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72–154 PDF 2011

REFORMING FCC PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 22, 2011 

Serial No. 112–66 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

(II)

(III) 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

LEE TERRY, 

Vice Chairman 

CLIFF STEARNS, Florida 

JOHN SHIMKUS, Illinois 

MARY BONO MACK, California 

MIKE ROGERS, Michigan 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

BRETT GUTHRIE, Kentucky 

ADAM KINZINGER, Illinois 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

ANNA G. ESHOO, California 

EDWARD J. MARKEY, Massachusetts 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., NEW JERSEY

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

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

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

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

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

Tennessee, prepared statement .......................................................................... 5 

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

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

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

Prepared statement .......................................................................................... 7 

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

California, opening statement ............................................................................. 8 

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

prepared statement .............................................................................................. 96 

WITNESSES

John Sununu, Honorary Co-chair, Broadband for America ................................. 10 

Prepared statement .......................................................................................... 13 

Answers to submitted questions ...................................................................... 130 

Kathleen Abernathy, Chief Legal Officer and Executive Vice President, Frontier Communications ............................................................................................ 19 

Prepared statement .......................................................................................... 21 

Answers to submitted questions ...................................................................... 132 

Brad Ramsay, National Association of Regulatory Utility Commissioners ........ 24 

Prepared statement .......................................................................................... 26 

Answers to submitted questions ...................................................................... 138 

Mark Cooper, Research Director, Consumer Federation of America .................. 40 

Prepared statement .......................................................................................... 42 

Answers to submitted questions ...................................................................... 153 

Ronald M. Levin, William R. Orthwein Distinguished Professor of Law, Washington University School of Law ......................................................................... 48 

Prepared statement .......................................................................................... 50 

Answers to submitted questions ...................................................................... 154 

Randolph J. May, President, Free State Foundation ........................................... 67 

Prepared statement .......................................................................................... 69 

Answers to submitted questions ...................................................................... 163 

SUBMITTED MATERIAL

Article entitled, ‘‘FCC Reform and the Future of Telecommunications Policy,’’ 

Philip J. Weiser, University of Colorado at Boulder ......................................... 98 

(1) 

REFORMING FCC PROCESS 

WEDNESDAY, JUNE 22, 2011 

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

The subcommittee met, pursuant to call, at 10:32 a.m., in room 

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

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Terry, Shimkus, 

Bono Mack, Bilbray, Bass, Blackburn, Scalise, Latta, Guthrie, 

Kinzinger, Barton, Upton (ex officio), Eshoo, Doyle, Barrow, 

Christensen, Dingell, and Waxman (ex officio). 

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

Policy Advisor/Director of Coalitions; Michael Beckerman, Deputy 

Staff Director; Paul Cancienne, Policy Coordinator, CMT; Nicholas 

Degani, Detailee, FCC; Andy Duberstein, Special Assistant to 

Chairman Upton; Neil Fried, Chief Counsel, C&T; Debbee Keller, 

Press Secretary; Carly McWilliams, Legislative Clerk; Jeff Mortier, 

Professional Staff Member; David Redl, Counsel, Telecom; Shawn 

Chang, Democratic Counsel; Jeff Cohen, FCC Detailee; Sarah Fisher, Democratic Policy Analyst; and Roger Sherman, Democratic 

Chief Counsel, Communications and Technology. 

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

Mr. WALDEN. Good morning and welcome. Before I begin my 

opening statement regarding FCC process reform that brings us together here today, I just wanted to update our members of the committee on the ongoing efforts on our top issue, which is related to 

spectrum auctions and public safety networks. Key staff on both 

sides of the aisle, along with Ms. Eshoo and myself, have been 

meeting regularly for several weeks to see if we can come together 

on a bipartisan agreement on spectrum legislation. These talks continue to make progress, and I appreciate the good faith effort on 

both sides and especially where the real work gets done—at the 

staff level. 

And I think we all know and are keenly aware that time is of 

the essence and we need to move to a conclusion at an appropriate 

time given the needs of public safety and the anniversary of 9/11. 

Meanwhile, though, our subcommittee can walk and chew gum at 

the same time so we have many other issues before us, including 

FCC process reform, which is the subject of today’s hearing. 

2 

We have before us a diverse panel of experts representing industry, think tanks, consumer groups, academia, and the States to testify on ways to improve the transparency and accountability of the 

FCC. To keep our discussion grounded, I have also circulated to my 

colleagues on the subcommittee and these experts a discussion 

draft of legislation. Again, I point out it is a discussion draft. That 

is what we are going to have today. 

I view that legislative language as a starting point for today’s 

conversation, and I thank all of you for your thoughtful analysis of 

the draft legislation and your testimony. I have heard from many 

who track these issues that they appreciate actually having a 

‘‘draft’’ document to review from which to make more informed 

comments, perhaps a process we could institute in certain independent agencies. This is the kind of process I would like to see 

used more often at the FCC. I look forward to you sharing your 

thoughts and ideas about best practices for this Agency. 

Now, at our last hearing, we heard from the FCC Chairman and 

his fellow commissioners. They testified on what was working at 

the FCC, recent improvements in the FCC’s processes, and what 

could still be improved. The hearing has made me an optimist. 

Chairman Genachowski explained the Agency has already improved the transparency of the Commission in several regards—by 

publishing the specific text of proposed rules, by releasing orders 

shortly after adoption, and by proposing to eliminate unnecessary 

and outdated regulations. But all of this is discretionary. 

Congress has the authority and I believe the responsibility to ensure that the Agency—which is conducting the public’s business— 

does so with transparency and accountability, regardless of who is 

currently the chairman. It is not asking too much to have the FCC 

actually codify a set of best practices and then operate by them. 

One idea in this mold is to ask the FCC to establish shot clocks 

so that parties know how quickly they can expect action in certain 

proceedings. Another is to ask the FCC to establish a means for the 

public to know the status of the rulemakings and other proceedings 

pending before the Commission. And another is to ask the FCC to 

establish procedures for a bipartisan majority of commissioners to 

actually be able to initiate a proceeding. By asking the FCC to regulate itself, we can give the Agency the flexibility it needs to act 

while guarding against a lapse in the Commission’s practices. It is 

not my intent to micromanage every decision and this legislation 

does not do that. 

In considering other reforms, we must balance the need for congressional and public oversight of the Commission with the flexibility the Commission needs to promote competition in the marketplace. For example, the Administrative Conference of the United 

States recently recommended 60-day comment periods for ‘‘significant regulatory actions,’’ as well as reply comment periods ‘‘where 

appropriate.’’ One idea is to strike a middle ground, requiring comment and reply comment periods of 30 days apiece but only when 

the APA already requires the Commission to issue a NPRM. 

Another idea is to extend to the FCC the cost-benefit analyses 

currently required of executive agencies and endorsed just this year 

in President Obama’s Executive Order on regulatory reform. Costbenefit analyses are valuable because they require an agency to 

3 

squarely address the cost of regulation, determine whether other 

methods may be less costly, and make a reasoned determination 

that the benefits outweigh the costs. If the President’s requirement 

is good enough for the Department of Education and the Environmental Protection Agency, why not the FCC? 

And trust me, the old argument that such a requirement will bog 

down the agency just doesn’t cut it. I have never met an agency 

that didn’t use this argument, yet they always seem to find money 

to buy new vehicles and buildings. 

Finally, it may be possible to tighten the FCC’s transaction review standards to harms that directly arise from the transaction 

before it. Such a requirement is not meant to displace the standard 

of review but to focus the Commission’s enquiry. If the Commissions Act empowers the FCC to review a transfer of broadcast licenses but not other aspects of a transaction, the FCC should review that transfer of broadcast licenses and not other aspects of the 

transaction. That is what their underlying statute says. 

These ideas are not the end of the discussion but the beginning, 

and I look forward to the thoughts of my colleagues and the panelists on moving forward. 

As I said at the outset, this is a discussion draft, and I am open 

to the input of our panelists—that is why you are here—and to the 

input of the public and my colleagues. When it comes to improving 

the transparency, accountability, and efficiency of the FCC, I am 

convinced we can find common ground. 

With that, I would yield to Ms. Blackburn for the remainder of 

time she may consume. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

(Good morning. Before I begin my opening statement regarding FCC process reform, I wanted to update members of the committee on the ongoing efforts on our 

top issue: spectrum auctions and public safety networks. Key staff on both sides of 

the aisle, along with Ms. Eshoo and I, have been meeting regularly for several 

weeks to see if we can come to a bipartisan agreement on spectrum legislation. 

These talks continue to make progress, and I appreciate the good faith commitment 

of the staffs to this work and know that all involved are keenly aware of the need 

to move toward a conclusion soon, given the needs of our public safety community 

and the anniversary of 9/11. Meanwhile, our subcommittee has other work it can 

and must also undertake, including our continuing efforts to modernize and standardize the processes of the FCC, which is the focus of today’s hearing.) 

We have before us a diverse panel of experts-representing industry, think tanks, 

consumer groups, academia, and the states-to testify on ways to improve the transparency and accountability of the FCC. To keep our discussion grounded, I have also 

circulated to my colleagues on the Subcommittee and these experts a Discussion 

Draft of legislation; I view that legislative language as a starting point for today’s 

conversation, I thank all of you for your thoughtful analysis of the draft legislation 

and your testimony. I’ve heard from many who track these issues that they appreciate actually having a ‘‘draft’’ document to review and from which to make more 

informed comments. This is the kind of process I’d like to see used more often at 

the FCC. I look forward to you sharing your thoughts and ideas about best practices 

for the agency. 

At our last hearing, we heard the FCC Chairman and his fellow Commissioners 

testify on what was working at the FCC, recent improvements in the FCC’s processes, and what could still be improved. That hearing has made me an optimist. 

Chairman Genachowski explained that the agency has already improved the transparency of the Commission in several regards-by publishing the specific text of proposed rules, by releasing orders shortly after adoption, and by proposing to eliminate unnecessary and outdated regulations. But all of this is discretionary. Congress 

4 

has the authority and the responsibility to ensure that the agency—conducting the 

public’s business—does so with transparency and accountability. It’s not asking too 

much to have the FCC actually codify a set of best practices and operate by them. 

One idea in this mold is to ask the FCC to establish shot clocks so that parties 

know how quickly they can expect action in certain proceedings. Another is to ask 

the FCC to establish a means for the public to know the status of rule makings and 

other proceedings pending before the Commission. And another is to ask the FCC 

to establish procedures for a bipartisan majority of commissioners to initiate action 

in a proceeding. By asking the FCC to regulate itself, we can give the agency the 

flexibility it needs to act while guarding against a lapse in the Commission’s practices. It’s not my intent to micro-manage every decision and this legislation does not 

do that. 

In considering other reforms, we must balance the need for congressional and 

public oversight of the Commission with the flexibility the Commission needs to promote competition in the marketplace. For example, the Administrative Conference 

of the United States recently recommended 60-day comment periods for ‘‘significant 

regulatory actions’’ as well as reply comment periods ‘‘where appropriate.’’ One idea 

is to strike a middle ground, requiring comment and reply comment periods of 30- 

days apiece, but only when the Administrative Procedures Act already requires the 

Commission to issue an NPRM. 

Another idea is to extend to the FCC the cost-benefit analyses currently required 

of executive agencies, and endorsed just this year in President Obama’s Executive 

Order on regulatory reform. Cost-benefit analyses are valuable because they require 

an agency to squarely address the cost of regulation, determine whether other methods may be less costly, and make a reasoned determination that the benefits outweigh the costs. If the President’s requirement is good enough for the Department 

of Education and the Environmental Protection Agency, why not the FCC? 

And trust me, the old argument that such a requirement will bog down the agency just doesn’t cut it. I’ve never met an agency that didn’t use this argument, yet 

they always seem to find money to buy new vehicles and buildings. 

Finally, it may be possible to tighten the FCC’s transaction review standards to 

harms that directly arise from the transaction before it. Such a requirement is not 

meant to displace the standard of review but to focus the Commission’s enquiry: If 

the Communications Act empowers the FCC to review a transfer of broadcast licenses but not other aspects of a transaction, the FCC should review that transfer 

of broadcast licenses and not other aspects of the transaction. 

These ideas are not the end of the discussion but the beginning. I look forward 

to the thoughts of my colleagues and the panelists on moving forward. 

As I said at the outset, this is a discussion draft and I am open to the input of 

our panelists-that’s why you’re here.and to the input of the public and my colleagues. When it comes to improving the transparency, accountability and efficiency 

of the FCC, I’m convinced we can find common ground. 

On that note, I yield my remaining time to Mrs. Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I appreciate the 

legislation that you are bringing forward. I do believe it is a starting point for us to address the crisis of confidence that many now 

have with the FCC. But we need to move the Agency away from 

being an institution driven by activists pursuing social outcomes to 

one grounded in regulatory humility and statutory obedience. 

Congress should slam the FCC’s regulatory backdoor shut, lock 

it, and return the keys to the free market. And any new regulations must require concrete examples of market failure and true 

consumer harm, because there is no room for additional burdens on 

American industries and consumers without showing just cause. 

We need stronger accountability and transparency of the Agency 

to ensure that it operates within its legal boundaries. I thank you 

for the time, and I yield back. 

[The prepared statement of Mrs. Blackburn follows:] 

5 

PREPARED STATEMENT OF HON. MARSHA BLACKBURN

Thank you Mr. Chairman. I appreciate the legislation you are bringing forward. 

I do believe it is a starting point for us to address the crisis of confidence that many 

now have in the FCC. 

But, we need to move the agency away from an institution driven by activists pursuing social outcomes to one grounded in regulatory humility and statutory obedience. Congress should slam the FCC’s regulatory back-door shut, lock it, and return 

the keys to the free market. 

Any new regulations must require concrete examples of market failure and true 

consumer harm because there is no room for additional burdens on American industries and consumers without showing just cause. 

We need stronger accountability and transparency of the agency to ensure it operates within its legal boundaries. 

Mr. SHIMKUS. Will the gentleman yield for just one second? 

Mr. WALDEN. Yes. 

Mr. SHIMKUS. I would like the time to welcome my former classmate, former Senator John Sununu. He is at the panel and it is 

good to see him on that side. 

Mr. SUNUNU. Thank you very much, Congressman Shimkus. It 

is very nice to be here. You know, I could never get on a Commerce 

Committee when I was in the House. That is part of the reason I 

ran for the Senate. But I did notice that I am at the kids’ table 

here, a little sweet, but I am grateful to be here nonetheless. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Mr. WALDEN. That is fine. And we have always wanted to have 

you before us and John has a lot of questions for you, Senator. 

I now turn to the ranking member of the subcommittee, my 

friend and colleague from California who is nursed back to health 

after her surgery, Ms. Eshoo. 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A 

REPRESENTATIVE FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Mr. Chairman. And good morning to you, 

to all of the members and thank you to all the witnesses that are 

here today. 

Today’s hearing continues our discussion of FCC process reform, 

and I think that it is important for us to keep pressing ahead on 

this, examine the suggestions that have been made, and hear from 

a variety of witnesses about their ideas and their comments on 

what we are considering. 

Last month’s subcommittee hearing highlighted that the Commission has really taken some proactive steps to increase openness, 

transparency, and accountability. And these efforts should be applauded as we examine legislative measures that might help to enhance the FCC’s effectiveness. 

I want to thank Chairman Walden for incorporating the FCC 

Collaboration Act into the draft legislation under discussion today. 

This is bipartisan reform which was introduced with Representative Shimkus and Doyle earlier this year and it would promote 

greater collaboration by allowing three or more commissioners to 

talk to each other outside of an official public meeting. 

As part of this Sunshine reform, I am very pleased that the discussion draft also incorporates federal/state joint boards. During 

last month’s hearing, Commissioner Clyburn described how commissioners have to rotate in and out of these meetings and how a 

6 

modification of the Sunshine Act would enhance joint board recommended decisions. Allowing FCC commissioners to collaborate 

more freely as part of their participation on federal/state joint 

boards makes sense. And I think it serves to strengthen our original legislation. 

As I noted in last month’s hearing, though, I think that we need 

to be cautious of legislative proposals which might or could diminish the Commission’s ability to protect the public interest and preserve competition. I think those are two very, very important values that need to be retained. I fully support reforms that will better serve the public good, but they shouldn’t be done at the expense 

of overly prescriptive rules that limit the FCC’s flexibility and decision-making process. 

Our witnesses today come from many backgrounds, including industry, the public interest, and academia. You bring years of experience working with the FCC both inside and outside the Agency. 

And so I especially look forward to hearing your thoughts on the 

draft legislation. So we have a lot of work to do. We have the spectrum legislation that really needs to move forward that will usher 

in a new era of telecommunications, its applications in the 21st 

century, and we have reforms to make. And I look forward to hearing from our witnesses today. And thank you, Mr. Chairman, for 

holding this. 

I would like to yield the remainder of my time to Congressman 

Doyle. 

Mr. DOYLE. Thank you very much. 

Mr. Chairman, thank you for holding this hearing. And we want 

to thank the distinguished panel of witnesses and our former colleague, John Sununu, for being here this morning to educate us 

about the important issue of FCC process reform. Mr. Chairman, 

while I appreciate your hard work to examine ways to update FCC 

process, I am somewhat concerned about certain aspects of the 

draft bill before us and look forward to working with you on that. 

The most troubling part is two things that concern me is one 

that we would limit the power of the Commission to impose conditions or voluntary commitments on the transactions it reviews. 

While conditions shouldn’t serve as excuses for the FCC to permit 

a transaction if it fails to serve the public interest, if a merger is 

approved, the FCC should impose conditions it deems necessary to 

meet its public interest standard. 

It also concerns me that we would require a Notice of Inquiry before every single NPRM. I think that this can be burdensome and 

I think this is something that is better left to the FCC. 

I do want to thank you for including the language of the Sunshine Reform bill that Congressman Shimkus and Congresswoman 

Eshoo and I have put forward. We think that would increase transparency and improve communication within the Agency. I look forward to hearing the testimony of all the witnesses today. Mr. 

Chairman, I look forward to working with you. 

And I yield back. 

Mr. WALDEN. The gentleman yields back his time. I now recognize the chairman of the full committee, the gentleman from Michigan, Mr. Upton, for 5 minutes. 

7 

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

Mr. UPTON. Well, thank you, Mr. Chairman. And I certainly 

want to welcome our great friend Mr. Sununu as well. 

The communications and tech sector is one of the largest drivers 

of our economy. And at a time when overall job creation remains 

weak and burdensome rules and red tape are keeping job creators 

on the sidelines, we should be doing everything that we can to unleash the creativity and innovative potential of this sector. Eliminating outmoded rules, removing regulatory barriers, and refraining from imposing new ones on this segment of our economy could 

do a lot to help spur jobs and help pull us out of our fiscal doldrums. 

Chairman Genachowski appears to recognize this. While the 

proof will be in the pudding, he is at least saying he plans to abide 

by the President’s Executive Order on regulatory reform even 

though independent agencies are not required to do so. And my 

hope is that he will submit to us and the administration the formal 

plan requesting OIRA to implement the Executive Order. 

If we want to improve the regulatory environment, process reform is an obvious place to start. The FCC’s decisions can only be 

as good as its process. And while the FCC has taken steps to improve the way that it conducts its business, more can be done. 

Today, we will examine a draft proposal, a good one, to set statutory baselines to ensure this and all future commissions address all 

the issues with the same minimum sound practices. 

Consistency and transparency not only produce better decisions, 

they help create confidence and certainty that will promote investment, innovation, and jobs. An expert, independent agency should 

also be engaging in objective analyses. And if it looks like the FCC 

is prejudging an issue and justifying predetermined outcomes after 

the fact, the Agency looks political and the public loses faith in its 

objectivity and expertise. 

It is important to recognize that this staff draft preserves much 

of the Agency’s flexibility. Indeed, in most cases, it simply directs 

the FCC to set its own rules on these matters. My sense is that 

it does strike the right balance, but I of course welcome input from 

my colleagues and witnesses. Our hope is that we can produce 

strong bipartisan legislation. 

And I yield the balance of my time to Mr. Terry. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

The communications and technology sector is one of the largest drivers of our 

economy. At a time when overall job creation remains weak and burdensome rules 

and red tape are keeping job creators on the sidelines, we should be doing everything we can to unleash the creativity and innovative potential of this sector. Eliminating outmoded rules, removing regulatory barriers, and refraining from imposing 

new ones on this segment of our economy could do a lot to help spur jobs and help 

pull us out of our fiscal doldrums. 

Chairman Genachowski appears to recognize this. While the proof will be in the 

pudding, he is at least saying he plans to abide by the president’s Executive order 

on regulatory reform, even though independent agencies are not required to do so. 

My hope is that he will submit to us and the administration the formal plan requested by the Office of Information and Regulatory Affairs to implement the Executive order. 

8 

If we want to improve the regulatory environment, process reform is an obvious 

place to start. The FCC’s decisions can only be as good as its process. While the 

FCC has taken steps to improve the way it conducts its business, more can be done. 

Today, we will examine a draft proposal to set statutory baselines to ensure this 

and all future commissions address all issues with the same minimum sound practices. 

Consistency and transparency not only produce better decisions, they help create 

confidence and certainty that will promote investment, innovation, and jobs. An expert, independent agency should also be engaging in objective analyses. If it looks 

like the FCC is prejudging an issue and justifying predetermined outcomes after the 

fact, the agency looks political and the public loses faith in its objectivity and expertise. 

It is important to recognize that this staff draft preserves much of the agency’s 

flexibility. Indeed, in most cases, it simply directs the FCC to set its own rules on 

these matters. My sense is it strikes the right balance, but I of course welcome 

input from my colleagues and the witnesses. My hope is that we can produce strong 

legislation that enjoys bipartisan support. 

I thank the witnesses and look forward to their testimony. I yield the balance of 

my time to Mr. Terry. 

Mr. TERRY. Thank you, Mr. Chairman. 

And during our last hearing on this subject on May 25, we heard 

from the current FCC chairman and commissioners themselves, 

many of whom spoke in favor of the concepts contained in our draft 

before us today. Chairman Genachowski recognized that shot 

clocks could be an ‘‘effective tool’’ going forward. Commissioners 

Copps and McDowell agreed there should be a mechanism for a bipartisan majority of commissioners to put items on the agenda 

meetings. And Commissioners Copps and Clyburn spoke of the 

need to reform the Sunshine rules to allow the commissioners to 

deliberate more efficiently. 

Now, as we work through here today, we are going to get our 

witnesses’ input to see how we can improve, continue working with 

our friends on the other side to make this bipartisan. Frankly, 

these are issues that the commissioners, past and present, have 

brought forward needing change. Some they can do on their own; 

some need our assistance. And we want to continue to work with 

everybody. 

So I welcome the testimony from our witnesses and look forward 

to moving this legislation. 

Do any other members on the Republican side seek time? There 

is a minute and a half left. 

Then I yield back. 

Mr. WALDEN. The gentleman yields back his time. I now recognize the ranking member of the full committee, Mr. Waxman, for 

5 minutes. 

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

Mr. WAXMAN. Thank you, Mr. Chairman. 

Today, the subcommittee will return to the topic of FCC reform 

and I commend Chairman Walden for working with us to put together a balanced panel of expert witnesses. We need to hear from 

diverse voices, and Chairman Walden has worked with us Democrats and Republicans together to assemble balanced witness panels. 

9 

I also wish to commend the chairman for the draft legislation we 

will be considering today. Unfortunately, it has serious defects. It 

would make the FCC less efficient and more bureaucratic in my 

opinion, the exact opposite of what we should be doing. 

I am a proponent of strong congressional oversight over the agencies within our jurisdiction. An engaged Congress can help agencies 

perform at a higher level and serve the American public better. In 

some instances, it is appropriate for Congress to legislatively modify the authority or practices of an agency to enhance agency operations and the public interest. At our first hearing on this topic, I 

asked basic questions that will guide me in determining whether 

we are promoting smart regulation and this bill does not provide 

reassuring answers. 

The first problem is that this legislation will create an undue 

burden on the FCC. It requires that the Commission perform a 

cost-benefit analysis for every rule that might impose a burden on 

industry. This will be costly and time consuming. Cost-benefit analyses might be appropriate for a limited set of major rules, but in 

no circumstances should they become a basis for years of litigation 

in court. 

Second, the legislation undermines the flexibility of the Agency 

to act quickly and efficiently in the public interest. If we put new 

prescriptive process requirements in statute, we can end up promoting slower, not faster, decision-making. For example, the requirement that the FCC conduct a Notice of Inquiry prior to moving to rulemaking could restrict the Agency’s ability to move more 

expeditiously in the public interest. 

Third, some of the requirements in the draft legislation appear 

to be about process for the sake of process. Provisions in the rulemaking reform section and the transparency reform section impose 

practices that the Commission already follows. Chairman 

Genachowski’s tenure has been marked by greater transparency, 

expanded opportunities for public input, and improved informationsharing with other commissioners and the public. He has shown 

that the FCC can reform itself without the need for action by Congress. 

And finally, I am concerned that we are making procedural 

changes in an attempt to address outcomes with which we don’t 

agree. Chairman Walden and others have criticized the voluntary 

commitments Comcast agreed to during review of its combination 

with NBC Universal. That appears to be why the current draft legislation radically alters the FCC’s authority under the Communications Act and could eviscerate the public interest standard. Before 

we take steps that could prevent combinations like Comcast/NBC, 

we need to examine whether they are in the interest of promoting 

public benefits or even in the interest of the companies they are intended to protect. 

There are some promising aspects of the legislation in particular 

I want to join my colleagues in support of the provisions that allow 

commissioners to collaborate more directly, but overall, I cannot 

support the draft in its current form. The chairman has said he 

wants to work together in a bipartisan way to improve this bill. I 

hope we do that and produce a bill that earns broad bipartisan support. 

10 

I look forward to hearing from our panel to address these issues 

into receiving their advice about how to improve the FCC. Thank 

you, Mr. Chairman, and yield back the balance of my time, unless, 

Ms. Christensen, would you like any of my time? I yield back. 

Mr. WALDEN. Thank you. The gentleman yields back his time, 

and now we will proceed with the hearing. And we would like to 

welcome all of our witnesses. And we will start with the Honorable 

John E. Sununu, Honorary Co-Chair, Broadband for America. And 

I would just advise the witnesses, these microphones, you have to 

get pretty close to and the button turns them on and off. And then 

we have the red light buttons there that control the time. 

And with that we welcome our friend and colleague, Mr. Sununu. 

STATEMENTS OF JOHN SUNUNU, HONORARY CO-CHAIR, 

BROADBAND FOR AMERICA; KATHLEEN ABERNATHY, CHIEF 

LEGAL OFFICER AND EXECUTIVE VICE PRESIDENT, FRONTIER COMMUNICATIONS; BRAD RAMSAY, NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS; MARK 

COOPER, RESEARCH DIRECTOR, CONSUMER FEDERATION 

OF AMERICA; RONALD M. LEVIN, WILLIAM R. ORTHWEIN DISTINGUISHED PROFESSOR OF LAW, WASHINGTON UNIVERSITY SCHOOL OF LAW; AND RANDOLPH J. MAY, PRESIDENT, 

FREE STATE FOUNDATION 

STATEMENT OF JOHN SUNUNU 

Mr. SUNUNU. Thank you very much, Chairman Walden, Ranking 

Member Eshoo. It really is a pleasure to be here. 

As you indicated, I am, along with Harold Ford, a co-chair of 

Broadband for America, an organization of 300 members, equipment manufacturers, broadband providers, applications providers, 

consumer advocate groups, economic development groups. And the 

focus is really on deployment and investment in the broadband industry and identifying public policy that can really ensure that it 

continues to be a driver of growth and prosperity in America. 

I certainly commend you for looking at the topic and your pursuit 

of improving the way the FCC operates. Without question, the 

focus of the discussion draft is on process and process matters. 

Process is the mechanism by which we ensure better transparency, 

fairness, certainty, clearer timelines, and all of those help to allow 

investors to make investments with a greater certainty of return 

and that is what promotes economic development and job creation. 

I do also, however, want to take the opportunity to talk in a little 

bit more broad terms about changes that we would like to see the 

committee look at within the statutory framework because in many 

regards, the obsolete premises of the existing statutory framework 

doesn’t match the structure and the competition that we see in the 

marketplace today. And that is, I think, a view that is shared on 

a bipartisan basis. Chairman Genachowski recently acknowledged 

that the statute isn’t perfect and said ‘‘it would make sense to update it.’’ The President’s State of the Union address talked about 

the fact that, you know, we live in a business and information age, 

but the last major reorganization of government happened in the 

age of black-and-white TV. So these issues—and I think the comments of the committee recognize—aren’t directed at any commisVerDate Nov 24 2008 16:21 Aug 02, 2012 Jkt 037690 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-66 062211\112-66 CHRIS
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sion, any chair, or any administration. It is a matter of making 

sure that the policies reflect the modern age in which we live. 

We do have a very vibrant, competitive communications base 

that is more vibrant and competitive than ever. There are always 

going to be aspects that we want to see operate better or even more 

competitive that would bring down prices even faster, but it is 

more vibrant and competitive than ever before, across the entire 

spectrum of voice, video, data, and other emerging internet-based 

services. 

Over the last 3 years within the broadband industry, we have seen $250 billion in capital investment. This is during a period of 

a very sharp and significant economic downturn. I don’t think we 

can find many areas of the economy that have made that level of 

capital investment. And again, there are always going to be areas 

where we want to see access improved or accelerated even more, 

but $250 billion is real money even to the United States Congress. 

The Communications Act of 1934 is built on the assumption of 

a natural monopoly. And I think if there is one point that I want 

to make it is that that is the default presumption. And unfortunately, that is not the world in which we live right now. I think 

legislative reform should dispense with antiquated presumptions 

about natural monopolies in the communications marketplace, and 

we should move away from industry-specific anticipatory regulation 

and instead treat communications companies like other businesses 

throughout the economy that are disciplined in the first instance 

by competition, not regulation. 

Second, Congress should affirmatively require that the FCC account for actual competition among emergent substitutable offerings in a consistent way. The statute can’t work properly without 

acknowledging that all the constituent parts of the broadband 

space, including web-based services and their implications for competition and consumers. 

Third, Congress should consider structural inefficiencies that 

sometimes bring an already sluggish regulatory process to a 

screeching halt. In particular, we need to recognize that the multicommissioner structure itself can breed interagency conflict and belabor decision-making. 

Second, the FCC rarely produces timely decisions when measured against the pressing decisional demands of the internet era. 

Third, the FCC asserts authorities that duplicate the work of 

other agencies, most notable in the context of reviewing mergers. 

Given the role played by expert antitrust agencies, there is no legitimate reason for the FCC to also assume responsibility for reviewing the competitive effects of a merger because the transaction 

happens to require a license transfer. 

And finally, the well-intended Sunshine laws have the perverse 

effect of slowing the deliberative process by requiring things like 

open meetings any time more than two commissioners wish to discuss official business. Some of these are addressed in the discussion 

draft, and I think that is important. 

But again, I come back to the premise that we need to reconsider 

the presumption of a monopoly that is written into both the ’34 act 

and even the 1996 amendments that carried the same premise. 

Again, this isn’t about any one commissioner or any one adminisVerDate Nov 24 2008 16:21 Aug 02, 2012 Jkt 037690 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-66 062211\112-66 CHRIS
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tration. I think we really do need to reconsider the FCC’s purpose 

and their role in a competitive, 21st Century environment so that 

we can be mindful and accomplish reform. 

I certainly appreciate the opportunity to testify and look forward 

to answering your questions. 

[The prepared statement of Mr. Sununu follows:] 

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Mr. WALDEN. Thank you, Senator. We appreciate your being here 

as well. We thank you for your testimony. We will now turn to Ms. 

Kathleen Q. Abernathy, former Federal Communications Commissioner and now with Frontier Communications as chief legal officer 

and executive vice president for governmental affairs. You have 

worn many hats. We look forward to your testimony here, and 

thank you for participating. 

STATEMENT OF KATHLEEN ABERNATHY 

Ms. ABERNATHY. Thank you very much. Good morning Chairman 

Walden, Ranking Member Eshoo, and members of the subcommittee. It is truly a privilege and an honor to appear before you 

this morning to talk about what is very, very important—process 

reform at the FCC. 

I am chief legal officer and executive VP of regulatory and government affairs for Frontier. We are the largest provider of 

broadband, voice, and video services to rural America. And as a 

wireline provider, Frontier is subject to regulatory oversight by the 

FCC and, just over this past year, we have engaged in a number 

of proceedings in front of the FCC, so we have current experience 

working with the current regulatory processes. 

I am pleased to be here today to discuss your proposed reforms 

and some of the ways it might impact the FCC. My testimony is 

informed by my career in the telecommunications industry, and as 

you mentioned, that has included stints at the FCC, both as a commissioners, as well as legal advisor, as well as working in the general counsel’s office. And with every position, I gained further insight into the processes that go on there. 

In addition to this work in the public sector and, of course, my 

current position at Frontier, I have worked at law firms and inhouse wireless, wireline, CLECs. This collective experience provides me with a unique perspective on how the FCC serves the 

public. I have experienced both the privilege and challenge of serving as a regulator, as well as the opportunity to work in the private 

sector. And the draft legislation proposes many reform actions that 

I think could make a major and significant improvement on the 

processes and I am pleased to talk about them today. 

I made public statements during my tenure as an FCC commissioner and thereafter that relate to some of the proposed. For example, I have stated and I continue to believe that the Sunshine 

Act is overly restrictive in prohibiting communication among three 

or more commissioners outside of a public meeting. It is perverse, 

but it actually works contrary to the notion of an improved collaborative spirit, it discourages creative problem-solving, and it creates 

hurdles to timely and effective decision-making process. And I 

think if you do nothing else, if you reform that one rule, then these 

other concerns that you have would be immediately addressed because you would have an actual dialogue between the parties who 

are running the agency. 

When it comes to transaction review and approval, Congress has 

conferred on the FCC a statutory obligation to review license transfers and to either reject, approve, or if necessary approve it with 

conditions. And these conditions should be designed to ensure that 

the transaction at issue complies with the Commission’s rules, as 

20 

well as being consistent with the public interest. As a commissioner, I always believed that the Commission owed it to the parties to act promptly on license transfers—there is a lot of cost associated with the delays in transfers—and to impose conditions when 

necessary to address merger-specific harm that impact the public 

interest. 

Merger reviews shouldn’t be seen by third parties as an opportunity to impose obligations unrelated to the mergers, especially if 

it has the unintended consequence of advantaging or 

disadvantaging a company as compared to its competitors. My belief is that general obligations not designed to address merger-specific harm, there is a vehicle for that. You should consider and review them in the context of rulemaking process, and that is subject 

to notice and comment. 

I have also noted before that I think there is a time and place 

for timelines and shot clocks. It is difficult to implement a uniform 

timeline for all proceedings. For example, with a particularly complex process, the FCC has to do a complex balancing between moving expeditiously to adopt a timely decision, as well as gathering 

the data necessary. But shot clocks are very, very beneficial because it is an action-forcing event. And the challenge with the numerous issues in front of the FCC and with the statute that many 

would agree is somewhat outdated is that these issues are very, 

very difficult. There is many times no good answer. And when 

there is no good answer, you sometimes don’t work ahead to a resolution. You kind of kick the can down the road because you are 

very frustrated. A shot clock would force you to just sort of address 

that issue and try and resolve it. 

I applaud Chairman Walden and the subcommittee for focusing 

on FCC process reform. Process and procedure—just as much as 

substance itself—have a direct impact on industry participants and 

consumers. And given the critical role of telecommunications in our 

daily lives and our global competitiveness, it is appropriate for 

Congress to consider updating and improving the framework for 

the FCC’s deliberative process. 

Thank you for having this important discussion and I look forward to your comments and questions. 

[The prepared statement of Ms. Abernathy follows:] 

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Mr. WALDEN. Ms. Abernathy, thank you. We appreciate your 

counsel. 

Now, we are going to hear from Brad Ramsey, who is the general 

counsel for the National Association of Regulatory Utility Commissioners. And thank you for being here. We look forward to your testimony as well. 

STATEMENT OF BRAD RAMSAY 

Mr. RAMSAY. Thank you, sir. And Chairman Walden and Ranking Member Eshoo and other members of the panel, I really appreciate the opportunity to testify today, and I commend Mr. Walden 

and the rest of you for holding this hearing. 

I represent NARUC, as Mr. Walden pointed out. I have been 

there 20 years. NARUC, for those of you that don’t know, is the 

group that represents all of the stake public service commissions 

that oversee telecommunications, energy, and other utilities in your 

jurisdictions. If you want to know what the potential impact of 

these process reforms are for state commissions, you know, protecting your constituents in state-specific preemption, pleadings 

that get filed at the FCC, and in the broader universal service and 

inter-compensation reform items that they consider from year to 

year, you want to talk to your state commission. They will tell you 

what the impact is in terms of their opportunity to protect the citizens of your individual States. And I am happy for those of you— 

and I don’t see very many in this room that I don’t think I already 

know their state commissioners. But if you don’t know your state 

commissioners, I am happy to provide a gateway for you. 

What is the hearing about today from my perspective? Well, I 

don’t think there is any question that reform is needed, and I also 

don’t think that there is any question that a number of the proposals included in this discussion draft will definitively improve 

transparency at the FCC and will definitely improve the ability to 

create a better record for decision-making at the FCC. 

NARUC has a technical position on every section, but we have 

been pushing some of these reforms for over 10 years. The draft 

that came out, I think it is an excellent starting point for a bipartisan bill that could pass in this Congress. So for me, this hearing, 

this draft is all about opportunity. You have an opportunity to finally correct the stilted application of Sunshine laws that does 

nothing but shed additional light on agency procedures. And all it 

does—and I know this from personal experience—is muck things 

up and slow things down. You have an opportunity. There are actually two or three provisions that make sure that everybody gets a 

realistic opportunity to comment on what the Agency is actually 

going to do, not just the people that have the most money, not just 

the people that have the most staff resources. 

You have an opportunity here to formally adopt some of the highly lauded—Ms. Eshoo mentioned the fact that the Commission deserves a lot of credit for a lot of the transparency measures that 

they have put into place. There were a couple measures that came 

in the last administration. I agree. You have an opportunity here 

to lock those into law and make sure that future commissions do 

not discard them. 

25 

You also have an opportunity to normalize expectations. This is 

a shot clock idea that is in the bill. I actually think that that is 

wonderful idea. The Agency gets to set the approximate time frame 

that they want to shoot for. And this is much better than an item 

languishing there for 10 years, or, in my case, and I end up languishing there for 5 or 6 years, and the next time I hear about it 

from the Agency is they are putting a notice out that says, you 

know, we would like to terminate your proceeding because the 

record is stale. A shot clock gives them something to shoot at. It 

is a good idea. 

But perhaps the most important opportunity that is presented in 

this item are the pieces that help the Agency build a better record 

upon which to base its decision. The decision can only be as good 

as the record that they are basing their decision upon. If you shortchange the decision, if you shortchange the process, you are shortchanging the American people. It is one of the reasons why when 

we are talking about, great, we are finally going to have some definitive deadlines or a minimum deadline that allows the state 

commissions who have this complicated process of perusing comments to actually file comments. But another good part of this bill 

is it says you are going to put the text of the dadgum rule out so 

that I actually know what to write my comments about. NARUC 

has endorsed that for some time. I commend the current chairman 

for doing it 85 percent of the time. I don’t understand why it can’t 

be done 100 percent of the time. 

You have ensured an opportunity here to make a real difference 

in the FCC decision-making process. It is long overdue. It is an opportunity that can only make better decisions come out of the—it 

is not going to make the process perfect, but it is going to make 

the decisions better, which can only benefit your constituents. The 

consumers across the country and the industry as a whole, it is an 

opportunity I hope you take. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Ramsay follows:] 

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Mr. WALDEN. Thank you, Mr. Ramsay. We appreciate your testimony and we look forward to offering up some questions. 

We go now to Dr. Mark Cooper, Research Director at Consumer 

Federation of America. Dr. Cooper, we are delighted you are with 

us today and we look forward to your comments. 

STATEMENT OF MARK COOPER 

Mr. COOPER. Thank you, Mr. Chairman, members of the committee. 

In the past 30 years, I have seen the good and bad of regulation 

up close and personal. In 300 appearances as an expert witness on 

behalf of public interest groups in 50 jurisdictions in the United 

States and Canada, Brad represents NARUC. I have testified before 95 percent of the NARUC members. 

In my testimony, I outline areas where the regulatory process at 

the Federal Communications Commission should be improved. We 

need reform of the ex parte communications. We need greater reliance on independent and peer reviewed research. We need to provide notice on the specific details of rules to afford the public the 

opportunity to comment on those rules. We should enhance public 

participation in rulemaking process by use of multi-stakeholder 

groups, regulatory negotiations, and participatory enforcement. 

Other agencies do it. The FCC should get with that kind of program to expand input from the public and the industry in a formal 

way rather than the backdoor way of the current ex parte process. 

The discussion draft, however, causes me great concern. I look at 

the center of the Communications Act as the public interest standard, which is a principle on which it stands. And the language that 

imposes a harm-based standard I believe will undermine the ability 

of the FCC to protect the consumer and promote the public interest. 

The word ‘‘harm’’ occurs exactly twice in the statute, both times 

in a section that worries about incumbent local exchange carriers 

who could abuse information service providers. The words ‘‘public 

interest’’ occur 103 times. That is the standard at the center of the 

act. 

Now, others will tell you why the Agency does not have to adhere 

to the executive branch order on cost-benefit analysis. Let me explain to you why it should not. A harm-based standard is inadequate to protect the public interest in the communications sector 

for several reasons. First, a substantial part of the Communication 

Act involves noneconomic democratic values of access to communication and freedom of speech, which are virtually impossible to 

evaluate in now-economic terms. The antitrust laws do not do democracy. 

Second, universal service is a critical goal of the Communications 

Act that is non-amenable to a narrow cost-benefit analysis. The 

value of connecting households to a network is an externality that 

is difficult to measure but extremely important as a political, social, and economic accomplishment. No other agency does universal 

service. 

Third, consumer privacy, over which the FCC has a significant 

authority in proprietary network information, is not readily amenable to a harms standard. 

41 

Fourth, in a dynamic network industry, a public interest approach is much more appropriate for interconnection and nondiscriminatory carriage. Under a harms standard, it would have 

been impossible to value the Carterphone decision, the Computer 

Inquiries, or the 802.11 WiFi rules, which were forward-looking 

and are key elements of creating the rich communication environment we have today. This is an industry with massive positive 

externalities. 

I believe this criticism also applies with equal force to the merger 

review. Mergers create unique challenges to the public interest that 

are best dealt with during the merger review process. The problem 

in contemporary markets like telecommunications is not too much 

regulation but too little competition. However, the lack of competition is not the result of nefarious business practices or lacks antitrust enforcement. 

These industries, so strong economies of scale and scope, which 

mean that very few competitors can achieve minimum efficient 

scale, they show strong economies of demand side known at network effects, which make them winner-take-most industries. The 

challenge in these industries is small numbers providing critical infrastructure and platforms that support massive amounts of other 

activity. The challenge is to make sure that they are profitable and 

innovative but check their tendency to use vertical leverage or market power to undermine competition. That is a very, very difficult 

proposition to evaluate with a narrow harm-based standard. That 

is a proposition that is easy to address in a merger, which creates 

the very problem of vertical leverage. That is what we have suffered in this industry. 

As always, I look forward to working with the committee to develop any legislation that is needed. I urge you to take the attack 

on the public interest standard out and focus on those areas where 

the Commission does not have the ability to act on its own. Most 

of the changes that we need in process can be done internally. Establish the norms for transparent, swift-enforced regulation, and 

once those norms are established, it will be difficult for future commissions to abandon them. The Commission should do what it can. 

This committee should help it where it can. 

[The prepared statement of Mr. Cooper follows:] 

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Mr. WALDEN. Dr. Cooper, thank you for your testimony. 

We will now go to Professor Ronald M. Levin with the William 

R. Orthwein Distinguished Professor of Law, Washington University School of Law. We welcome you today and look forward to your 

testimony, sir. 

STATEMENT OF RONALD M. LEVIN 

Mr. LEVIN. Thank you, Mr. Chairman and members of the committee. 

I hope to provide a little different perspective on this bill from 

those of the other panelists because my specialization is not in 

communications law. It is in administrative law—in other words, 

the manner in which the legal system deals with regulatory cases 

in general, regardless of the agency. Now, I don’t think that perspective gives you all the answers you need for this bill, but I think 

it will provide some helpful insights on some of its provisions. 

For example, as the Sunshine Act reform, I think that perspective will tend to support the thrust of what you are doing. I know 

you have heard from the FCC veterans that the Sunshine Act often 

interferes with collaborative decision-making, forces agency heads 

to rely on staff intermediaries rather than talk to each other. But 

I think it is worth pointing out here that that critique is shared 

by numerous agency officials and practitioners and scholars who 

specialize in other fields of regulation. So I think if you go forward 

with the experiment in this bill, you would get strong support from 

much of the administrative law community. 

On the other hand, I want to raise some warning flags about 

parts of the bill that would reshape FCC rulemaking procedures. 

Many students of the administrative process will tell you that 

agency rulemaking has become progressively more complicated 

over the past few decades, and this happens largely because Congress and presidents keep adding refinements to the process. Each 

of those refinements, they look appealing when considered in isolation, but in the aggregate, they make it progressively more difficult 

for agencies to carry out the tasks that Congress has told them to 

perform. So you really ought to think twice about provisions in the 

bill that would make it even harder for the FCC to complete a rulemaking proceeding. My statement goes into this in some depth, but 

I will just focus on three areas of concern in these remarks. 

First, some of the new duties are ones you probably shouldn’t impose at all. I really doubt that in every rulemaking proceeding that 

might be perceived as putting forward a burdensome rule, you 

should require the Commission to speculate about what performance measures to use to evaluate that rule sometime in the future. 

And I don’t think the FCC should routinely have to specify what 

market failure, a new rule would resolve because market failure is 

not the only valid reason the FCC may have for issuing a rule. 

Secondly, the bill provides some practices that the Commission 

should want to do much of the time but not necessarily all the 

time. And so you need to build in some flexibility. For instance, 

should the FCC have to solicit public comments twice during every 

rulemaking proceeding? Well, often that is very useful, especially 

when they didn’t exactly tell you what they were planning to do the 

49 

first time. But at other times, a single round satisfies all the purposes of notice and comment and it should be enough. 

Likewise, should they always provide a reply comment period 

after the traditional comment period? Well, sometimes they should, 

especially when some group that dumps these lengthy and controversial comments on the last day of the comment period, there 

should be a chance to reply. But that is not always the situation, 

and so you need to build in some room for the Commission to say, 

here, we don’t need a reply and we should avoid the delay and 

move forward. 

Finally, I think the committee should take another look at and 

rewrite the section that provides for the Commission to prepare a 

cost-benefit analysis to accompany any rule that would be burdensome. The intent here, as I understand it, is to put the FCC on par 

with executive agencies which now prepare cost-benefit analyses 

under the President Executive order, and the FCC isn’t subject to 

that order. But the problem is that the scope of the Executive order 

is much more limited than your provision because that order provides for cost-benefit analysis in only a small fraction of law rulemaking and it provides the agency compliance with that order is 

not judicially reviewable. 

If you were to allow broad judicial review under this bill, you 

would be inviting strenuous opposition to the bill. That was one of 

the main worries that led to the demise of APA reform in the mid- 

’90s. So if you want the bill to remain relatively noncontroversial, 

you need to avoid or limit judicial review and also narrow the scope 

of the cost-benefit requirement. 

And with that, I will conclude my oral presentation. I hope it is 

helpful and I will be happy to respond to any questions. 

[The prepared statement of Mr. Levin follows:] 

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Mr. WALDEN. Professor, it is very helpful and we thank you for 

your testimony and your counsel. 

We will go now to our final witness on the panel, Mr. Randolph 

J. May, President of the Free State Foundation. Mr. May, we are 

delighted to have you with us and we look forward to your testimony. 

STATEMENT OF RANDOLPH J. MAY 

Mr. MAY. Thank you, Mr. Chairman and members of the committee. Thank you for inviting me to testify. I am president of the 

Free State Foundation, a nonpartisan research and educational 

foundation. The Free State Foundation is a free market-oriented 

think tank that focuses its research in the communications law and 

policy area. By way of background, I should note that I am a past 

chair of the ABA’s Section of Administrative Law, and I am currently a member of the Administrative Conference of the United 

States and a Fellow at the National Academy of Public Administration. So today’s hearing on FCC process reform is at the core of my 

expertise in communications law and policy, as well as administrative law. 

As a frame of reference for my testimony, I want to recite statements made over a decade ago by two different FCC commissioners, one Democrat and one Republican. FCC Chairman William 

Kennard in August 1999 released a strategic plan entitled, ‘‘A New 

FCC for the 21st Century.’’ The plan begins, ‘‘In 5 years, we expect 

communications markets to be characterized predominately by vigorous competition that will greatly reduce the need for direct regulation. As a result, over the next 5 years, the FCC must wisely 

manage the transition from an industry regulator to a market 

facilitator. The FCC as we know it today will be very different in 

both structure and mission.’’ That was in 1999. 

In December 2000, then-FCC Commissioner—soon-to-be Chairman—Michael Powell said, ‘‘Our bureaucratic process is too slow to 

respond to the challenges of internet time. One way to do so is to 

clear away the regulatory underbrush to bring greater certainty 

and greater simplicity to the market.’’ These statements provide a 

useful frame of reference for considering FCC reform. 

I support many of the reforms proposed in the draft bill, and I 

do discuss them at greater length in the testimony. Right now I 

just want to highlight a few of the provisions and then talk briefly 

about one additional provision. 

I endorse the provision that would require the Agency with respect to the adoption of any new rule that may impose additional 

burdens, to analyze the market failure and actual consumer harm 

the rule addresses, to perform cost-benefit analysis, and to include 

measures for evaluating the effectiveness of the rules. 

The FCC has had a pronounced tendency over the years—and 

certainly this tendency was evident with respect to the adoption 

late last year of new net neutrality regulations—to adopt rules 

without engaging in meaningful analysis that would be required by 

the proposal. The requirement to analyze any claimed market failure and consumer harm before adopting new rules should force the 

FCC to engage in more rigorous economic analysis than it often 

68 

does when it relies on the indeterminate public interest standard 

for authority. 

I am not going to probably agree with much that Mark Cooper 

said here today possibly, but he is correct that the public interest 

standard that is found in over 100 provisions in the Communications Act. I wholeheartedly endorse the proposed changes to the 

Sunshine Act. They have been noted and I won’t dwell on those 

here, but I support those. 

The provision reforming the Commission’s transaction review 

process is as important as any other provision in the draft bill. In 

light of the continued abuses—and I think they have increased over 

the past decade—in the merger review process. The Agency often 

imposes extraneous conditions after they are ‘‘volunteered at the 

last minute by transaction applicants anxious to get their deal 

done.’’ And this is after the transactions have been subject to reviews already lasting a year or more. 

The requirement that any condition imposed be narrowly tailored 

to remedy a transaction-specific harm coupled with the provision 

that the Commission may not consider a voluntary commitment offered by a transaction applicant unless the Agency can adopt a rule 

to the same effect will go a long way to reforming the review process. 

My own preference would be to go even further and reduce the 

substantial overlap that now occurs between the Department of 

Justice and the FCC and have the Department of Justice primarily 

responsible for assessing the competitive impact of a transaction. 

As I said early in my testimony, the reality is that most segments of the communications marketplace are not effectively competitive. When Congress passed the Telecom Act of 1996, it anticipated the development of a competitive marketplace stating in the 

statute’s preamble that it intended for the FCC to ‘‘promote competition and reduce regulation.’’ The FCC has not done nearly 

enough in the 15 years since the passage of the ’96 act to reduce 

regulation. 

Whatever the reason, the point is that a fix is needed and the 

draft bill, while commendable in many respects, does not directly 

address the problem of reducing existing regulations. I don’t have 

time to address it at any length now, but I hope you will consider 

adopting a proposal that I have made that would amend the forbearance provision of the act and the regulatory review provision 

in the act that were both included in the 1996 act to be used as 

clearly the regulatory tools that have been used only sparingly. 

And they could be amended very simply to allow those provisions 

to be much more effective in achieving less regulation and getting 

rid of unnecessary regulations that are on the books now. 

Thank you very much for inviting me here today, and I look forward to your questions. Thank you. 

[The prepared statement of Mr. May follows:] 

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Mr. WALDEN. Thank you very much, Mr. May, and thank you to 

all of our panelists who have given us great counsel here today. We 

appreciate it. Some I appreciate more than others. No, I am just 

kidding. That is why we had you here. We needed the honest assessment of what works and what doesn’t work in this bill. 

Mr. May, I think when we get into this discussion of what is in 

the public interest, it really is what any three commissioners decide at the time as they are reaching some agreement. It is pretty 

broadly determined, is that not correct? 

Mr. MAY. It is about as indeterminate, I think, as any other 

phrase could be. And I have to confess I have used that, whatever 

three commissioners say it is on any given day many times myself. 

But it absolutely is and, in fact, I wrote a law review article about 

10 years ago in which I counted up those provisions. That is why 

I know Mr. Cooper is correct. But the point is that it provides no 

guidance to the Commission and it does need changing. 

Mr. WALDEN. I seek unanimous consent to enter into the record 

an article by Phil Weiser, who just left the White House as National Economic Council to return to the University of Boulder. 

Without objection, we will put this in the record. 

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

Mr. WALDEN. In the article, he notes that frequently the FCC 

seeks to leverage its authority to approve mergers, to obtain concessions that often have little or nothing to do with the competitive 

issues raised in the transaction. And I think that is at the heart 

of the matter of what I, at least, and I think many members on 

this committee are trying to get at. It is not that you ignore or eviscerate the public interest standard; it is when it is used as an excuse to go do something you don’t have the authority to do through 

your own organic statute. 

Commissioner Abernathy, do you agree the Commission should 

not leverage merger reviews to obtain concessions that have little 

or nothing to do with the transaction’s specific harms? 

Ms. ABERNATHY. I have said that previously in speeches and I do 

agree. Now, just to be clear, in transactions where I was involved 

with other commissioners, you do have disagreements about a public interest issue associated with the transaction, so I may think a 

particular condition isn’t required. But this still leaves, I think, a 

tremendous amount of ability for the commissioners to address the 

issues that are raised by the transaction. You may have disagreements about whether it is really a problem or not, but I think it 

does leave a tremendous amount of discretion to the commissioners. 

Mr. WALDEN. As I listened to your testimony and read it in advance, it seems like there is concurrence, that having the text proposed rules available to the public and to other commissioners is 

something you all agree on. Does anybody disagree with that? 

Mr. MAY. Could I just respond? 

No, I don’t disagree. You know, in theory—— 

Mr. WALDEN. Let me get an answer. Does anybody disagree with 

having the text made available prior to the votes in the Commission? Mr. Levin? 

Mr. LEVIN. Only to the extent that as a non-specialist in this 

area, it occurred to me there might be a wide range of situations 

79 

where that wouldn’t work because it is urgent, because it is a very 

minor matter where you are just talking about a factual dispute 

and in an adjudication, the public has nothing to say about it. 

There might be feasibility limitations. I do agree with it as a general proposition. 

Mr. COOPER. I would go one step further and I would like that 

kind of provision to apply to merger reviews as well so that at the 

end of the process when—so we have that under the antitrust laws. 

The public should be allowed to comment on the conditions that 

were adopted. Now, that may or may not address some of the concern about extraneous issues—— 

Mr. WALDEN. Right. 

Mr. COOPER [continuing]. But in that further review, if things 

were truly extraneous, people would have a chance to comment on 

that and the Agency could, in fact, be informed by that process. But 

full comment on an actual rule is the essence of democracy. 

Mr. WALDEN. Mr. May? 

Mr. MAY. I think the provision you are referring to here is the 

one that would require that the text that the Commission is considering at a meeting be made available to the public, and in response 

to Professor Levin’s concern, I don’t think your draft specifies the 

time before the meeting that it has to be available, so my understanding is it could be very shortly before. 

But in other agencies, this might not be deemed perhaps as necessary, but as I point out in my testimony, what happens at the 

FCC in a public meeting, as you may know, is that at the presentation of an item, the staff before every item says, ‘‘Mr. Chairman, 

we request editorial privileges.’’ And the chairman says ‘‘granted.’’ 

And then no one has the text and sometimes it is weeks before the 

item is ultimately released to the public. And you really don’t know 

what is going on. Because of the delay in the release of the item, 

you don’t know whether that was—— 

Mr. WALDEN. Right. 

Mr. MAY [continuing]. Editorial or not. And that is why it is useful. 

Mr. WALDEN. And my time has run out. 

Ms. Abernathy, did you want to make a quick comment? 

Ms. ABERNATHY. Well, the way the actual process works is that 

you have the text of the item that you are voting on that day and 

then you are writing separate statements. Many of the commissioners are writing separate statements. And so I had never seen 

a situation where editorial privilege changed anything of significance in the item. But there are procedures that still need to be 

recognized, and I think that is part of the reasons for today’s hearing is to understand that it is not as simple as just kicking the 

order out the door. You still need to review it one last time, get 

separate statements from the commissioners. It shouldn’t take a 

long time but there is that process. 

Mr. WALDEN. Thank you. I now recognize the gentlewoman from 

California, Ms. Eshoo, for 5 minutes. 

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

all the witnesses. I think that you have been highly instructive to 

us. 

80 

First off, I don’t think I heard anyone say that they were opposed 

to the FCC Collaboration Act, is that correct? Anyone opposed? No. 

I think there was a consensus on that, which pleases me. 

To Commissioner Abernathy, thank you again for your testimony. As you know as part of the Verizon/Frontier transaction, 

Frontier offered voluntary commitments to build out broadband deployment and meeting broadband needs of anchor institutions 

which I salute you for. I wish Congresswoman Matsui were here 

because she has worked very hard on the whole issue of serving anchor institutions. 

At any rate, those anchor institutions are within the areas to be 

served by Frontier. Now, none of these voluntary conditions directly address merger-specific harms, yet they confer, I think, important public interest benefits. So first, would you comment on 

whether Frontier would be able to offer these voluntary commitments if this draft legislation were in place as law? 

Ms. ABERNATHY. I think if you spoke with Commissioner Copps, 

for example, with regard to these commitments, he would argue 

they were merger-specific. I might say maybe not but the way the 

analysis would go is that the whole reason for the acquisition from 

a Frontier perspective was for greater scale and scope. The public 

interest benefit was for greater broadband deployment throughout 

rural America. 

Ms. ESHOO. Yes. 

Ms. ABERNATHY. And so some of the commissioners, even though 

we said that is what we are going to do, they wanted more specific 

commitments associated with that broadband deployment, which 

we had said from day one was part of our reason for engaging in 

the acquisition. 

Ms. ESHOO. Well, I support what you did. I think it is terrific. 

I just was trying to compare and contrast what you did with what 

is being proposed. Did what is being proposed get in the way of 

what you did or was it—— 

Ms. ABERNATHY. I am sorry to interrupt, but I don’t think in the 

context of our specific merger that it would have changed any of 

the conditions. 

Ms. ESHOO. Do you believe in that instance that the public interest standard is preferable to a harms standard? 

Ms. ABERNATHY. As opposed to does not create harm to the public? 

Ms. ESHOO. Yes. 

Ms. ABERNATHY. Versus benefits the public? 

Ms. ESHOO. Yes. 

Ms. ABERNATHY. I think it is not a huge difference. 

Ms. ESHOO. OK. For all of the witnesses, I generally agree that 

publishing the specific language of proposed rules is a good idea, 

and as you know, Chairman Genachowski is making this a best 

practice at the FCC. This now occurs in 83 percent of rulemakings, 

which is a very significant increase over a previous chairman. 

But I am concerned that requiring this in all instances could inadvertently undermine the goals of transparency and efficiency underlying the draft bill. So to all of the witnesses, does this requirement make sense when the Commission places a proposal from outside parties out for comment in a Notice of Proposed Rulemaking? 

81 

Mr. SUNUNU. I really think it would depend on the circumstance 

and the scope of the proposal. Any time you, you know, require a 

publication or even establish a shot clock, by definition you are requiring another step, you are extending the time frame, and someone is always going to be able to argue that that is making the 

process more cumbersome. 

Ms. ESHOO. Yes. 

Mr. SUNUNU. But you have got to balance the need and the desire for transparency with the need or the desire for expediency. 

I would also make the observation that any process burden that 

you establish, whether it is in the name of transparency or fairness 

or certainty, which are all good things, is going to be as much of 

a burden for a deregulatory effort as it is for a regulatory effort, 

at least as far as it is constructed here. 

Ms. ESHOO. Thank you. Ms. Abernathy? I don’t have very much 

time left so I do have to speed through the witnesses. Yes, Dr. Cooper? 

Mr. COOPER. Well, I want to offer an observation about this question of the opportunity to comment on the actual rules, because I 

believe that is—in fact, one of the really good definitions of democracy is the opportunity to write the rules under which you live. 

And in a representative democracy, participation in the process is 

really important. 

The thing that strikes me—and I have said this before in public—is that the problem here is not with the Communications Act 

or the FCC. It is with the Administrative Procedure Act. This is 

such a fundamental part of democracy that the implementation of 

the Administrative Procedure Act has deteriorated to the point 

where we let agencies deny people the right to speak. And so I 

would like this problem to be solved. And I said this in my testimony in two ways. One, I think we ought to look at the Administrative Procedures Act and figure out how to make sure that the 

citizenry gets a chance to participate in the rulemaking. 

Second of all, if we want more participation, if we want more 

flexible and quicker rules—I believe as a veteran of some reg-negs 

and other multi-stakeholder groups—that the agency needs to 

reach out and create formal transparent processes where industry 

and public interest come together to help it. Other people do it. 

EPA does it, DOE does it, OSHA does it. There is no reason why 

the FCC can’t do it. 

Ms. ESHOO. Thank you. Thank you very much. 

Mr. TERRY [presiding]. Mr. Shimkus, you are recognized for 5 

minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. My mic is really loud 

so I apologize. I don’t usually need it this loud. 

For Mr. Sununu, just aside, you mentioned that Congressman 

Harold Ford was with you. Is that senior or junior? It may dictate 

how we feel about your testimony. Junior. 

Mr. SUNUNU. Junior, another classmate. 

Mr. SHIMKUS. Send him our regards, will you? 

Mr. SUNUNU. Will do. 

Mr. SHIMKUS. I pulled up the organizational chart of the FCC because I always believe that a lot of times structure dictates process. 

And that even though the structure is determined by the commisVerDate Nov 24 2008 16:21 Aug 02, 2012 Jkt 037690 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-66 062211\112-66 CHRIS
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sioner—in a lot of your opening statements, I don’t think you were 

asked to look at structure—but I would ask you after this hearing 

if you have comments on structure to get back to us because I do 

believe that some of these bureaus are established as the Senator 

said, you know, when there was a quasi-monopoly, 1934, and then 

we have kind of—like building a home you take out walls, you put 

a different roof on, you extend. And I have always been amazed at 

how, with the convergence of technology, that we don’t have a convergence of regulation. 

And I will give you an example, I think, hopefully. We have no 

internet bureau. There is no internet bureau so if you are overseas 

and you are going to call on Skype on a WiFi system, you have no 

Universal Service Fund, you have no inter-carrier compensation, 

you have no local taxes, you have last mile issues that aren’t compensated for. It just seems to me that if someone doesn’t talk about 

structure, then the policy applications of the regulations—and I 

don’t want to get into big detail because a lot of you didn’t talk 

about structure, and I want to lay that out if you would be some 

structure—but Mr. May, you have signaled? 

Mr. MAY. Well, I would just say briefly I appreciate your concerns. I actually recommended several years ago that the Commission create a broadband bureau, even if it would have subdivisions 

that still dealt as it would with wireline and so forth. Now, that 

might be useful. But I just would take the opportunity to say 

quickly that ultimately to address the issue that you are talking 

about, Senator Sununu—— 

Mr. SHIMKUS. Quickly. I am running out of time. 

Mr. MAY [continuing]. You need to actually change the act to get 

rid of the silos that are presently—— 

Mr. SHIMKUS. I have always been concerned about the silos. 

Let me go to Dr. Cooper. I want to confirm that when my colleague, Ms. Eshoo, asked about on the Sunshine applications that 

you agree that the Sunshine applications in the draft you would 

support? 

Mr. COOPER. I am OK with the Sunshine application as a general 

proposition. I have two caveats. One, the reporting of those partial 

meetings, I want transcripts, not summaries. And I want transcripts of ex parte communications, too, because those ought to be 

fully part of that—— 

Mr. SHIMKUS. OK. I read your written statement—— 

Mr. COOPER. Yes. 

Mr. SHIMKUS [continuing]. And so when she asked that and you 

didn’t object, I wanted to get—— 

Mr. COOPER. And I also—— 

Mr. SHIMKUS. That is fine. I need to go to the next—I have a lot 

of my friends in—I have been really involved in the presidential 

Executive order on jobs, which he did in January 2011 and I really 

would focus this on the EPA, that there should be a cost-benefit 

analysis and a job on new rules and regulations. The Blue Dog Coalition sent a letter to Chairman Genachowski asking him to at 

least voluntarily comply with the President’s Executive order. 

Mr. May, what are your comments on the Blue Dog letter? Have 

you seen this and do you think that the FCC should do a cost-benVerDate Nov 24 2008 16:21 Aug 02, 2012 Jkt 037690 PO 00000 Frm 00088 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-66 062211\112-66 CHRIS
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efit analysis and a projection of possible job creation activities in 

the rules and regs? 

Mr. MAY. I think it is useful that it does those things, and I 

think the recent Executive order and President Obama’s op-ed suggested as much generally. But I appreciate there may be some exceptions for minor rules and so forth, but in general, it is a useful 

thing. And here is why just in sum. Because the FCC for most of 

its history has been oriented around this public interest standard, 

which is, as we discussed earlier, completely indeterminate, means 

whatever three commissioners say on any given day. This type of 

requirement, Congressman, would get the FCC oriented in today’s 

competitive environment to doing the type of more rigorous economic analysis it just hasn’t had a history to do or the inclination 

to do. So it is a useful thing. 

Mr. SHIMKUS. Mr. Chairman, my time has expired. 

Mr. TERRY. The gentleman from California, Ranking Member 

Waxman, you are recognized for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Mr. Levin, I wanted to ask you some questions. I think it was 

very helpful to have you hear because you are in a unique position 

looking at these issues from an administrative procedures point of 

view. You don’t come here with any biases about how the FCC has 

performed and you don’t have an agenda before the FCC, so your 

position is unique and it is, I think, very helpful. 

You raise a number of concerns and caution about the potential 

inflexibility, burdens, and unintended consequences of this bill, and 

I want to ask you to elaborate a bit on those concerns. What are 

the risks of moving forward with the approach outlined in the bill? 

Mr. LEVIN. With what? 

Mr. WAXMAN. The risks. What are the risks of moving forward 

with the approach outlined in the bill itself? 

Mr. LEVIN. Well, I think on particular provisions, it could be too 

confining to say you have to have an advanced Notice of Inquiry 

before every proposed rule or Notice of Proposed Rule. You need 

two of something because sometimes the agency has a pretty good 

idea of what it is going to do. Rather than have two rounds of discussion with the delay that that would cause, you give the public 

at least one shot to comment on what the Commission wants to do 

and that may well be enough. You don’t need to build in an automatic second round. 

Likewise, you don’t necessarily need a reply period if there was 

no real opposition in the first period or if all the comments came 

in early in the period. People will have had plenty of chances to 

reply during the regular comment period. To have a mandatory second period means you are building in a delay for no practical benefit. 

Mr. WAXMAN. Let me ask you about the cost-benefit analysis that 

is required under this proposal. 

Mr. LEVIN. Right. 

Mr. WAXMAN. You concluded that this kind of scrutiny prior to 

issuance of highly expensive or consequential regulations may be 

appropriate, but for routine regulations, such a requirement would 

not be cost-justified. Expand on that. 

84 

Mr. LEVIN. Sure. So compare this with the presidential Executive 

order, which is the model I think for what the committee intends 

to do. They say that for all rules you should make a reasoned assessment of the benefits and the costs. Now, in that sense it is just 

saying think about the plusses and the minuses and I think that 

is simple. But a true cost-benefit analysis, as we usually use that 

term, is a rigorous, sophisticated, and expensive analysis with a 

qualified policy analyst, and the Executive orders limit that to situations where you have a very consequential rule. For a minor rule, 

it is an overinvestment of resources that agencies can ill afford to 

squander. And so to that extent I think you have a disproportion 

between the Executive order model and what the bill contemplates. 

Mr. WAXMAN. What do you think about the ability of the Administrative Procedure Act to allow the FCC or any other agency to 

evaluate the plusses and the minuses, the cost and the benefits? 

Mr. LEVIN. Well, one thing to keep in mind—and I think this 

gets to the thrust of your question—is that an agency will have to 

analyze the plusses and minuses of the bill anyway because it has 

to survive a pretty hard look on judicial review. There is also oversight such as this committee provides. They will have to answer 

the questions. And as far as the APA itself is concerned, they have 

to write a statement of basis and purpose to explain what they are 

doing. So to that extent, there is an expectation that they have to 

address the merits seriously. I don’t think you necessarily need to 

add on to that with an FCC process provision. 

Mr. WAXMAN. Yes. What are your thoughts about the idea of this 

legislation is just focused on one agency? Should we be taking a 

broader approach with reform proposals where they are needed? 

Mr. LEVIN. Well, I have endorsed an experiment with respect to 

the Sunshine Act, so I don’t want to rule out categorically that you 

might do something agency-specific and see how it works. However, 

I think if you are going to think about issues of that kind, you 

should not do something just to improvise. At least you should be 

very attentive to developed understandings in the administrative 

law field. And if you are about to do something that departs from 

it, you should be very cautious and rethink what you contemplate. 

Mr. WAXMAN. And then lastly, how does this legislation compare 

with related recommendations adopted by the Administrative Conference just last week? 

Mr. LEVIN. I think in some ways it is parallel but it also, I think, 

probably is a little stricter. And the final text hasn’t been released, 

but my general understanding of what ACUS will say is that reply 

comments are good where appropriate, that at least 30 days or 60 

days of comments should usually be available but doesn’t provide 

that it should be 100 percent of the time. 

Mr. WAXMAN. Thank you. 

Thank you, Mr. Chairman. 

Mr. WALDEN. Thank you. And I am going to exercise the prerogative of the chair with unanimous consent so we could all recognize 

one of our staff people, David Rettle, whose wife last week gave 

birth to their first child, Benjamin David Rettle. We have asked 

David to submit a photo for the record for this hearing. 

Mr. WAXMAN. Reserving the right to object. 

85 

Mr. WALDEN. We would hope on at least this matter we could 

have—no. With that, thank you, and congratulations to David and 

his wife and the arrival of Benjamin David. There will be other announcements later in the year. 

Mr. Barton, we recognize you now for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. We hope that was not 

an open and transparent process. 

Mr. WALDEN. No, it was streamed on video. 

Mr. BARTON. Right. Right. Anyway, we want to welcome former 

Congressman and Senator Sununu, good colleague, good friend, 

and I also think an engineer before this committee. 

I have long been a proponent of FCC reform. I had a bill with 

several other members of the committee in the last Congress, I 

have a bill in this Congress, and I plan to be a cosponsor of the 

draft that Chairman Walden has circulated for comments, so I 

think this is a good thing, a good day. And I think it is high time. 

I have a few questions I am going to ask for specific witnesses, but 

if anybody has a specific comment, feel free to chip in. 

The Section 5A, Subparagraph (b), transparency reform that 

would require the Commission to establish internal procedures to 

provide adequate deliberation over and review of pending orders, 

publication of draft orders before open meetings, minimum public 

comment periods, Mr. Sununu, are you supportive of that? 

Mr. SUNUNU. I am. 

Mr. BARTON. Is there anybody on the witness dais that is not 

supportive of that, the transparency issues? Let the record show 

that everybody seems to be supportive. 

What about 5A, Subsection (c), Sunshine reform that would allow 

three commissioners to meet for collaborative discussions if they do 

so in a bipartisan manner, which means that it has to be at least 

one member of each political party in consultations? And they also 

have to have the Office of the General Counsel to do oversight. Is 

anybody opposed to that? Mr. Cooper? 

Mr. COOPER. I would like a full transcript of any of those meetings as opposed to summary. 

Mr. BARTON. OK. I don’t have a problem with that. And by the 

way, Mr. Cooper, it is good to have you back. You probably have 

enough standing to get a pension from this committee as many 

times as you have testified, so we are glad that you are back. 

Let us see. Let us look at the Section 5A, Subsection (g) refers 

to shot clocks, which would require the Commission to establish 

shot clocks for each type of proceeding. Is that generally approved 

by everybody? OK. It looks like you are doing good, Mr. Chairman. 

Mr. COOPER. By shot clocks I have one concern. I want the shot 

clock to run when the record is complete. 

Mr. BARTON. When the record is—— 

Mr. COOPER. We have had a problem in merger review in which 

the companies aren’t forthcoming into providing the data, and 

months and months after the shot clock starts we all of a sudden 

get a big data dump and we get them screaming about how it is 

taking too long. So I think the Commission should be allowed to 

build the record first and be comfortable that it has the complete 

record and then this shot clock should start. 

86 

Mr. BARTON. My last question, last minute is Section 5A, Subparagraph (j), the transaction review reform. This would preserve 

the Commission’s ability to review transaction but would require 

conditions for those transaction reviews to be narrowly tailored to 

remedy harms that arise as a direct result of the transaction. What 

is the general review of that? 

Mr. COOPER. Well, my testimony I criticized that as unnecessarily undermining the ability of the agency to deal with this dynamic market where mergers change the structure—— 

Mr. BARTON. So you want to tweak it, you want to eliminate it, 

you—— 

Mr. COOPER. I don’t believe the standard needs to be changed. 

Mr. BARTON. You don’t think it needs to be changed? 

Mr. COOPER. I don’t think it needs to be changed. 

Mr. BARTON. This gentleman next to you, Mr. Ramsay, what is 

your view on that? 

Mr. RAMSAY. I just wanted to pipe in here and say I am a government lawyer. I am not allowed to take positions that disagree 

with my clients, and in this particular case, my clients haven’t 

come to any consensus on that provision, so I haven’t either. 

Mr. BARTON. Your clients are the—— 

Mr. RAMSAY. State Public Utility Commissioners, yes, sir. 

Mr. BARTON. OK. Mr. Sununu? I mean Senator Sununu? 

Mr. SUNUNU. I answer to just about everything. 

I think the real issue is the one with regard to the voluntary considerations. And people are frustrated by the fact that at times the 

Commission seems to have sought out and imposed voluntary considerations—we all know what that means—that are outside their 

jurisdiction. So this is really as much a question of how to ensure 

that the Commission stays within its jurisdiction as it is to determine whether or not there should ever be a voluntary consideration 

or whether the public interest standard is or isn’t being misused. 

It is a question of finding language and finding a process that is 

consistent and that ensures that the Commission stays within its 

jurisdictional boundaries. And I think that is what the intention is 

of this section. 

Mr. BARTON. Mr. Cooper, before—— 

Mr. COOPER. I have proposed a way to deal with that, which is 

that those conditions should be subject to comment and review, 

which would expose abuses. And I think that is the way to get at 

the abuses but also preserve the authority to really deal with the 

issues that the merger proposes. 

Mr. BARTON. OK. Mr. Chairman, I think you have got a winner 

here. It obviously needs to be tweaked some, but you have worked 

hard on this and you have listened to a lot of people. I only have 

a few minor technical changes I wish to suggest, but I hope we can 

introduce a new bill and move expeditiously to move it through 

subcommittee into full committee. This is something whose time 

has come. And I yield back. 

Mr. WALDEN. Thank you, Mr. Chairman. I appreciate the good 

work you and others in this committee have done for many years 

in this area, and I think we are on the cusp of having good legislation here that does need some tweaks. And we intend to work as 

best we can in a bipartisan way to get that done. 

87 

So with that, now, I would like to recognize the gentleman from 

Michigan, my friend and esteemed colleague Mr. Dingell, for 5 minutes. 

Mr. DINGELL. I thank my dear friend the chairman for this recognition, and I also express my thanks to my dear friend Mr. Doyle 

who is always kind and generous in his dealings with me. And I 

would like to welcome back Senator Sununu. Welcome back. 

Mr. SUNUNU. Thank you. 

Mr. DINGELL. It is good to see you again. 

These questions to Professor Levin and Ms. Abernathy. They will 

require yes or no. 

The draft bill requirement says that the Commission will complete an identification and analysis of the market failure that 

prompted a given rulemaking seems to be a little much. Does the 

Commission engage in rulemakings that are not prompted by market failures? Yes or no? 

Ms. ABERNATHY. Yes. 

Mr. DINGELL. Professor? 

Mr. LEVIN. Well, I am not an FCC specialist, but I would expect 

the answer is no—— 

Mr. DINGELL. Thank you. 

Mr. LEVIN [continuing]. That some of them should not relate to 

market—— 

Mr. DINGELL. The next question indicates to me that the draft 

bill’s failure analysis requirement has been at least superfluous, or 

worse, unnecessary in many cases. Am I correct in that feeling? 

Mr. LEVIN. The cost-benefit analysis? You are correct. 

Mr. DINGELL. Ma’am? 

Ms. ABERNATHY. It would be necessary in some situations. 

Mr. DINGELL. All right. Now, again, to Professor Levin and Ms. 

Abernathy, the draft bill seems to require that the Commission 

perform a cost-benefit analysis on every rule that may impose additional burdens on industry or consumers, is that correct? 

Mr. LEVIN. I think that is what it says, yes. 

Ms. ABERNATHY. I believe that is what the bill says. 

Mr. DINGELL. Now, again, to Professor Levin and Ms. Abernathy, 

I believe the requirements are, again, overbroad and would require 

the Commission to devote many of its finite resources to performing such analysis. Do you agree? Yes or no? 

Mr. LEVIN. I agree. 

Ms. ABERNATHY. I agree. It is overbroad. 

Mr. DINGELL. Now, again, to Professor Levin and Ms. Abernathy, 

further, is it reasonable to assume that the Commission has neither adequate staff nor funding with which to complete the costbenefit analysis of every rule that imposes additional burdens on 

industry or consumers? Yes or no? 

Mr. LEVIN. It is reasonable to assume the answer is yes. 

Ms. ABERNATHY. I don’t know. 

Mr. DINGELL. OK. Now, if this be the case, it would appear, then, 

that the Commission would require additional funds in order to 

comply with the draft bill’s requirements, is that correct? 

Mr. LEVIN. Presumably. 

88 

Mr. DINGELL. OK. Or we might assume that the FCC will be 

doing more to accomplish less at greater cost, is that an unfair assumption? 

Mr. LEVIN. So I would assume. 

Mr. DINGELL. OK. Now, this again to the last two witnesses. Finally, I come to the matter of personal interest. In the Congress in 

the past I have introduced legislation to amend Section 10 of the 

Federal Communications Act to require the Commission act on a 

forbearance petition within a year’s time. Forbearance as a result 

of Commission inaction and action that takes place as a result of 

Commission inaction appears to me to be very bad policy. Now, to 

all of our witnesses here starting with Senator Sununu, would you 

support amending Section 10 of the Communications Act as I have 

just described to eliminate the forbearance that is practiced by the 

Commission leading to decisions being made by a simple inaction 

on the part of the Commission? 

Mr. SUNUNU. To eliminate the forbearance or to set a time limit 

of 1 year? 

Mr. DINGELL. Well, tell me what you feel. Should we do it where 

we have to act on it within a year’s time? 

Mr. SUNUNU. I think any time you can set a clear time frame for 

action, it is going to add certainty to the regulatory process. I don’t 

know if 1 year is the right amount of time, but certainty in the regulatory process is likely to be a good thing. 

Mr. DINGELL. Thank you. Ms. Abernathy, yes or no? 

Ms. ABERNATHY. I agree with the additional clarity around the 

forbearance process. 

Mr. DINGELL. Mr. Ramsay? 

Mr. RAMSAY. We are on record with agreeing with the concept of 

shot clock, so I guess the answer is yes. 

Mr. DINGELL. Mr. Cooper? 

Mr. COOPER. Justice delayed is justice denied but it needs to be 

worked both ways. So when complaints are pending at the Commission, they languish for years. If you are going to have a shot 

clock, it ought to be both to the favor of the public and the—— 

Mr. DINGELL. Well, maybe we ought to fire the damned Commission if they can’t come to a decision on these matters or give them 

more money. 

Let us see. Mr. Levin? 

Mr. LEVIN. Well, I don’t do FCC law but administrative law authorities generally are skeptical about Congress imposing too many 

statutory deadlines because the upshot may be that those deadlines 

will drive the process more fully than—— 

Mr. DINGELL. Well, let us not debate that but it seems like poor 

sense to have the Commission just simply saying we haven’t acted 

so it is going to become the rule or it is going to become law or it 

is going to become the regulation. That appears to me to be very 

bad. Do you agree? 

Mr. LEVIN. I am sorry. Could you repeat that? 

Mr. DINGELL. Well, the Commission just sits around and 

twiddles its thumbs, nothing happens, and then all of a sudden, we 

have a new rule. It doesn’t seem like good sense to me. Does it 

make sense to you? 

89 

Mr. LEVIN. I think they should proceed expeditiously. I think the 

idea of establishing deadlines for themselves is good, but if we are 

talking about legally enforceable deadlines, you often have too 

much control by outsiders. 

Mr. DINGELL. Thank you. My time is limited. Next witness? 

Mr. MAY. I disagree with your proposal because it shifts the 

whole forbearance thing around. It was included in the act to be 

deregulatory and that is why the provision says if—— 

Mr. DINGELL. Thank you very much. 

So Mr. Chairman, I say this with respect. If our intention here 

is to focus on process reform, I would urge you to be done deliberately, transparently, and with adequate participation of all affected parties. And after all, we should avoid the mistakes of the 

agency that we seek to reform. Mr. Chairman, your courtesy is appreciated and I thank you. 

Mr. WALDEN. I thank the gentleman from Michigan and now I 

turn to the gentleman from Ohio, Mr. Latta, for questions. I made 

a mistake. Ms. Blackburn. 

Mrs. BLACKBURN. That is quite all right. I know I am hard to see 

over here. 

I want to stay on this issue of forbearance. And Mr. May, I want 

to come to you because you have talked about the reforms that are 

needed in Section 10 and then regulatory review, the periodic reviews that are needed in Section 11. And I appreciated your comments. And so why don’t you elaborate a little bit on how including 

evidentiary presumption to forbearance, how it would enhance the 

likelihood of the Commission in reaching a deregulatory decision? 

Because I think that as we look at reform, this is going to be a key 

nugget for us. 

Mr. MAY. Thank you, Representative Blackburn. Here is the deal 

in a nub. These two provisions—forbearance and regulatory review, 

if you look at them—were clearly put into the ’96 Act to be used 

as deregulatory tools. That is evident on the face of those provisions. The fact is they have only been used very sparingly by the 

Commission. They haven’t accomplished much deregulation, even 

as the market has become much more competitive. So I think the 

Congress through a pretty modest fix could address that situation 

in this way, not by changing the substantive criteria that are in the 

forbearance and regulatory review provisions. But again, when you 

look at them, they are addressed to the development of a competitive market. It doesn’t change the substantive criteria. 

But I would add a sentence that essentially says that enacting 

on a petition or in doing the regulatory review proceeding, unless 

the Commission can find by clear and convincing evidence that the 

criteria have not been met, that it shall presume that the rules 

should go away. So again you are not changing the criteria but you 

are adding an evidentiary presumption. 

Because you ought to wonder why these two provisions, which 

are unique—I think even Professor Levin, who has looked at other 

agency statutes, for many years I have challenged anyone to find 

another forbearance provision like this in another statute and no 

one has done that like this. It seems me if the provision is there, 

you ought to make it useful. And you could do it by just that shifting an evidentiary burden. 

90 

And to me this is the most important thing the committee could 

do. And it does fall in the realm—it is sort on the line between substance and process in a way, but it should be done, I think, if the 

committee wants to address the situation of existing regulations 

because your draft principally addresses regulations going forward. 

Thank you. 

Mrs. BLACKBURN. Thank you. Let me reclaim my time. And I 

have got a couple of yes or no questions that I want to give to each 

of you. 

Commissioner McDowell gave quite a hefty statement calling for 

a ‘‘full and public operation financial and ethics audit’’ of everything connected to the FCC. Mr. Sununu, starting with you, yes or 

no, do you support having that full audit, all the way down the 

line? 

Mr. SUNUNU. I think as a matter of fact it is good policy. 

Mrs. BLACKBURN. OK. 

Ms. ABERNATHY. I agree. It is good policy. 

Mrs. BLACKBURN. OK. 

Mr. RAMSAY. NARUC has no position. 

Mrs. BLACKBURN. Pardon me? 

Mr. RAMSAY. My association has not taken a position on that. 

Mrs. BLACKBURN. No position, OK. 

Mr. COOPER. As far as I can tell, the FCC is no better or worse 

than any other agency. The inspector general and the laws of the 

United States cover the problems, so I say no. 

Mrs. BLACKBURN. So you would say two wrongs make a right? 

OK. Professor? 

Mr. LEVIN. I am not an FCC authority. If I had to stake out a 

guess I would probably give an answer like Mr. Cooper’s. 

Mrs. BLACKBURN. OK. Mr. May? 

Mr. MAY. I think it is a good thing to do. Not every year necessarily but it wouldn’t be a bad thing to do. 

Mrs. BLACKBURN. OK. One ‘‘no’’ position, two waffled and three 

‘‘yes,’’ so I will take that. But remember, these are yes-and-no questions. All right. One more, yes or no. OK. 

Do you think that Congress should be in the position of defining 

the role for the FCC and telling the FCC what to do or should the 

FCC continue doing what they are doing right now, which is trying 

to tell Congress what to do? Mr. Sununu, yes or no? 

Mr. SUNUNU. Well, it is absolutely a congressional prerogative—— 

Mrs. BLACKBURN. OK. 

Mr. SUNUNU [continuing]. And again, in my opening statement, 

I think that in addition to this draft legislation, we need to look 

more broadly about the underlying premise of the ’34 Act, the ’96 

amendments, and view this as a competitive world first and not as 

a natural monopoly. 

Mrs. BLACKBURN. OK. 

Ms. ABERNATHY. Yes, Congress defines the scope of the FCC’s authority. 

Mrs. BLACKBURN. Thank you. 

Mr. RAMSAY. Yes, Congress defines the scope of the FCC’s authority and can tell it to a justice—— 

Mrs. BLACKBURN. Thank you. 

91 

Mr. COOPER. Congress did that in the ’96 Act. 

Mrs. BLACKBURN. OK. 

Mr. LEVIN. Yes, Congress should set the bounds of the Commission’s actions but it should give discretion to the Commission for 

things that require more flexibility than Congress can get around 

to addressing in specific terms. 

Mrs. BLACKBURN. OK. Mr. May? 

Mr. MAY. Yes. 

Mrs. BLACKBURN. OK. So we have got four that say ‘‘yes,’’ one 

that gives a little bit more—one I think is uncertain. So I thank 

you all. Remember, yes or no, you did fairly well for being here in 

Washington and limiting your words even though you couldn’t give 

me a yes or a no. 

And I yield back. 

Mr. WALDEN. I thank the gentlelady for her questions. And I 

turn now to the gentleman from Pennsylvania, Mr. Doyle. 

Mr. DOYLE. Thank you, Mr. Chairman. 

I am very concerned about this section of the draft that requires 

the Commission to issue a Notice of Inquiry for every single proceeding. I think in some cases this could cause serious harm to consumers and the public safety, and I would urge my colleagues to 

think back, for example, to the proceedings a few years ago when 

VoIP customers couldn’t make 9-1-1 calls, and the FCC needed to 

act quickly to enact E-9-1-1 rules. This is just one example. Another might be the rules required to implement the legislation we 

just passed to expand low power FM radio, which the Commission 

is currently working on. 

And I know that Professor Levin has already voiced his opinion 

on this, but I would just ask for the rest of the panelists, given 

these concerns, is there a strong enough reason to require NOIs for 

every single proposed rulemaking? Why not just leave this up to 

the FCC? If we could just go down the line. 

Mr. SUNUNU. I have to believe there is an in between. I think 

as a matter of policy, the Notice of Inquiry is a good idea. There 

certainly may be examples either in the past or hypothetical where 

it might not be the ideal situation, but it is important if you are 

going to make exceptions to define those circumstances and those 

exceptions as clearly as possible. I mean you defeat the whole purpose if you just say, well, the FCC can decide because you are 

going to have less clarity and less definition in the process. 

Mr. DOYLE. Ms. Abernathy? 

Ms. ABERNATHY. I think an NOI as written is overly broad and 

so it should be circumscribed to some degree so that you don’t 

waste resources and create delays. But I think in concept it is a 

good idea for many proceedings. 

Mr. DOYLE. Mr. Ramsay? 

Mr. RAMSAY. I agree with actually the statements of both of the 

people that preceded me. I believe that, you know, typically a rush 

to judgment means you ran too fast, so I like the concept of having 

a Notice of Inquiry in most instances. I would note that in emergency circumstances, the APA allows the Commission to bypass 

even a Notice of Proposed Rulemaking. So in those circumstances, 

there is already a mechanism. But the question is how to set the 

92 

standard as Mr. Sununu said for when you don’t have to do the 

NOI, which is not an easy thing to address. 

Mr. WALDEN. Will the gentleman yield for a second? 

Mr. DOYLE. Yes, sure. 

Mr. WALDEN. On page 3 of the draft, we incorporate that APA 

emergency exemption. So I would draw your attention to that. And 

on the second page, if they have done an NOI, and NPRM or a Notice or Petition for Rulemaking within the last 3 years, that qualifies. 

Mr. RAMSAY. But it still requires two rounds of comment? 

Mr. WALDEN. No, you don’t require—— 

Mr. COOPER. There is an ‘‘or’’ in that paragraph. The first paragraph says ‘‘or’’ as far as I can tell. And so maybe I have misread 

it. And it is really important that we get this right because I believe in the opportunity to comment. But I don’t think it is necessary for two rounds of comment. If the agency proposes a rule 

and builds a record, then that meets this. And I see that ‘‘or.’’ It 

says ‘‘one or the other,’’ so it doesn’t say a Notice of Inquiry and 

these others. It says ‘‘or.’’ Now, maybe there is someplace else in 

here where we get the impression of the ‘‘and,’’ but it is an ‘‘or.’’ 

Mr. WALDEN. Yes. Mr. Levin? 

Mr. LEVIN. Well, the chairman is correct that the bill as written 

exempts the true emergency situations where you can proceed with 

no notice and comment. But that having been said, we should also 

think about situations where there is some urgency about getting 

just the basic notice and comment done and having two rounds of 

comment is unwarranted. So you should leave some flexibility to 

say we don’t need advanced notice in this particular situation. The 

public still gets one shot at commenting and saying it is a bad idea, 

change it, et cetera. But you don’t need the extra round and sometimes that would be imprudent. 

Mr. DOYLE. But I guess the trick is how do you write that into 

the bill? Mr. Sununu brings this up that, you know, do we just 

leave this at the discretion to the FCC or is there a way to create 

some language that would allow it to happen what you have just 

suggested? 

Mr. LEVIN. I think it needs some consideration, but one idea I 

suggested in my draft is that you might set up the procedure and 

say the agency can, for good cause, bypass it. And that term is usually read to me—and a very good cause, not because you feel like 

it. 

Mr. DOYLE. Sure. Mr. May? 

Mr. MAY. Yes, just briefly. This is a provision I am generally not 

in favor of in the draft for a lot of the reasons that Professor Levin 

talked about. But here is what should happen. The reason it is 

here I think is because the FCC, especially in recent years over all 

commissions, it started to draft Notice of Proposed Rulemakings in 

a much more open-ended way than it used to back when I was at 

the Commission a long time ago. And it is, I guess, responding to 

that. But it is likely to increase the time that the FCC could act 

on things that it does need to act on. 

Remember I talked about Chairman Powell saying that the Commission needs to be able to act in internet time. So this is I am 

not sure the right way to get at that. Maybe just if your oversight 

93 

would get the FCC focused on drafting rulemaking proposals that 

actually propose specific things, if not precise rule language. 

Mr. DOYLE. Sure. Thank you, Mr. Chairman. 

Mr. WALDEN. Thank you, Mr. Doyle. 

We go now to Mr. Scalise for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. 

It was brought up earlier that a lot of us have concerns. I want 

to put some real structure in place for the FCC, not just for clarity 

in the industry, but also to move it away from what many of us 

view as an agency that is starting to implement their own political 

agenda as opposed to an agency that should be focused on regulations as it applies to existing law. 

I want to ask—and I want to start with Mr. May—when we look 

at some of the mergers that have come through recently, and of 

course there are still mergers pending for the FCC, there is a provision here in Section J of this draft that says, ‘‘The Commission 

may not consider voluntary commitment of a party to such transfer 

or transaction unless the Commission could adopt that voluntary 

commitment as a condition under Paragraph 1.’’ Let me ask you, 

you know, in your experiences from what you have seen with some 

of these conditions that have been placed on mergers at a time 

where companies really are very vulnerable to some of the pressures that would be put in place to agree to something that they 

might not otherwise support in those preconditions place as a condition of a merger, if you can address that in general but also as 

it relates to what you are seeing here in the language in the draft? 

Mr. MAY. Well, I think the language in the draft is good and I 

am enthusiastic about this provision. I said in my opening statement I would actually like to see the merger review process reformed even further. But this is useful because what it does is at 

least try and put some constraints on the FCC from going too far 

afield by tying the FCC’s extraction of voluntary commitments to 

conditions that are narrowly tailored to remedy a harm that arises 

as a direct result of specific transfer or specific transaction. Now, 

there can still be disputes about that, but you know, at least that 

does confine it and that is a useful thing. 

The problem right now—and this is why this is so important— 

the only constraint right now is the public interest standard. And 

the public interest standard, of course, is completely indeterminate. 

And I can think of mergers where the FCC has imposed a condition 

or there has been a voluntary commitment offered not to outsource 

jobs overseas, for example, in one merger. Well, that might be a 

nice thing to happen as a policy but it didn’t have anything at all 

to do with that particular merger at all. And there had been examples like that. And it gives the process an unseemly flavor when 

at the last minute, 2 days before a merger, you see, you know, voluntary commitments offered up like this. 

Mr. SCALISE. And how about as it relates to the entire industry, 

too, because there are some conditions that, you know, maybe currently or in the past that have been placed that don’t just affect 

the entities involved in the merger but also could be impacted industry-wide? 

Mr. MAY. Well, that is true and it also, of course, happens the 

other way around sort of perversely that you can have a condition 

94 

imposed extracted by the FCC—and I am using the word extracted 

because, again, these things generally happen at the last minute— 

where a condition that ought to be industry-wide, imposed on an 

industry-wide basis if at all if it is going to be imposed—one party, 

the party to the merger is now subject to it and that seems not to 

be really equitable. 

But then what happens is often that condition sometimes is then 

used going forward by the FCC as a proposal then to apply to the 

whole industry so it becomes a bit of a precedent if not a legallybinding—— 

Mr. SCALISE. Right. And I think again that is a good condition 

because it is a problem we have seen, we have heard about, but 

it has actually been implemented and is probably still being used 

today in some of the others. 

I want to ask Ms. Abernathy a question as it relates to the annual reports. We have heard a number of complaints that the annual reports at the FCC has to comply with today, by the time they 

are filed, they are outdated. It takes a whole lot of work to put in 

and then they are filed and really not that useful. This draft and 

its Section K really lays out a different process of putting a communications marketplace report in place that might be a little more 

conducive to the changing technologies. If you can maybe address 

both what you are seeing in the draft but also as it relates to the 

current practice of these annual reports and whether or not they 

are even useful. 

Ms. ABERNATHY. I think if you implement new reporting obligations and eliminate some of the old ones, then that makes a lot of 

sense because, again, some of the reports were built around the old 

silos. And so the information, it takes a lot of time and money to 

gather the information, and yet it probably isn’t providing a great 

deal of beneficial competitive analysis for Congress. So I think 

there has got to be a better reporting way, and this is a proposal 

that I think would start you in the right direction. 

Mr. SCALISE. Mr. Sununu? 

Mr. SUNUNU. I am sorry. If I could make an observation on that 

point, though. The language that is here in the Communications 

Marketplace section identifying challenges and opportunities in the 

marketplace, the jobs, and economy, frankly it begins to make the 

FCC sound like an economic development group and that is simply 

not what it is. I think perhaps what we are trying to get at here 

is that the Commission should be more focused on evaluating the 

competitive state of the marketplace, the number of players, price 

trends, new products, innovation in the space, and taking that into 

consideration in their regulatory and rulemaking process. So I 

might encourage you to look a little bit more carefully at that language in order to (a) avoid unintended consequences and avoid creating new areas for the FCC to engage in regulation and instead 

focus it on making sure that we have got a regulatory authority focused on the current competitive state of the marketplace. 

Mr. WALDEN. We appreciate that. 

Mr. SCALISE. We appreciate your comments and yield back, Mr. 

Chairman. 

Mr. WALDEN. Thank you. We do have a vote on in the House 

floor but we should have time for Mr. Latta for 5 minutes. 

95 

And as he prepares, I would really appreciate as you have heard 

the discussion among yourselves and with us, if you have specific 

recommendations for improving the language in the bill that are 

not referenced in your own testimony, it would be most helpful to 

get that to us as soon as possible. Thank you. 

Mr. Latta? 

Mr. LATTA. Well, thank you, Chairman. I really appreciate you 

holding the hearing today and all the panelists for being here. We 

really appreciate your time. And I also appreciate the chairman’s 

discussion draft that I think is very, very important. 

We all have lots of folks coming through our office all the time 

talking about what is happening out there. And you know, the FCC 

is no different from what I have heard from a lot of different folks 

in that we have to really go in and look what is happening there 

because it could be stifling businesses out there. And one of the 

things I have done—I have also got a bill out there for cost-benefit 

analysis for the FCC when they are promulgating rules and at the 

very beginning and also at the final rule. 

And the things that we have heard that they are looking at 

across—either with those cost-benefits would be that either would 

or should the FCC consider the costs—or largely the costs of businesses of complying with the new regulatory regime, i.e., creating 

new compliance regime, training employees, changing, billing other 

back-office systems, the lost revenue that businesses could be— 

would be lost for the new prohibited—engaging in particular business models that would be prohibited under the new regulation and 

the cost of productivity in the businesses. 

And one of the things, if I may, Ms. Abernathy, if I could ask you 

first is in your unique role as a former FCC commissioner and also 

at Frontier what you would see would be able to comment on this 

idea from, you know, the FCC’s perspective and also from Frontier 

if they would have to do a cost-benefit analysis. 

Ms. ABERNATHY. I think it is appropriate for a number of proceedings to engage in a cost-benefit analysis because at the end of 

the day if the costs drive up our cost to consumers and the overall 

incremental information that is potentially provided to the FCC is 

de minimis, that makes no sense. And sometimes what happens in 

the context of looking at various rules and regs is the commissioners have the best of intentions but they haven’t really thought 

through the costs and the burdens on the industry. And it is backwards. And so I think it would make a big difference. 

Mr. LATTA. Let me ask you this. Looking at what has happened 

in the recent past with the FCC, could you comment on any more 

recent rules that would have benefitted from a cost-benefit analysis? 

Ms. ABERNATHY. I could get back to you in writing afterwards 

just because I need to look back. 

Mr. LATTA. I appreciate that. 

Mr. May, I know in your testimony that you have addressed on 

page 2, your last paragraph there that, you know, you said in there 

taking them generally in order that they appear in the bill draft, 

and especially those provisions that would require the agency—you 

go on to also state to perform a cost-benefit analysis. If could just 

96 

get your read on that a little bit farther on the cost-benefit analysis. 

Mr. MAY. I think generally this would be a good requirement to 

impose on the FCC. I take Professor Levin’s point that it is worth 

thinking about whether it should be for every rule, and the answer 

is it may not be. But there is a lot of economically significant rules 

that the FCC proposes. Now, I think of Bill Shock, Net Neutrality, 

you know, the Data Roaming bill it just did. All of those are the 

types of rules that have cost and benefits and I think the FCC— 

obviously it does some of this now, but as I said earlier, because 

historically it has tended to focus, you know, again, in 103 places 

it has authority to act in the public interest. And because that is 

so indeterminate, it has, in my view, a bit of—with respect to all 

past commissioners—it has got a bit of a mindset, to think of 

things in a way that is not economically as rigorous as it should 

be in today’s environment, which is at least increasingly competitive, fast-changing marketplace environment. 

Mr. LATTA. In my remaining time, Mr. Ramsay, I know on page 

7 of your testimony today that you state that ‘‘Still, logically, an 

analysis of a rule’s potential benefits and costs, as well as milestones for its review, could focus available resources and expertise 

on the efficacy of any proposed rule.’’ And just any other comment 

on cost-benefit analysis? 

Mr. RAMSAY. The only thing I said on my testimony is true is 

that the nature of regulation and the nature of regulatory oversight 

is a balance of competing interests. The APA already requires 

agencies to specify the basis and explain why they are doing 

things. We haven’t taken a specific position on the application of 

a strict cost-benefit test, so I can’t speak to that. But I think I also 

noted in my testimony that it is certainly consistent with Executive 

orders dating back to, I think, Gerald Ford. 

Mr. LATTA. Thank you very much, Mr. Chairman. I see my time 

has expired, and I yield back. 

Mr. WALDEN. Mr. Latta, thank you for your participation in the 

hearing. I want to thank all of our subcommittee members for their 

participation, especially thank our panelists. You have been most 

enlightening for all of us as we work to improve this draft. And as 

I said, I really would appreciate any specific recommendations on 

how to make this better and more workable. 

So with that, we thank you again and this hearing is adjourned. 

[Whereupon, at 12:30 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. CLIFF STEARNS

Here we are 15 years after the ’96 telecom act and technology has advanced beyond what any one of us could have possibly imagined. Yet the laws governing these 

industries have lagged way behind and many are no longer relevant to the new 

services and technologies that have arisen over the past few years. That is why I 

believe this draft legislation is an important first step. 

This draft is quite similar to a bill Mr. Barton and I introduced in the previous 

Congress. Since then, I have introduced H.R. 2102, the FCC Commissioners’ Technical Resource Enhancement Act, to allow each Commissioner to hire an electrical 

engineer or computer scientist. 

Equipping the FCC with both legal and technical advisors should provide Commissioners with the necessary staff experience to tackle increasingly complex techVerDate Nov 24 2008 16:21 Aug 02, 2012 Jkt 037690 PO 00000 Frm 00102 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 112\112-66 062211\112-66 CHRIS
97 

nical matters. I hope my colleagues will join me with this initiative and that this 

bill can be apart of the reform discussion. 

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Æ 


72154.111