YouTube, and others, said just last 

week. This is not a marketplace that has failed. It is thriving, and 

let us leave well enough alone. 

Mr. LATTA. So, in your opinion, that is what is driving innovation? 

Mr. PAI. Absolutely, and that is one of the great things about the 

broadband revolution, that all these business models are thriving 

because everyone can deliver these services over the Internet. 

Mr. LATTA. OK. Let me follow up with this. Should the government be out there picking winners and losers in this space, or trying to impose new technology mandates to potentially so that—slow 

that innovation and limit that choice? 

Mr. PAI. Absolutely not. I think the worst thing the government 

could do would be to regulate either the entire marketplace, or pick 

out particular business models for disparate regulatory treatment. 

That will simply serve to distort the marketplace, and we will 

never know which business model consumers really would prefer. 

Mr. LATTA. Thank you. Turning to you, Mr. Chairman, if I may, 

my district is Northwest/West Central Ohio, and you are kind of 

familiar with it in your days back in Ohio. I have a lot of general 

community hospitals, and other larger hospital associations in my 

district, and a number of these hospitals have expressed a very serious concern to the Commission regarding the technical rules for 

the use of the channel 37 by unlicensed TV white spaces devices. 

It has already been decided that channel 37 will be available for 

use by unlicensed devices in part of the incentive auction proceedings, however, technical rules that protect wireless medical telemetry service, WMTS, systems and also allow for the safe use of 

the TV white spaces devices that have not been mutually agreed 

upon. Let me ask you, do you agree that because wireless devices 

could cause harmful interference to hospital operations, and jeopardize patient safety, it is vitally important that all parties have 

the opportunity to work cooperatively to reach a consensus industry agreement on this issue before the Commission considers it in 

the August open meeting? 

Mr. WHEELER. So I agree that there is a technological challenge 

that we have to make sure that we deal with, and I believe that 

we have a belt and suspenders approach to that. The belt is to say 

that 380 meters from such a site is a no-go zone, which is essentially tripling of where we were before in response to what the 

WMTS folks have said, and some of the trials they have run up in 

Minnesota. 

But the suspenders are also that the coordination database, that 

must be used for unlicensed purposes, gets information fed into it 

if there is a problem in Northern Ohio or a particular area, and 

that then becomes a no-fly zone. And so what we have put in place 

39 

is hard rock, and flexibility, that is going to deliver the kind of security that I think that both you and we are looking for. 

Mr. LATTA. But do you think they have enough time to make 

sure they get that information to the Commission before your August meeting? Do you think there is enough time? Because, here 

we are on the 27th of July, or 28th that we are right at that point? 

Mr. WHEELER. So they have just submitted to us additional information from these field tests, and it was based upon that that we 

altered what our proposal is. This is not an issue that hasn’t been 

dealt with since you passed the Spectrum Act. This is something 

that has been going on for multiple years. Their tests were really 

helpful in that regard. That is why we tried to make sure that we 

harmonize with the kinds of things that they discovered in those 

tests, and provide the flexibility to move in and do something if, 

in fact, there is an aberration. 

This kind of goes to Mrs. Blackburn’s point about sharing. This 

is the whole reality about sharing, that we want to create a structure that says that you can deal with the aberrations. And this 

Committee told us in statute to do that, and that was a wise decision on your part, and we are following through on that. 

Mr. LATTA. Well, thank you. Mr. Chairman, if I may, I would like 

to submit for the record a statement from the American Hospital 

Association. 

Mr. WALDEN. Without objection. 

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

Mr. LATTA. Thank you. 

Mr. WALDEN. The Chair now recognizes the gentleman from 

Vermont. Just kidding. Mr. Doyle from—— 

Mr. DOYLE. Boy, that—— 

Mr. WALDEN [continuing]. Pennsylvania. 

Mr. DOYLE. That would have really gone bad. 

Mr. WELCH. Mr. Chairman, if your goal was to get his attention, 

you succeeded. 

Mr. WALDEN. Just wanted to make sure he was awake. Mr. 

Doyle. 

Mr. DOYLE. Thank you, Mr. Chairman. Gentlemen, welcome. 

Commissioner Pai, I was just listening to your opening statement, 

where you were lamenting how you and Commissioner O’Reilly 

have all these wonderful ideas that are met with either no response, or no. And I just want you to know, we on the Democratic 

side, we are feeling your pain. It is called being in the minority. 

Mr. WALDEN. Would the gentleman—— 

Mr. DOYLE. We know that feeling. 

Mr. WALDEN [continuing]. Just for a second. We have been informed by the folks that do the streaming, Mr. Wheeler, if you 

could pull that microphone closer? In the Internet Age, they are not 

able to hear you quite as well, so—— 

Mr. DOYLE. Thank you, Mr.—we feel your pain, I just want you 

to know. Chairman Wheeler, I have questions for you. I know, like 

me, you are a strong advocate for a competitive telecommunications 

marketplace, and you have been a great advocate in moving these 

long stalled issues forward. I have a number of questions and concerns about the special access proceeding. First, I am concerned 

that the window for moving forward on special access reform is 

40 

narrowing, particularly with this latest extension of the comment 

window. Additionally, I have heard that the FCC still hasn’t made 

the data from the special access data request available to the 

stakeholders. With the comment deadline looming, when will the 

stakeholders be able to access this data in order to make fully informed comments for the proceeding? 

Mr. WHEELER. Thank you, Mr. Doyle. I don’t know the specific 

date. We will announce a specific date. I can’t free form it here, but 

obviously there have been multiple challenges with special access 

that start with a collection of data that was thwarted for years, 

and we were finally able to begin collecting that data. Insofar as— 

we will make sure that data is on the record, and on the record 

in a timely manner. And I share your interest in wanting to make 

sure that we have an opportunity to address the special access 

question, but it needs to be fact-based. 

Mr. DOYLE. Yes. I mean, can you give us any idea when you anticipate the Commission taking action on the proceeding? Is it 

going to be in my lifetime? 

Mr. WHEELER. Sir, I hope it is while I am Chairman, and that 

that is a shorter period than your lifetime. 

Mr. DOYLE. Let me ask you another thing. And, like a lot of people on this Committee, and our Ranking Member, Ms. Eshoo, I also 

have concerns about the trigger for the spectrum reserve in the incentive auction. We have all been working hard to ensure that this 

auction will enhance competition for wireless broadband, and that 

consumers will reap the benefits of lower prices and greater innovation. To that end, what is the Commission doing to address the 

concerns that many of us have about the reserve trigger, particularly in regard to the trigger coming into play so late in the auction? 

Mr. WHEELER. Well, let me be sure which trigger you are talking 

about. Are you triggering the assignment round issue? 

Mr. DOYLE. No, the reserve. 

Mr. WHEELER. The reserve? So the question then becomes, ‘‘are 

you going to cut back on the amount of bidding that goes on for 

reserve spectrum?’’ And we have taken the position that you should 

not. That, first of all, the reserve has been created. That in itself 

is a huge step, that there are a lot of people on this Committee, 

and on the Commission, disagree with. 

Then the question becomes, ‘‘do you want the auction to function 

through the whole process, or do you want to truncate it for a 

quicker trigger for this spectrum, while the other spectrum auction 

keeps going?’’ And it seems to me that what that ends up doing is 

reducing participation in the auction. It probably reduces the prices 

people will pay, because it means that, here in the reserve you 

stop, while the bidding keeps going on up here in the unreserved. 

And I think an auction is something that proceeds to a conclusion, 

not an auction that gets terminated to favor one party or another. 

So the establishment of the reserve is a huge point. I think what 

we should not be doing is picking winners and losers inside that 

reserve. 

Mr. DOYLE. Yes. Thank you, Mr. Chairman. I will yield back. 

Mr. WALDEN. The gentleman yields back. The Chair now recognize the gentleman from Illinois, Mr. Shimkus, for 5 minutes. 

41 

Mr. SHIMKUS. Thank you, Mr. Chairman. Welcome. You both 

agree that, to facilitate rural broadband deployment really is going 

to take USF reform, is that correct? Would you—— 

Mr. WHEELER. Yes, sir, we both—— 

Mr. SHIMKUS. And Commissioner Pai? 

Mr. PAI. Yes, sir. 

Mr. SHIMKUS. And, Commissioner Pai, in your opening statement 

you mentioned some principles. Can you re-state those real quickly 

again for me? I caught a couple of them, but I didn’t—— 

Mr. PAI. So with respect to my rural broadband plan, it would 

be a two-fold plan. First and foremost would be targeted changes 

to our universal service rules to allow essentially rate-of-return carriers to get universal service support for the costs that they incur 

for deploying broadband in rural areas. And so currently that support only extends to voice service. I would let them get that support 

if they offered broadband as a standalone service. 

Secondly, creating a voluntary path where rate-of-return carriers 

could, at their option, get into a similar Connect America Fund 

that we have for price cap carriers. And obviously the so-called 

ACAN model in that regard isn’t perfect, but nonetheless, if rate 

of return carriers find it to be preferable, they should be given a 

limited window to be able to do that. 

Mr. SHIMKUS. Thank you. Chairman Wheeler, these are all kind 

of rural questions for rural service, so it is really appealing to the 

constituary representing about a third of the State of Illinois, so it 

is like a lot of the rural areas. So this is on this dropped call issue 

still. I mean, I go to some of my either family-owned phone—— 

Mr. WHEELER. Yes, sir. 

Mr. SHIMKUS [continuing]. Companies, or the co-ops that I still 

have out there, and I think we talked about the last couple hearings—— 

Mr. WHEELER. Yes. 

Mr. SHIMKUS [continuing]. That we have been with, and the 

intermediary carriers called the least cost routers, they—— 

Mr. WHEELER. Right. 

Mr. SHIMKUS [continuing]. Seem to be the problem. Can you tell 

me how we are going to—because you know these companies. They 

get blamed if the call gets dropped. It is an intermediary carrier 

that is doing it, and it causes all sorts of problems. 

Mr. WHEELER. Thank you, Congressman. Yes, and you put your 

finger on—it is the intermediate carrier, and it is the failure on the 

part of the major carriers to police their subcontractors, if you will. 

So we have done several things. First of all, there used to be a 

game that got played where they would give a false ring to pretend 

the call was being completed, when it really wasn’t. We have got 

a rule in place saying that is out of business. 

Secondly is that we have been enforcing this. Within the last few 

weeks we fined Verizon $2 million, and required them to do $3 million of additional improvements to stop this, because in 26 rural 

areas they weren’t paying attention to this, which is the heart of 

the problem. It is this going to what you call the intermediate carriers that they need to be paying attention to. 

And thirdly is that we have a data survey out there right now 

to try and identify exactly what the extent and other causes might 

42 

be so that we can take additional action, if warranted. But yes, sir, 

we understand that the call completion is a serious issue, and we 

want to be all over it. 

Mr. SHIMKUS. Well, that is good, because we are going into the 

August break, and I know they will have—— 

Mr. WHEELER. You are going to hear about it. 

Mr. SHIMKUS. They are going to come visit me again during the 

break, and they are going to ask, and so I am glad I got a chance 

to ask the question, and continue to address this issue. 

Last question, Commissioner Pai, when it comes to the IP transition, and the ability to upgrade technologies, we kind of talked 

about that earlier, do all providers face a regulatory level playing 

field when it comes to making upgrades and provide their customers with the newest technology? 

Mr. PAI. Congressman, I don’t think they do. I think that some 

segments of the industry face no barrier to deciding to deploy next 

generation infrastructure that connects people to digital opportunities. On the other hand, another segment faces antiquated rules 

that essentially require them to maintain the networks of yesterday, the copper-based TDM networks. And obviously every dollar 

they have to spend maintaining those networks is by definition a 

dollar they can’t spend deploying fiber that would allow them to 

compete with others. 

And so that is why I have said that, look, if we want to have 

more broadband competition, let us have a level playing field, 

regulatorily speaking, in which every single provider has the 

strongest possible incentive to deploy fiber to the home to compete 

for that customer’s attention. 

Mr. SHIMKUS. Great. And I will just end on—Chairman Wheeler, 

thank you for your work on 911. I am glad we talked prior, and 

I look forward to getting together with Ranking Member Eshoo 

to—— 

Mr. WHEELER. Thank you, sir. 

Mr. SHIMKUS. There is always work to be done in this—— 

Ms. ESHOO. Right. 

Mr. SHIMKUS [continuing]. Field, and—— 

Ms. ESHOO. Would you yield just—— 

Mr. SHIMKUS. I would—— 

Ms. ESHOO [continuing]. For—— 

Mr. SHIMKUS. Yes. 

Ms. ESHOO [continuing]. Ten seconds? Thank you. I thank the 

gentleman, and we are going to work together on that. How does 

the Commission come up with the amount of what a fine is going 

to be? I mean, in one case it is $100 million. You just mentioned 

$2 million. These are considerable sums, so how do you—do you 

have a set of rules around that, or—— 

Mr. WHEELER. For some kinds of issues, such as Lifeline, there 

is a schedule. For others it is, again, a totality of the circumstances 

kind of a situation, where you make a judgment call. 

Ms. ESHOO. And your department—— 

Mr. SHIMKUS. My time has expired. 

Ms. ESHOO [continuing]. Makes the call? 

Mr. WHEELER. Yes, ma’am. 

43 

Mr. WALDEN. Time has expired. Now go to the gentleman from 

Vermont, Mr. Welch, for 5 minutes. 

Mr. WELCH. Thank you very much. I thank both of you for joining us today. 

Chairman Wheeler, universal service, a really important issue, 

and I know that you have been implementing some reforms, and 

I am asking you to tell us what is the status of that, and what are 

you doing to make sure at the FCC that public resources are being 

responsibly used? And, actually, you can both answer that. 

Mr. WHEELER. Thank you, Congressman, because Commissioner 

Pai and I share the belief that he has been talking about here, insofar as the dichotomy between narrow band and broadband, and 

that needs to be fixed. I think I go a little further in my approach 

than Commissioner Pai does. I have developed what I have now 

started calling the Walden Rule, because—— 

Mr. WALDEN. Please. 

Mr. WHEELER. Because I read the other day that you said, Mr. 

Chairman, ‘‘that USF should spend money where no one else will 

spend’’. And that is a core principle. And as this Committee has 

been telling us so often, you need to review what our rules are. 

Mr. WELCH. Right. 

Mr. WHEELER. The fact that we are spending money to subsidize 

the telephone company around Disney World, just because we always have, doesn’t make a lot of sense. We just had a man in Hawaii go to jail for tax fraud. He is a recipient of rural universal 

service funds, and it ended up that he was charging his family’s 

education expenses to universal service, and people were having to 

pay for it. We ought to have some standards for what is in OPEX. 

We ought to have some standards for what is in CAPEX. 

I was just asked the other day to approve a waiver for a universal service trial to a company that could not produce audited financial statements. That is wrong. This isn’t my money. This is the 

people’s money. We need to get it out. That is why Commissioner 

O’Reilly, Commissioner Clyburn, and I are working together on a 

bipartisan package of reforms for how we are going to deal with 

making sure that rate of return carriers have what Commissioner 

Pai I think has called a two track solution, and that is that we 

have a model that deals with the new broadband realities, and 

then we have a review of what the standards ought to be for the 

old system. 

Mr. WELCH. Right. 

Mr. WHEELER. And we are moving down that path. 

Mr. WELCH. Let me hear a little from Commissioner Pai. Thank 

you, Mr. Chairman. 

Mr. PAI. Congressman, I think you captured the sentiment perfectly in your opening remarks, when you said that, when it comes 

to broadband, rural service should be there, and be high quality. 

And that is exactly why I have proposed this plan, to make sure 

that, when it comes to rural Americans, we don’t leave them on a 

so-called slow lane when it comes to broadband. We give them the 

exact same opportunity they would have whether they were in 

Montpelier or in New York City. 

And my concern, however, is that, given the timeframe that we 

have committed to, which is to get this done by the end of the year, 

44 

I think it would be better to embrace the approach that Congressman Cramer, and over 100 other members, including 20 members 

of this Committee, embrace, which is to have a targeted solution 

to the standalone broadband problem. I completely agree with the 

Chairman, there are abuses in the system that need to be corrected, and I stand willing and able to work with him and the other 

Commissioners to change that, but we can’t let the necessary and 

the perfect be the enemy of the good. 

Mr. WELCH. Well, thank you very much. The other thing, Lifeline, my view is that it is a really important program, but there 

is fraud, there is abuse. And one of the things that happens around 

here is that, out of frustration, when there is fraud and abuse, 

sometimes we attack the very existence of the program, rather 

than reform it. And I think where there is bipartisan agreement is 

that anything we can do to limit fraud and abuse, obviously, we 

want to do. What is the progress on Lifeline? 

Mr. WHEELER. Thank you, Mr. Welch. The—— 

Mr. WELCH. And that is for both of you. 

Mr. WHEELER. We are going to have a rulemaking on Lifeline 

hopefully before the year is out. It depends on the comments and 

everything that we receive. And it begins with overhaul. There are 

two problems with Lifeline. One, it was designed wrong; and two, 

it was overseen wrong. Other than that, everything is fine. But it 

was designed wrong. 

I must say, this was put in place by a previous administration, 

which we have inherited. It is ridiculous to have the people who 

are benefiting from the receipt of the funds be those certifying that 

the folks—get them to the right folks. It is ridiculous that you not 

require those people who are receiving the funds to keep records. 

On the administration side, it is ridiculous that you not have a 

database for duplicates. So what we have done, since we came in, 

25 percent reduction on expenditures on Lifeline. 20 million people 

who were inappropriately on it are no longer on it. And $100 million in penalties. 

So we have done what we can to fix the oversight. What this 

rulemaking is going to do is continue that, and fix the underlying 

rule problems. 

Mr. WELCH. Thank you. My time is up, but I don’t know if you 

want to let Commissioner Pai add anything? 

Mr. WALDEN. He might address the eligibility database. I don’t 

think we got to that. Commissioner Pai? 

Mr. PAI. Congressman, I obviously support the Chairman’s vision, at least, of having a more fiscally responsible program. My 

problem, however, is that we didn’t adopt some of the more basic 

reforms. For example, capping or putting a budget on the program, 

as every other universal service fund program has. Targeting 

broadband adoption, which is really the critical issue, we want 

these funds connecting people who are offline to help them get online. But currently 34 percent of American households, over 40 million households, are eligible for the program. And so if we are going 

to modernize the program to target broadband, let us make sure 

we have fiscal responsibility measures in place, and let us make 

sure we target the help to people who really need it. And that is, 

I think, an important conversation to have. 

45 

Mr. WALDEN. What about the eligibility database? Where are you 

on that? 

Mr. WHEELER. So—— 

Mr. PAI. Sorry, go ahead. 

Mr. WHEELER. Go ahead, no. 

Mr. PAI. No, after you. 

Mr. WHEELER. The duplication database is working quite well. 

Insofar as the eligibility database, the issue is our ability to get access to data held by state agencies, and we are in the process of 

working our way through that. 

Mr. WALDEN. That is something we need to get done, obviously. 

Mr. WHEELER. I agree. 

Mr. WALDEN. I will go now to the gentleman from New Jersey, 

Mr. Lance, for 5 minutes. 

Mr. LANCE. Thank you, Mr. Chairman. Commissioner Pai, I want 

to speak with you about the FCC’s recent order regarding TCPA. 

You stated in your dissent that the attempt to modernize it, ‘‘is 

likely to leave the American consumer, not to mention American 

enterprise, worse off’’. Can you elaborate to the Committee how you 

believe the Commission may not have gotten this correct, and what 

it should have done to protect the American consumer? 

Mr. PAI. Thank you, Congressman, for the question. I begin from 

the premise that unwanted robocallers are a plague on the American consumer. I don’t want to get those calls, I know the Chairman doesn’t want to get them. Nobody wants to get them. My problem, however, with the Commission’s order is that it takes us in 

the opposite direction. For one thing, it exempted entire industries 

from the TCPA. So now, for example, the prison pay phone industry can robocall you. Additionally, it dramatically expanded the 

range of devices that are now considered to be auto-dialers. So now, 

if you use your smartphone to make a telephone call, that is technically an auto-dialer, subject to the TCPA. 

Similarly, it opened the loopholes for reassigned numbers. There 

are 37 million numbers that are re-assigned every single year. A 

lot of legitimate businesses have no reason to know if they have 

that number in stock, and they have the prior phone number’s 

owner—the consent of that owner—they have no reason to know 

that that number has been reassigned, unless they can face TCPA 

liability. Those are the kinds of loopholes that I think are simply 

going to generate even more litigation, and litigation has already 

become a flood. There were 14 class actions filed in 2008. Last year 

alone there were something like 1,918. And so my concern is that 

we are opening up a lot of these loopholes. 

At the same time, we are not cracking down on the really bad 

actors, which are the unwanted robocallers. For example, we didn’t 

create, contrary to what I would have preferred, a safe harbor for 

carriers to allow them to develop technology to block foreign 

robocallers. We didn’t take more aggressive enforcement measures, 

despite the fact that we got 96,000 complaints last year for violations of the Do Not Call registry. In the first 7 months of this year, 

even though I called for it in January, we have had one citation 

from the Enforcement Bureau against the Do Not Call registry violators, and that is unacceptable to me. 

46 

Mr. LANCE. Why do you think the Commission did not have a 

safe harbor rule? 

Mr. PAI. I am not sure why, to be honest with you. But what I 

can tell you is that it has created tremendous uncertainty among 

the host of legitimate businesses that have their consumers’ consent, and want to communicate important information. Everyone 

from restaurants to the Los Angeles Lakers have faced class action 

lawsuits for trying to communicate with people who have voluntarily communicated with them. 

Mr. LANCE. Thank you. Chairman? 

Mr. WHEELER. Thank you, Mr. Lance. Several things. First of all, 

let me just go down Commissioner Pai’s list. Exemptions, we wanted to make sure that there were opportunities if your doctor, or a 

hospital, needs to do something because of a medical emergency, or 

your bank needs to contact you because of fraud, or something like 

that, that there should be those kinds of exemptions, and they are 

not big loopholes. 

Secondly, you get to make one mistake, and discover that the 

Lance phone has been transferred. You don’t have to do this three, 

four, or hundreds of times, as some people have. You can say, ‘‘excuse me, this is not the number,’’ and just provide notification. 

Thirdly, it was the Congress that created the private right of action, and that is something that is a decision that is out of our 

hands. But to your key point about the safe harbor and the carrier 

solution, specifically we address that, because the carriers were 

saying to us, ‘‘we are afraid to offer blocking services, because you 

might charge us with blocking calls, doing just that,’’ which would 

be a violation of our rules. And so we amended the rules to say, 

‘‘no, that is not a violation.’’ 

And we now have a workshop coming up where we are bringing 

the carriers, and other affected parties, in to sit down to say, ‘‘OK, 

exactly how do you do it?’’ Because how you handle a VOIP call is 

different from how you handle a TDM call. And how do you put 

those in place? We have said to the carriers, ‘‘our rules now specifically allow you to block calls where you are requested by consumers. Please do.’’ 

Mr. LANCE. Thank you. Any sur-rebuttal, Commissioner Pai? 

Mr. PAI. Congressman, I would simply point out that the safe 

harbor wasn’t given enough granularity, to say the least. And if a 

carrier is willing to trust an agency that has proven itself to be 

more than willing to fine a company up to $100 million for a violation of rules that don’t exist, I would urge them not to rely on a 

safe harbor that doesn’t provide much guidance at all. 

Mr. WHEELER. You are not encouraging folks not to not black 

calls? Are we together on the fact that, yes, we want them to be 

blocking calls? 

Mr. PAI. On that we agree, which is precisely why I proposed 

that the agency create a very detailed, specific guideline for how 

the safe harbor would operate. 

Mr. WHEELER. I don’t want to send mixed messages—say, no, we 

can’t do it because there is—— 

Mr. LANCE. Thank you. My time has expired, and thank you for 

the rebuttal, the sur-rebuttal, the sur-sur-rebuttal, and the sur-sursur-rebuttal. 

47 

Mr. PAI. And feel free to call either one of us at home if you 

would like to follow up. 

Mr. WHEELER. That is right. 

Mr. WALDEN. I have got a pre-recorded message we will—— 

Mr. WHEELER. That is right. 

Mr. WALDEN [continuing]. Send you. I do think there are issues 

the Committee will proceed to talk about on this issue, though, as 

it relates to democracy and—— 

Mr. LANCE. Thank you, Mr. Chair. 

Mr. WALDEN. We will go now to Mr. Loebsack of Iowa for 5 minutes. 

Mr. LOEBSACK. Thank you, Mr. Chair. I really just want to come 

back to one issue that was already brought up, and have you elaborate a little bit on that, Mr. Wheeler. But before I actually ask that 

specific question, I always just like to talk about rural broadband, 

as you might imagine, both of you, and just how important it is for 

places like Iowa, but not just places like Iowa, just all over the 

country. And I know we have bipartisan support to make sure that 

we have rules in place, make sure that we have programs in place, 

incentives in place, to expand that broadband availability to so 

many folks around the country. 

We know it is an economic development issue. We know it is a 

health issue when we talk about the spectrum, for example, issue 

for hospitals, making sure that—I heard from someone this morning about that, making sure that they have the broadband available, and makingsure that they can do what they need to do for 

their patients. 

We know it is important for education. I often talk about the 

University of Iowa, how they have a program where they offer AP 

classes, but it doesn’t do any good in those rural areas if those folks 

cannot access what the University of Iowa offers. And we know 

that farmers, it is very, very important for farmers to be able to 

have access to broadband so they can make decisions, obviously, for 

planting, and for their businesses in general, and on and on and 

on. I was in Centreville, Iowa for one of my 24 town hall meetings 

on broadband—small town, and there were 27 people at that meeting on a weekday afternoon at 2:00 in the afternoon because it is 

just so absolutely critical for them to be able to have this 

broadband coverage. 

So really my question goes back to what I think was already 

mentioned. You know, earlier this year 115 members, myself included, wrote to you, Chairman Wheeler, urging reform of the portion of the high cost program that supports small rural broadband 

providers so that they could receive USF support for lines, over 

which customers opted to purchase only broadband, rather than 

traditional voice service, as is the current practice. The rural 

broadband industry submitted a data-only broadband reform plan 

to the FCC in 2013, but the FCC has not yet acted on this plan. 

Are there issues with the reform plan specifically proposed by the 

Rural Broadband Industry that prevent the FCC from acting on it 

as proposed? And if you could just elaborate on that, I would appreciate it. 

Mr. WHEELER. Thank you, Congressman. There are something 

like 114 different carriers in Iowa. You represent the poster child 

48 

of the rural challenge for rate of return carriers. And it is outrageous that if you live in rural America you are 30 times more 

likely not to be able to get broadband as if you live in an urban 

area. 

So there are two components. One is dealing with things through the price cap carriers. And we recently released what will be $10 

billion over 6 years to seven carriers to build their facilities. I love 

seeing the headlines that pop up across the country that we get in 

our report that so-and-so carrier announces they are going to spend 

$27 million to bring broadband to this area, as a result of our 

funds. 

Then we go to the rate of return carriers. The challenge with 

rate of return carrier, and how we deal with it, is that the program 

has been in place for so long, and the circumstances have changed 

over that period. Now, as I say, I agree strongly with Commissioner Pai that this bifurcation between narrow band and 

broadband doesn’t make any sense, but we have got to do better 

than just slapping that Band-Aid on. We have to be saying, ‘‘how 

do we make sure that we can bring this whole program forward?’’ 

So we sat down with the rural carriers to say, ‘‘how can we do 

that?’’ And to try and reach a consensus, because there are a couple 

of rural carrier associations who don’t agree with themselves, as 

you know, how do you do that? It is encouraging. Everybody has 

agreed on this two prong process that I laid out a minute ago. And 

I am optimistic that Commissioner O’Reilly, and Commissioner 

Clyburn, and myself, who are all working together with the rural 

carriers to come up with a package proposal, will be able to get this 

done, and that we will be able to live up to the commitment that 

we made over in the other body to have it done by the end of the 

year. 

Mr. LOEBSACK. Thank you. Thank you, Mr. Wheeler. Thank you, 

Mr. Chair, and I yield back. 

Mr. WALDEN. The gentleman yields back. The Chair recognize 

the gentleman from Kentucky, Mr. Guthrie, for 5 minutes. 

Mr. GUTHRIE. Thank you, Mr. Chairman, and thank you for 

being here. And my first question is for Commissioner Pai, and it 

is three parts. I will ask, and if you need it repeated, I can do so 

as well, but this all flows together. But why do you oppose putting 

broadcasters in the duplex gap, and why is it important to minimize the number of broadcast stations placed in the wireless portion of the 600 megahertz band after the incentive auction? And I 

can stop there. I will go ahead and give you the three, and see— 

maybe you can answer one. Why do you believe it is preferable to 

put broadcast stations in the uplink portion—or the wireless band, 

rather than the downlink? And you have suggested that the Commission hold an en banc hearing to discuss issues related to the 

600 megahertz plan. Why do you such a hearing would be helpful? 

Mr. PAI. Congressman, thanks for the question. I was transcribing as quickly as I could, so if I miss one, please let me know. 

In terms of putting broadcasters in the duplex gap, one of the 

things that a typically disparate industry, as the wireless industry, 

the broadcasters, and unlicensed advocates agree on, is that placing broadcasters in duplex gap would be a terrible idea. Wireless 

companies don’t like it because it would impair downlink spectrum, 

49 

which they have told us is more critical for them, in terms of meeting consumer demand. Broadcasters have told us it is not optimal 

because the duplex gap is the only exclusively reserved spectrum 

for wireless microphones, which a lot of broadcasters rely on, and 

unlicensed advocates have told us as well that if you have a full 

powered broadcaster out there, unlicensed devices will get drowned 

out. And so that is part of the reason why I have said consistently 

that we need to do what the record suggests, and that is moving 

them somewhere other than the duplex gap. 

That raises the question, well, where do you put them? And as 

between the downlink and the uplink, I don’t think there is any 

question, certainly not in terms of the record itself, that there is 

tremendous opposition to putting them in downlink. If you think 

about it, everyone carrying a smartphone around now relies tremendously on downlink spectrum. We are always downloading 

things from the Internet. So putting a broadcaster in the 

downlink—first of all, it will impair a lot of the spectrum that is 

slated to be sold at auction and make it a lot less appealing. Secondly, it will end up causing tremendous problems, in terms of interference between broadcast and wireless. 

And here the 700 MHz auction is really a cautionary tale. Think 

about all the efforts that the Commission had to deal with because 

we had broadcasters in channel 51, and we had wireless carriers 

in the adjacent A block of the 700 MHz band. Those issues took a 

long time to resolve, and it was really challenging. Here we are 

talking about co-channel, in addition to adjacent channel interference. Plus, remember, this is the last spectrum auction, hopefully, we are going to have in some time with respect to this band, 

so broadcasters placed in downlink will be there essentially permanently. So this is not a problem we will be able to work around. 

So that is why I would prefer, based on what I have seen in the 

record, to place broadcasters, if they have to be put in the wireless 

band, to be placed in the uplink. Wireless carriers have told us it 

is technically preferable for a couple of reasons. First, they can 

minimize the amount of—or they can minimize the problems it 

would cause, in terms of interference, because you could just simply put a base station filter on. It would be a lot easier, since base 

stations are smaller in number, fixed in location, as opposed to putting a filter on a mobile device, which everyone is carrying around, 

and is always moving. 

So in terms of the en banc hearing, which I think was your third 

question, one of the reasons why I think it would be helpful is that 

the Commission has simply not made available enough data, in 

terms of the simulations for these clearing scenarios, the data, and 

the assumptions that underlie those simulations. And we have 

heard from everybody, from unlicensed advocates, to broadcasters, 

and wireless carriers, we need more data, and we need to give you 

more meaningful input before you make a decision. 

And so that is why I thought, let us just bring them all into a 

room, let us have everybody participate, and so then we, the Commissioners, can have a fully informed discussion before we vote on 

August 6, or whenever it is, to make sure that the band plan is 

right. I mean, Congress only gave us one chance to get it right, and 

if we don’t, then I am afraid the cost could be substantial. 

50 

Mr. GUTHRIE. OK. I am going to try to get another question in, 

and for Commissioner Pai as well. So you said hopefully this is the 

last spectrum auction for a long time, I think you said? 

Mr. PAI. With respect to 600 megahertz, yes. 

Mr. GUTHRIE. Well, do you believe enough is being done to ensure there is a long term national strategy to make additional spectrum available for commercial use, and if not, what else do you believe should be done? 

Mr. PAI. Thanks for the question. I think, consistent with what 

the Chairman has said, what Congresswoman Matsui and Congresswoman Blackburn have said, we need to make sure that there 

is more spectrum in the pipeline. I look at, the proliferation of 

broadband as a consumer, and I think that is a great thing. I look 

at it as a Commissioner, I wonder, how are we going to supply this 

spectrum that all these devices connected to the Internet are going 

to need? And that is part of the reason why I have been so bullish 

about getting more licensed and unlicensed spectrum out there. 

Mr. GUTHRIE. Do you think congressional action is needed? 

Mr. PAI. I think in some cases it might be. With respect to Federal users in particular, it would be very helpful. And I know that 

you and Congresswoman Matsui have been leaders on that, and I 

thank you for that legislation. 

Mr. GUTHRIE. Chairman Wheeler, I only have about 20 some seconds, but to comment on what he was about, the national—more 

available spectrum? 

Mr. WHEELER. Yes, sir. 

Mr. GUTHRIE. May not be enough time. 

Mr. WHEELER. Yes, sir, and I would like to identify with what 

you and Congresswoman Matsui are doing. And, if we get a chance, 

I would like to also respond to your first question as well. 

Mr. GUTHRIE. OK. I only have 9 seconds, so I yield back, sorry. 

Mr. WALDEN. The gentleman yields back. The Chair now recognizes the gentlelady, Ms. Clarke, for 5 minutes. 

Ms. CLARKE. Thank you, Mr. Chairman, and I thank our Ranking Member. I, of course, thank our panelists this afternoon for 

your updates regarding the agency’s activities. 

I have a few concerns that I would like to have you address, and 

one of them worries me a bit, and it is what is not in your testimony, it is how the Commission will address continuing challenges 

in diversity and representation in the media and telecom industries. We are in the 21st century. We look at our nation, and its 

diversity, and I think there is a widespread acknowledgement that 

what we see, in terms of industry, is really just not reflective of 

who we are as a country. 

So I would like to ask, first of all, Chairman Wheeler, where is 

the Commission’s focus on the completion of the diversity studies, 

and how can this data be used to create more nuanced and tailored 

policies and reforms that advance equity and inclusion? And second 

to that is what metrics and accountability structures are in place 

to ensure that vulnerable populations and their communities will 

be adequately served through these proposals? 

Mr. WHEELER. Thank you very much, Ms. Clarke. The media report that I had promised to the Committee by the middle of next 

year will include a topic on diversity. It has, frankly, been an issue 

51 

that has caught up previous reports. I think that there are a couple 

of things we can take up. There is a substantial increase in the 

number of broadcast licensees since I became Chairman, minority 

broadcast licensees in large part, because of what we did on the 

JSA rules. Those rules were being used to keep opportunity away 

from minority entrepreneurs and I am proud of that effort. 

Secondly I think we all have to recognize, as a point that Mr. 

Latta was raising previously, the importance of how the television 

business is changing, and the opportunity that is reflected by over 

the top providers. There has been a difference up here on whether 

we ought to do what this Committee did for direct broadcast satellite for over the top. And that is to say that you can’t hold content 

back. You can’t have various leverage points, because I think over 

the top programming creates incredible new opportunities for minorities. 

And lastly, we have been talking a lot about the designated entity rules and the wireless auction. I feel strongly that what this 

Congress asked us to do was to create opportunities for minorities, 

women, and rural individuals to participate in wireless. That is 

what we did in the DE rules. The suggestions that have been made 

by my colleagues on the Republican side actually would have limited the ability for real live DEs, rather than hypothetical DEs, to 

participate. 

Ms. CLARKE. So on the subject of DEs, and Commissioner Pai, 

excuse me, I will have you respond as well. It appears that we have 

probably cracked the code of only one part of supporting small businesses, gained access to capital to enable to compete in the wireless 

industry. How can the Commission facilitate more secondary market transactions for DEs and other small businesses, especially 

those owned by women and minorities, with the private sector? 

Mr. WHEELER. Were you addressing that to him? So I think that 

we need to make sure that—again, the JSA rule was very helpful 

in that regard, and has performed as expected. We have made it 

clear that when broadcast licensees come in for transfers, and they 

are complying with the rule which says that they can’t now have 

control of multiple licensees in a market, that we will look favorably upon them selling those assets to minority entrepreneurs. 

And, in fact, that has been successful. 

Ms. CLARKE. Thank you, Chairman. Commissioner, I have run 

out of time, but hopefully we can get a response from you as well. 

Thank you. 

Mr. PAI. Right now, or for the record, or—whichever. 

Mr. WALDEN. Probably for the record, because I want to keep 

moving forward, I think. 

Mr. PAI. OK. 

Mr. WALDEN. Mr. Olson from Texas, you are recognized for 5 

minutes. 

Mr. OLSON. I thank the Chair, and welcome Chairman Wheeler 

and Commissioner Pai. Since I have been on the Energy and Commerce Committee, since 2011, consumer privacy has been a focus 

of my work for the people of Texas 22. In the 112th and 111th Congress, that work was done on the Commerce, Manufacturing, and 

Trade Subcommittee because they had jurisdiction over the FTC. 

But the FCC has grabbed that authority to regulate the broadband 

52 

ISPs, taken it from the FTC, and now it is with the FCC, and now 

it is under this Committee’s jurisdiction. 

The good news is you haven’t lost me. I am still with you. But 

folks back home want to know why. What was the problem with 

the FTC and broadband ISPs that forced this change? And a matter of time, would you—Chairman Wheeler 1 minute, and you, Mr. 

Pai, 1 minute to respond to his comments. Chairman Wheeler, why 

was it changed—— 

Mr. WHEELER. Thank you, Congressman. As you know, the FTC 

Act, writ large, says that it does not have jurisdiction over common 

telecommunications carriers—common carriers. And so when we 

said that ISPs were telecommunications carriers, it triggered that. 

What your constituents should know, however, is that we work 

closely with the FTC, their jurisdiction, insofar as its providers. 

And whatever we do on our privacy proposals, which will be forthcoming in the next few months, we will do our best to harmonize 

so that there is a common set of concepts that govern privacy. 

Mr. OLSON. OK, great. That gave me some time back. Mr. Pai, 

you response, Mr. Pai. 

Mr. PAI. Congressman, unfortunately, the FCC’s reclassification 

of Internet Service Providers as common carriers had a two-fold hit 

on consumers. First, it deprived the FTC of jurisdiction, as the 

Chairman has pointed out, because of the common carrier exemption, jurisdiction that the FTC has explicitly been given congressional authorization for under things like COPPA. 

Secondly, because the FCC then arrogated that issue for itself, 

unfortunately, our authority under the statute is relatively circumscribed. As you pointed out, Section 222, CPNI is a pretty narrow, arcane piece of the privacy puzzle, if you will. So we don’t actually have any rules in place. 

And, moreover, the guidance, so-called, that we have given out 

has been completely unhelpful. For example, in May of this year, 

our Enforcement Bureau put out a guidance with respect to privacy 

and it said, and I quote, ‘‘The Enforcement Bureau intends that 

broadband providers should employ effective privacy protections in 

line with the core tenets of basic privacy protections.’’ What does 

that mean? I have no idea, ISPs have no idea, consumers have no 

idea. 

Mr. OLSON. I have no idea. 

Mr. PAI. And so I would rather have let the experts of the FTC, 

who have protected consumers lo these many years, handle this 

issue based on law that you have given them. 

Mr. OLSON. And so you believe it is important that the FTC has 

expertise to handle these issues, as opposed to the FCC, correct? 

Mr. PAI. Expertise and legal authority, yes. 

Mr. OLSON. OK. And the Chairman talked aboutanother issue, 

about privacy and edge providers. Chairman Wheeler, a consumer 

interest group filed a petition asking you to start a rulemaking to 

oppose consumer privacy protections on edge providers. When are 

we going to see your response? Do you believe that edge providers 

should have a different standard protection than ISPs? 

Mr. WHEELER. Thank you very much, Congressman. First of all, 

the Commission has, for decades, been enforcing privacy under the 

CPNI rules on telecommunications carriers. So it is not as though 

53 

we fell into this patch. There is a long history of privacy protection 

regarding telecommunications carriers. 

Insofar as extending our jurisdiction to the edge providers, I have 

said repeatedly that that is not our intention. I don’t know when 

the specific response to that specific petition will be coming out. I 

will be happy to get you a date. I don’t know what the planning 

process on it is. 

Mr. OLSON. OK, thank you. Commissioner Pai, your response? 

Mr. PAI. I think this is part of the problem. When the FCC 

crossed this Rubicon on February. If you believe, as the majority 

did at the time, that the Internet is a virtuous cycle, and you have 

Internet Service Providers and edge providers acting with one another to provide a better consumer experience, it would seem to follow logically, then, that if an edge provider is acting in an anticompetitive or anti-consumer way, then why shouldn’t the FCC 

have the jurisdiction to extend those same rules to edge providers. 

And, moreover, if you look at the Internet conduct standard, it 

is not clear to me, a priori, why the FCC should limit its focus on 

Internet Service Providers. You could easily see a dominant edge 

provider engaging in anti-competitive conduct. And so that is part 

of the uncertainty that, unfortunately, the FCC opened up, and I 

hope we don’t follow that to its logical conclusion. 

Mr. OLSON. Well, thank you both. I yield back the balance of my 

time. 

Mr. WALDEN. The gentleman yields back the balance of his time. 

The Chair recognizes the gentleman from Illinois, Mr. Rush, for 5 

minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman, and I want to 

thank you and the Ranking Member for today’s hearing. Mr. Chairman, Commissioner Pai, I welcome both of you to today’s hearing. 

So good to see you once again. 

Mr. Chairman, I want to lift up one of the most troubling and 

egregious matters that is under the consideration of the FCC. And 

I am referring to the prison phone call rates. I understand that 

FCC is poised to make a ruling on in-state phone rates for prison 

phone calls. That said, Mr. Chairman, we must stop this immoral 

practice of avaricious greed and unabashed exploitation of the poor, 

the very ones least able to afford this phone rate robbery. 

Additionally, Mr. Chairman, once and for all we must do away 

with the practice of site commission kickbacks, and we must cap 

in-state phone rates. As you know, Mr. Chairman, the prison call 

industry is a multi-billion dollar business. And if there is any 

doubt, I want to call your attention to a recent Huffington Post article entitled ‘‘Prisoners Pay Millions to Call Loved Ones Every 

Year. Now This Company Wants Even More’’. And this article referenced how Securus—a company called Securus, the 7th largest 

company in the prison phone call rate industry, Securus bragged 

to its investors about its $404.6 million future profits on the backs 

of the very same poor. 

Mr. Chairman, as you know, I have been fighting this issue for 

over a decade, and it is now time for the FCC to take action, and 

rein in these predatory practices by capping the rate at five cents 

per minute, and eliminating all ancillary fees. But more importantly, Mr. Chairman, the FCC must also be a step ahead of these 

54 

predatory companies that are right now trying to circumvent the 

laws by offering video phone calls at the same predatory rates that 

they offer for telephone calls. 

Mr. Chairman, my question is, when will the FCC rule on this 

legalized telephonic terrorism? 

Mr. WHEELER. Thank you very much, Mr. Rush. I agree, this is 

a very serious issue, and people across America owe a huge debt 

of gratitude to Commissioner Clyburn—this issue that had been 

sitting on the desk of the FCC for 10 years, since Martha Wright 

filed her first petition and brought it forward, so that there was a 

decision about inter-state. 

But you know what happens, is that whack-a-mole starts getting 

played here. OK, we can’t do it here, so we will move it over here. 

Well, next month we have a decision on that, on intra-state, that 

we are doing next month. The point that you make about video 

phones is another legitimate point. The reality here is that what 

we are talking about is a monopoly that is granted to prisons to 

determine how people communicate. And like any monopoly, it 

ends up being exploitive. And the people who are hurt by that exploitation are the very people who rely on it. And I can assure you, 

sir, that Commissioner Clyburn keeps our feet to the fire on this, 

and that I am fully supportive of her efforts. 

Mr. RUSH. That is good news, Mr. Chairman, and I am just apoplectic about this situation. And I don’t know—well, let me move 

on. If I have—my time is up. 

Mr. WALDEN. Time has expired. Yes, I should tell you, we are 

going to do a second round of questions, so if you are here for that, 

there will be more time. We will now go to the gentleman from 

Florida, Mr. Bilirakis, for 5 minutes. 

Mr. BILIRAKIS. Thank you, Mr. Chairman, I appreciate it. Thanks 

to both of you for showing up today, and thank you for your testimony. 

Chairman Wheeler, in March we discussed public safety interference complaint responses, and a resulting quarterly report, 

which you thought was a good idea. I know you have provided 

some information. Have you posted what you provided the Committee on the Web site so the public can see what is going on, and 

what you are doing? 

Mr. WHEELER. Sure. 

Mr. BILIRAKIS. You have? 

Mr. WHEELER. No, I am saying—would we, or—— 

Mr. BILIRAKIS. Have you posted online—— 

Mr. WHEELER. I can’t answer that question specifically, sir. I will 

get you the answer—— 

Mr. BILIRAKIS. Can you get that information—— 

Mr. WHEELER. Sure. 

Mr. BILIRAKIS [continuing]. To us as soon as possible? 

Mr. WHEELER. Yes, sir. 

Mr. BILIRAKIS. Yes. And if you haven’t, I mean, can you post that 

online as soon as possible? 

Mr. WHEELER. I think that is a good point, sir. 

Mr. BILIRAKIS. OK, very good. Commissioner Pai, there has been 

a lot of attention and concern regarding the designated entity aucVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
55 

tion rules. Do you believe there are now correctly—are they now 

correctly balanced, and if not, what should be done to fix them? 

Mr. PAI. Unfortunately, Congressman, I don’t think they are. In 

fact, the agency has moved in the opposite direction. My principle 

for this small business program is that it should benefit small businesses. But, unfortunately, the agency, having loosened some of the 

restrictions that were imposed on a bipartisan basis several years 

ago, has now opened the door for large corporations to abuse the 

program and, ironically enough, squeeze out a lot of the small businesses, minorities, women, and others, who need access to capital 

in order to provide facilities-based service. 

And we saw that in the most recent AWS–3 auction, where small 

carriers tried to compete, but they weren’t able to because the 

deep-pocketed Fortune 500 corporation used shell companies to 

prevent them from bidding. And that is part of the reason why I 

proposed what I thought were pretty common sense reforms. If you 

are making in the upper eight figures, you don’t need a taxpayerfunded discount in order to participate in a spectrum auction. If 

you are a genuine small business, with less than $15 million of revenue, you don’t need more than $50 million of taxpayer-funded bidding credits in order to get spectrum at an auction. If you are a 

genuine business, you should be able to provide facilities-based 

service, not simply flip your spectrum to a large incumbent corporation the minute the auction is over. 

Unfortunately, they fell one vote short, all of those proposals, 

which would, I submit, have restored public faith in the small business program. 

Mr. BILIRAKIS. Thank you. Chairman Wheeler, in the open Internet order you committed to take steps to prevent increases in poll 

attachment rates that might result from reclassifying broadband. 

What steps have you taken since the order to prevent such increases, and what additional steps are expected, sir? 

Mr. WHEELER. Thank you, Congressman. There is a proceeding 

underway to do that that we started in the last 6 weeks, 8 weeks, 

somewhere like that. It is designed to make sure that there is parity between telecommunications service and cable service attachment fees. 

Mr. BILIRAKIS. OK. Again, can you continue to update us on this? 

Mr. WHEELER. Yes, sir. 

Mr. BILIRAKIS. Appreciate it very much. All right, Mr. Chairman, 

I yield back. 

Mr. WALDEN. OK. Yes. So now we will go to—Mr. Johnson is 

next—— 

Mr. JOHNSON. Thank you. 

Mr. WALDEN [continuing]. For 5 minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman. Chairman Wheeler, in 

a recent response to questions for the record as to whether you 

think stakeholders who cannot afford to have regulatory lawyers or 

lobbyists in Washington, D.C. should also have the same access 

that other stakeholders have, you made a point that the Commission does not have funding for routine field hearings, and similar 

activities, yet your emissary, Ms. Sone, has been routinely traveling to various events. In fact, it seems that both you and Ms. 

Sone have been wheels up quite frequently in your travels. So let 

56 

me pose the question this way. Given that you apparently have a 

robust travel budget, isn’t the real issue how you elect to spend the 

money? 

Mr. WHEELER. Thank you, Congressman. I think the people who 

I keep turning down, saying ‘‘no, I am not going to come talk,’’ 

would probably disagree. My travel is significantly less than other 

members of the Commission but your point is a well taken point, 

and that is that decisions get made. There is a travel budget that 

each Commissioner has, and that is for his or her discretion. There 

is not—— 

Mr. JOHNSON. OK. Well, you have answered my question. It really is up to your discretion on how you spend the money. So could 

you let us know, for the record, how much the FCC has spent on 

travel in fiscal year 2013, 2014, and 2015 so far? 

Mr. WHEELER. By—— 

Mr. JOHNSON. Could you—— 

Mr. WHEELER. By Commissioner? 

Mr. JOHNSON [continuing]. Get that back? 

Mr. WHEELER. By Commissioner? 

Mr. JOHNSON. Yes. 

Mr. WHEELER. Yes, sure. 

Mr. JOHNSON. OK, great. I would like to see that. Commissioner 

Pai, I was listening closely to your discussion with my colleague, 

Mr. Bilirakis, regarding the designated entity program, and I am 

really struggling a bit with Chairman Wheeler’s decision to eliminate the attributable material relationship rule, and the facilities 

requirement in the competitive bidding rules for a couple of reasons, and you pointed those out. You made a compelling case that 

this sets the state for arbitrage. 

So how are we going to prevent that from happening? What actions does the Commission need to take to make sure that these 

rural small carriers are able to get the credits that the Designated 

Entity Program was designed to give them so that they can serve 

those underserved, unserved areas? 

Mr. PAI. Thanks for the question, Congressman. I think, to be 

honest, we first need to return to the status quo, before the most 

recent decision, and we need to adopt some common sense reforms 

to make sure that large corporations don’t game the system again. 

And to be sure the order did take some of these measures, prohibiting a single corporation from using multiple bidders in the 

same market and the same auction, but, that is low hanging fruit 

that is already prohibited by the criminal anti-trust laws. I am 

talking about genuine reforms of the DE Program to make sure 

that the people who need the help, the people who want to serve 

folks in Ohio, or Kansas, can be able to do that. 

And I have proposed some of those reforms, such as limiting the 

amount of bidding credits people can get, making sure that large 

companies can’t own a majority of a DE, making sure that we preserve that AMR, as it is known, so that people don’t end up flipping all of the spectrum to the entrenched incumbents, those are 

the kinds of common sense reforms that don’t have a partisan affiliation to them. And I wish the majority had agreed with me. 

Mr. JOHNSON. Yes. Well, I can tell you that it is a real concern 

for me, and I am sure for other colleagues that represent rural 

57 

areas of the country. I have got high school students that don’t 

have access to broadband Internet service, and, as a result, they either have to go to a public library nearby, or some other location, 

maybe to where they can get a wireless signal or something like 

that, to do their homework, to do research, to do that kind of thing. 

And this is 2015, for crying out loud. 

Mr. PAI. If I could just add a coda, one of the reasons why the 

facilities-based requirement is so important is because in a lot of 

cases the larger providers don’t see the business case in building 

out to that school, or to that area, whereas a smaller rural provider, who actually does want to connect those folks to the Internet 

wirelessly, they have a strong incentive to make sure that those 

folks are connected. So when those rural providers are squeezed 

out, because there is no more facilities-based requirement, and 

speculators can come in and take the spectrum and flip it to the 

big incumbents, that really does impact those consumers. 

Mr. JOHNSON. OK. All right. Well, thank you. Mr. Chairman, I 

yield back. 

Mr. WALDEN. Thank you. And now we go to the gentleman from 

Missouri, Mr. Long, for 5 minutes. 

Mr. LONG. Thank you, Mr. Chairman, and thank you all for 

being here today. Chairman Wheeler, on July 24, 4 days ago, your 

agency announced that—granted with conditions approval of the 

transfer of control licenses and authorizations from DirecTV to 

AT&T. We hear much about your agency’s 180 day shot clock for 

reviewing such transfers, yet your agency’s conditional grant of approval took over twice that amount of time, as you are well aware, 

over 400 days. I have got some questions that I would like to have 

answers to. Number one, what is the point of the shot clock? 

Mr. WHEELER. Well, the shot clock is aspirational, to begin with, 

but it is something that we try to manage to. The difficulty in this 

particular situation was that we were hung up by a court proceeding and a court Decision that itself took as long as the shot 

clock. And that specifically dealt with the kind of information that 

we could have on the public record. We had to get through that before we could get through the decision. 

Mr. LONG. Well, on the 170th day of the 180 shot clock your 

agency stopped it for 3 months. What—— 

Mr. WHEELER. Because of the court Decision. We had—— 

Mr. LONG. That was the same thing you are talking about, the 

court—— 

Mr. WHEELER. Yes. 

Mr. LONG [continuing]. Decision? 

Mr. WHEELER. So the reality here is that there is right now, 

pending before Commissioner Pai and me—have you—yet? I mean, 

that is not a set up question. I don’t know the answer to it. 

Mr. PAI. On what? I am sorry. 

Mr. WHEELER. On the protective order. 

Mr. PAI. I just saw it yesterday, so—— 

Mr. WHEELER. OK. So we have put out an order to outline how 

you protect confidential information so that we can be in compliance with the court so that this will not happen again. And the absence of that was what held up this proceedings. 

58 

Mr. LONG. OK. Commissioner Pai, same question to you. Do you 

have the same opinion on why the shot clock was stopped at the 

170th day, or what the benefit of the shot clock is? 

Mr. PAI. Congressman, I do have a different view. The agency inflicted a wound on itself, which is why the court had to intervene. 

The court didn’t simply, out of whole cloth, decide to participate in 

this proceeding. What happened was, in the context of that transaction and another transaction, the agency decided to try to get all 

kinds of confidential information from programmers and—without 

any kind of due process. And so the programmers naturally sued. 

I urged the agency to try to reach a settlement, because this information wasn’t really necessary to resolution of the issues in the 

transaction, and a unanimous D.C. Circuit Court of Appeals agreed 

with me, calling the FCC’s decision an unexplained and substantial 

departure from previous policy. And miraculously, even though 

they remanded it and told the FCC, look, here is the road map you 

need to follow if you want this information, despite having said the 

information was critical, ultimately the agency didn’t even seek it 

or rely on it in making the decision. So that is why I said, look, 

the shot clock needs to be more than aspirational, it needs to be 

a rule. Just as there are 24 seconds in the NBA, there should be 

180 days, period, for the FCC, with extensions for extenuating circumstances. But, nonetheless, we need to give both the public and 

the parties a lot of certainty as to how the FCC is going to do—— 

Mr. LONG. OK. Let me move on. I have got another question here 

for Chairman Wheeler. 3 days prior to your agency’s conditional 

grant of approval of the transfer, control of license and authorization from DirecTV and AT&T, the Department of Justice announced that, after an extensive investigation, it concluded that 

the combination of AT&T’s land-based Internet video business with 

DirecTV’s satellite-based video business does not pose a significant 

risk to competition. 

Although the Justice Department closed its investigation without 

imposing any conditions on the transaction, your agency announced 

that it was imposing a number of conditions to address potential 

harms presented by the combination of AT&T and DirecTV, despite 

the Justice Department’s view that the combination of the two 

video businesses did not pose a significant risk to competition. 

What significant risks to competition did your agency identify that 

the Justice Department apparently missed? 

Mr. WHEELER. Thank you, Congressman, and we worked closely 

with the Justice Department on this, and I don’t think that there 

was a sliver of light between us. The reality—— 

Mr. LONG. And how can—— 

Mr. WHEELER. The reality—— 

Mr. LONG. How can you say that—— 

Mr. WHEELER. Because we have a different test. We have—— 

Mr. LONG. You have a what? 

Mr. WHEELER. We have a different test. They have an anti-trust 

test that they face. We have a public interest test that we are supposed to measure by. So we have actually two different standards 

that we measure to. And what was happening here was that in 

about 25 percent of AT&T’s service area, DirecTV was a competitor 

to AT&T for video service. And so eliminating that competition, the 

59 

question became, ‘‘does that create an incentive, then, to eliminate 

broadband competition as well?’’ 

So what we required was that AT&T expand its broadband coverage, which increased competition for broadband by a significant 

amount, and created an opportunity for those video providers not 

to have to go through an increasingly decreasing—increasingly—a 

decreasing choke point—— 

Mr. LONG. You just wanted to see if I was paying attention. 

Mr. WHEELER [continuing]. Insofar as—— 

Mr. LONG. We have got a red light on our backboard. My 5 

minute shot clock has expired, so I will be back for round two. 

Mr. WHEELER. Good. 

Mr. LONG. The Chair now recognizes the gentleman from New 

York, Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. Mr. Wheeler, the big 

issue that I have been involved in is pirate radio, which you may 

know. And back in early June pretty much every New York member of Congress, as well as—— 

Mr. WHEELER. Yes, sir. 

Mr. COLLINS [continuing]. New Jersey sent you a letter. And 

while the issue may not be a terrible issue, in some parts of the 

country, it truly is in New York City, as evidenced by—not often 

can you get 27 members of New York to agree. Upstate and 

downstate, we are like two different worlds. So to sum it up, we 

are extraordinarily disappointed that the FCC has clearly said it 

is not a priority. We just got the letter from you yesterday. 

And I understand budget concerns, and the point I want to emphasize is this is an issue, even though it is not to you, and you 

are the Chairman. We really don’t appreciate you saying that—as 

you put in here, the time and expense of pursuing these cases 

present particular difficulties in the current flat budget environment, where the Commission’s staffing is at its lowest point in 30 

years. Overtime is less available, so, accordingly, we must 

prioritize our work based on existing resources and harm to the 

public. Thus, matters posing an imminent threat to public safety, 

or directly harming large numbers of consumers, must take precedence over other matters, such as pirate radio. 

So, I understand what you are saying, but what is the size of 

your budget? 

Mr. WHEELER. So that letter, and those particular words which 

I wrote were not designed to say that this is a low priority, but designed to say that first issue is public safety. Pirate radio has to 

exist inside that, and I believe that we have been very aggressive. 

During my Chairmanship, we have had 200 private radio enforcements. In the last year we have had 100 alone. And—— 

Mr. COLLINS. How many in New York, just—— 

Mr. WHEELER. I don’t know the exact number, but I would say 

maybe not—80 percent of those. And so what we have done is, and 

Commissioner O’Reilly, when he was meeting with the New York 

broadcasters, really focused on that, and he helped us focus on 

that. So we formed an inter-agency task force, to work with the 

NAB and the New York broadcasters on this issue to make 

sure—— 

60 

Mr. COLLINS. Well, so you had that meeting, and the fourth point 

on that that came out was basically that you need more folks in 

your local enforcement office. That point number four of that hearing was additional FCC enforcement options. 

Mr. WHEELER. That was one—right, that was one of the things 

that they—— 

Mr. COLLINS. But in another hearing we talked about how you 

have been reducing the local field offices, and pulling those folks 

back to headquarters. And some of us would presume that is to be 

ready to enforce Title 2, which we can disagree on as well. But it 

seems a little disingenuous, and our big concern is words are 

words, actions are actions, and the actions have not convinced me, 

and I think other members, that it is at all a priority. Your letter, 

while it said maybe someday, if we have got nothing else to do, we 

will see what we might want to find in pirate radio, that is—it is 

a low priority for the FCC. 

Mr. WHEELER. If that is how you interpret it, I apologize, because that is not what was meant. So the New York office, the Boston office, and the Miami office, which is where pirate radio tends 

to exist—those three areas. This is a whack-a-mole—I keep using 

the whack-a-mole today, but this is a whack-a-mole kind of situation—— 

Mr. COLLINS. Well, sure, that is what pirate radio is. They—— 

Mr. WHEELER [continuing]. Where people keep—— 

Mr. COLLINS. Absolutely. 

Mr. WHEELER [continuing]. Moving around. So one of the things 

I think that I encouraged in that letter is that Congress can also 

be helpful, because we can go and shut somebody down, and he or 

she moves to this spot, boom, they are up again. 

Mr. COLLINS. Right. 

Mr. WHEELER. And we are just constantly chasing. If Congress 

could also enact—make it illegal to aid and abet the carrying out 

of this—and I think that is also what the NAB group has recommended. If we can get at those who are aiding and abetting— 

because there is a cabal that pulls this off, right? Well, he moved 

to my apartment over here, you move to this space over here. We 

didn’t know anything about this. And so there is a totality of the 

package here. I mean, 200 enforcements. We have a task force 

working on it. We could use some additional authority so we could 

have some teeth. 

Mr. COLLINS. I am about out of time, so two things. One is, 

maybe this is a rhetorical question, but I will ask it. There have 

been suggestions that the FCC has actually directed field offices to 

step down and back away from enforcement. Any truth in that? 

Mr. WHEELER. I have heard that—— 

Mr. COLLINS. Right. 

Mr. WHEELER [continuing]. Suggestion. I have not—— 

Mr. COLLINS. So I am going to put it right out here. 

Mr. WHEELER. I have heard that suggestion. I have not seen that 

command. 

Mr. COLLINS. And it did not come from you? 

Mr. WHEELER. Did not come from me. 

Mr. COLLINS. Could you provide me the language that you might 

suggest? Because I can appreciate—don’t bring me a problem withVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00066 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
61 

out a solution. Can you bring me the language that we might put 

in—— 

Mr. WHEELER. Great. 

Mr. COLLINS [continuing]. To some other legislation that would 

assist you on the pirate radio? 

Mr. WHEELER. Thank you, sir. 

Mr. COLLINS. It is an important issue for us in New York, and 

we just don’t want to be the last thing on Friday afternoon at 4:59, 

somebody said I have 1 minute until I go home, let me see what 

I can do on pirate—— 

Mr. WHEELER. Yes, sir. 

Mr. COLLINS [continuing]. Radio. Thank you. 

Mr. WHEELER. Thank you. 

Mr. COLLINS. I yield back. 

Mr. WALDEN. The gentleman yields back. The Chair now recognizes the gentleman from North Dakota, Mr. Cramer. 

Mr. CRAMER. Thank the Chairman, and the Ranking Member, 

once again for suffering along with me as you wait for the last 

questioner. And thanks to both of you as well. And thank you, 

Commissioner Pai, for referencing the letter that 114 of my closest 

friends and I sent to the Chairman and to the FCC regarding 

standalone, and to both of you for addressing it so thoroughly 

today. And I might just hone in a little bit on some of the finer 

points regarding the timeline. Because in the letter I received, Mr. 

Chairman, from you yesterday you often referred to a lack of consensus. There seems to be some consensus. You pledged that by the 

end of the year we will solve this, but we need more consensus 

from stakeholders. As you both know, of course, the community 

presented a plan in 2013, modified somewhat over the last couple 

of years to meet moving targets. 

I might ask you, Commissioner Pai, you have offered up I think 

your quote there from your plan was simple amendments to existing rules as an outcome. And one of the things I have noticed 

around here, and I have certainly noticed in regulatory bodies, having served on one, we can tend to complicate simple things. My 

goal is usually the opposite of that. Are there issues in the plan 

that prevent this from going forward, or prevent us from utilizing 

that as the model, or are there other issues that have caused this 

to take so long? 

Mr. PAI. Thanks for the question, Congressman, and thank you 

also for your kind words about my proposal, which in turn is modeled on your letter. Stepping back 60,000 feet, I think the problem 

is basically this. There are a number of problems with the high cost 

fund, A, B, C, D, E. Problem A, however, is standalone broadband 

service, and my position has been consistent with your letter, and 

a companion letter in the Senate: let us adopt targeted changes to 

our rules to make sure that rate of return carriers aren’t penalized 

for offering broadband as a standalone service. Now, that is not to 

say that problems B, C, D, E aren’t important, but, for the purposes of this issue, standalone broadband service, let us get that 

piece of it done, and then turn to the other issues. 

Now as to the issue with the rate of return carriers and the consensus, I appreciate the efforts of my colleagues to try to find that 

consensus, but nonetheless, number one, it is not necessary to reVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
62 

solve those issues, to adopt a standalone broadband solution, and 

number two, if we end up waiting until a consensus emerges on 

those other issues, I fear we are not going to meet the deadline we 

set for ourselves publicly of getting this done by the end of the 

year. 

Mr. CRAMER. Chairman Wheeler, can we meet the end of the 

year deadline? Is there a reason we can’t meet that, and are we attaching too many other things to the simple solution? 

Mr. WHEELER. Those are the two right questions. 

Mr. CRAMER. Yes. 

Mr. WHEELER. I am trying to do that. It is my goal to do it. I 

expect to do it. A couple of points here. In order to do that, you cannot be wedded to consensus. As you know from your previous term, 

at some point in time you have got to pull up and shoot. 

Mr. CRAMER. Indeed. 

Mr. WHEELER. Boy, am I trying to get consensus. But if you can’t 

get everybody to agree at some point in time, we will put forward 

a proposal on that in a timely basis in order to do things by the 

end of the year. Because, at the root of this, is that we have got 

to do better for rural consumers, period. And it is not just one simple fix. It is a broader set of fixes. Because I am in violent agreement on the narrow band/broadband issue, but it is not enough. 

And then we also have a responsibility to those people who are 

paying for this every month in their phone bills, to make sure that 

the money is spent responsibly. And I hope we have consensus. I 

am working for consensus. But if we can’t have consensus, we need 

to have progress. 

Mr. CRAMER. Well, there are other issues the FCC has taken up 

this year that I wish there would have been more consensus on, so 

I don’t want consensus to mean 100 percent, as you might imagine. 

Shifting, then, just a little bit with my remaining time, we spent 

some time talking about, of course, the auction. I was about to call 

it the voluntary auction. That is what it used to be called. I think 

it still is. The word voluntary is how it is often referred to, because, 

of course, it is, in fact, voluntary, both opting in and opting out. 

And, as you know, the $1.75 billion that Congress has put in for 

the repacking fund is probably not going to be enough, considering 

that we are looking at, what, 1,100, maybe, TV stations that are 

going to have to involuntarily move. 

Is there a plan to deal with that shortfall that I can assure my 

rural North Dakota broadcasters that they won’t have to bear all 

the costs? Maybe Commissioner Pai first, and then the Chairman 

with the remaining time. 

Mr. PAI. Congressman, I have long suggested that we should 

treat the 1.75 billion relocation fund as a budget at the FCC, and 

structure the auction so as to minimize the possibility that we 

would exceed it, and ultimately end up putting the onus on the 

broadcasters to pay up. 

The other issue that I have heard, most recently in Nebraska 

from a group of broadcasters, is that the 36 months is not necessarily as long as it might seem, that there is a shortage of people 

who are able to do the work, there is a shortage of the equipment 

that is necessary for the repacking to be done, and that the Commission should be mindful of that as well as it progresses. So I 

63 

share your concern, and I want to make sure that broadcasters, to 

the extent possible, are held harmless, in terms of necessary expenditures. 

Mr. CRAMER. Chairman, do you want to speak—— 

Mr. WHEELER. I think Commissioner Pai has identified the key 

issue, and that is we do need to make sure that we have to live 

within a budget, and we want to manage things within a budget. 

You gave us that number. We can’t change that number, and we 

have got to come up with a program that will make it work. 

Mr. CRAMER. Thank you both. Thank you, Mr. Chairman. 

Mr. WALDEN. And if you hang around, Mr. Cramer, we are going 

to do a second round. You could be, like, really quick on the shot 

clock here. We are now going to go to the gentleman from New 

Mexico, Mr. Luja AE1n, for 5 minutes. 

Mr. LUJA AE1N. Mr. Chairman, thank you so much for having us 

here today. Ranking Member Eshoo, it is an honor to be with—here 

with both of you. Chairman Wheeler, Commissioner Pai, thank you 

for joining us as well. 

I appreciate the testimony centered around rural access. As Commissioner Pai said, he is a rural guy, I am a rural guy. I think 

Chairman Walden also represents a very rural district, as we talk 

about many parts of the country that need broadband access, and 

affordability. And you have heard me say this many times, Chairman Wheeler, we can have connectivity at 30,000 feet when we are 

flying across the United States in an airplane, there is no reason 

that we cannot have connectivity when we are on the ground traveling all across America, not only in rural communities, tribal communities, and states like mine, in New Mexico. 

With that being said, in New Mexico, for example, 77 percent of 

those living rural communities, and 89 percent living in tribal communities lack access to advanced broadband. Chairman Wheeler, 

as you said in your testimony, you have pursued an aggressive 

agenda at the FCC that includes reforming the E-rate Program, 

modernizing the Lifeline Program, and establishing the Connect 

America Fund. Can you discuss what this agenda means for people 

who lack sufficient access to broadband and communication services, not just with buildout, but also with making it more affordable so people are able to take advantage once there is a buildout 

program? 

Mr. WHEELER. Yes, sir. Thank you, Congressman, and I hope 

that we can do significantly better than the speeds that are delivered in the air, and that is what we are doing. I have been in New 

Mexico multiple times, in tribal areas, and other very remote areas 

in New Mexico to personally visit and talk to the individuals involved. 

I remember a situation that—there was a fiber going down this 

side of the road, a fiber on an Indian reservation, and over here, 

about 100 yards away, was a high school, and up here was the library. And they couldn’t get a connection from the fiber to the high 

school because it was cost-prohibitive, and the E-rate Program 

wasn’t paying for that. Now we pay for that, and that is in large 

part because of these kinds of specific examples that we have seen. 

We need to make sure this is the case. 

64 

We also need to make sure that low income individuals who are, 

unfortunately, disproportionately represented on tribal areas have 

access to broadband support to connect them. And that is why we 

are not only overhauling, but changing the orientation of the lifeline program to go to broadband. 

Mr. LUJA AE1N. And, Chairman Wheeler, in all these areas—I 

am going to submit some other questions into the record to flesh 

these areas out, but, as we do this, I really appreciate the conversation that we have had today, and the focus, and seeing how we can 

grow the rural family as well, and see how we get more attention 

there. 

The other place that I want to complement both of you, Commissioner Pai, Chairman Wheeler, and get your perspective is on modernizing the FCC. You have embarked on expanding electronic filing and distribution, decreasing backlogs, and improving responsiveness to consumers. Can you both tell me what you are doing 

to provide greater information to consumers, including transparency and accountability, standardizing forms, digitizing the 

process, including the submittal of documents? 

Mr. WHEELER. Boy, am I glad you asked that question. 

Mr. LUJA AE1N. And you both support that effort? 

Mr. WHEELER. The—— 

Mr. LUJA AE1N. Yes, Commissioner Pai? 

Mr. PAI. Yes. 

Mr. LUJA AE1N. Yes? 

Mr. WHEELER. On my first trip to our consumer operation in Gettysburg, I saw in the corner a humongous machine that the staff 

proudly announced to me could take 17 different forms and put 

them into one envelope. And I said, ‘‘well, why are we sending out 

17 different forms?’’ And they said, ‘‘well, because that is the way 

we do it.’’ So you contact the FCC on a robocall issue, and we will 

send you the form for robocall, as well as the form for loudness on 

commercials, as well as the form for every other kind of complaint 

we had. And I said, ‘‘wait a minute, we can do better than this.’’ 

Mr. LUJA AE1N. And those forms are required to be sent back. 

Mr. WHEELER. And the—— 

Mr. LUJA AE1N. Those forms—— 

Mr. WHEELER. And I would talk to consumers who would say, 

‘‘what am I supposed to do with this? Which form am I supposed 

to—? So we now have totally updated it and put it on the Web. We 

just won a prize for being one of the best consumer interface sites 

on the Web. And most of all, we are then taking that information 

and putting it back into what should we be doing to help us focus 

on our priorities. 

Mr. LUJA AE1N. That is great. Mr. Chairman, if there are other 

areas that we can work on in this space, I look forward to having 

those conversations. And if I am able to, because of the length of 

the line, Mr. Chairman, I look forward to the second round—— 

Mr. WALDEN. Indeed. 

Mr. LUJA AE1N. Thank you, Chairman. 

Mr. WALDEN. I don’t know if you can get there from here. Which 

we are going to start now, so thank you. 

I want to go back to this issue of LPTV and translators, and 

maybe Commissioner Pai—Chairman Wheeler. There is all this 

65 

talk now at the Commission about setting aside an entire channel 

for unlicensed. And I support unlicensed, we have made a lot of unlicensed available, there is more to be done, but won’t setting aside 

a whole channel for unlicensed contribute to the problem that we 

are hearing from translator and the LPTV community? Commissioner. 

Mr. PAI. Mr. Chairman, it will by definition, to the extent that 

a particular vacant channel is allocated solely for unlicensed. In 

the TV band, that means an LPTV’s station can’t occupy it postauction. 

Mr. WHEELER. In—— 

Mr. WALDEN. Chairman Wheeler? 

Mr. WHEELER [continuing]. Reality, probably not, because what 

we are talking about here are using TV white spaces, and creating 

these kinds of additional applications for unlicensed in those areas 

where the duplex gap is not sufficient. And that is going to be a 

handful of areas that I doubt will be any areas that are the typical 

LPTV rural kind of area. 

Mr. WALDEN. So will you commit to LPTV and translators having 

priority, then, over unlicensed? 

Mr. WHEELER. No. We are going to—so it was really clear—— 

Mr. WALDEN. In the TV band? 

Mr. WHEELER. I think that the mandate from this Committee is 

clear. The mandate from this Committee is that there is no priority 

given to LPTV. 

Mr. WALDEN. True. 

Mr. WHEELER. And the Committee also said, however, that we 

need to be encouraging unlicensed. I don’t think that it comes down 

to that kind of a solution, though, Mr. Chairman, with all due respect. I think that it is possible, and what we are just breaking our 

tails on, is to be able to accomplish both of these, and I think we 

will be successful. 

Mr. WALDEN. Yes. I would say—my recollection of the statute, 

which we together helped write here, was—— 

Mr. WHEELER. You wrote it. 

Mr. WALDEN [continuing]. That unlicensed was never set aside as 

a priority to go create a nationwide band. In fact, we had a lot of 

discussion about that very fact, that you don’t go clear all this and 

then give it away to, in effect, some pretty major operators. You 

know, Commissioner Pai? 

Mr. PAI. And this is part of the reason why I suggested that we 

adopt a technically sound solution to where to put broadcasters if 

we put them in the wireless—— 

Mr. WALDEN. Right. 

Mr. PAI [continuing]. Band. If we put them in the uplink, then 

we avoid this entire issue altogether, whereas in the duplex gap, 

we not only impair unlicensed, which has to find a home, but also 

downlink. 

Mr. WHEELER. This is a really good point that Commissioner Pai 

has raised, that there is serious concern on. So, first of all, let us 

remember what we are talking about here—how do we minimize 

the aggregate impact across the country? And that means that in 

a handful of markets, it is a percentage that can be in single digits, 

OK, that there is an issue. He is proposing that you put it in the 

66 

uplink, put the interference in the uplink. What that does is knock 

out an entire bay station. 

Mr. WALDEN. Right. 

Mr. WHEELER. The impact is much broader. 

Mr. WALDEN. I think you have got disagreement with Commissioner Pai, but I am going to have to move along here. My concern 

is there are a lot of—I hear from my colleagues all over the west, 

there are concern these translators are going to go dark because 

they are going to get squished out. And if they get squished out because you created a whole band of unlicensed, that only adds to the 

problem. And there is a public interest obligation underpinning all 

of this at the Commission to provide for. 

Now, I realize they are not classy. I realize they don’t have all 

the rights, and all that. I was a licensee of translators myself. I 

knew I could be pushed out. But through this you have got some 

flexibility here to manage, and that is, I guess, what we are calling—— 

Mr. WHEELER. Yes, we—— 

Mr. WALDEN. I want to switch gears to go to the TCPA issue very 

quickly, because this issue of auto-dialer has come up. And, in your 

order, you adopted a pretty broad definition of an auto-dialer, although you acknowledged, and I quote, ‘‘there are outer limits of 

the capacity of equipment to be an auto-dialer, and there must be 

more than a theoretical potential that the equipment could be 

modified to satisfy the auto-dialer definition.’’ Is my iPhone an 

auto-dialer? 

Mr. WHEELER. No, sir. 

Mr. WALDEN. Then let me ask you this. There are at least three 

apps that we found, Dial My Calls, Call Bot Automated Calling, 

and Voxling that would turn my iPhone into an auto-dialer. 

Mr. WHEELER. So the issue that we were trying to deal with in 

this order was not the hardware, but the impact, because since 

Congress acted in 1991, the technology has changed. And what 

Congress’s instructions to us were is no contact from auto-dialers 

without—— 

Mr. WALDEN. But—— 

Mr. WHEELER [continuing]. Permission. 

Mr. WALDEN. But my—— 

Mr. WHEELER. I am taking that—— 

Mr. WALDEN [continuing]. Question to you, though, is if I push 

somebody’s name, Chairman Wheeler’s—I don’t ever dial your 

number. I just push—— 

Mr. WHEELER. Correct. 

Mr. WALDEN [continuing]. Chairman Wheeler, and it dials. To 

me—is that an auto-dialer? 

Mr. WHEELER. No, sir. 

Mr. WALDEN. OK. If I have a database of names that I want to 

reach out to, let us say voters, and I want to turn them out to vote, 

and I have a device that calls until somebody answers, and then 

I can take the call, is that an auto-dialer? 

Mr. WHEELER. Yes, sir. 

Mr. WALDEN. OK. So I no longer can do that? If I have a teletown hall in my office, which I do, and there is some company that 

67 

does—calls all those thousands of people in my district, are they 

now prohibited from doing this? 

Mr. WHEELER. Unless the consumer has asked to get this. The 

statute is very explicit. 

Mr. WALDEN. So tele-town halls now by members of Congress, 

and most members do that, are now against—— 

Mr. WHEELER. All I am doing is—— 

Mr. WALDEN. No, I am asking you the question. 

Mr. WHEELER [continuing]. The statute. No, sir. That is right. 

Mr. WALDEN. So those are prohibited, and your contention is always have been? 

Mr. WHEELER. Yes, sir. 

Mr. WALDEN. Wow. That is interesting. That would be news to 

a lot of people. Commissioner Pai? 

Mr. PAI. Mr. Chairman, I think part of the reason why it is indisputable that a smartphone is an auto-dialer under the FCC’s new 

interpretation—if you look at the statute, it says a capacity to randomly or sequentially dial a number. I explicitly said capacity 

means the actual capacity. The smartphone has, in itself, intrinsically, the ability to do that. The majority rejected my argument and 

said, no, you could download an app. There are all kinds of other 

things you could do to effectively make the smartphone an auto-dialer, even if it isn’t intrinsically. 

And that is part of the reason why literally every communications device, other than a rotary phone, I give the majority credit 

for excepting those, nonetheless is now subject to TCPA liability as 

an auto-dialer. And that is not good for consumers, that is not good 

for providers. It is not good for anybody, other than trial lawyers. 

Mr. WALDEN. Well, and we are hearing from others out there 

who are—there is this issue with the health care exchanges, and 

whether or not insurance companies can follow up and notify you 

that it is time for you to come in and have some tests done. I have 

been told that may be prohibited now. Are you aware of that? Are 

you hearing those issues? 

Mr. PAI. That is the first I have heard of it, but it doesn’t surprise me, because now we have seen it from a number of different 

industries. They are just uncertain about what the rules of the 

road are. 

Mr. WALDEN. Yes. 

Mr. WHEELER. So understand what we were doing, Mr. Chairman, was responding to a series of petitions. We did not issue a 

rule. People petitioned us and said, ‘‘what is the rule?’’—what does 

your—— 

Mr. WALDEN. Right, but you interpreted. 

Mr. WHEELER. And if somebody wants to petition us on the kinds 

of things you talk about, we can deal with that. 

Mr. WALDEN. Right. 

Mr. WHEELER. On the health care issue one, we specifically had 

an exemption for bank fraud, health care, things like this. And for 

government agencies. 

Mr. WALDEN. And with changing technology, 40 percent of Americans no longer have a land line, right? 

Mr. WHEELER. Right. 

68 

Mr. WALDEN. I know you spoke out and said, basically, pollsters 

could go the way of blacksmiths, I guess. 

Mr. WHEELER. Well, they have been right. 

Mr. WALDEN. Well, I guess my point is—so that industry, in effect, in terms of trying to do a random sample is now put out 

this—— 

Mr. WHEELER. But—— 

Mr. WALDEN [continuing]. In this effect, right? How do you do a 

random sample on a poll if you can’t randomly sample and dial? 

Mr. WHEELER. So I once sat down with Peter Hart to write a 

piece—— 

Mr. WALDEN. Right. 

Mr. WHEELER [continuing]. Exactly on that, insofar as wireless, 

because you can’t get to the wireless numbers. 

Mr. WALDEN. Right. 

Mr. WHEELER. You don’t know what they are. So that went by 

the board. The issue here is, if you come to us and you say, the 

statute says, which it does, that the only folks who are allowed to 

be called are those who want to be called—— 

Mr. WALDEN. Got it. 

Mr. WHEELER [continuing]. And I am supposed to be a strict 

constructionalist of the statute—— 

Mr. WALDEN. Well, we have seen some examples by the Court 

where they would disagree with your interpretation of statute on 

other issues—— 

Mr. WHEELER. Let me—— 

Mr. WALDEN [continuing]. Rather violently and directly. 

Mr. WHEELER. And you are constantly encouraging me to be a 

strict constructionalist. 

Mr. WALDEN. Well, I think we are just figuring out the impact—— 

Mr. WHEELER. Yes. I understand. 

Mr. WALDEN [continuing]. Of your ruling as it relates to—I have 

gone way beyond my time, but I will now defer to my colleague 

from California, Ms. Eshoo. 

Ms. ESHOO. Thank you, Mr. Chairman. Well, it is an important 

discussion, and I think that we need to talk about this some more, 

because what went into the statute was like holding a mirror up 

to the country at that time. 

Mr. WHEELER. In ’91, right? 

Mr. WALDEN. In ’91. That is a long time ago. That is many, many 

moons ago, when you think of how many generations of technology 

changes have taken place. So whether someone wants to be a strict 

constructionist or whatever, I think that we have to have the elasticity to stay up with the times. I mean, each one of us represents 

750,000 people. Now, maybe we have got to reach out to every single one of them if we possibly can, but, in my view, meeting with 

people relative to a telephone town hall meeting has been overwhelmingly embraced. Not just accepted, but embraced by my constituents. Plus it saves tons of money, and they get to just ask 

whatever they want. So these are, I don’t think they would be satisfied—well, this is what the statute says. I think they would say, 

change whatever you have to change, but keep up with the changes 

that are taking place. So it is important. 

69 

Since we are going into a second round, and maybe it is just the 

Chairman and myself. No, that is—two others? Good, Billy and 

Ben. I want to talk about your budget. The House appropriators 

have really screwed the FCC, in plain English, in my view. And I 

don’t think it is funny, I think it is serious. We had members asking questions today about travel budgets. I think that whatever 

you do, and however you do it, it would be interesting to see if it 

tracks along with what—how members of Congress are allowed to 

handle their MRA. I don’t know, but it may be something for us 

to discuss. Now, the fiscal year appropriations bill has $315 million 

in it. That reflects a cut of $25 million below the fiscal year 2015 

enacted level, and $73 million below the request. Now, they also 

have placed in riders relative to net neutrality and all of that. 

Now, what I would like to ask you, Mr. Chairman, is have you 

had conversations with the appropriators? Is there anyone from the 

majority here that has been asked to lean in with the appropriators? I mean, we are constantly putting on the FCC, and in oversight, all of these issues come up. I don’t know who is going to do 

this work and follow up with every member’s request about what 

they want? You wanted to close offices, members said don’t close 

them, we need them open. But, I mean, there are so many things 

that are reliant on dollars. And I am not talking about having a 

load of extra dough. I am talking about the agency being able to 

carry out its responsibilities. So what I would like to know from 

you is, have you had conversations with the appropriators on the 

majority side? Have you had conversations with the majority side 

here to see what can be worked out with the budget? 

I don’t know, these riders, the President is not going to sign 

something like that. And at the end of the day, I think that the 

appropriations process is so messed up around here because we 

don’t have regular order, speaking of transparency, and process, 

and all of that, that we are going to end up with an omnibus bill. 

And I think that is what is going to happen. So compare and contrast what your present budget is, because an omnibus doesn’t really allow for that much more, and address for us any conversations, 

or how you are following up with whatthe appropriators did to the 

budget of your agency. 

Mr. WHEELER. Thank you, Congresswoman. We have had conversations with everybody who will listen, and some who won’t. 

And I mean that only in a flippant remark. I am—— 

Ms. ESHOO. Yes. 

Mr. WHEELER [continuing]. Not saying people aren’t listening. 

We have talked to this Committee, we have talked to their Committee. I was honored that the Chairman came to the Appropriations Committee, which I think—the first time that I have ever 

known that a Chairman has actually come—— 

Mr. WALDEN. Second time. I was there last year. 

Mr. WHEELER. I missed you, then. I was—sorry. 

Mr. WALDEN. I was right behind you and waving. 

Mr. WHEELER. OK. So that he has got a record now for twice. 

Ms. ESHOO. But that is not the point. 

Mr. WHEELER. But the—— 

Ms. ESHOO. I want to know about the money. 

70 

Mr. WHEELER. But, yes, we have to live with the number that 

the Congress gives us. It is that simple. 

Ms. ESHOO. Have you, in response to what the appropriators 

have done—and I don’t know, Mr. Chairman, were you there to 

support the appropriators in cutting the budget, or against it? 

Mr. WALDEN. I was there to listen to the appropriators—— 

Ms. ESHOO. I see. 

Mr. WALDEN. Yes. 

Ms. ESHOO. You didn’t testify? 

Mr. WALDEN. No. No, I was there to hear what they had to say. 

Ms. ESHOO. I see. Have you come up with—you know what I 

would like to ask you to do? Two things. What you will be able to 

do—— 

Mr. WHEELER. Yes. 

Ms. ESHOO [continuing]. With a budget that is reduced by 25 million—— 

Mr. WHEELER. Yes, ma’am. 

Ms. ESHOO [continuing]. And the top line things that you have 

to do. We have got to move forward with the voluntary auction, and 

all the top line items. And also, if we have an omnibus bill, what 

that does. And I look forward to reviewing that. I think it should 

be sent to everyone on the—— 

Mr. WHEELER. Thank you. 

Ms. ESHOO [continuing]. Committee. 

Mr. WHEELER. We would be—— 

Ms. ESHOO. I would really like to see that, because—— 

Mr. WHEELER. Do you mean—— 

Ms. ESHOO [continuing]. We are walking into something that I 

think the members of this subcommittee, that have oversight responsibility, are going to have to understand, that we either have 

to curb our appetite for giving the FCC assignments that—if they 

don’t have the dollars to carry them out, then they don’t have the 

dollars to carry them out. Something has going to go. 

Mr. WHEELER. I will tell you one interesting thing. We are currently at the lowest number of full time employees in modern history for the agency. 

Ms. ESHOO. Thank you. 

Mr. WALDEN. Thank the gentlelady. Now go to the gentleman 

from Missouri, Mr. Long. 

Mr. LONG. I was very impressed that I got to follow the Chairman for the first time—— 

Mr. WALDEN. You hang around long enough—— 

Mr. LONG. Felt kind of like Sally Field. I thought, they really do 

like me. Then I looked around and no one else was here, so—Commissioner Pai, I have got a question for you. It has been reported 

that the Chief of the Enforcement Bureau has acknowledged that 

many of his cases fall into the legal gray area where companies 

might not even realize they are doing anything wrong. I know you 

have raised concerns about this. Can you kind of explain your concerns, and what could be done to address them? 

Mr. PAI. Thanks for the question, Congressman. I think, unfortunately, many of the FCC’s more high profile enforcement initiatives 

have betrayed that basic principle of due process, and that is not 

an FCC law. That is going back to King John signing the Magna 

71 

Carta 800 years ago this summer at Runnymede. And I think part 

of the reason why I have been so outspoken about it is that if private actors, from companies all the way to individuals, don’t know 

what the rules of conduct are, then they have no reason to know 

that their conduct is violating what the FCC thinks should be the 

rule. 

And with respect to certain notices of apparent liability the agency has issued, it is almost more a quest for headlines first, and we 

will figure out the law later, if at all. But that has it precisely 

backwards. To me, we should look at the facts, we should look at 

what the law is. If there is a gap in the law, let us change it to 

make sure that people are abiding by what we think is proper conduct. But we can’t sanction somebody for violating a rule that they 

have no reason to know, or don’t know, exists. 

Mr. LONG. OK. Thank you. And, Chairman Wheeler and Commissioner Pai, to the two of you, I am curious about the Broadcasters Relocation Fund, and how those monies are going to be 

spent. The fund is currently at $1.75 billion, as you know, and obviously that fund was set up to pay for all of the relocation costs 

to the broadcasters you are required by the FCC to move to a new 

channel as part of the auction. After examining these issues for the 

last few years, has the FCC determined how many stations it is 

able to re-pack with that $1.75 billion fund? 

Mr. WHEELER. Thank you, Congressman. It is a moving target, 

depending upon the characteristics of who participates in the auction. Do you have to move an antenna? Do you have to build a taller antenna? How far do you have to move it? 

Mr. LONG. Now, can you give me a ballpark on the number? 

Mr. WHEELER. I can get back to you with one, sir. I don’t have 

one on the top of my head. But what we have tried to do is to develop a set of rules that can live inside of that, and so let me get 

you the number we use for denominator in that. 

Mr. LONG. OK. I would—— 

Mr. WHEELER. Because I don’t know it off the top of my head. 

Mr. LONG [continuing]. Appreciate it. And, Commissioner Pai, 

same question to you. 

Mr. PAI. I have heard estimates that it will cost somewhere 

north of $3 billion to relocate all the broadcasters. And, if that figure is correct, and we only have $1.75 billion in the relocation fund, 

then it necessarily follows that broadcasters would be out of pocket 

for that extra $1 1⁄4 billion. And that is something that I hope to 

avoid, and certainly I am willing to work with you and the Chairman, and my colleagues, to make sure that doesn’t happen. 

Mr. LONG. Well, do you have any estimate on the number that 

the $1.75 billion—that is the number I am trying to get to, how 

many that would cover? 

Mr. PAI. No, unfortunately, I don’t, because, as the Chairman 

pointed out quite eloquently, there are a lot of moving parts to this, 

and every broadcaster is unique. 

Mr. LONG. OK. Because I have heard some figures, and I have difficulty believing that $1.75 billion will cover the estimated number that they are talking about. So if both of you could get back 

to me on that, I would appreciate it. And I am going to yield back 

with a minute 37 to go. 

72 

Mr. WALDEN. The gentleman yields back. The Chair recognizes 

the gentleman from New Mexico, Mr. Luja AE1n. 

Mr. LUJA AE1N. Thank you, Chairman Walden, and I would like 

to associate myself with the questions that both Ranking Member 

Eshoo and Chairman Walden were asking pertaining to what appears now to be our inability to reach out to the American people 

to be able to get feedback from them. 

Chairman Wheeler, as we talked about these telephone town 

halls, when I travel the 13th Congressional District of New Mexico, 

especially in rural communities, one of the things that I hear from 

members of the community that I represent was sometimes I have 

to travel 3 or 4 hours just to get to town centers, not even city centers, is how much they appreciate being able to weigh in. 

So if the rule requires them to opt into this program, how would 

we reach out to seven, 800,000 constituents for them to opt in? We 

can’t sent them an e-mail because, based on a 2015 press release 

coming from the FCC, only 48 percent of those making less than 

$25,000 have broadband service at home. And so if we can’t reach 

out to them to opt in, do I send them a letter, which is what the 

FCC is working against? You don’t want to be sending letters and 

forms out to opt in, and then you would have to check a box yes 

or no, and then you get the letter back in. I certainly hope that we 

can look at this to see how we can address this. And I know it is 

something that I visited with Chairman Walden, and with Ranking 

Member Eshoo, with both the majority and minority staffs on this, 

so I look forward to working with you on that as well. 

With that being said, just some additional questions about 

broadband penetration. There has been a little bit of conversation 

today about broadband, and, Chairman Pai, do you see broadband 

penetration or accessibility in rural parts of the country to 

broadband as a necessity or a luxury? 

Mr. PAI. Well, Congressman, thanks for the question. As I said 

in response to Congresswoman Eshoo earlier, my goal has been always to make sure that any American anywhere, whether it is on 

tribal land in New Mexico, or somewhere in my home state of Kansas, anyone who wants digital opportunity, in terms of a broadband 

connection, should be able to get it. And that is why I have laid 

out proposals on rural broadband, on e-rate, on wireless infrastructure, on 5 GHz spectrum, to make sure that we have a bunch of 

competitors out there all competing to provide every American with 

that opportunity. And as far as the semantic classification of it, 

that is something that I will leave to wiser minds than myself, but 

my focus—— 

Mr. LUJA AE1N. But with the semantics associated with the difference between necessity and luxury, how would you characterize 

the importance of accessibility to broadband in rural parts of the 

country? 

Mr. PAI. I think it is absolutely critical, and one of the things I 

have enjoyed in this job is having a chance to travel to small 

towns, from Diller, Nebraska, to Fort Yukon, Alaska to be able to 

see how people have used broadband to get opportunities they otherwise wouldn’t have. I am sure this is the case in your district, 

but I have seen it in a lot of rural districts that if people don’t get 

that high speed connection, they will move somewhere else. They 

73 

will move to another state, or a bigger city to get it. And that is 

unfortunate, because I think there are a lot of ideas in rural America that are probably withering on the vine for lack of that 

broadband connection. 

Mr. LUJA AE1N. Yes. 

Mr. PAI. And that is something that I am passionate about, and 

I would be more than happy to work with you—— 

Mr. LUJA AE1N. I appreciate that, yes. Well, I would characterize 

it as a necessity, not a luxury. I really appreciate you considering 

it or characterizing it as absolutely critical. I would agree with that 

assessment as well. 

With that, Commissioner Pai, as we look to the Lifeline Program 

as well—and in the testimony that—or your dissent to the 2015 

order, in it there were some concerns associated with the cost to 

the program to date. And in your dissent you did recognize that 

there had been some reforms, that we looked back to 2012, understanding that in 2005, 2008, we saw a transformation of Lifeline 

that went from land line phones to being able to go into mobile 

phones, and now into smartphone apparatus. Since then, in 2012, 

the Commission came forward with a unanimous opinion, which resulted in a reduction of $214 million in savings in 2012, with a substantial projection going into 2014. I am trying to still get the numbers on what those realized savings were as well. 

But in your dissent you also listed a concern where there were 

providers that were signing people up fraudulently, which we need 

to crack down on, and we share that concern. But in the 2015 order 

that you dissented, there was a reform in there that did state that 

we would—that the FCC would remove the ability for providers to 

sign people up for Lifeline—or for verification. 

Mr. PAI. Yes. 

Mr. LUJA AE1N. Is that something that—with that principle, is 

that something that you agree with, and were there other areas 

that you disagreed with in the order? But is that something that 

you could agree with that we could work on together? 

Mr. PAI. Well, I would love to work with you on that, and I do 

think that verification is a critical issue. I think one of the problems that I cited in my dissent is the fact that fly by night operators, like Icon Telecom in Oklahoma, they just created so-called 

Lifeline customers out of whole cloth, got a lot of money for doing 

it, and the CEO ended up pocketing $20 million, and spent it on 

his own private expenses. And that is something we need to weed 

out. We need more enforcement action, we need to reform the rules, 

and we need to have that conversation about how to have a fiscally 

responsible program. 

Mr. LUJA AE1N. And so I appreciate the reforms the Commission 

has put in place. The last question I have is, is $1.6 billion the 

right cap? Because you and I share a concern with broadband 

availability in communities, but I would hope that we both would 

agree that it is not just accessibility from an infrastructure perspective to broadband, it is also an affordability question in many 

rural parts of the country. What is the right number for a cap, and 

should it be arbitrary, or should it be based on data? 

Mr. PAI. I do believe it should be fact-based, and that is part of 

the reason why I suggested a cap or a budget of $1.6 billion, beVerDate Nov 24 2008 10:56 Jul 20, 2016 Jkt 037690 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-70 CHRIS
74 

cause the program was at $800 million in 2009. It is now at $1.6, 

and that is the only one of the universal service fund programs 

that isn’t capped. And so what I suggested was, we need to have 

a balance here. We need to make sure that we target the people 

who are offline in the Lifeline Program. 

We also have to make sure that we are responsible stewards of 

the consumers’ tax dollars. After all, this is paid for by consumers, 

and $1.6 seemed to me to be a good conversation—a good starting 

point to have. 

Mr. LUJA AE1N. But $1.6 is based on last year’s numbers. The 

only data associated there is that is what the number rounds up, 

and year to year that number changes, understanding that the inflation from 2008 to 2012 was because the reforms were necessarily 

in place that helped us back that number down with the reforms 

in 2012, and the recent actions by the FCC in 2015. 

So, Mr. Chairman, this is an area maybe where we can work on 

it together as well, but I look forward to have more conversations 

in this space as well. Thank you for the time, Mr. Chairman. 

Mr. WALDEN. Thank you, and we appreciate your participation, 

and that of our witnesses. And, speaking of outdated data, just in 

closing, the quadrennial review I referenced in my opening statement is now—I think the last one we got is probably 8 years old, 

so I hope the Commission will deal with the quadrennial ownership 

report on a basis as required by statute. AM modernization is still 

something high on a number of our priorities, and on the de-stack 

issue, we ask in stellar that the Commission deal with the 

downloadable security issues, and it appears that Committee was 

given direction to work disaggregation of data on a video stream. 

So, again, we are after the downloadable security issue. 

I have one letter to put in the record from Care Payment, without objection. 

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

Mr. WALDEN. And I think you heard, Mr. Chairman, bipartisan 

concerns here on TCPA. We realize you are implementing the law, 

it appears a law that was created back in ’91, when you got 

charged for incoming phone calls. Nobody is talking about robocalls 

here for cell phones. None of us want that. But I think there is an 

issue here where we need to take a look at that law. 

So, with that, thank you for your diligence, and your patience, 

and with that, subcommittee stands adjourned. 

[Whereupon, at 1:15 p.m. the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

With communications and technology issues touching nearly every part of our 

21st century economy, these sectors need a fair, consistent, and transparent regulator. I think it’s a good sign when we’re having a healthy debate about the tough 

questions before the commission—it means the system is working. On the other 

hand, recent breakdowns in collegiality and last-minute data dumps into the record 

erode and needlessly distract from the commission’s important work. 

A number of significant decisions were considered in the past year, and even more 

are on the horizon. For example, there is substantial work that must be completed 

before the incentive auction can take place. Proposals about the auction, such as the 

proposed duplex gap, have raised concerns among all participants that, without appropriate resolution, could threaten the auction’s success. 

75 

Real reforms, including a funding cap, must be made to the Universal Service 

Fund to ensure ratepayer dollars are spent wisely and the program is sustainable 

for years to come. Additionally, the chairman’s plan to start a rulemaking on the 

commission’s privacy authority under the new net neutrality rules represents fertile 

ground for the temptation of agency overreach—a temptation that must be resisted. 

How the commission addresses these issues will tell us whether real progress is obtainable. 

As we continue our oversight of the Federal Communications Commission, I remain concerned that little has improved since our last oversight hearing in March. 

Our work to institute real process reforms has traversed multiple chairmen and 

comes from our desire to guide the agency in a direction that works for the American people and enhances innovation, investment and jobs creation. 

It has been my hope that working together we can make the FCC a shining example of an effective, transparent, and apolitical government agency. As a Cubs fan, 

I still have hope. An FCC at its best is one that will benefit folks in Michigan and 

across the country as we continue to innovate and create jobs in the 21st century. 

I look forward to Chairman Wheeler and Commissioner Pai’s take about how we 

can make that happen. The American people and our nation’s economy deserve better than what we have seen. Let’s make sure they get it. 

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Æ 


98157.049