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[Senate Hearing 110-1124]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 110-1124
 
                           OVERSIGHT OF THE 
                   FEDERAL COMMUNICATIONS COMMISSION

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 13, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

                  U.S. GOVERNMENT PRINTING OFFICE
74-009                    WASHINGTON : 2012
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
   Christine D. Kurth, Republican Staff Director and General Counsel
                  Paul Nagle, Republican Chief Counsel
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on December 13, 2007................................     1
Statement of Senator Boxer.......................................    61
Statement of Senator Cantwell....................................    70
Statement of Senator Dorgan......................................     2
    Prepared statement...........................................     3
Statement of Senator Inouye......................................     1
    Prepared statement...........................................     1
Statement of Senator Kerry.......................................    54
Statement of Senator Klobuchar...................................    65
Statement of Senator Lautenberg..................................    62
Statement of Senator Lott........................................    42
Statement of Senator McCaskill...................................    79
Statement of Senator Nelson......................................    74
Statement of Senator Rockefeller.................................    51
Statement of Senator Stevens.....................................     1
    Prepared statement...........................................     1

                               Witnesses

Adelstein, Hon. Jonathan S., Commissioner, Federal Communications 
  Commission.....................................................    21
    Prepared statement...........................................    23
Copps, Hon. Michael J., Commissioner, Federal Communications 
  Commission.....................................................    15
    Prepared statement...........................................    17
Martin, Hon. Kevin J., Chairman, Federal Communications 
  Commission.....................................................     5
    Prepared statement...........................................     8
McDowell, Hon. Robert M., Commissioner, Federal Communications 
  Commission.....................................................    34
    Prepared statement...........................................    36
Tate, Hon. Deborah Taylor, Commissioner, Federal Communications 
  Commission.....................................................    30
    Prepared statement...........................................    32

                                Appendix

DeMint, Hon. Jim, U.S. Senator from South Carolina, prepared 
  statement......................................................    85
Letter dated, December 11, 2007, from John Altamura; Richard N. 
  Massey; Ron Smith; Victor (Hu) Meena; Michael J. Small; 
  Jonathan D. Foxman; Bryan Corr; Dan Rule; Laura Phipps; Larry 
  Lueck; Frank DiRico; Jerry Whisenhunt; Richard Watkins; Robert 
  G. Dawson; and John E. Rooney to Hon. Daniel K. Inouye and Hon. 
  Ted Stevens....................................................    89
Letter dated, December 12, 2007, to Hon. Daniel K. Inouye and 
  Hon. Ted Stevens from Gene Kimmelman, Vice President for 
  Federal and International Policy, Consumers Union; Mark Cooper, 
  Research Director, Consumer Federaton of America; and Ben 
  Scott, Policy Director, Free Press.............................    87
Response to written questions submitted by Hon. Maria Cantwell 
  to:
    Hon. Jonathan S. Adelstein...................................   146
    Hon. Michael J. Copps........................................   132
    Hon. Kevin J. Martin.........................................   100
    Hon. Robert M. McDowell......................................   167
    Hon. Deborah Taylor Tate.....................................   152
Response to written question submitted by Hon. Thomas R. Carper 
  to:
    Hon. Jonathan S. Adelstein...................................   149
    Hon. Michael J. Copps........................................   134
    Hon. Kevin J. Martin.........................................   110
    Hon. Robert M. McDowell......................................   168
    Hon. Deborah Taylor Tate.....................................   154
Response to written questions submitted by Hon. Byron L. Dorgan 
  to:
    Hon. Jonathan S. Adelstein...................................   143
    Hon. Kevin J. Martin.........................................    92
    Hon. Robert M. McDowell......................................   163
    Hon. Deborah Taylor Tate.....................................   150
Response to written questions submitted by Hon. Daniel K. Inouye 
  to:
    Hon. Jonathan S. Adelstein...................................   142
    Hon. Michael J. Copps........................................   131
    Hon. Kevin J. Martin.........................................    91
    Hon. Robert M. McDowell......................................   162
    Hon. Deborah Taylor Tate.....................................   149
Response to written questions submitted by Hon. John F. Kerry to:
    Hon. Kevin J. Martin.........................................    91
Response to written questions submitted by Hon. Frank R. 
  Lautenberg to:
    Hon. Jonathan S. Adelstein...................................   148
    Hon. Michael J. Copps........................................   133
    Hon. Kevin J. Martin.........................................   110
    Hon. Robert M. McDowell......................................   168
    Hon. Deborah Taylor Tate.....................................   154
Response to written questions submitted by Hon. Bill Nelson to:
    Hon. Jonathan S. Adelstein...................................   145
    Hon. Michael J. Copps........................................   132
    Hon. Kevin J. Martin.........................................    98
    Hon. Robert M. McDowell......................................   166
    Hon. Deborah Taylor Tate.....................................   152
Response to written questions submitted by Hon. Gordon H. Smith 
  to:
    Hon. Michael J. Copps........................................   140
    Hon. Kevin J. Martin.........................................   131
    Hon. Robert M. McDowell......................................   169
    Hon. Deborah Taylor Tate.....................................   159
Response to written questions submitted by Hon. Olympia J. Snowe 
  to:
    Hon. Michael J. Copps........................................   135
    Hon. Kevin J. Martin.........................................   117
Response to written question submitted by Hon. Ted Stevens to:
    Hon. Michael J. Copps........................................   135
    Hon. Kevin J. Martin.........................................   111
    Hon. Robert M. McDowell......................................   168
    Hon. Deborah Taylor Tate.....................................   155
Response to written questions submitted by Hon. John Thune to:
    Hon. Michael J. Copps........................................   140
    Hon. Kevin J. Martin.........................................   127
    Hon. Robert M. McDowell......................................   170
    Hon. Deborah Taylor Tate.....................................   160
Response to written questions submitted by Hon. David Vitter to:
    Hon. Kevin J. Martin.........................................   126
Snowe, Hon. Olympia J., U.S. Senator from Maine, prepared 
  statement......................................................    86

                           OVERSIGHT OF THE 
                   FEDERAL COMMUNICATIONS COMMISSION

                              ----------                              

                      THURSDAY, DECEMBER 13, 2007

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:45 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Daniel K. 
Inouye, Chairman of the Committee, presiding.

          OPENING STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    The Chairman. Since time is of the essence, I will request 
that all Members refrain from giving their opening statements, 
but place them in the record so we can spend time listening to 
the Commissioners.
    Is there any objection?
    [The prepared statement of Senator Inouye follows:]

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
    It's an exciting time for communications. We are seeing dramatic 
changes in the way we communicate, conduct business, educate, and 
entertain ourselves in this country. The future of communications holds 
tremendous promise, but this promise does not come without risk. As 
public servants, both here in Congress and on the Commission, we are 
challenged to ensure that our communications markets evolve in a manner 
that serves the public interest. We must foster an environment where 
consumers have choices, where businesses have opportunities, and where 
the rules of the regulatory road are clear.
    A transparent regulatory process is essential. When agencies short-
circuit the decisionmaking process, public trust in their authority 
erodes. With the Commission poised to make historic decisions on media 
ownership, universal service, broadband, and the digital television 
transition, public confidence in the process is not a luxury, it's a 
necessity.
    I look forward to hearing from our witnesses and thank you for 
joining us for this oversight hearing.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. No objection.
    [The prepared statement of Senator Stevens follows:]

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
    It has been 10 months since all five of you last appeared together 
before the Committee. There have been a number of regulatory proposals 
that have drawn national attention. Some of those issues have been 
resolved, but other issues important to consumers remain.
    As February 17, 2009 approaches, much remains to be done to assure 
a smooth digital television transition. Plans are in place to achieve 
the goal, but coordination, outreach and execution are needed on the 
local level to make sure that all consumers are informed. What 
broadcast TV means to parts of Alaska is different from what it means 
to Manhattan. How to get a converter box to remote Alaskan villages is 
also different. Because of unique needs rural America should be a top 
priority for the digital transition.
    The 700 MHz spectrum auction for the DTV transition takes place 
next year. This spectrum represents great opportunities to bring new 
consumer services, including additional broadband. And the auction will 
fund a number of public safety programs that have already been put into 
place.
    Deployment of broadband is also an important priority. The 
Commission has indicated that steps to provide a more accurate picture 
of the marketplace will be taken, and it is my hope that these actions 
will be taken soon. Universal Service is the most important element for 
the communications infrastructure our country needs in rural areas. I 
was glad to see that the Joint Board has outlined proposals for 
comprehensive reform. While Alaska is unique, it is not alone in 
needing Universal Service programs to deliver the benefits of 
broadband, telemedicine and distance learning. Universal Service has a 
central role in the continued development of this country's resources 
in rural America and any reform efforts should reflect this important 
role.

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman?
    The Chairman. Yes?
    Senator Dorgan. Mr. Chairman, I've been called over to the 
Majority Leader's office at 11 o'clock. I have been so looking 
forward to this hearing. I would like to say 2 minutes' worth, 
at some point, after you have given your opening statement.
    The Chairman. I will not make any statement.
    Senator Dorgan. All right. Well, then, after Senator 
Stevens gives an opening statement?
    Senator Stevens. We'd be happy to yield to you. Be happy to 
yield to you.
    Senator Dorgan. All right.
    Senator Stevens. Yes. Happy to yield to you, yes.
    Senator Dorgan. And I regret the inconvenience, but I have 
been looking forward, for some while, to talk especially to 
Chairman Martin and other members of the board.
    Apparently, there's a move underway to finalize a rule on 
cross-ownership by December 18, a rule that was just announced 
in November--in my judgment, abrogating all of the standards 
that you would normally have that would give the American 
people a chance to comment on a rule after a period of 60 or 90 
days. This Committee passed a piece of legislation, co-authored 
by Senator Lott, myself, and many others, that indicated that 
there ought to be at least 90 days given for a comment period 
for the American people. If the FCC proceeds ahead with a 
December 18 date, I think it is a serious mistake and, I think, 
flies in the face of what this Committee has already said to 
the FCC it ought to be doing.
    There are 1,400 pages that have been requested under a FOIA 
request that have not yet been released. The pages that have 
been released of information from inside the FCC tells us, at 
this point, that the FCC started--and I'm talking now about one 
of the top officials of the FCC--started with the proposition 
they wanted to do research to find out how they could justify 
the cross-ownership elimination.
    And so, I think there are a lot of questions here that need 
to be asked. I wish very much I could stay, but the Majority 
Leader has asked that I come to a meeting on the appropriations 
bills. I'm going to do that. But, if I--I expect that's going 
to last some while--but, I hope this Committee will ask tough 
questions of this Commission.
    This Commission should not, on December 18, drive home a 
final rule without giving the American people the 90 days, at 
least, to make comments. And this Commission should not take 
action before it finishes its proceeding on localism, which has 
been shortchanged for years. And I feel very strongly about 
this, as do many of my colleagues, and I hope the Commission 
will take heed of what this Committee has done and what I 
believe their obligations are to the American people, to this 
Committee, and to this Congress.
    Senator Stevens. Since you feel so strongly, I'll be glad 
to yield my seat to you and take your seat at that table.
    [Laughter.]
    Senator Dorgan. Mr. Chairman, I'm sure you----
    Senator Kerry. I think you've got a seat at that table, 
anyway.
    Senator Dorgan. Senator Stevens, I'm sure you would, but I 
think I will defer on that request.
    But, I hope you will take my place during the question 
period in asking the questions I've just propounded, because I 
think they need to be asked in a very assertive way.
    Mr. Chairman, thank you for your courtesy.
    The Chairman. I thank you very much. And, with that----
    Senator Stevens. All statements will go in the record, Mr. 
Chairman?
    The Chairman. Yes, without objection, so ordered.
    [The prepared statement of Senator Dorgan follows:]

              Prepared Statement of Hon. Byron L. Dorgan, 
                     U.S. Senator from North Dakota
    Thank you, Chairman Inouye for holding this hearing. Before I get 
to the issue of media ownership, which is what I intend to focus on, 
let me mention just a few separate points.
    First, the FCC is considering Liberty Corp's intention to purchase 
DIRECTV. On May 7, 2007, I sent a letter with Senator Conrad in support 
of the North Dakota broadcasters' petition asking the FCC to require as 
a condition of this transaction that DIRECTV offer local into local 
broadcasting in all 210 markets by the end of 2008. This is a crucial 
issue. You all know that I am concerned about the issue of localism. In 
Minot/Bismarck, only the NBC, ABC and PBS local stations are offered by 
EchoStar, and DIRECTV does not offer any local stations. Almost a third 
of the households in Western North Dakota do not have satellite access 
to emergency alerts, AMBER alerts, local news and local advertising. A 
good number of these households are watching affiliates from New York, 
Los Angeles and Denver. This is very troubling to me and I want to know 
what the FCC is doing about it. The Commission isn't hesitant to put 
conditions on transactions--this is a case that clearly deserves a 
condition of local into local carriage.
    Second, the Joint Board has issued its recommendations. I want to 
know what the FCC is doing to move forward with comprehensive reform of 
Universal Service. It is crucial to the State of North Dakota.
    Third, the Chairman of the FCC is aware of the recent activities by 
broadband and wireless carriers that raised network neutrality 
questions. I sent the Commission a letter on the issue of 
discrimination in text messaging and have not had a response. I want to 
know what the FCC is doing on that issue.
    And fourth, I understand that the FCC still owes 1,400 pages to the 
Georgetown Institute for Public Representation from an August 2006 FOIA 
request. These documents should be turned over immediately.
    Now, on to media ownership . . . The FCC has taken a series of 
destructive actions in the past two decades that, I believe, have 
undermined the public interest. Now they are preparing to do it again.
    They are now working toward a December 18 vote on a change to our 
media ownership rules. They have rushed to finish the localism and 
ownership hearings with as little as 5 business days of notice for the 
last hearings.
    Chairman Martin put out his proposed rule changes on November 13--
after the comment period had closed. He didn't consult his fellow 
commissioners and didn't issue the rules in the Federal Register, but 
put out the rule changes in a New York Times op-ed and in an FCC press 
release.
    He hasn't given the public the opportunity to comment on the actual 
rule changes he plans to move on December 18.
    Now this seems like a massive rush to me and a big mistake. How 
will the public interest be served by attempting to rush through a plan 
to relax ownership rules?
    Chairman Martin is proposing for the top 20 markets, cross-
ownership of newspapers and broadcast stations that are not ranked in 
the top 4. In addition, he has opened a gaping loophole for mergers 
outside of the top 20 markets.
    Chairman Martin has framed his proposal as a modest compromise. But 
make no mistake, this is a big deal. When nearly half of the people in 
this country are told that in their cities and towns the media will get 
the green light to consolidate, they will not be happy. The proposal 
also goes beyond the top 20--it would also create a greatly relaxed 
approval process for cross-ownership in any U.S. media market and spur 
a new wave of media consolidation in both large and small media 
markets.
    Frankly I find this further concentration to be an affront to 
common sense. This will undercut localism and diversity of ownership 
around the country. Studies show that removing the ban on newspaper/
broadcast cross-ownership results in a net loss in the amount of local 
news produced in the market as a whole.
    In addition, while the FCC suggests that cross-ownership is 
necessary to save failing newspapers, the publicly traded newspapers 
earn annual rates of return between 16 and 18 percent. Let's put that 
in context. Major oil companies earn 16 percent. Why do we need a 
bailout for an industry that earns at least three times the rate you 
and I can get at our local bank? And the FCC neglects to mention that 
there is already a ``failing entity'' waiver process for entities that 
do encounter financial hardships.
    I have received an FCC produced draft study obtained through a FOIA 
request by the Georgetown Institute for Public Representation. The FCC 
study is called ``Financial Health of the Newspaper Industry'' and is 
dated June 2006. It shows that: (a) the newspaper industry is not doing 
all it can to increase its online revenues and therefore, its profit 
margins; (b) for the 12 largest publicly traded companies, average 
profit margins went down and up in consistently (for example there was 
an increase in profit margins for these companies from 2001 to 2004 of 
6.5 percent to 12.7 percent); (c) the report explicitly states that 
``the industry overall is still profitable.''
    Finally, the Commission fails to argue why the FCC needs to be in 
the newspaper business. The FCC regulates the broadcast airwaves. The 
FCC has no authority over newspapers, except that in the way broadcast 
transactions include them. The FCC need not be considering the growth 
and changes of the newspaper business. It is not in the Commission's 
purview to just make broadcast cross-ownership rule changes based on 
estimations of the condition of companies they aren't even overseeing.
    Yet Chairman Martin is committed to moving on the cross-ownership 
rule. The Georgetown Institute for Public Representation FOIA request 
produced another interesting document. It shows evidence that the FCC's 
Chief Economist at the time, Leslie Marx, when planning for a series of 
media ownership studies started from the results the agency wanted and 
worked backward. According to a July 2006 research plan, Marx began the 
research process with ``thoughts and ideas'' about ``how the FCC can 
approach relaxing newspaper/broadcast cross-ownership restriction.'' 
She then identified ``some studies that might provide valuable inputs 
to support a relaxation of newspaper/broadcast ownership limits.'' The 
studies outlined in the document were then implemented by the FCC, and 
at least one researcher identified as being on the ``A-list'' was 
chosen to carry them out.
    There are a number of reasons that consolidation is harmful to our 
democracy. But even if I disagree with the rules the FCC issues, and 
even if I think the FCC should break up the big media companies rather 
than allow them to consolidate, the FCC must go through an honest and 
thorough process. They must study the questions that affect a decision 
of whether to adjust ownership limits. They have not done this and they 
will not have done this prior to a December or January or even February 
vote.
    Bipartisan Members of this Committee have told the FCC numerous 
times that they need to first consider the impact of ownership on 
localism. They have not done this. Folding in a localism report into 
this rule does not do it justice and fails to answer questions about 
the effect of ownership on local content. The FCC should complete 
studies and allow for a substantial comment period on the rulemaking.
    On December 4, this Committee reported out the bipartisan ``Media 
Ownership Act of 2007,'' S. 2332. This bill is co-sponsored by Senators 
Lott, Obama, Snowe, Kerry, Collins, Bill Nelson, Craig, Boxer, 
Cantwell, Biden, Clinton, Feinstein, Tester, Durbin, Dodd, Feingold, 
Sanders, Murray, McCaskill and Casey. We and many others in Congress 
feel that the FCC must go through a thorough process evaluating 
localism and diversity, which they have not done, and then must give 
the public enough time to comment on the proposed rules.
    We call for 90 days of comment on the actual rules. We've had a 
long comment period, but without any specific proposal. We also require 
the FCC to finish a separate proceeding on localism, with a study of 
the impact of consolidation on localism at the market level, and 90 
days of comment on the recommendations for improving localism. This 
must be done before the rule changes are issued for comment. Finally, 
we require an independent panel on female and minority ownership to be 
established, and the FCC to provide this panel with accurate data on 
female and minority ownership. This panel must issue recommendations 
and the FCC must act on them prior to voting on ownership rules.
    But the FCC is choosing to ignore us. And they are choosing to 
ignore the thousands of people from around the country that came out 
and testified against further media concentration. If they had told 
them what the Chairman's proposed rule was, they would have come out 
and specifically addressed it. But unfortunately, Kevin Martin only 
allowed them to speak vaguely against rule changes.
    The last time the FCC tried to do this, the U.S. Senate voted to 
block it. On September 16, 2003, the Senate voted 55-40 to support a 
``resolution of disapproval'' of the FCC's previous decision to further 
consolidate media. If we have to do this again we will. Members of this 
Committee have sent numerous letters to the FCC stating what needs to 
be done prior to a vote on media ownership limits and yet they are on 
track to move this proceeding to a vote. The FCC is clearly not 
listening and I'm happy they are here today so we can discuss this with 
them once again.

    The Chairman. First witness, Chairman of the Federal 
Communications Commission, The Honorable Kevin J. Martin.
    Chairman Martin?

         STATEMENT OF HON. KEVIN J. MARTIN, CHAIRMAN, 
               FEDERAL COMMUNICATIONS COMMISSION

    Mr. Martin. Thank you. Thank you, Chairman Inouye and Vice 
Chairman Stevens and all the Members of the Committee, for the 
opportunity to be here with you today.
    I have a brief opening statement, and look forward to 
answering the questions you might have.
    This hearing comes at a particularly appropriate time, as 
we on the Commission, with the guidance of Members of Congress, 
are grappling with some of the most important and difficult 
issues that we may face; namely, the review of the media 
ownership rules and reforming the Universal Service Program.
    In both instances, the Commission is faced with striking a 
balance between preserving the values that make up the 
foundation of our media and telecommunications regulations, 
while ensuring that those regulations keep pace with the 
technology and marketplace of today.
    It is not an exaggeration to say that media ownership is 
the most contentious and political--and potentially divisive 
issue to come before the Commission. It certainly was in 2003, 
and many of the same concerns about consolidation and its 
impact on diversity and local news coverage are being voiced 
today. And it's no wonder; the media touches almost every 
aspect of our lives, we're dependent upon it for our news, our 
information, and our entertainment. Indeed, the opportunity to 
express diverse viewpoints lies at the heart of our democracy.
    In Section 202(h) of the 1996 Telecommunications Act, 
Congress required the Commission to periodically review its 
broadcast ownership rules to determine, ``whether any of such 
rules are necessary in the public interest as a result of 
competition.'' It then goes on to read, ``The Commission shall 
repeal or modify any regulation it determines to be no longer 
in the public interest.''
    In 2003, the Commission significantly reduced the 
restrictions on owning television stations, radio stations, and 
newspapers in the same market and nationally. Congress and the 
courts overturned almost all of those changes. There was one 
exception. The court specifically upheld the Commission's 
determination that the absolute ban on newspaper/broadcast 
cross-ownership was no longer necessary. The court agreed that, 
``reasoned analysis supports the Commission's determination 
that the blanket ban on newspaper/broadcast cross-ownership was 
no longer in the public interest.'' It is against this backdrop 
that the FCC undertook a lengthy, spirited, and careful 
reconsideration of our media ownership rules.
    In 2003, when we last conducted a review of the media 
ownership rules, many expressed concern about the process. 
Specifically, people complained that there were not enough 
hearings, not enough studies, and not enough opportunity for 
public comment.
    When we began, 18 months ago, the Commission committed to 
conducting this proceeding in a manner that was more open and 
allowed for more public participation. We provided a lengthy 
comment period, of 120 days, which we ultimately extended to 
167 days. We held six hearings across the country, at a cost of 
more than $200,000. We spent hundreds of thousands on 
independent studies. Each of those I solicited incorporated 
input from all of the other commissioners and all of my 
colleagues on the Commission about the topics, authors, and 
peer-reviewers of these studies. We put those studies out for 
public comment and made all the data available to the public.
    I also held the two remaining hearings on localism, a 
proceeding that had been initiated under Chairman Powell, and I 
circulated a final report containing specific recommendations 
and proposed rule changes on localism.
    I also circulated a proposal to adopt rules that are 
designed to promote diversity by increasing and expanding 
broadcast ownership opportunities for small businesses, 
including minority- and women-owned businesses.
    The media marketplace is considerably different than it was 
when the newspaper/broadcast cross-ownership rule was put in 
place, more than 30 years ago. Back then, cable was a nascent 
service, satellite television did not exist, and there was no 
Internet. But, according to almost every measure, newspapers 
are struggling. Across the industry, circulation is down and 
their advertising revenue is shrinking.
    As the first chart that I have indicates, 16 of the 19 
major newspapers in the top 20 markets saw a drop in 
circulation just in the last 6 months, ending in September of 
2007. The Atlanta Journal Constitution lost nearly one in ten 
subscribers during that period. Newspapers in financial 
difficulty oftentimes have little choice but to scale back 
local news-gathering to cut costs. In 2007 alone, 24 newsroom 
staff at The Boston Globe were fired, including two Pulitzer 
Prize-winning reporters; the Minneapolis Star Tribune fired 145 
employees, including 50 reporters from their newsroom; 20 were 
fired by the Rocky Mountain News; the Detroit Free Press and 
Detroit News announced cuts totaling 110 employees in that 
market. Allowing limited cross-ownership may help to forestall 
the erosion in local news coverage by enabling companies to 
share these local news-gathering costs across multiple media 
platforms.
    I, therefore, propose that we allow a newspaper to purchase 
a broadcast station, but not one of the top four television 
stations, and only in the largest 20 cities in the Nation, and 
only as long as eight independent voices still remain.
    In contrast to the FCC's actions 4 years ago, I propose not 
to loosen any other ownership rule. Indeed, this proposed rule 
change is notably more conservative an approach than the 
remanded newspaper/broadcast cross-ownership rule that the 
Commission adopted in 2003. That rule would have allowed 
transactions in the top 170 markets. The rule I propose will 
only allow a subset of transactions in the top 20 markets, 
which would still be subject to an individualized determination 
that the transaction is in the public interest.
    The revised rule would balance the need to support the 
availability and sustainability of local news while not 
significantly increasing local concentration or significantly 
decreasing or harming diversity.
    The Commission also needs to ensure that communities are 
served by local broadcasters who are responsive to their needs. 
Last month, the Commission adopted an order requiring 
television broadcasters to better inform the community about 
how the programming they air serves them.
    Additionally, I presented my colleagues a final report 
containing specific recommendations and proposed rule changes 
reflecting the comments and record produced in the localism 
proceeding.
    I have also circulated an order that proposes to adopt 
rules that are designed to promote diversity by increasing and 
expanding broadcast ownership opportunities for small 
businesses, including minority- and women-owned businesses.
    It's my belief that all of these proposals together will 
serve the public interest, providing for competition, localism, 
and diversity in the media.
    The United States and the Commission also have a long 
history and tradition of making sure that rural areas of the 
country are connected and have similar opportunities for 
communications as other areas. One of the core principles of 
the Universal Service Fund is to enhance access to advanced 
services for healthcare providers throughout the Nation. 
Deploying broadband for the delivery of telemedicine can enable 
patients to receive medical care without leaving their homes or 
their communities.
    This may not seem like a big deal to those of us who need 
to only drive a mile or two to visit our local doctor or 
dentist, but it can mean everything to patients who have 
lived--who live hundreds of miles from medical specialists, who 
have limited access to healthcare in their own communities.
    Last year, the Commission took action to address the lack 
of broadband for healthcare providers, launching a new rural 
healthcare pilot program. We recently awarded more than $417 
million for the construction of 69 statewide and regional 
broadband healthcare networks in 42 states and three U.S. 
territories. The network is going to connect over 6,000 
healthcare clinics, hospitals, and medical facilities and 
providers across the country.
    On this chart you can see each green dot represents one of 
the 6,000 healthcare facilities that'll now be connected, along 
with the Internet backbone connections that they'll end up 
having.
    Senator Stevens. We can't see Alaska and Hawaii.
    Mr. Martin. I have a special handout blown up for you, 
providing for both Alaska and Hawaii.
    The rural healthcare program illustrates the singular 
importance of the Universal Service Fund and living up to our 
commitment to rural Americans. Changes in technology and 
increases in the number of carriers that receive Universal 
Service support have placed significant pressure on the 
stability of the Fund. A large and rapidly growing portion of 
the high-cost support program is now devoted to supporting 
multiple carriers to serve areas in which costs are 
prohibitively expensive for even one carrier.
    As this final chart indicates, the CETC Universal Service 
Fund payments have been growing dramatically since 2002; and, 
specifically in 2000, such providers only received $1 million 
in support. Last year, they received almost a billion dollars 
in support. I'm supportive of several proposals for fundamental 
reform that could help contain the growth of the Fund in order 
to preserve and advance the benefits of Universal Service and 
protect the ability of people in rural America to continue to 
be connected.
    The United States is in the midst of a communications 
revolution, and the Commission is committed to ensuring that 
our values keep up with our technology. At the Commission, 
we're working to ensure that no community gets left behind and 
that the benefits are felt across the country, in rural and 
urban areas alike. We're also committed to maintaining the 
stability of both traditional and new forms of media and news-
gathering.
    With that, I certainly look forward to answering your 
questions and, again, appreciate the opportunity to be here 
today.
    [The prepared statement of Mr. Martin follows:]

         Prepared Statement of Hon. Kevin J. Martin, Chairman, 
                   Federal Communications Commission
    Thank you, Chairman Inouye, Vice Chairman Stevens, and Members of 
the Committee, for the opportunity to be here with you today. I have a 
brief opening statement and then I look forward to answering any 
questions you may have.
    Now is an important time for the Commission. I am pleased to report 
that since we appeared before you last, the Commission has moved 
forward on a number of significant issues for the benefit of the 
American people. The Commission has been working both on our own and in 
coordination with industry, other governmental agencies, and consumer 
groups to advance the digital transition and promote consumer 
awareness. Through all of our activities, the Commission is committed 
to ensuring that no American is left in the dark. In addition, our 
policies continue to facilitate steady growth in broadband deployment 
according to the Commission's latest high-speed data report. 
Importantly, we established rules for the upcoming 700 Mhz auction 
which represents the single most important opportunity for us to add 
another more open broadband platform. And finally the Commission has 
continued to work to remove barriers to entry by competitors in all of 
the sectors we regulate such as by providing franchise relief to 
incumbent cable providers, new entrants, and eliminating the use of 
exclusive contracts for video service in apartment buildings.
    This hearing comes at a particularly appropriate time as we on the 
Commission--with the guidance of Members of Congress--are grappling 
with some of the most important and difficult issues that we may face: 
namely the review of the media ownership rules and reforming the 
Universal Service Program. In both instances the Commission is faced 
with striking a balance between preserving the values that make up the 
foundation of our media and telecommunications regulations while 
ensuring those regulations keep apace with the technology and 
marketplace of today.
Media Ownership Proceedings
    It is not an exaggeration to say media ownership is the most 
contentious and potentially divisive issue to come before the 
Commission. It certainly was in 2003 and many of the same concerns 
about consolidation and its impact on diversity and local news coverage 
are being voiced today. And it is no wonder. The decisions we will make 
about our ownership rules are as critical as they are difficult. The 
media touches almost every aspect of our lives. We are dependent upon 
it for our news, our information and our entertainment.
    A robust marketplace of ideas is by necessity one that reflects 
varied perspectives and viewpoints. Indeed, the opportunity to express 
diverse viewpoints lies at the heart of our democracy. To that end, the 
FCC's media ownership rules are intended to further three core goals: 
competition, diversity, and localism.
    Section 202(h) of the 1996 Telecommunications Act, as amended, 
requires the Commission to periodically review its broadcast ownership 
rules to determine ``whether any of such rules are necessary in the 
public interest as a result of competition.'' It goes on to read, ``The 
Commission shall repeal or modify any regulation it determines to be no 
longer in the public interest.''
    In 2003, the Commission conducted a comprehensive review of its 
media ownership rules, significantly reducing the restrictions on 
owning television stations, radio stations and newspapers in the same 
market and nationally. Congress and the court overturned almost all of 
those changes.
    There was one exception. The court specifically upheld the 
Commission's determination that the absolute ban on newspaper/broadcast 
cross-ownership was no longer necessary. The court agreed that ``. . . 
reasoned analysis supports the Commission's determination that the 
blanket ban on newspaper/broadcast cross-ownership was no longer in the 
public interest.'' It has been over 4 years since the Third Circuit 
stayed the Commission's previous rules and over 3 years since the Third 
Circuit instructed the Commission to respond to the court with amended 
rules.
    It is against this backdrop that the FCC undertook a lengthy, 
spirited, and careful reconsideration of our media ownership rules.
The Commission's Process
    In 2003, when we last conducted a review of the media ownership 
rules, many expressed concern about the process. Specifically, people 
complained that there were not enough hearings, not enough studies, and 
not enough opportunity for comments and public input. When we began 
eighteen months ago, the Commission committed to conducting this 
proceeding in a manner that was more open and allowed for more public 
participation.
    I believe that is what the Commission has done. First, we provided 
for a long public comment period of 120 days, which we subsequently 
extended. We held six hearings across the country at a cost of more 
than $200,000: one each in Los Angeles, California; Nashville, 
Tennessee; Harrisburg, Pennsylvania; Tampa Bay, Florida; Chicago, 
Illinois; and Seattle, Washington. And, we held two additional hearings 
specifically focused on localism in Portland, Maine and in Washington, 
D.C. The goal of these hearings was to more fully and directly involve 
the American people in the process.
    We listened to and recorded thousands of oral comments, and allowed 
for extensions of time to file written comments on several occasions. 
To date, we've received over 166,000 written comments in this 
proceeding.
    We spent almost $700,000 on ten independent studies. I solicited 
and incorporated input from all of my colleagues on the Commission 
about the topics and authors of those studies. We have put those 
studies out for peer review and for public comment and made all the 
underlying data available to the public.
    I also committed to completing the Notice of Inquiry on localism, 
something that was initiated but stopped under the previous Chairman. 
This included holding the two remaining hearings. All told, the 
Commission devoted more than $160,000 to hear from expert witnesses and 
members of the public on broadcasters' service to their local 
communities. In addition, the Commission hired Professor Simon Anderson 
of the University of Virginia to produce an academic paper on 
``Localism and Welfare'', which was made available on our website last 
December. I have presented to my colleagues a final report containing 
specific recommendations and proposed rule changes reflective of the 
comments and record produced by the inquiry.
    Finally, although not required, I took the unusual step of 
publishing the actual text of the one rule I thought we should amend. 
Because of the intensely controversial nature of the media ownership 
proceeding and my desire for an open and transparent process, I wanted 
to ensure that Members of Congress and the public had the opportunity 
to review the actual rule prior to any Commission action.
The Changing Media Marketplace Today
    The media marketplace is considerably different than it was when 
the newspaper/broadcast cross-ownership rule was put in place more than 
thirty years ago. Back then, cable was a nascent service, satellite 
television did not exist and there was no Internet. Consumers have 
benefited from the explosion of new sources of news and information. 
But according to almost every measure newspapers are struggling. At 
least 300 daily papers have stopped publishing over the past thirty 
years. Their circulation is down and their advertising revenue is 
shrinking.
    At The Boston Globe, revenue declined 9 percent in 2006. The 
Minneapolis Star Tribune announced an ad and circulation revenue 
decline of $64 million from 2004 to 2007. The Denver Post saw a revenue 
decline of 15 percent. Tribune, owner of the Los Angeles Times, saw ad 
revenues decline 6 percent in the last year--a total loss of $47 
million. At USA Today, the most-read paper in the Nation, revenue 
declined 6.6 percent over the past year as the total number of paid 
advertising pages fell from 929 to 803. And the San Francisco Chronicle 
reported in 2006 that the paper was losing $1 million dollars--a day.
    Newspapers in financial difficulty oftentimes have little choice 
but to scale back local news gathering to cut costs. USA Today recently 
announced it would be cutting 45 newsroom positions--nearly 10 percent 
of its total staff. In 2007 alone, 24 newsroom staff at The Boston 
Globe were fired, including 2 Pulitzer Prize-winning reporters; the 
Minneapolis Star Tribune fired 145 employees, including 50 from their 
newsroom; 20 were fired by the Rocky Mountain News; the Detroit Free 
Press and The Detroit News announced cuts totaling 110 employees; and 
the San Francisco Chronicle planned to cut 25 percent of its newsroom 
staff.
    Without newspapers and their local news gathering efforts, we would 
be worse off. We would be less informed about our communities and have 
fewer outlets for the expression of independent thinking and a 
diversity of viewpoints. I believe a vibrant print press is one of the 
institutional pillars upon which our free society is built. In their 
role as watchdog and informer of the citizenry, newspapers often act as 
a check on the power of other institutions and are the voice of the 
people.
    If we believe that newspaper journalism plays a unique role in the 
functioning of our democracy, we cannot turn a blind eye to the 
financial condition in which these companies find themselves. Our 
challenge is to address the viability of newspapers and their local 
news gathering efforts while preserving our core values of a diversity 
of voices and a commitment to localism in the media marketplace. Given 
the many concerns about the impact of consolidation, I recognize this 
is not an easy task. But I believe it is one that we can achieve.
    Allowing cross-ownership may help to forestall the erosion in local 
news coverage by enabling companies to share these local news gathering 
costs across multiple media platforms. Indeed the newspaper/broadcast 
cross-ownership rule is the only rule not to have been updated in 3 
decades, despite that fact that FCC Chairmen--both Democrat and 
Republican--have advocated doing so. In fact, Chairman Reed Hundt 
argued for relaxation in 1996 noting, ``the newspaper/broadcast cross-
ownership rule is right now impairing the future prospects of an 
important source of education and information: the newspaper 
industry.'' Application of Capital Cities/ABC, Inc., Memorandum Op. & 
Order, 11 FCC Rcd 5841, 5906 (1996). And as I mentioned, in 2003 the 
Third Circuit recognized this fact when it upheld the Commission's 
elimination of the newspaper/broadcast cross-ownership ban, saying that 
it was ``no longer in the public interest.''
    As a result, I proposed the Commission amend the 32-year-old 
absolute ban on newspaper/broadcast cross-ownership. This proposal 
would allow a newspaper to purchase a broadcast station--but not one of 
the top four television stations--in the largest 20 cities in the 
country as long as 8 independent voices remain. This relatively minor 
loosening of the ban on newspaper/broadcast cross-ownership in markets 
where there are many voices and sufficient competition would help 
strike a balance between ensuring the quality of local news gathering 
while guarding against too much concentration.
    In contrast to the FCC's actions 4 years ago, we would not loosen 
any other ownership rule. We would not permit companies to own any more 
radio or television stations either in a single market or nationally. 
Indeed this proposed rule change is notably more conservative in 
approach than the remanded newspaper/broadcast cross-ownership rule 
that the Commission adopted in 2003. That rule would have allowed 
transactions in the top 170 markets. The rule I propose would allow 
only a subset of transactions in only the top 20 markets, which would 
still be subject to an individualized determination that the 
transaction is in the public interest.
    The revised rule would balance the need to support the availability 
and sustainability of local news while not significantly increasing 
local concentration or harming diversity.
Proposed Newspaper/Broadcast Cross-Ownership Rule
    Under the new approach, the Commission would presume a proposed 
newspaper/broadcast transaction is in the public interest if it meets 
the following test:

        1. The market at issue is one of the 20 largest Nielsen 
        Designated Market Areas (``DMAs'');

        2. The transaction involves the combination of a major daily 
        newspaper and one television or radio station;

        3. If the transaction involves a television station, at least 8 
        independently owned and operating major media voices (defined 
        to include major newspapers and full-power commercial TV 
        stations) would remain in the DMA following the transaction; 
        and

        4. If the transaction involves a television station, that 
        station is not among the top four ranked stations in the DMA.

    All other proposed newspaper/broadcast transactions would continue 
to be presumed not in the public interest. Moreover, notwithstanding 
the presumption under the new approach, the Commission would consider 
the following factors in evaluating whether a particular transaction 
was in the public interest:

        1. The level of concentration in the DMA;

        2. A showing that the combined entity will increase the amount 
        of local news in the market;

        3. A commitment that both the newspaper and the broadcast 
        outlet will continue to exercise its own independent news 
        judgment; and

        4. The financial condition of the newspaper, and if the 
        newspaper is in financial distress, the owner's commitment to 
        invest significantly in newsroom operations.
Ensuring Localism
    The Commission also needs to ensure that communities are served by 
local broadcasters who are responsive to their needs. Establishing and 
maintaining a system of local broadcasting that is responsive to the 
unique interests and needs of individual communities is an extremely 
important goal for the Commission.
    Last month, the Commission adopted an order requiring television 
broadcasters to better inform their communities about how the 
programming they air serves them. Specifically, television stations 
will file a standardized form on a quarterly basis that details the 
type of programming that they air and the manner in which they do it. 
This form will describe a host of programming information including the 
local civic affairs, local electoral affairs, public service 
announcements (whether sponsored or aired for free) and independently 
produced programming. With a standardized form and public Internet 
access to it, the public and government officials will now be able to 
engage them directly in a discussion about exactly what local 
commitments broadcasters are and/or should be fulfilling.
    In addition, I have circulated a Localism Report and NPRM that 
addresses other actions the Commission can take to ensure that 
broadcasters are serving the interests and needs of their local 
communities. The rule changes that I propose are intended to promote 
localism by providing viewers and listeners greater access to locally 
responsive programming including, but not limited to, local news and 
other civic affairs programming. Among other actions, the item 
tentatively concludes that:

   Qualified LPTV stations should be granted Class A status, 
        which requires them to provide 3 hours of locally-produced 
        programming;

   Licensees should establish permanent advisory boards in each 
        community (including representatives of underserved community 
        segments) with which to consult periodically on community needs 
        and issues; and

   The Commission should adopt processing guidelines that will 
        ensure that all broadcasters provide a significant amount of 
        locally-oriented programming.
Increasing Diversity
    In order to ensure that the American people have the benefit of a 
competitive and diverse media marketplace, we need to create more 
opportunities for different, new and independent voices to be heard. 
The Commission has recently taken steps to address the concern that 
there are too few local outlets available to minorities and new 
entrants.
    Last month, we significantly reformed our Low Power FM rules in 
order to facilitate LPFM stations' access to limited radio spectrum. 
The new order streamlines and clarifies the process by which LPFM 
stations can resolve potential interference issues with full-power 
stations and establishes a going-forward processing policy to help 
those LPFMs that have regularly provided 8 hours of locally originated 
programming daily in order to preserve this local service. The new 
rules are designed to better promote entry and ensure local 
responsiveness without harming the interests of full-power FM stations 
or other Commission licensees.
    I believe it is important for the Commission to foster the 
development of independent channels and voices. Again, last month, the 
Commission took significant action adopting an order that will 
facilitate the use of leased access channels. Specifically, the order 
made leasing channels more affordable and expedited the complaint 
process. These steps will make it easier for independent programmers to 
reach local audiences.
    I have also circulated an order that proposes to adopt rules that 
are designed to promote diversity by increasing and expanding broadcast 
ownership opportunities for small businesses, including minority and 
women-owned businesses. This item proposes to give small businesses and 
new entrants that acquire expiring construction permits additional time 
to build out their broadcast facilities. It also proposes to revise the 
Commission's equity/debt attribution standard to facilitate investment 
in small businesses in order to promote diversity of ownership in 
broadcast facilities.
    In addition, among other things, the item would adopt a rule 
barring race or gender discrimination in broadcast transactions, adopt 
a ``zero-tolerance'' policy for ownership fraud, and commits to the 
Commission convening an ``Access-to Capital'' conference in the first 
half of 2008 in New York City. As with the localism item, I am hopeful 
that my colleagues will move forward on these proposals quickly.
    The Commission is also working to ensure that new entrants are 
aware of emerging ownership opportunities in the communications 
industry. Recently, I sent a letter to our Advisory Committee on 
Diversity. I suggested that they help create educational conferences 
that will encourage communications companies that engage in 
transactions and license transfers to include small businesses, 
minorities, and women entrepreneurs, and other designated entities 
during negotiations on assets and properties identified for 
divestiture.
    It is my sincere belief that all of these proposals together will 
serve the public interest, providing for competition, localism, and 
diversity in the media. My proposed change to the newspaper/broadcast 
cross-ownership rule addresses the needs of the newspaper industry and 
helps preserve their local news gathering, while at the same time 
preserving our commitment to localism, diversity, and competition.
    The Commission must strike the right balance between ensuring our 
rules recognize the opportunities and challenges of today's media 
marketplace and prioritizing the commitment to diversity and localism. 
I look forward to working with my fellow Commissioners to adopt rules 
consistent with these goals.
Broadband and Universal Service
Continued Broadband Deployment
    Broadband technology is a key driver of economic growth. The 
ability to share increasing amounts of information at greater and 
greater speeds, increases productivity, facilitates interstate 
commerce, and helps drive innovation. But perhaps most important, 
broadband has the potential to affect almost every aspect of our 
lives--from where and when we work to how we educate our children and 
deliver healthcare.
    The Commission has continued to make significant progress 
facilitating broadband deployment. The United States is the largest 
broadband market in the world, and our newest report finds continued 
dramatic growth. In 2006, high-speed lines increased 61 percent 
compared to 37 percent in 2005. Today, more than 99 percent of the U.S. 
population lives in Zip Codes having at least one broadband subscriber.
    Since I became Chairman, the Commission has taken a number of 
actions to help spur broadband deployment. We removed regulatory 
obstacles that discouraged infrastructure investment and slowed 
deployment. We classified cable modem, DSL, BPL, and wireless broadband 
as ``information services'' not subject to legacy regulations. We 
streamlined the franchise process for new entrants and incumbent cable 
providers and banned exclusive contracts in MDU's to spur competition 
in the video market--competition which is essential to further 
investment in underlying infrastructure.
    There is however, more work to be done. I have proposed the 
Commission take additional steps to better our broadband deployment 
efforts. We need to gain a better understanding of who has broadband 
and the nature of the broadband services being deployed in the 
marketplace. Last fall I circulated a number of proposals to my 
colleagues that would revise how we collect broadband information. 
These proposals would:

   Ask how many people have broadband per Zip Code, instead of 
        only asking whether there is one person with broadband service 
        per Zip Code.

   Revise our current definition of ``high-speed'' from 200k 
        and above to 1.5 mbps to 3.0 mbps to account for changes in 
        technology, consumer demand, and the evolving marketplace.

   Collect information about different tiers of broadband 
        service being offered in the marketplace.

     First Generation data: 200k up to 768k

     Basic: 768k to 1.5 mbps

     High Speed: 1.5 mbps to 3.0 mbps

     Robust: 3.0 mbps to 6.0 mbps

     Premium: 6.0 mbps and above

   Adopt a national broadband availability mapping program, 
        with the objective of creating a highly detailed map of 
        broadband availability nationwide. This program will facilitate 
        activities of other broadband initiatives by Federal and state 
        agencies and public-private partnerships.

   Collect more accurate data on wireless broadband by 
        separating out data ``capable'' handsets and counting the 
        number of consumers with data (broadband) service plans.

   Finally, I have recommended that the Census Bureau include a 
        question about household broadband in its American community 
        survey.
Reforming Universal Service
    The United States and the Commission have a long history and 
tradition of making sure that rural areas of the country are connected 
and have similar opportunities for communications as other areas. I 
believe our Universal Service Program must continue to promote 
investment in rural America's infrastructure and ensure access to 
telecommunications services that are comparable to those available in 
urban areas today, as well as provide a platform for delivery of 
advanced services tomorrow.
    With each passing day, more Americans interact and participate in 
the technological advances of our digital information economy. A modern 
and high quality communications infrastructure is essential to ensure 
that all Americans, including those residing in rural communities, have 
access to the same economic, educational, and healthcare opportunities. 
Thus the Commission has a responsibility to preserve and advance the 
benefits of Universal Service.
Extending Telemedicine and Rural Healthcare
    One of the core principles of the Universal Service Fund is to 
enhance access to advanced services for healthcare providers throughout 
the Nation. Deploying broadband for the delivery of telemedicine can 
enable patients to receive medical care without leaving their homes or 
communities. This may not seem like a big deal to those of us who need 
only drive a mile or two to visit our local doctor or dentist. But, it 
can mean everything to patients who live hundreds of miles from medical 
specialists or have limited access to healthcare in their own 
communities.
    Last year, the Commission took action to address the lack of 
broadband for health care providers launching the Rural Health Care 
Pilot program. This program will provide funding for up to 85 percent 
of an applicant's costs of deploying a dedicated broadband network 
connecting health care providers in rural and urban areas within a 
state or region. It also provides funding for up to 85 percent of 
applicant's costs of connecting the state or regional networks to 
Internet2 and/or National Lamda Rail--dedicated nationwide backbones--
as well as the public Internet. The Commission received an overwhelming 
response to this initiative. Regional and state health networks across 
the country submitted applications.
    The Commission recently awarded more than $417 million dollars for 
the construction of 69 state-wide and regional broadband healthcare 
networks in 42 states and 3 U.S. territories. The networks will connect 
over 6,000 healthcare providers across the country, including 
hospitals, clinics, public health agencies, universities and research 
facilities, behavioral health sites, community health care centers, and 
others.
    All of the networks will construct innovative and highly efficient 
regional broadband networks, either by building new, comprehensive 
networks or upgrading existing ones. All of these networks will be able 
to connect to the public Internet as well as to one of the Nation's 
dedicated Internet backbones: Internet2, or National Lambda Rail.
    The projects include large, multi-state networks connecting 
hundreds of facilities, as well as smaller networks, providing critical 
links to connect clinics in insular and isolated areas with health care 
specialists hundreds of miles away. These networks will enable 
everything from basic clinical care to the deployment of electronic 
medical records. By providing access to these telehealth networks, 
public health officials will be able to share critical information when 
responding to public health emergencies such as pandemics or 
bioterrorism.
    The Rural Health Care program illustrates the singular importance 
of the USF and living up to our commitment to rural Americans. 
Telehealth and telemedicine services provide patients in rural areas 
with access to critically needed medical specialists in a variety of 
practices, including cardiology, pediatrics, and radiology, in some 
instances without leaving their homes or communities. Intensive care 
doctors and nurses can monitor critically-ill patients around the clock 
and video conferencing allows specialists and mental health 
professionals to care for patients in different rural locations, often 
hundreds of miles away.
Stabilizing Universal Service
    Changes in technology and increases in the number of carriers that 
receive Universal Service support have placed significant pressure on 
the stability of the Fund. A large and rapidly growing portion of the 
high cost support program is now devoted to supporting multiple 
carriers to serve areas in which costs are prohibitively expensive for 
even one carrier. These additional networks in high cost areas don't 
receive support based on their own costs, but rather on the costs of 
the incumbent provider, even if their costs of providing service are 
lower. In 2000, such providers received $1 million in support. Last 
year, they received almost $1 billion in support.
    I'm supportive of several proposals for fundamental reform that 
could help contain the growth of the Fund in order to preserve and 
advance the benefits of Universal Service and protect the ability of 
people in rural areas to continue to be connected. I have circulated 
among my colleagues at the Commission an Order that adopts the 
recommendation of the Joint Board to place an interim cap on the amount 
of high-cost support available to competitive ETCs. I have also 
circulated a Notice of Proposed Rulemaking that would require that 
high-cost support be based on a carrier's costs in the same way that 
rural phone companies' support is based. I continue to believe the 
long-term answer for reform of high-cost Universal Service support is 
to move to a reverse auction methodology. I believe that reverse 
auctions could provide a technologically and competitively neutral 
means of controlling the current growth in the Fund and ensuring a move 
to most efficient technologies over time. I also believe that reverse 
auctions could enable us to begin providing support for next generation 
services as well. Accordingly, I have also circulated among my 
colleagues a Notice of Proposed Rulemaking to establish reverse 
auctions.
    Similarly, maintaining the stability of the Universal Service 
contribution system is an important responsibility. That is why we took 
several interim steps to ensure the stability of the Fund by raising 
the wireless safe harbor and broadening the contribution base to 
include interconnected VoIP providers. The actions helped ensure that 
the contribution base reflects the current market realities and that 
contributions remain equitable and nondiscriminatory. I also remain 
committed to adopting and implementing a numbers-based contribution 
system.
Wireless Broadband
    The upcoming spectrum auction is perhaps the most critical step in 
bringing broadband to the widest range of Americans.
    The Commission's rules for the 700 MHz auction are designed to 
facilitate a national wireless broadband service. A coalition of 
companies that support a national wireless broadband alternative--
Intel, Skype, Yahoo!, Google, DIRECTV, and EchoStar--urged the 
Commission adopt rules that would maximize the opportunity for a 
national wireless broadband service to emerge. They urged the 
Commission to make available at least one 11 MHz paired block, offered 
over large geographic areas, with combinatorial bidding so that a 
national service could be established. The Commission's rules meet 
these requirements while providing significant opportunities for small 
and rural carriers to obtain spectrum at auction as well.
    The license winner for about one-third of the spectrum will be 
required to provide a platform that is more open to devices and 
applications. A network more open to devices and applications will 
benefit consumers nationwide by giving them greater choice and control 
over their wireless experience. Consumers using this new open platform 
will be able to use the wireless device of their choice and download 
whatever software they want. Currently, American consumers are too 
often asked to throw away their old phones and buy new ones if they 
want to switch cell phone carriers. And when they buy that new phone, 
it is the wireless provider, not the consumer, who chooses what 
applications the consumer will be allowed to use on that new handset. 
Wireless consumers in many other countries face fewer restraints: for 
example, they can take their cell phones with them when they change 
carriers; and they can use widely available Wi-Fi networks--available 
in their homes, at the airport or at other hotspots--to access the 
Internet. An open platform will ensure that that the fruits of 
innovation on the edges of the network more swiftly pass into the hands 
of consumers.
    I believe our efforts may already be having an impact. Recently, 
Verizon Wireless announced its plans to introduce a new option for 
customers throughout the country--an option that will allow customers 
to use any device and to use any applications that they choose on the 
Verizon Wireless network. That announcement, along with the Open 
Handset Alliance's previous announcement of an open platform capable of 
working on multiple networks, is a significant step toward fulfilling 
the goal of a more open wireless environment.
    Meeting the needs of public safety is also critically important. 
During a crisis, public safety officials need to be able to communicate 
with one another. We are all aware of problems caused by the lack of 
interoperability for public safety during recent crises like 9/11 and 
Hurricane Katrina. To that end, the upcoming auction will help create a 
truly national interoperable broadband network for public safety 
agencies to use during times of emergency.
Conclusion
    The United States is in the midst of a communications revolution, 
and the Commission is committed to ensuring that our values keep up 
with our technology. At the Commission, we are working to ensure that 
no community gets left behind, and that the benefits are felt across 
the country in rural and urban areas alike. We are also committed to 
maintaining the stability of both traditional and new forms of media 
and newsgathering.
    I look forward to answering any questions you may have.

    The Chairman. Thank you very much, Chairman Martin.
    Now Commissioner Michael J. Copps.

   STATEMENT OF HON. MICHAEL J. COPPS, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Commissioner Copps. Good morning, Chairman Inouye, Vice 
Chairman Stevens, Members of the Committee.
    This oversight hearing could not be timelier. The FCC is 
poised to make some bad decisions, and, seems to me, at this 
point, only Congressional oversight can get us back on track. 
My good friend Chairman Martin, in what I consider a 
regrettable lapse in good judgment, proposes, in just 3 
business days from now, to throw open the doors to newspaper/
broadcast combinations in every market in the country. To make 
matters worse, he would do so before the Commission does 
anything meaningful and systematic to revive some of the 
localism that has been lost in our broadcast media, and before 
we develop a workable strategy to reverse the sad and 
embarrassing state of minority and female ownership of U.S. 
broadcast media.
    Our attention should be on fixing these problems, that 
media consolidation has caused, before we feed another frenzy 
of big media sales and swaps. Our attention should be on the 
upcoming DTV transition that threatens television outages and a 
consumer backlash the likes of which you and I may have never 
seen. Our attention should be on comprehensive reform of 
Universal Service to bring the tools of 21st century 
opportunity to every citizen in the land.
    The media ownership proposal in front of the Commission is 
presented to us as a ``moderate relaxation'' of the newspaper/
broadcast ownership ban in the 20 largest markets. But a look 
at the fine print shows that the proposal would actually apply 
the same test in every market in the country. That's right. Any 
station can merge with any newspaper in just about any market. 
The only difference is that in the top 20 markets you start 
with the presumption that you meet the test, while in the other 
markets you must overcome the presumption. But we make that 
about as easy as taking your next breath. Four embarrassingly 
meaningless factors are provided to help applicants overcome 
the presumption. And you don't even have to meet all of them; 
it's just a list of the things that the FCC will ``consider.'' 
And given how the FCC has ``considered'' media regulation in 
recent years, you can write your cross-ownership deal up today 
and it's pretty close to a slam-dunk you're not going to get 
much pushback from us.
    The process here has been no better than the proposed 
outcome. The Commission conducted hearings, reluctantly, on 
ownership and localism, yet I cannot find, anywhere in the 
pending item, the citation of a single citizen's testimony. 
Were people's comments without value? Is public comment now 
extraneous to our decisionmaking? And why were some hearings 
called with such little notice that people often could not 
attend? There are other process breakdowns attending this 
proceeding which time precludes my discussing: inadequate 
studies, items written and circulated before the comment period 
closes, and so on. The point is, we need processes at the FCC 
that allay distrust rather than short circuits that create 
distrust.
    To me, this is just plain nuts. We rush in to encourage 
more consolidation without addressing the damage consolidation 
has already caused. Is our response to the decline of localism 
really going to be to encourage more one media company towns 
often controlled from afar, rather than instituting a real, 
honest-to-God license renewal system where the presence of 
localism and diversity determine whether or not you get your 
license renewed? And please don't tell me that, ``A little 
localism tweak here or there can fix the problem, so, don't 
worry, go ahead and vote ownership consolidation next week, and 
we'll come back and do a better job on localism later.'' We 
should all want a comprehensive localism package now. That's 
what we were told was coming when the localism proceeding was 
launched, not that we would rush ahead to encourage more of the 
consolidation that did so much to diminish localism in the 
first place.
    Why can't we systematically address the fact that, in a 
Nation that is almost one-third minority, people of color own 
only a scant 3 percent of all full-power commercial television 
stations? Is it any wonder that minority issues and minority 
contributions to our culture get such short shrift in an 
environment like that, and why minorities are so often depicted 
in caricature? Is our response to this really going to be to 
take the smaller stations where the few lucky minority and 
female owners exist, and put those stations into a new media 
bazaar?
    What we have here is a stubborn insistence to finish the 
proceeding by December 18, disregarding both public and 
Congressional opinion. There is a way out, however. The Media 
Ownership Act of 2007 has been approved by this Committee. Our 
FCC conversations on media ownership should be guided by this 
bill's provisions. The legislation provides a simple and an 
eminently workable roadmap. I've had conversations with my 
colleagues about the need for a credible process along these 
lines. I am deeply disappointed that the decision has, 
nonetheless, been made to plunge ahead on December 18. We 
should have been able to reach agreement. I hope we still reach 
agreement. I hope we still can.
    But when overwhelming majorities of citizens oppose further 
media consolidation, when Members of Congress write to us 
almost daily to caution us, and when legislation to avoid a 
nine-car train wreck is moving through Congress, I think the 
FCC has a responsibility to stop, look, and listen.
    I worked here in the Senate for 15 years, and I feel a keen 
responsibility to listen to its members, and especially to this 
Committee. And I don't think the Commission is listening very 
well right now.
    The stakes in this debate over the future of the media are 
so enormous. This has been my number-one priority at the 
Commission, as most of you members know. I've studied the 
history of this country, and I know how precious media is. The 
diversity and creativity of our culture can be enhanced or it 
can be diminished by the media environment. Media can reflect 
and nourish these things, or it can shove them aside. And there 
has been too much shoving aside in recent years.
    Our civic dialogue can be either expanded or dumbed down by 
media. Lately, our policies have encouraged an erosion of the 
civic dialogue upon which the future of our democracy depends. 
I hope this Committee can yet save the Commission from itself.
    Thank you for the opportunity to testify, and I look 
forward to your comments, your guidance, and your questions.
    [The prepared statement of Commissioner Copps follows:]

      Prepared Statement of Hon. Michael J. Copps, Commissioner, 
                   Federal Communications Commission
    Good morning, Chairman Inouye, Vice Chairman Stevens and members of 
the Committee.
    This oversight hearing could not be timelier. The Commission's 
priorities are dangerously out-of-whack, and we urgently need this 
Committee's help to save us from ourselves. We have a proposal before 
us at the Commission to open the door to newspaper/broadcast 
combinations in every market in the country and the drive is on to rush 
this to a vote next week. Meanwhile we have given short shrift to 
pressing problems like the sad state of minority ownership of U.S. 
media properties and the obvious decline of localism in our broadcast 
programming. We have also neglected the DTV transition, and have not 
done nearly enough to prepare consumers and broadcast stations for the 
rapidly approaching deadline. If we don't turn this around quickly, the 
DTV transition will result in widespread television outages and a 
consumer backlash the likes of which you and I haven't seen for a long, 
long time. On Universal Service, the Commission has before it a choice: 
down one road is action on a holistic set of recommendations that for 
the first time includes broadband deployment essential to the mission 
of Universal Service; down the other is approval of a cap on high-cost 
support to competitive eligible telecommunications carriers (CETCs) 
that has the very real potential of being the only action the FCC takes 
to reform the system. What a lost opportunity that would be. I fear the 
Commission is not going to choose wisely.
    Let me begin with media ownership. The proposal in front of the 
Commission has been portrayed as a ``moderate'' relaxation of the 
newspaper/broadcast cross-ownership ban in the 20 largest markets. But 
look carefully at the fine print. The proposal would actually apply the 
same test in every market in the country. That's right--any station can 
merge with any newspaper in any market in the country. The only 
difference is that in the top 20 markets you start with a presumption 
that you meet the test, while in the other markets you don't.
    And there's the rub. The four factors proposed by the Chairman are 
so riddled with holes that they are essentially meaningless. You don't 
even have to meet them all--it's just a list of things the FCC will 
``consider.'' Given how the FCC has ``considered'' media regulation in 
recent years, I don't have much confidence that any proposed 
combination will be turned down. In fact, I can predict the boilerplate 
language that will accompany such approvals: ``Although applicants 
starting with a negative presumption face a high hurdle, in this case 
we find the applicant has met its burden by [fill in the blanks].''
    This is not the only example of media regulation that seems like a 
chapter out of Alice in Wonderland. Just 2 weeks ago, an FCC majority 
ostensibly ``denied'' Tribune a waiver before turning around and 
granting a two-year waiver were Tribune to file an appeal. The majority 
turned these unprecedented legal summersaults to push Tribune to 
challenge the newspaper/broadcast cross-ownership ban in a court they 
think may be more sympathetic to their cause than the Third Circuit. To 
no one's surprise, Tribune filed an appeal the very next business day.
    There's still more evidence of the real agenda at play. I've given 
Chairman Martin credit for holding six media hearings around the 
country, although I would have preferred more. No one knows better than 
the American people whether they are being served by their local media. 
And at each stop, all of the Commissioners seemed to agree--the public 
needs to be heard before the FCC acts on a subject as important as the 
American media.
    Thousands of citizens came out at great inconvenience to 
themselves--and often waited for hours--to provide their testimony. 
Throughout the process, many openly questioned whether the hearings 
were real or just cover for a pre-determined outcome. This skepticism 
gained credence last month when our last media ownership meeting was 
announced for Seattle with only 1 week's notice. Listening to people or 
checking a box? Well, we may have our answer. I went through the draft 
Order to see how it handled the hundreds of public statements at these 
hearings. While there is a passing reference to the public hearings, 
not a single citizen's testimony is specifically cited or discussed. I 
was flabbergasted. The whole point of these hearings was to gather 
evidence from the American people--and the Order does not find a single 
comment worthy of mention?
    So then I went through the draft to look for the public input from 
our six separate localism field hearings, which the further notice 
stated would be considered as part of the media ownership record. 
Again, not a single citizen's testimony is specifically cited or 
discussed. It's hard to reach any conclusion other than public comment 
is largely extraneous to the process. What else are we to think when a 
draft Order is circulated 2 weeks before public comment is due on the 
proposal?
    I realize we are not taking a public opinion poll in this 
proceeding. But surely public comment deserves more respect than this. 
As anyone who attended these hearings can tell you, calls for more 
media consolidation were few and far between. That's not surprising--a 
recent survey finds that 70 percent of Americans view media 
consolidation as a problem. And by an almost two-to-one margin, they 
believe newspapers should not own TV stations in the same market and 
they favor Congress passing laws to make sure that can't happen. Those 
poll numbers are consistent across the political spectrum. So this is 
no red state-blue state issue. It is an all-American grassroots issue. 
This doesn't surprise Commissioner Adelstein or me because that's 
exactly what we have seen in the scores of town meetings and forums we 
have attended around the country since 2002.
    I recognize that there is another possibility--that this is simply 
a rush job to be completed any way possible by December 18, so there 
just wasn't enough time to consider the full record. Whatever the 
reason, there is only one way to do this job and that is to do it 
right. The issues are too important to address in the current slapdash 
manner.
    No one on this Commission, even if some feel differently about the 
pros and cons of changing the ownership rules, should want to 
perpetuate those kinds of appearance issues about the FCC. The 
Commission is in dire need of a process that allays fears rather than 
one that creates them.
    In the meantime--and before we vote to further loosen our rules--
there are two policy goals on which we need to make real progress--
minority and female ownership is one, localism is the other. These 
issues have been languishing for years at the FCC. We always seem to be 
running a fast-break when it comes to approving more media 
consolidation, but it's the four-corner stall when it comes to minority 
and female ownership and ensuring that broadcasters serve their local 
communities.
    Racial and ethnic minorities make up 33 percent of our population 
but they own a scant 3 percent of all full-power commercial TV 
stations. And that number is plummeting. Free Press just recently 
released a study showing that during the past year the number of 
minority-owned full-power commercial television stations declined by 
8.5 percent, and the number of African American-owned stations 
decreased by nearly 60 percent. It is almost inconceivable that this 
shameful state of affairs could be getting worse; yet here we are.
    There are recommendations that have been presented to address the 
issue, both by outside commenters and our own Diversity Committee. 
These need to be put together in a comprehensive, systematic and 
prioritized response to a problem that is a national disgrace. I say 
that advisedly--it is a national disgrace to have a media environment 
that is so blatantly unreflective of how we look as a nation. I support 
Commissioner Adelstein's call, joined by many others, for an 
independent panel to review the dozens of proposals before us. We need 
to fix this problem before voting on any proposals permitting big media 
to get even bigger. Consolidation has made it infinitely tougher for 
women and minorities to own stations, so why would we give the green 
light to more consolidation before coming up with programs to give 
women and minorities a chance to compete? And why should we put into 
play, as Chairman Martin's proposal does, the very stations that small, 
independent, minority broadcasters could have a shot at if they had the 
proper incentives? Why would we even consider that?
    It may be difficult for you to believe, but the Commission doesn't 
even have an accurate count of how many minority and female owners 
there are. Just last week, the Congressional Research Service issued a 
report on the FCC's 10 media ownership studies and it paints an 
anything-but-rosy picture of the record on which the Chairman proposes 
to act. The report raises questions about the underlying data and 
technical analyses used for several of the studies. In particular, it 
points to the lack of accurate data on minority and female media 
ownership. As CRS points out, the Third Circuit instructed the 
Commission on remand to consider the impact of any media ownership rule 
changes on minority ownership. CRS finds, however, that the FCC has 
failed to collect accurate data on minority and female ownership, and 
that without such data, ``it is impossible to perform'' the analysis 
required by the Third Circuit. Indeed, CRS notes that all of the 
researchers and peer reviewers agree that the Commission's databases on 
minority and female ownership ``are inaccurate and incomplete and their 
use for policy analysis would be fraught with risk.'' I agree. The 
Commission is courting another unfavorable ruling from the Third 
Circuit, proving once again that the impact of further media 
consolidation on minority and female ownership is simply not a 
priority.
    It's the same story on localism. A draft Notice of Proposed 
Rulemaking was recently circulated, apparently on the premise that 
asking questions is sufficient to ``check the box'' so a Commission 
majority can move forward to loosen the newspaper/broadcast cross-
ownership ban. But localism should never be seen as a means to an end--
it is an end in itself. It is at the heart of what the public interest 
is all about. All deliberate speed in getting some localism back? By 
all means. A rush to judgment to clear the way for more big media 
mergers? No way.
    For today, our conversation on media ownership should start and end 
with the requirements of S. 2332, the ``Media Ownership Act of 2007.'' 
Senator Dorgan, Senator Lott and the other cosponsors, thank you for 
your leadership and for your understanding that unless we have a 
credible process, we cannot have a credible result. Right now, the 
Chairman is ready to relax the newspaper/broadcast cross-ownership ban 
without completing 90 days of public comment on the proposed rule; 
before completing a separate rulemaking to promote localism that 
includes a 90 day comment period; before collecting accurate data on 
female and minority ownership; and before convening and acting 
comprehensively upon recommendations by an independent panel on 
minority and female ownership.
    These fundamental procedural requirements are the heart of S. 2332. 
Last week, the full Commission testified before the House 
Telecommunications Subcommittee on this topic, and Chairman Dingell 
passed on some advice he received from his father: if given a choice 
between controlling the process and controlling the substance, his 
father told him, choose the process and you'll win every time. The same 
is true here. As minority Commissioners, we cannot control process. 
However, your legislation would ensure that the substance is debated 
fairly and transparently. Were the Commission to abide by the criteria 
in the Dorgan-Lott bill, I certainly would support bringing the 
Chairman's proposal to a vote. The bill should be the guiding 
principles for completing the media ownership proceeding.
    I also want to point out that in all this haste to give big media a 
huge gift for the holidays, another critical issue is not receiving its 
due--the DTV transition. We are 14 short months from a massive switch-
over that will directly affect millions of American households. We have 
just one chance to get this right. Unlike many countries that are 
taking a phased approach, we are turning off analog signals in every 
market in the country on a single date--February 17, 2009.
    I recently traveled to the United Kingdom to witness the first 
stage of their DTV transition. I was concerned before going over there; 
now I am thoroughly alarmed. The UK is taking the transition seriously, 
and has put together the kind of well-funded and well-coordinated 
public-private partnership that I, and many of you, have been calling 
for over here.
    There are two basic things that need to happen for a successful 
transition. Number one, consumers have to be prepared. We have a 
pending consumer education proceeding that could help ensure that the 
message is getting out in a coordinated and effective way. But no vote 
has been scheduled to get it done.
    The second thing that has to happen is broadcasters need to 
prepare. Hundreds of stations must take significant actions over the 
next 14 months. Things like new antennas and transmitters, new tower 
construction and new transmission lines--all of which can require 
financing, zoning approvals, tower crews, or international 
coordination. But many broadcasters need to know what the technical 
rules of the road are going to be before they can move forward. Those 
issues are teed up in a proceeding called the ``Third DTV Periodic 
Review.'' Although the record has been closed for months, a draft Order 
was just circulated to the Commission last week. Already, I fear that 
many broadcasters simply aren't going to make it. If we don't start 
making the DTV transition a national priority, we will almost certainly 
have a 9-car train wreck on our hands. And the American people will be 
looking for someone to blame. Those of us who plan to be on duty in 
February 2009 are going to need some real good answers.
    Finally, let me turn to Universal Service. As a member of the 
Federal-State Joint Board on Universal Service, I have participated in 
the Board's two recent recommendations to the FCC. In May, I dissented 
from a recommendation that the FCC place an ``interim'' cap on the 
high-cost support received by CETCs based on my strong belief that it 
solves no enduring problem and that it will be interpreted by many as 
movement enough to justify putting the larger Universal Service reform 
imperative on the back-burner. As a result, it would diminish rather 
than enhance the prospects for near or even mid-term reform. I continue 
to believe that this is the case.
    However, to its credit the Joint Board did not rest and last month 
it recommended a far more comprehensive plan for overhauling the high-
cost fund. Most notable is its recommendation, for the first time, to 
include broadband as a supported system within the Universal Service 
system. While I would have acted more boldly on how to ensure that the 
Commission makes good on this commitment, I was enormously pleased to 
approve this historic finding by the Joint Board because it establishes 
for the first time the right mission for Universal Service in the 21st 
century. Congress concluded many years ago that a core principle of 
Federal telecommunications policy is that all Americans, no matter who 
they are or where they live, should have access to reasonably 
comparable services at reasonably comparable rates. Congress wisely 
anticipated that the definition of Universal Service would evolve and 
advance over time. The Joint Board's recommendation to include 
broadband in the definition of Universal Service finally puts the 
program in sync with the intent of the Act.
    I continue to believe there are a variety of ways to promote 
Universal Service and at the same time ensure the sustainability and 
integrity of the Fund. As I testified earlier this year, much would be 
accomplished if the Commission were to include broadband on both the 
distribution and contribution side of the ledger; eliminate the 
Identical Support rule; and increase its oversight and auditing of the 
high-cost fund. Additionally, Congressional authorization to permit the 
assessment of Universal Service contributions on intrastate as well as 
interstate revenue would be a valuable tool for supporting broadband. 
That being said, the Joint Board made an assortment of recommendations 
of its own. I agreed with some of them and not with others. 
Nevertheless, the FCC has before it a recommendation that I believe 
merits further action rather than taking an interim step that could 
very well short-circuit the larger discussion.
    Thank you for the opportunity to testify and I look forward to your 
comments about these and other of the many issues before us.

    The Chairman. I thank you very much, Mr. Commissioner.
    Our next witness, Commissioner Jonathan Adelstein.

STATEMENT OF HON. JONATHAN S. ADELSTEIN, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Commissioner Adelstein. Thank you, Chairman Inouye, Vice 
Chairman Stevens, Members of the Committee.
    I certainly appreciate your calling this hearing. I think 
it's critical that we get your guidance. We need it urgently. 
Your leadership on all the pressing issues before us really 
lights a productive path for us to follow. And no issue on our 
agenda has more far-reaching consequences than media ownership.
    As we've traveled across the country, we heard a loud and 
unified chorus: Americans from all perspectives, whether from 
the left or the right, and virtually everybody in between, 
oppose further media consolidation. They don't want a handful 
of giant companies dominating their primary sources of news, 
information and entertainment.
    Given the dangerous direction that this Commission is now 
headed in, it's really disappointing to see us proceed without 
due deference to the American public and their elected 
representatives.
    Mr. Chairman, you led this Committee to a unanimous 
bipartisan vote to compel a more thoughtful process, and I 
would have expected the Commission to redirect its course. To 
do otherwise would be an unprecedented act of defiance in the 
face of such a clear message from our authorizing Committee. 
You've given us a path to resolve the lingering controversy 
over this proceeding. I fully support the process as set forth 
in your bill, the Media Ownership Act, as was introduced by 
Senators Dorgan and Lott. Even if not quickly adopted by 
Congress, we should, in the spirit of compromise, deference to 
this Committee, and cooperation amongst the Commissioners, 
follow your guidelines. I think that would restore 
Congressional and public faith in our review.
    The proposal now before us, though portrayed as modest, as 
Commissioner Copps said, would actually open the door to 
newspapers buying broadcast outlets in every market in America. 
Every market in America. The standards for waiver are as loose 
as a wet noodle. They're so weak that combinations could be 
allowed in any city, no matter how small, or for any TV 
station, no matter how dominant.
    So, we need to reassess our priorities. Across the country, 
people aren't clamoring for us to let newspapers buy broadcast 
outlets. People are concerned about making the media more 
responsive to their local communities, to the local artists, 
and to their civic and cultural affairs. They're concerned that 
people of color and women are stereotyped, misrepresented, or 
under-represented. They're furious about the level of sexual, 
violent, and degrading content that they see paraded by them 
every night on their television screens. And they believe media 
consolidation has something to do with it.
    So, let's put first things first. Media consolidation only 
takes outlets further out of the reach of women and people of 
color, and further from the local communities and their values. 
That's why, as this Committee has asked, we need to first 
implement improvements to diversity and localism before, and 
not after, we even consider loosening the media ownership 
rules. That's why I've called for the creation of an 
independent panel to help us raise the dismal level of media 
ownership outlets by women and minorities.
    I deeply appreciate the endorsement of this Committee for 
that call and the wide support from leading civil rights 
organizations across the country. Now it's time for the 
Commission to act.
    There's nothing sacrosanct about December 18. It's not too 
late for us to reach an internal agreement on a reasonable 
process that addresses the concerns raised by your Committee. 
And I'll work with all of my colleagues to try to see if we can 
make that happen.
    Now, while we're rushing headlong toward media 
consolidation, another more time-sensitive issue of deep 
concern is where we need to show far greater leadership, and 
that's the DTV--the digital television--transition. Instead of 
straining to quickly, immediately, next week, make big media 
even bigger, we should have already finished our DTV education 
plan. We should have already provided urgently needed guidance, 
technical guidance that broadcasters are asking us for. Again, 
it's about priorities.
    As I testified before you in October, and the GAO 
reiterated just this week, with regard to the DTV transition, 
nobody's in charge and we have no plan. It's high time that we 
create the Interagency Task Force that we talked about at that 
hearing in October, and the bipartisan leadership of this 
Committee supported, to coordinate Federal efforts and to work 
with the private sector. I think we still have time to turn 
this around, but only if we increase the level of leadership, 
planning, coordination, and resources that are dedicated to it.
    I think more Federal attention is also needed to restore 
America's cutting edge in telecommunications. I'm concerned 
that lack of a national broadband strategy is one of the 
reasons we're falling further behind our global competitors.
    In my written statement, I outline the elements of a 
broadband plan. I think we need greater national focus on this 
than we have today. And I greatly appreciate, Chairman Inouye, 
your leadership and the Committee's efforts to move a bill that 
would improve our understanding of the broadband challenge.
    Universal Service also plays a key role in supporting rural 
networks, maintaining high telephone penetration, and 
increasing access for schools and libraries. The FCC is 
reexamining almost every aspect of Universal Service, and, as 
we consider these changes, I think we need to protect its 
strength, and preserve the vital role that it's played. As 
technology evolves, we need to channel Universal Service toward 
advanced services and broadband. We must conduct our management 
of the funds with the highest standards.
    So, on all of these key issues before us, if we follow your 
leadership, we'll be in the best position to serve the public 
interest. Thank you for this opportunity to testify and for 
calling this hearing.
    [The prepared statement of Commissioner Adelstein follows:]

    Prepared Statement of Hon. Jonathan S. Adelstein, Commissioner, 
                   Federal Communications Commission
    Chairman Inouye, Vice Chairman Stevens, and Members of the 
Committee, thank you for calling this oversight hearing on media and 
telecommunications matters pending before the Federal Communications 
Commission.
    As an independent agency, the Commission's overriding statutory 
obligation is to promote the public interest. But it is you--the 
elected representatives of the American people--who are directly 
accountable to the public. I consider it an honor to discuss with you 
some of the many important issues before us. Your oversight regarding 
our agenda, including media ownership, the transition to digital 
television (DTV), broadband, Universal Service, spectrum and wireless 
policy is an essential part of the Commission's decision-making 
process. It should improve our responsiveness and service to the 
American people.
Media Ownership
    Perhaps no issue on the Commission's agenda has more far-reaching 
consequences for the future of our democracy than the media ownership 
rules. Free over-the-air broadcasting licenses are scarce, and 
broadcasters have an enormous impact on the free exchange of ideas. 
Despite the growth of other media delivery systems, broadcasting, in 
combination with newspapers, are still the most pervasive of all 
platforms.
    It is clear the public grasps the gravity of our ownership rules. 
As we have visited communities across the country, we have heard a 
nonpartisan chorus opposing any further concentration of ownership in 
the media industry. Americans from all walks of life and all political 
perspectives, whether right, left and virtually everybody in between, 
do not want a handful of companies dominating their primary sources of 
news, information and entertainment.
    The Commission's current course, if unchecked, could cause lasting 
harm to American media for future generations. Without major changes, 
the pending proposal before us will decidedly hurt competition, 
diversity and localism. Independent voices will be silenced; women and 
people of color, who already own tragically few media outlets, will 
find them even further out of reach; and the public will not receive 
any quantifiable measure of more local news, information or decent 
family programming.
    It has been disappointing to see the Commission proceed with such 
little deference to the American people and their elected 
representatives. In the wake of your leadership, Mr. Chairman, and the 
unanimous vote of this Committee to compel a more open and transparent 
process, I would have expected the Commission to redirect its course. 
You have given us a path to resolve lingering controversy over how to 
consider the media ownership rules. I fully support following the 
process you have laid out on bipartisan basis which was approved 
unanimously by this Committee. Even if it is not adopted by Congress 
immediately, the Commission should, in the spirit of deference, 
compromise, cooperation and responsiveness to Congress, follow the 
process outlined in the Media Ownership Act of 2007 (S. 2332). This 
legislation would:

   require the FCC to complete a separate proceeding to 
        evaluate how localism is affected by media consolidation;

   give the public an opportunity to comment on that proceeding 
        for 90 days;

   require that the localism proceeding be done separately and 
        be completed prior to a vote on proposed media ownership rules; 
        and

   require establishment of an independent panel on female and 
        minority ownership and for the FCC to provide the panel with 
        accurate data on female and minority ownership--this panel must 
        issue recommendations and the FCC must act on them prior to 
        voting on any proposed ownership rules.

Following these simple guidelines is a path to restoring Congressional 
and public faith in the Commission's procedures in the media ownership 
proceeding.

    Failure to adhere to the guidance of elected leaders in Congress 
and to follow open and transparent procedures undermines public 
confidence. Nowhere is this more important than in our review of the 
media ownership rules. Yet, the Commission's approach to our final 
media ownership hearing in Seattle, Washington is emblematic of our 
shortcomings. Along with many Members of Congress, Senator Maria 
Cantwell and Congressman Jay Inslee requested the Commission give their 
constituents an opportunity to share their views about media ownership 
before we proposed to modify the rules. As the date of a rumored 
Seattle hearing approached and no official announcement was made, 
Senator Cantwell and Congressman Inslee again wrote the Commission to 
ask that the public be afforded 1 month notice so they could plan for 
the event. But their letter was ignored and the hearing was announced, 
giving the public just five business days notice--the very minimum 
allowed by Federal law.
    The people of Seattle were rightfully outraged at the short notice, 
but they showed up in large numbers anyway, over 1,100 strong on a 
Friday night, in protest. Public witnesses expressed with passion and 
eloquence their concern about any steps that would further media 
consolidation, which they believed had gone too far already. They 
openly questioned how the FCC could proceed on such a course.
    The next day back at the office, the Chairman announced plans in a 
New York Times op-ed and a press release on how he sought to relax the 
newspaper/broadcast cross-ownership rule. That was not only the first 
time the public learned of the plan. It was also the first time the 
Commissioners were notified of the details. It is hard to imagine how 
it was possible to review and consider hundreds of public comments made 
in Seattle alone before issuing the proposal the next working day. What 
could have been a meaningful opportunity for public input and 
cooperation with Congress was lost.
    The proposal, which is portrayed as ``modest,'' is fraught with 
substantive problems that will require serious internal Commission 
cooperation, consultation and negotiations. The proposal as drafted 
would actually open the door to dominant local newspapers buying up 
broadcast outlets in every market in America and potentially of any 
size. And it would transform the current ban on newspaper/broadcast 
into a nationwide bazaar that would only require buyers to meet the 
loosest standards for a waiver.
    Even if the proposal were limited to the top 20 markets, that would 
account for 43 percent of U.S. households, or over 120 million 
Americans. But the details reveal loopholes that would permit new 
cross-owned combinations from the largest markets down to the smallest 
markets, potentially affecting every American household. The proposal 
would permit many cross-ownership combinations in markets in which none 
previously existed, but as written it would not lead to more news and 
information in those markets.
    The waiver standards are as stiff as a wet noodle. The majority of 
Commissioners would be able to bend and reshape them at will. Even 
under the current stronger standards of a blanket prohibition on cross-
ownership, the Commission has been lax in permitting waivers.
    The proposal suggests four factors to be considered for waiver 
requests, each of which would require significant strengthening to be 
meaningful. First, the draft would have the Commission consider if a 
company will ``increase the local news disseminated.'' With no 
definition, even an insignificant amount of news a year could qualify. 
We need real, quantifiable and substantial standards. Second, each 
outlet would have to maintain ``independent news judgment.'' But there 
are no standards articulated for determining or enforcing what that 
means. Third, the Commission would consider the ``level of 
concentration'' in the market. But the proposal offers no measure by 
which to judge what is too concentrated, so evidence showing 
concentration can be dismissed on a whim. We need a meaningful and 
quantifiable standard by which to judge what constitutes unacceptable 
increases in concentration. And fourth, the Commission would consider a 
newspaper's ``financial condition.'' This factor is so vague as to be 
virtually meaningless. We should base the standard on the financial 
distress requirements that are currently considered grounds for a 
waiver.
    These loopholes also undercut the assertion that the proposal would 
prevent a newspaper from buying one of the top-four rated stations in 
the same market. That alleged protection would disappear with the wave 
of a hand in the market below the top 20 if these loose waiver 
standards were invoked, so that a newspaper could buy any TV station in 
any city, no matter how large.
    The main public interest justification for newspaper/broadcast 
cross-ownership has been the claim that relaxing the rule would create 
more local news. A path-breaking study by leading consumer 
organizations, using the FCC's own data, demonstrated that claim to be 
wrong. They found that the data underlying an FCC-sponsored study 
finding more local news by cross-owned stations actually reveals that 
there is less local news in those markets as a whole, taking into 
account all news outlets. It remains unclear exactly why the overall 
level of local news available diminishes. Perhaps it is because other 
outlets choose not to compete with the local leviathan or they lose 
equal access to the newspaper's investigative and news resources. But 
the fact is the Commission's own data reveals the other outlets in 
those cities reduce their news coverage more than the cross-owned 
outlets increase it. So not only is less news produced in the market, 
but an independent voice is silenced when the dominant local newspaper 
swallows up a broadcast outlet. We must find the root causes of this 
problem and address them before we proceed to relax the cross-ownership 
rule.
    We must also study the relationship between inappropriate 
programming for children, such as excessively sexual or violent 
programs, and the concentration of media ownership. A 2005 report found 
that 96 percent of all the indecency fines levied by the FCC in radio 
from 2000 to 2003 (97 out of 101) were levied against four of the 
Nation's largest radio station ownership groups. The remaining 11,000-
plus stations were responsible for just 4 percent of all FCC radio 
indecency violations, a fraction of their national audience share. 
While the radio report did not prove a causal link between ownership 
concentration and broadcast indecency, I believe the Commission has an 
obligation to study and understand the relationship between media 
concentration--station ownership and program ownership--and indecency 
before we permit more consolidation. A study last year by the Parents 
Television Council found that, in the midst of an unprecedented wave of 
media consolidation between 1998 and 2006, violence on TV during the 
evening hours of 8, 9 and 10 grew by 45, 92 and 167 percent, 
respectively. Commissioner Copps and I requested a full FCC field 
hearing to explore the relationship between media consolidation and the 
rising volume of material inappropriate for children in the media, but 
none was held.
    In terms of violence, the Commission released its report on violent 
television programming and its impact on children last April. Since 
then, the Commission has not done anything proactive to address the 
many concerns we have heard. While there may be limitations on what we 
can do under current law, there is no limitation upon our ability to 
show leadership to confront the problem. And we have been too 
complacent in the face of nothing less than a crisis facing our 
children and families.
    The debate about media concentration is fundamentally about 
priorities. As we solicited the views of citizens across the country, 
we did not hear a clamor for relaxation of the cross-ownership rules. 
We only hear that from media company lobbyists inside the Beltway. The 
public is concerned about the lack of responsiveness of their media 
outlets to local communities, artists, civic and cultural affairs and 
family programming. They are concerned that people of color and women 
are stereotyped, misrepresented or underrepresented. They are furious 
about the level of sexual, violent and degrading material they are 
seeing and believe media consolidation has something to do with it. And 
they want us to address the public interest obligations of broadcasters 
first.
    That is why I have insisted that we first address and implement 
improvements to localism and diversity of ownership before--not after--
we address the media ownership rules. Like this Committee, I have 
called for an independent, bipartisan panel to guide us on a course to 
implement improvements in the level of ownership of media outlets by 
women and minorities. Many Members of Congress and leading civil rights 
organizations have joined that call. And I have demanded, along with 
many Members of Congress, including this Committee, that we finalize 
the Localism Report and implement real improvements in the 
responsiveness of media outlets to local concerns first.
    Rather than take this in order, address these lingering crises 
first, the Commission seems to be moving forward obsessively to allow 
more consolidation, notwithstanding Congressional and public concern. 
That would be a mistake. It is not too late for us to achieve a 
bipartisan agreement on a reasonable process to finalize the media 
ownership proceeding that addresses the many concerns raised by the 
public, leading consumer advocates and this Committee. I will work with 
all of my colleagues to achieve that goal.
DTV Transition
    As we focus today on the public's access to their media--their 
airwaves--it is also critical that the FCC show far greater leadership 
on a potential disaster that is the DTV transition. As the Government 
Accountability Office (GAO) has noted, there is nobody in charge of the 
transition and there is no plan. We still have time to turn this 
around, but only if we increase the level of leadership, coordination 
and resources dedicated to this undertaking. The ongoing leadership of 
this Committee has been and will continue to be extremely helpful in 
focusing our efforts.
    The GAO reiterated this week the need for us to establish a 
strategic plan. As I have testified before this Committee, I believe we 
need a national DTV outreach, education and implementation plan that 
coordinates the efforts and messages of all stakeholders. Here are some 
next steps that I believe we need to take, immediately, to get on the 
path of reaching and educating people in the more than 111 million U.S. 
television households.
    Create Federal DTV Transition Task Force. It is long overdue for 
the FCC, NTIA and other relevant Federal agencies to formalize their 
relationship and develop a Federal DTV Transition Task Force with 
representation from the leadership of each agency. The GAO has said 
that the FCC has the authority to establish a task force under the 
Federal Advisory Committee Act. This multi-agency task force would 
develop benchmarks and a timeline to achieve nationwide awareness of 
the DTV transition. And, it would be accountable to Congress. The 
private sector has established a coordinating mechanism through the DTV 
Transition Coalition, and it is high time we do the same for the 
Federal Government.
    The task force would need staff. The FCC, for example, should 
detail staff to the task force from Consumer and Governmental Affairs, 
Media, Enforcement, and Public Safety and Homeland Security Bureaus, 
and the Offices of General Counsel and Engineering and Technology. With 
dedicated staff from different agencies, the task force would also 
serve as the clearinghouse for all things related to the DTV transition 
national campaign and for coordinating this network of networks. The 
aging and disabilities communities, for example, would have access to 
financial and human resources to assist these at-risk groups in making 
the transition. The task force would be able to coordinate with public 
and private partners, leverage existing resources and develop a single 
unified Federal message, such as developing and using common 
terminology to describe the Digital-to-Analog Converter Box program and 
other DTV technology. In addition to coordinating government efforts at 
all levels--including state, regional, local, and tribal governments--
the task force can convene joint meetings with the private sector DTV 
Transition Coalition to ensure a coherent, consistent message across 
all channels. And it can help coordinate the many public-private 
assistance efforts needed for at-risk communities.
    Launch a Targeted Grassroots Information and Technical Assistance 
Campaign. The task force, working with state, local and tribal 
governments, the DTV Transition Coalition partners, and community-based 
service providers, could target communities with the highest 
concentration of over-the-air viewers, including senior citizens, low-
income, non-English speaking, rural populations and tribal communities. 
It can launch a coordinated grassroots campaign, which would include 
posting signs in supermarkets, retail stores, churches, social service 
organizations, all modes of public transportation and other public 
places. Many at-risk citizens will need help acquiring and hooking up 
their converter boxes, and it remains entirely unclear who is going to 
help them. If it is to be done through volunteers, it will take a vast 
effort to vet and train them.
    No Federal agency currently has the mandate or resources to help 
people who can't themselves hook up the boxes to their TV sets. For 
example, while the FCC, the Administration on Aging and its allied 
aging network--which includes state and local agencies, as well as 
community based service providers like Meals on Wheels--have been in 
very early discussions about various grassroots efforts, no plan is in 
place. People with disabilities experience great difficulty accessing 
closed captions and video descriptions. A technical assistance program 
must be established soon, with timelines for training and outreach to 
ensure people who need help can get it.
    While these steps may require some additional funding from Congress 
or a reallocation of funds already appropriated, first and foremost, 
dedicated leadership and focus are required from the FCC--the expert 
agency primarily responsible for the DTV transition.
    Establish Much Needed Guidance for Broadcasters Soon. In addition 
to these outreach and education initiatives, the Commission must take 
steps to ensure that over-the-air viewers are not disenfranchised 
during or after the DTV transition, and that all full-power stations 
are prepared to cease analog transmission and operate in digital by the 
end of the transition on February 17, 2009. Accordingly, I believe the 
Commission should: (1) complete the Third DTV Periodic Review as 
quickly as possible; and (2) prepare a report to Congress on the status 
of the DTV transition on February 17, 2008--one year before the hard 
deadline.
    Because the law does not provide for any waivers or extension of 
time, February 17, 2009 is indeed the last day that full-power 
broadcast stations will be allowed to transmit in analog. There are a 
total of 1,812 stations that will be serving the American people after 
the transition but, to date, only approximately 750 are considered to 
have fully completed construction of their digital facilities and are 
capable to broadcast in digital only in the final position from which 
they will broadcast. The remaining stations vary in levels of 
transition preparedness. Some stations need to construct their 
transmission facilities, change their antenna or tower location, or 
modify their transmission power or antenna height, while others may 
have to coordinate with other stations or resolve international 
coordination issues.
    In the Third DTV Periodic Review, the Commission is contemplating 
rules to govern when stations may reduce or cease operation on their 
analog channel and begin operation on their digital channel during the 
DTV transition. The Commission also sought comment on how to ensure 
that broadcasters will complete construction of digital facilities in a 
timely and efficient manner that will reach viewers throughout their 
authorized service areas. These and other important questions, such as 
the deadlines by which stations must construct and operate their DTV 
channels or lose interference protection, should have been answered 
already. Broadcasters need to know the rules as they invest billions 
into this transition. We have lost valuable time focused on other more 
tangential aspects of the transition while not moving forward on 
clarifying urgent demands on broadcasters to get a huge job done in 
short order.
    The Third DTV Periodic Review also proposed that every full-power 
broadcaster would file a form with the Commission that details the 
station's current status and future plans to meet the DTV transition 
deadline. While each individual form would be posted on the 
Commission's website, I believe it is just as important for the 
Commission, Congress and the public to get a comprehensive sense of 
where each full-power broadcast station is 12 month before the end of 
the transition. A report to Congress one year before the transition 
ends will provide both the broadcaster and the FCC sufficient time for 
any mid-course correction.
Universal Service
    Universal service has been the bedrock telecommunications policy of 
the past seventy years. Indeed, Congress and the Commission recognized 
early on that the economic, social, and public health benefits of the 
telecommunications network are increased for all subscribers by the 
addition of each new subscriber. With a decade behind us since the 1996 
Act, the FCC is re-examining almost every aspect of our Federal 
Universal Service policies, from the way that we conduct contributions 
and distributions, to our administration and oversight of the Fund. As 
we move forward on all these fronts, I will continue to work to 
preserve and advance the Universal Service programs as Congress 
intended.
    To ensure continued success, we must remain committed to providing 
specific, predictable and sufficient support mechanisms based on 
equitable and non-discriminatory contributions. For that reason, I have 
supported recent Commission decisions to stabilize the base of support 
for Universal Service. The Commission also continues to grapple with 
overarching questions about how our Universal Service contribution 
policies should evolve as we move into the broadband age and an age of 
bundled, flat-rated services. As we consider further changes to our 
contribution rules, I look forward to working with my colleagues to 
ensure that we take appropriate steps to ensure that Universal Service 
remains on solid footing. We must also ensure scarce funds are 
carefully targeted and the program is run in a fiscally responsible 
manner.
    Having a stable base of support is so critical because our 
Universal Service support mechanisms play a vital role in meeting our 
commitment to connectivity, helping to maintain high levels of 
telephone penetration, particularly for those with low incomes and in 
hard-to-serve areas, and increasing access for our Nation's schools and 
libraries. Earlier this year, I was pleased to help mark the 10th 
anniversary of the implementation of the Schools and Libraries program 
(E-Rate). With the help of the E-Rate program, the Internet access rate 
in our schools has jumped from only 14 percent in 1996 to 94 percent, 
today. Senator Rockefeller and Senator Snowe showed great foresight in 
anticipating the impact of the Internet on the way that our children 
learn and how our communities connect. Ten years from its inception, we 
must capitalize on this success and continue to improve the program. 
The Commission has made a number of good decisions over the past year 
that should make the program work better, but there is more that we can 
do to ensure that our schools and libraries get the increased bandwidth 
they need to run the most cutting edge applications and software. Our 
nation's school children can not be relegated to yesterday's technology 
if they are to keep getting the tools they need to succeed.
    Ensuring the vitality of Universal Service will be particularly 
important as technology continues to evolve. As voice, video, and data 
increasingly flow to homes and businesses over broadband platforms, 
voice is poised to become just one application over broadband networks. 
So, in this rapidly-evolving landscape, we must ensure that Universal 
Service evolves to promote advanced services, which is a priority that 
Congress made clear. The economic, public health, and social 
externalities associated with access to broadband networks will be far 
more important than the significant effects associated with the plain-
old-telephone-service network, because broadband services will touch so 
many different aspects of our lives.
    I note that the Federal-State Joint Board on Universal Service 
(Joint Board) recently released its recommendations on comprehensive 
reform of the high cost support mechanisms. While I am still reviewing 
these recommendations, I was pleased that the Joint Board encouraged 
the Commission to revise its list of services supported by Federal 
Universal Service to include broadband Internet access service. The 
Joint Board recommended that the Commission establish a Broadband Fund, 
tasked primarily with facilitating construction of facilities for new 
broadband services to unserved areas. The Joint Board also recognized 
the effectiveness of the current High Cost Loop Fund in supporting the 
capital costs of providing broadband-capable loop facilities for rural 
carriers. I look forward to carefully reviewing the Joint Board's 
recommendations, and I hope that the Commission will seek comment 
quickly on these proposals from a broad range of commenters.
    I was also pleased to support the Commission's recent decision to 
expand the Federal Universal Service Rural Health Care program to 
include a pilot program to fund the construction of broadband 
infrastructure to connect rural health care providers. The telemedicine 
programs funded through the Rural Health Care program can have dramatic 
benefits for rural communities, and I have repeatedly supported efforts 
to improve the connectivity of rural health care providers. Without 
Universal Service, the high cost of telemedicine services might put 
them out of reach of many small communities. Yet, the Rural Health Care 
program has consistently been underutilized despite widely-varying 
levels of connectivity among rural health care providers. The adoption 
of a broadband pilot program has promise for increasing access to 
telemedicine facilities and I look forward to reviewing the results of 
that effort.
    Finally, I believe that it is important that the Commission conduct 
its stewardship of Universal Service with the highest of standards. We 
must aggressively combat any evidence of waste, fraud and abuse.
Need for a National Broadband Strategy
    Americans should have the opportunity to maximize their potential 
through communications, no matter where they live or what challenges 
they face. To achieve that ambitious goal, we must engage in a 
concerted and coordinated effort to restore our place as the world 
leader in telecommunications by making available to all our citizens 
affordable, true broadband, capable of carrying voice, data and video 
signals. An issue of this importance to our future warrants a 
comprehensive national broadband strategy that targets the needs of all 
Americans.
    Right now, broadband is redefining the economic opportunities 
available to our communities and entrepreneurs. Broadband can connect 
businesses to millions of new distant potential customers, facilitate 
telecommuting, and increase productivity. Much of the economic growth 
we have experienced in the last decade is attributable to productivity 
increases that have arisen from advances in technology, particularly in 
telecommunications. These new connections increase the efficiency of 
existing business and create new jobs by allowing news businesses to 
emerge, and new developments such as remote business locations and call 
centers. The opportunities for rural areas that have seized the 
initiative are enormous.
    Even as consumers are increasingly empowered to use broadband in 
newer, more creative ways, we are competing on a global stage. New 
telecommunications networks let people do jobs from anywhere in the 
world--whether an office in downtown Manhattan, a home on the 
Mississippi Delta, or a call center in Bangalore, India. This trend 
should be a wake-up call for Americans to demand the highest quality 
communications systems across our Nation, so that we can harness the 
full potential, productivity and efficiency of our own country. We must 
give all our towns the tools they need to compete in this new 
marketplace.
    We have made progress, many providers are deeply committed, and 
there are positive lessons to draw on. Yet, I am increasingly concerned 
that we have failed to keep pace with our global competitors over the 
past few years. Each year, we slip further down the regular rankings of 
broadband penetration. While some have protested the international 
broadband penetration rankings, the fact is the U.S. has dropped year-
after-year. This downward trend and the lack of broadband value 
illustrate the sobering point that when it comes to giving our citizens 
affordable access to state-of-the-art communications, the U.S. has 
fallen behind its global competitors.
    Some have argued that the reason we have fallen so far in the 
international broadband rankings is that we are a more rural country 
than many of those ahead of us. If that is the case, we should 
strengthen our efforts to address any rural challenges head-on.
    I am concerned that the lack of a comprehensive broadband 
communications deployment plan is one of the reasons that the U.S. is 
increasingly falling further behind our global competitors. This must 
become a greater national priority for America than it is now. We need 
a strategy to prevent outsourcing of jobs overseas by promoting the 
ability of U.S. companies to ``in-source'' within our own borders.
    Elements of a Strategy. A true broadband strategy should 
incorporate benchmarks, deployment timetables, and measurable 
thresholds to gauge our progress. We need to set ambitious goals and 
shoot for affordable, truly high-bandwidth broadband. We should start 
by updating our current anemic definition of high-speed of just 200 
kbps in one direction to something more akin to what consumers receive 
in countries with which we compete, speeds that are magnitudes higher 
than our current definitions.
    We must take a hard look at our successes and failures. We need 
much more reliable, specific data than the FCC currently compiles so 
that we can better ascertain our current problems and develop 
responsive solutions. The FCC should be able to give Congress and 
consumers a clear sense of the price per megabit, just as we all look 
to the price per gallon of gasoline as a key indicator of consumer 
welfare. Giving consumers reliable information by requiring public 
reporting of actual broadband speeds by providers would spur better 
service and enable the free market to function more effectively. 
Another important tool is better mapping of broadband availability, 
which would enable the public and private sectors to work together to 
target underserved areas.
    I am grateful for the Senate Commerce Committee's leadership on 
these issues and recognition of the importance of developing a more 
rigorous assessment of the broadband challenge. The ``Broadband Data 
Improvement Act,'' introduced by Chairman Inouye, and sponsored and 
supported by so many members of the Committee, would provide valuable 
tools for Congress, the Commission, and consumers in our joint efforts 
to increase access to truly affordable, high-speed broadband services. 
By directing the Commission to improve and expand its data collection 
efforts, by directing other Federal agencies to focus on this great 
infrastructure priority, and by facilitating partnerships at the state 
and local level, this legislation would help us make great progress on 
this critical front.
    We must also redouble our efforts to encourage broadband 
development by increasing incentives for investment, because we will 
rely on the private sector as the primary driver of growth. These 
efforts must take place across technologies, so that we not only build 
on the traditional telephone and cable platforms, but also create 
opportunities for deployment of fiber-to-the-home, fixed and mobile 
wireless, broadband-over-power-line, and satellite technologies. We 
must work to promote meaningful competition, as competition is the most 
effective driver of innovation, as well as lower prices. Only rational 
competition policies can ensure that the U.S. broadband market does not 
devolve into a stagnant duopoly, which is a serious concern given that 
cable and DSL providers now control approximately 96 percent of the 
residential broadband market. We must also work to preserve the open 
and neutral character that has been the hallmark of the Internet, in 
order to maximize its potential as a tool for economic opportunity, 
innovation, and so many forms of public participation. We also need to 
encourage and support the effort by the large incumbent local exchange 
carriers to deploy new systems capable of delivering high-quality video 
services.
    One of the best opportunities for promoting broadband, and 
providing competition across the country, is in maximizing the 
potential of spectrum-based services. The Commission must do more to 
stay on top of the latest developments in spectrum technology and 
policy, working with both licensed and unlicensed spectrum. Spectrum is 
the lifeblood for much of this new communications landscape. The past 
several years have seen an explosion of new opportunities for 
consumers, like Wi-Fi, satellite-based technologies, and more advanced 
mobile services. We now have to be more creative with what I have 
described as ``spectrum facilitation.'' That means looking at all types 
of approaches--technical, economic or regulatory--to get spectrum into 
the hands of operators ready to serve consumers at the most local 
levels possible.
    In January 2008, the Commission will commence its auction of the 
700 MHz band, a potentially historic opportunity to facilitate the 
emergence of a ``third'' broadband platform. This is the biggest and 
most important auction we will see for many years to come. While the 
Commission recently adopted auction rules that reflect a compromise 
among many different competing interests, I am hopeful that there will 
be opportunities for a diverse group of licensees in the 700 MHz 
auction and that our more aggressive build-out requirements will 
benefit consumers across the country. We also put in place a new 
approach to spectrum management by adopting a meaningful, though not 
perfect, open access environment on a significant portion of the 700 
MHz spectrum. This decision represents a good faith effort to establish 
an open access regime for devices and applications that will hopefully 
serve consumers well and create opportunities for small providers for 
many years to come.
    There also is more Congress can do, outside of the purview of the 
FCC, such as providing adequate funding for Rural Utilities Service 
broadband loans and grants, and ensuring RUS properly targets those 
funds; establishing new grant programs supporting public-private 
partnerships that can identify strategies to spur deployment; providing 
tax incentives for companies that invest in broadband to underserved 
areas; devising better depreciation rules for capital investments in 
targeted telecommunications services; promoting the deployment of high-
speed Internet access to public housing units and redevelopment 
projects; investing in basic science research and development to spur 
further innovation in telecommunications technology; and improving math 
and science education so that we have the human resources to fuel 
continued growth, innovation and usage of advanced telecommunications 
services; and, of course, we need to make sure all of our children have 
affordable access to their own computers to take full advantage of the 
many educational opportunities offered by broadband.
    What is sorely needed is real leadership at all levels of 
government, working in partnership with the private sector, to restore 
our leadership in telecommunications. This Committee's attention to 
this issue is exactly the kind of effort that is needed. I also believe 
we need a National Summit on Broadband--or a series of such summits--
mediated by the Federal Government, including Congress, the Executive 
Branch and independent agencies, state and local governments, and 
involving the private sector, which could focus the kind of attention 
that is needed to restore our place as the world leader in 
telecommunications.
    Thank you for holding this critical hearing, and I look forward to 
working with you to make sure that American media remain the most 
vibrant in the world, that the DTV transition is a success for the 
American people, and that we continue to provide opportunities for all 
Americans to benefit from the most cutting edge communications tools 
available.

    The Chairman. I thank you very much, Commissioner.
    Our next witness, Commissioner Deborah Taylor Tate.

 STATEMENT OF HON. DEBORAH TAYLOR TATE, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Commissioner Tate. Thank you, Mr. Chairman, Vice Chairman 
Stevens, and honorable Members of this Committee. It is an 
honor always to appear before you as a member of the FCC.
    As a public servant, I recognize that this is a position of 
trust which requires engaging in open dialogues with you, with 
Congress, and with the American people, and I welcome that 
today.
    A few of the issues that have been at the top of our 
agenda, we will discuss today, from reviewing our media 
ownership rules, of course, to coordinating with the industry 
for a successful DTV transition, to managing spectrum 
allocation for new and innovative services, to encouraging the 
nationwide deployment of broadband, to facilitating 
interoperability of our public safety services, to ensuring the 
long-run viability of the Universal Service Program. These 
decisions will be among the most historically significant that 
this Commission will undertake and command your attention, as 
well as the public's.
    Following a remand, as you all know, by the D.C. Circuit 
Court in 2004, media ownership has been a front-burner issue 
for this Commission. Throughout this review, the focus of our 
attention has been on the touchstones of competition, 
diversity, and localism. Over the past 18 months, as you heard, 
we have held six open public hearings all across the entire 
country, in many of your states--L.A., Tampa, Harrisburg, 
Chicago, Seattle. And I was glad to welcome the Commission to 
my home town of Nashville. We have, indeed, heard from 
thousands of American citizens in an unprecedented access to a 
governmental body providing them the opportunity to voice their 
opinion regarding the media and ownership of media outlets. 
Over my 20-plus years as a public servant at all levels of 
government, I can't remember a single time that an agency has 
expended this much institutional energy and investment on a 
single issue. We invited and received hundreds of thousands of 
comments, not only from the general public, but assembled 
expert panels of economists, TV, radio, and film producers, 
musicians, directors, professors, students, small and large 
broadcasters, and, of course, local community organizations.
    During the year and a half of our ongoing hearings, we have 
also arranged for ten media studies, subjected those to two 
sets of peer review, and have made them accessible online.
    Never before, of course, has so much competition existed 
for the eyes and ears of American consumers of news and 
information, wherever, whenever, however, and over whatever 
device they choose. This competition is now cross-platform and 
includes newspapers and broadcasters, and also cable, 
satellite, wireline, and, increasingly, mobile networks. And, 
as more platforms offer access to the Internet, then, of 
course, the breadth of the sources only expand.
    I grew up in small-town Tennessee, with only a handful of 
radios and three TV networks. And obviously, now we have access 
to more media voices than ever.
    A rule shouldn't account just for the needs of our 
generation, but also of the I-Generation, as they're called, 
those who live in an online YouTube world with access to local, 
national, and international news sources that we could have 
only dreamed of at their ages. Like many of you, I'm an avid 
consumer of news, trade publications, national newspapers, my 
local paper, TV news clips, online news sites, and even alerts 
set to my personal news preferences; yet, those sources pale in 
comparison to the sources utilized by the younger generation.
    Like many of you and members of our Commission, I continue 
to be very troubled by the statistics regarding the 
staggeringly low rate of female and minority ownership in the 
industry. And I've tried, not merely just to talk about the 
issues, but to actively work with others to find solutions, 
whether participating in NAB's Education Foundation series that 
they've done for women and minorities, or the Hispanic 
Broadcasters Association Financing and Capitalization Seminar, 
or events sponsored by NABOB, the National Association of 
Black-Owned Broadcasters. We keep hearing, and we know, that 
financing is at the top of their concern, whether already in 
business or hoping to be a new owners. So, I've offered to lend 
my support to an annual Wall Street Conference that would focus 
on investment opportunities.
    I'm pleased that the Commission is presently now 
considering a number of proposals, such as allowing minority 
and women broadcasters to purchase expiring construction 
permits, changing our equity plus debt attribution rule, and 
requiring nondiscrimination clauses in contracts. Let there be 
no doubt that women, and many of whom are African American, 
are, indeed, succeeding in the industry, and we need to learn 
from them. Look, for example, no further than Cathy Hughes, 
Founder and Chair of Radio One, the largest African American-
owned and operated broadcast company in the U.S. And I have 
many other examples.
    On another important issue, as co-chair of the Federal-
State Joint Board on Universal Service, I'm pleased that we 
were able to deliver to the Commission a recommended decision, 
and meet our promise to you all that we would do that in 
November. We all agree that a modern communications 
infrastructure is absolutely essential, so that all Americans, 
those living in rural America, have access to the full array of 
educational, economic opportunities that are delivered via 
advanced communications services at comparable rates.
    Finally, I remain committed to issues that are important to 
many of you: fighting childhood obesity, protecting children 
online, and reducing children's exposure to media violence. We 
continue to partner with you all in Congress.
    I look forward to your thoughts, and I'm certainly happy to 
answer any questions that you have.
    Senator Lott, we'll miss you.
    [The prepared statement of Commissioner Tate follows:]

     Prepared Statement of Hon. Deborah Taylor Tate, Commissioner, 
                   Federal Communications Commission
    Mr. Chairman, Members of the Committee, it is an honor to appear 
before you today as a member of the Federal Communications Commission. 
As a public servant, I realize that I hold a position of public trust 
and recognize that protecting that trust requires engaging in open 
dialogues, both with Congress and the American people. Accordingly, I 
welcome the Committee's input and questions.
    Since I arrived at the Commission in January 2006, there have been 
hundreds of issues before us. Some of these affect only a single party, 
while others are of national and even international significance. For 
all issues, it is our duty to carefully consider the facts and approach 
our analysis with the goals of fostering competition, encouraging 
innovation, and helping ensure this country's global competitiveness 
for years to come.
    A few issues before the Commission have been at the top of our 
agenda since I arrived. From reviewing our media ownership rules, to 
coordinating with the industry for a successful DTV transition, to 
fiscal responsibility in managing spectrum allocation for new and 
innovative services, to encouraging nationwide deployment of broadband, 
to facilitating the interoperability of our public safety services, to 
ensuring the long-run viability of our Universal Service program, these 
decisions will be among the most historically significant the 
Commission will make and therefore should command your attention as 
well as the public's.
    Following a remand by the D.C. Circuit in 2004, media ownership has 
been a front-burner issue for the Commission. Throughout this review, 
the focus of our attention has been on the touchstones of competition, 
localism, and diversity of voices. Over the past 18 months, we have 
held open public hearings across the entire country--literally from sea 
to shining sea--in Los Angeles and El Segundo, California; Tampa, 
Florida; Harrisburg, Pennsylvania; Chicago, Illinois; Seattle, 
Washington; and I was so glad to welcome my colleagues to Belmont 
University in my hometown of Nashville. These lengthy hearings have 
enabled thousands of American citizens to have unprecedented access to 
a governmental body while providing them the opportunity to voice their 
opinion regarding ownership of media outlets. Over my 20-plus years of 
public service--at all levels of government--I cannot remember a single 
time that an agency expended this much institutional energy and 
investment on an issue, or was this open and thorough regarding a 
matter of public interest. We invited comment not only from the general 
public, but also from expert panels of economists; TV, radio, and film 
producers; musicians; directors; professors; students; small and large 
broadcasters; and community organizations. During the roughly year and 
a half of on-going hearings, we also arranged for ten media studies, 
which were completed over the summer, subjected to peer review, and 
were made accessible online.
    Never before has so much competition existed for the eyes and ears 
of American consumers of news and information, wherever, whenever, and 
however, over any device they may choose. This competition is cross-
platform, and it includes newspapers and broadcasters, of course, but 
also cable, satellite and wireline networks and, increasingly, mobile 
networks. And as more platforms offer access to the Internet, the 
breadth of the sources only expands. I grew up in a small town in rural 
Tennessee where our media choices were a handful of radio stations and 
three major television networks. Today, in cities and towns across the 
country, households have more access to media voices than ever.
    We must structure our media ownership rules to account for the 
needs not just of our generation, but of the next generation. The ``I-
Generation,'' as they are often called, lives in an online, YouTube 
world, with access to local, national, and international news sources 
we could only have dreamed of at their ages. Like many of you, I am an 
avid consumer of news--from industry trade publications to national 
newspapers to my local paper, The Tennessean, as well as CNN clips, 
online news sites, and tools such as alerts that are set to my personal 
news preferences. Yet my list of news sources pales in comparison to 
the number of sources accessed by the younger generation.
    While I share many commenters' concerns about the negative impact 
media can have, from extreme violence to exceedingly coarse language, 
to the impact on childhood obesity, I appreciate the many media 
companies that try to have a positive impact.
    I also continue to be troubled by the statistics regarding the low 
rate of female and minority ownership in the industry. During my tenure 
at the Commission, I have tried not merely to talk about the issues, 
but to work with others to find solutions, both inside and outside the 
Commission, which could have a positive impact. Over the past year, I 
participated in the NAB Education Foundation series for women and 
minorities; I attended the Hispanic Broadcasters Association Financing 
and Capitalization Seminar; and I have also worked with the National 
Association of Black Owned Broadcasters. At these events, when women 
and minority broadcasters discuss challenges they face, financing is 
always at the top of the list. This is true for those who are just 
starting out, and those who have been in the industry for years. I am 
very pleased that the Commission is presently considering a number of 
proposals to assist women and minorities. In addition, I have offered 
to lend my support to an annual conference that would focus on 
investment opportunities. Another recommendation before the Commission 
is allowing minority and women broadcasters to purchase expiring 
construction permits, and giving them the duration of the permit, or 18 
months, to complete construction. Finally, we continue to discuss 
changing the Equity-Debt Plus (EDP) attribution rule so that investors' 
concerns with ownership limits will not prevent them from making 
investments they would otherwise consider.
    Let there be no doubt that women--many of whom are African 
American--are indeed succeeding in this industry. Look for example at 
Cathy Hughes, Founder and Chairperson of Radio One/TV One, Inc., the 
largest African American-owned and operated broadcast company in the 
United States, or Susan Davenport Austin, Vice President and Treasurer 
of Sheridan Broadcasting Corporation, which manages the only African 
American-owned national radio network. And then there is Caroline 
Beasley, Executive Vice President and CFO of Beasley Broadcast Group, 
Inc., the 18th largest radio broadcasting company in the country, and 
Susan Patrick, Co-Owner Legend Communications, who has been in the 
media brokerage business for more than 20 years. I hope that we will 
employ every possible avenue to have a more positive impact on the 
diversity of both voices and ownership.
    On another important issue, as Co-Chair of the Federal-State Joint 
Board on Universal Service, I am pleased that the Board issued a 
recommendation that will ensure the sustainability of Universal 
Service. We all agree that a modern and high-quality communications 
infrastructure is essential to ensure that all Americans, including 
those living in rural communities, have access to the full array of 
educational, economic, and other opportunities that are delivered via 
advanced communications services. Indeed, Congress has directed that 
consumers in all regions of the Nation have access to reasonably 
comparable telecommunications and information services, including 
advanced services, at reasonably comparable rates. The Commission's 
efforts to enact sound policy with regard to our Universal Service 
rules reflect a firm commitment to this Congressional directive.
    Finally, apart from our many Congressionally mandated obligations, 
the Commission remains involved in many public interest issues that are 
important to the members of this Committee, such as fighting childhood 
obesity, protecting children online, and reducing children's exposure 
to media violence. We continue to partner with Congress and the private 
sector to improve the lives of children and families, through our joint 
Childhood Obesity Task Force and the Internet Safety Roundtable, which 
Senator Stevens and I recently participated in.
    I look forward to hearing your thoughts and working with you on 
these and many other important issues facing the Commission, Congress, 
and our Nation.

    The Chairman. Thank you, Commissioner Tate.
    And may I now recognize Commissioner Robert McDowell.

  STATEMENT OF HON. ROBERT M. McDOWELL, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Commissioner McDowell. Thank you, Mr. Chairman and Senator 
Stevens and all the distinguished Members of the Committee.
    And, Senator Lott, I guess this is the last time we'll 
appear before you, and I'd like to thank you for your service 
to the U.S. Senate and the U.S. House and your country. Thank 
you.
    Of course, the Commission has been very active since the 
last time we appeared before this Committee, on February 1. My 
written statement covers a panoply of issues that we've worked 
on since then, but right now I'd like to focus on media 
ownership, of course.
    The future of our media ownership rules is the highest-
profile issue before us. By far, this proceeding elicits more 
public passion than any other. The media can shape the debate 
over every other issue, because it serves as a filter, or lens, 
for the information the American people rely upon to make 
decisions about their lives and the future of our great 
country.
    ``Information,'' as Thomas Jefferson said, ``is the 
currency of democracy.'' The founders of our country understood 
the important role played by the media in American society when 
they crafted the Bill of Rights. In fact, this Saturday marks 
the 216th anniversary of the ratification of the Bill of 
Rights. And first among them, of course, is the First 
Amendment, guaranteeing free expression and freedom of the 
press. In 1791, technology limited such expressions to word of 
mouth or the written word printed on the medium of paper.
    Today, the media marketplace has been transformed by 
technological innovation into the most robust and dynamic 
multimedia environment in human history. Just in the past two 
decades, we have witnessed a brilliant technological explosion 
that has brought consumers five national broadcast networks, 
hundreds of cable channels delivering content produced by more 
than 550 independent programmers, nearly 14,000 radio stations, 
two vibrant satellite television companies, telephone companies 
offering video, cable overbuilders, satellite radio, the 
Internet and its millions of websites and bloggers, a myriad of 
wireless devices operating in a wonderfully chaotic and 
competitive environment (which has hatched the term 
``mobisode'' for video content downloaded onto cell phones), 
iPods, podcasts, and much more. And that's not counting the 
countless new technologies and services that are rushing over 
the horizon, such as those resulting from our Advanced Wireless 
Services auction of last year or the upcoming 700 MHz auction, 
which starts next month. In short, consumers have more choices 
and more control over what they read, watch, and listen to than 
ever.
    These new media platforms do not live under the same 
regulations as traditional media. As a result, it should not be 
any wonder that most of the new investment, energy, and ideas 
are flowing into these newer and less regulated platforms. 
Contemplating this changing marketplace, in 1996 Congress 
mandated that the FCC periodically review the rules governing 
the ownership of traditional media platforms. Congress created 
an unusual statutory presumption in favor of modifying, or even 
repealing, ownership rules as more competition enters the 
market. Section 202(h) states that we must, ``determine whether 
any of such rules are necessary in the public interest as the 
result of competition. The Commission shall repeal or modify 
any regulation that it determines to be no longer in the public 
interest.'' This is our mandate from the directly elected 
representatives of the American people. The Commission's 
longstanding public policy goals of promoting competition, 
diversity and localism continue to guide our actions in media 
ownership, as well.
    Although the current media ownership proceeding began at my 
very first open meeting as a Commissioner, almost 18 months 
ago, this issue has been before the Commission in one form or 
another for almost 12 years. Since a large bipartisan vote in 
Congress engendered the Telecommunications Act of 1996, both 
Democrat and Republican Commissions have initiated several 
proceedings, the first starting later in that same year.
    That action produced another proceeding in 1998 which ended 
with a report in June 2000 from a Democrat-controlled FCC, 
finding that the 1975 newspaper/broadcast cross-ownership ban 
may no longer be necessary to protect the public interest, in 
certain circumstances. That conclusion gave rise to the 2001 
cross-ownership proceeding, which led to a 2002 rulemaking, 
which, finally, produced an order. The order was appealed to 
the Third Circuit. In the meantime, Congress overturned the 
FCC's relaxation of the national television cap, while the 
court remanded almost all of the remainder of the order. But, I 
emphasize the word ``almost.'' The court also concluded that, 
``reasoned analysis supports the Commission's determination 
that a blanket ban on newspaper/broadcast cross-ownership was 
no longer in the public interest.''
    Since then, the Commission's work on the latest iteration 
of this proceeding has been unprecedented in scope and 
thoroughness. We gathered and reviewed over 130,000 initial and 
reply comments, and extended the comment deadline once. We 
released a Second Further Notice in response to concerns that 
our initial notice was not sufficiently specific about 
proposals to increase ownership of broadcast stations by people 
of color and women. We traveled across our great Nation to hear 
directly from the American people during eight field hearings. 
During those hearings, we heard from 115 expert panelists on 
the state of ownership in those markets, and we stayed late 
into the night, and frequently early into the next morning, to 
listen to concerned citizens who had signed up to speak. And 
I've greatly valued hearing directly from the thousands of 
people who have traveled to our hearings, often on very short 
notice.
    While we deliberate, consumers' eyeballs and corresponding 
ad dollars are migrating to new media platforms. The Hollywood 
writers' strike is a good example of this phenomenon. Creators 
are taking their content directly to the Internet. Under this 
new scenario, viewers that would usually be tuned in to 
broadcast entertainment are, despite the strike, able to find, 
download, and watch new and different programming choices 
directly.
    Also as a result of this paradigm shift, at least 300 daily 
newspapers have shut their doors forever in the last 32 years, 
because people are looking elsewhere for their content. 
Traditional media is shrinking, and new media is growing.
    But the good news is that all Americans will benefit from 
this new media world, because these new technologies, with 
their low barriers to entry, empower the sovereignty of the 
individual, regardless of who you are. All of us should weigh 
all of the arguments presented before us in the context of 
these facts.
    Thank you for having us here today, and I look forward to 
your questions.
    [The prepared statement of Commissioner McDowell follows:]

     Prepared Statement of Hon. Robert M. McDowell, Commissioner, 
                   Federal Communications Commission
    Good morning, Mr. Chairman, Senator Stevens and distinguished 
Members of the Committee. Thank you for inviting us to appear before 
you again this morning.
    The Commission has been quite active since we were last before you 
on February 1. Time does not allow for me to discuss every issue before 
the Commission today, but I have included some highlights in this 
testimony. I will begin with a discussion of media issues. Second, I 
will talk about wireline issues. Last, I will touch upon wireless 
issues. As always, I look forward to answering any questions you may 
have.
Media Issues
    Media Ownership. Of course, the highest profile issue before us is 
the future of our media ownership rules. By far, this one issue elicits 
more public passion than any other issue we work on. The media can 
shape the debate over every other issue because it serves as a filter 
or lens for the information the American people rely upon to make 
decisions about their lives and the future of our great country. 
``Information,'' as Thomas Jefferson said, ``is the currency of 
democracy.'' The founders of our Nation understood the important role 
played by the media in American society when they crafted the Bill of 
Rights. In fact, this Saturday marks the 216th anniversary of the 
ratification of the Bill of Rights. First among them, of course, is the 
First Amendment guaranteeing free expression and freedom of the press. 
In 1791, technology limited such expressions to word of mouth or the 
written word printed on the medium of paper.
    Today, there is no disputing that the media marketplace has been 
transformed by technological innovation into the most robust and 
dynamic multimedia environment in human history--to the point where 
sometimes people complain about being bombarded by ``too much 
information.'' Just in the past two decades, we have witnessed a 
brilliant technological explosion that has brought consumers five 
national broadcast networks, hundreds of cable channels spewing diverse 
cable content produced by more than 550 independent programmers, nearly 
14,000 full-power radio stations, two vibrant satellite television 
companies, telephone companies offering video, cable overbuilders, 
satellite radio, the Internet and its millions of websites and 
bloggers, a myriad of wireless devices operating in a wonderfully 
chaotic and competitive environment, iPods, podcasts, and much, much 
more. And that's not counting the myriad new technologies and services 
that are coming over the horizon such as those resulting from our 
Advanced Wireless Services auction of last year or the upcoming 700 MHz 
auction, which starts next month. In short, consumers have more choices 
and more control over what they read, watch and listen to than ever.
    New media platforms do not live under the same regulations as 
traditional media. As a result, it should not be any wonder that most 
of the new investment, energy and ideas are flowing into these newer 
and less-regulated platforms. Contemplating this changing marketplace, 
in 1996 Congress mandated that the FCC periodically review the rules 
governing the ownership of traditional media platforms. Accordingly, 
Congress created a statutory presumption in favor of modifying, or even 
repealing, ownership rules as more competition enters the market. 
Section 202(h) states that we must ``determine whether any of such 
rules are necessary in the public interest as the result of 
competition. The Commission shall repeal or modify any regulation that 
it determines to be no longer in the public interest.'' \1\ This is our 
mandate from the directly elected representatives of the American 
people. The Commission's longstanding public policy goals of promoting 
competition, diversity and localism continue to guide our actions in 
media ownership.\2\
---------------------------------------------------------------------------
    \1\ 47 U.S.C.  303, note.
    \2\ See 2002 Biennial Review Order, 18 FCC Rcd 13620, 13627 (2003).
---------------------------------------------------------------------------
    Although the current media ownership proceeding began at my first 
open meeting as a Commissioner, almost 18 months ago, this issue has 
been before the Commission in one form or another for almost twelve 
years. Since a large bipartisan vote in Congress engendered the 
Telecommunications Act of 1996 containing that unusual statutory 
presumption in favor of deregulation, both Democrat and Republican 
commissions have initiated several proceedings. The 1996 Act sparked a 
proceeding on this matter the very same year. That action produced 
another proceeding in 1998 which ended with a report in June 2000 from 
a Democrat-controlled FCC finding that the newspaper/broadcast cross-
ownership ban, enacted in 1975, may no longer be necessary to protect 
the public interest in certain circumstances. That conclusion gave rise 
to the 2001 cross-ownership rulemaking. The 2001 proceeding became the 
basis for the 2002 rulemaking, which produced an order. The order was 
appealed to the Third Circuit. In the meantime, Congress overturned the 
FCC's relaxation of the national television cap while the court 
remanded almost all of the remainder of the order. But I emphasize the 
word ``almost.'' The court also concluded that, ``reasoned analysis 
supports the Commission's determination that the blanket ban on 
newspaper/broadcast cross-ownership was no longer in the public 
interest.'' \3\
---------------------------------------------------------------------------
    \3\ Prometheus Radio Project v. F.C.C., 373 F.3d 372, 398 (3d. Cir. 
2004)
---------------------------------------------------------------------------
    Since then, the Commission's work on the latest iteration of this 
proceeding has been unprecedented in scope and thoroughness. We 
gathered and reviewed over 130,000 initial and reply comments and 
extended the comment deadline once. We released a Second Further Notice 
in response to concerns that our initial notice was not sufficiently 
specific about proposals to increase ownership of broadcast stations by 
people of color and women. We gathered and reviewed even more comments 
and replies in response to the Second Notice. We traveled across our 
great nation to hear directly from the American people during six field 
hearings on ownership in: Los Angeles and El Segundo, Nashville, 
Harrisburg, Tampa-St. Pete, Chicago, and Seattle. We held two 
additional hearings on localism, in Portland, Maine and here in our 
Nation's capital. During those hearings, we heard from 115 expert 
panelists on the state of ownership in those markets and we stayed late 
into the night, and sometimes early into the next morning, to hear from 
concerned citizens who signed up to speak.
    We also commissioned and released for public comment ten economic 
studies by respected economists from academia and elsewhere. These 
studies examine ownership structure and its effect on the quantity and 
quality of news and other programming on radio, TV and in newspapers; 
on minority and female ownership in media enterprises; on the effects 
of cross-ownership on local content and political slant; and on 
vertical integration and the market for broadcast programming. We 
received and reviewed scores more comments and replies in response. The 
comments of those who did not like the studies are also part of the 
record. I have also greatly valued hearing directly from the thousands 
of people who have traveled to our hearings, often on short notice.
    Almost no one has disputed the data that shows we live in a media 
world that is far different from the one that existed even at the time 
of the 1996 Act. Consumers' eyeballs and corresponding ad dollars are 
migrating to new media platforms. The Hollywood writers' strike is a 
good example of this phenomenon. The strike is all about following the 
audience and ad revenue. Creators are taking their content directly to 
the Internet. Under this new scenario, viewers that would usually be 
tuned in to broadcast entertainment are, despite the strike, able to 
find, download and watch new and different programming choices 
directly.
    Moreover, as a result of this paradigm shift, at least 300 daily 
newspapers have shut their doors forever in the last 32 years because 
people are looking elsewhere for their news, information and 
entertainment. During the third quarter of this year, ad revenue for 
newspapers dropped by 9 percent and circulation for a similar period 
dropped by almost 3 percent. In view of these developments we must ask: 
has this new era of competition been helpful or harmful to localism and 
diversity? On the one hand, some argue that combinations that may have 
been dangerous to diversity in 1975 are no longer any threat due to the 
existence of an unlimited number of delivery platforms and content 
producers. The record demonstrates that not only are there more hoses 
to deliver the information, there are more spigots to produce the 
information. On the other hand, most people still rely primarily on 
television broadcasts and newspapers for their local news and 
information. With local broadcasters and newspapers still producing a 
large share of local online content as well, are there really more 
diverse sources of local journalism than before? All of us must handle 
this question with great care.
    Another vexing question is: what can the FCC do to promote 
ownership among people of color and women? Many positive and 
constructive ideas before the Commission may be constrained by Supreme 
Court prohibitions against race-specific help on one side, and a lack 
of statutory authority for doing much more on the other side. Whatever 
the FCC or Congress does must withstand Constitutional muster. So let's 
focus on the possible--and the legally sustainable. I am hopeful that 
many of the ideas before us for a vote on December 18 can be adopted so 
America can start back on the path of increased ownership of 
traditional media properties by women and people of color.
    As we debate and deliberate these important matters, traditional 
media is shrinking and new media is growing. But the good news is that 
all Americans will benefit from this new paradigm because new 
technology empowers the sovereignty of the individual, regardless of 
who you are. All of us should weigh all of the arguments presented 
before us in the context of these facts.
    Digital Transition. One of the biggest challenges the Commission 
faces over the next fifteen months is moving our Nation from analog to 
digital television with minimal consumer disruption. The Commission, 
particularly our Media Bureau and Office of Engineering, is working 
diligently on digital transition issues to make the February 17, 2009, 
transition date a reality. Much more work remains to be done, but we 
are all striving to make the transition as smooth as possible for the 
industry and for consumers so that the benefits of digital television 
technology can be enjoyed by the public.
    Since Congress established the transition deadline, the Commission 
has moved beyond simply ensuring that stations were capable of 
operating in digital to focus on facilitating broadcasters' 
construction of their final, post-transition channel facilities. In 
early August, the Commission issued the final table of allotments, 
which provides over 1,800 television stations across the country with 
their final channel assignments for broadcasting following the DTV 
transition on February 17, 2009. Last week, Chairman Martin circulated 
to the Commissioners an order that proposes procedures and rule changes 
to ensure that broadcasters can begin digital operations on time. I 
look forward to working with my colleagues to provide broadcasters the 
certainty they need to move ahead with the transitions for their 
individual stations.
    The natural next step for the Commission is to review how cable 
multichannel video programming distributors (MVPDs) will carry the 
broadcasters' digital signals after the conclusion of the digital 
transition. At our October meeting, we adopted an order regarding the 
obligations of cable operators to ensure that the digital signals of 
``must carry'' stations are not materially degraded and are viewable by 
all cable subscribers, as required by law. The order requires cable 
systems that are not ``all-digital'' to provide must-carry signals in 
analog format to their analog subscribers. This requirement will sunset 
3 years after the broadcast digital transition hard date, with review 
by the Commission of the rule within the final year. Our decision 
strikes the appropriate balance between ensuring that broadcast signals 
are not materially degraded and permitting cable operators to use their 
technology efficiently to produce both high quality video and high-
speed broadband offerings for consumers. We must now consider the 
appropriate requirements for DBS and other MVPD competitors. I thank 
key players in the private sector for their efforts to find workable 
solutions for the benefit of all the parties, especially consumers. I 
look forward to working with my colleagues on these issues in the near 
future.
    DTV Consumer Education. Both government and industry have begun 
consumer education campaigns about the transition to DTV. At the FCC, 
we have a consumer education website about the transition, www.dtv.gov, 
with helpful consumer and product information. This fall, we have held 
three consumer education workshops to address the transition generally 
and to ensure that senior citizens, minorities and non-English speakers 
are prepared for the transition.
    We are also considering an order regarding what types of consumer 
education efforts the Commission should require of broadcasters, MVPDs, 
manufacturers, retailers and others, including winners of the 700 MHz 
spectrum auction and participants in the Low Income Universal Service 
Program. The order proposes to implement rules suggested by Congressmen 
Dingell and Markey in a letter to the Chairman dated May 24, 2007. I 
have some concerns regarding whether the Commission should regulate 
heavily in this area, given that the industries involved--particularly 
broadcasters, MVPDs and retailers--have an overwhelming economic 
incentive to ensure that the transition goes smoothly, and given the 
enormity of their voluntary consumer education campaign commitments. I 
also have questions regarding whether we can adopt some of the proposed 
regulations consistently with the First Amendment and the Commission's 
limited jurisdiction over some of these entities. Nonetheless, the 
Commission should do all that it can to work with all stakeholders to 
ensure a seamless digital transition.
    Video Franchising and MDU Access. I am pleased by recent actions 
the Commission has taken to promote additional competition among video 
competitors in an already competitive environment. To help create an 
environment where investment, innovation and competition can flourish, 
it is imperative that government treat like services alike, preferably 
with a light regulatory touch. This is especially true given the advent 
of the ``triple play'' of video, voice and high-speed Internet access 
services being offered by cable, telephone and other companies. The 
Commission has recently taken action to achieve regulatory parity 
between incumbent cable companies and new entrants into the video 
markets.
    At our October agenda meeting, we adopted an order that helps give 
many consumers who live in apartment buildings and other multiple 
dwelling units (MDUs) the hope of having more choices among video 
service providers. The order could affect up to 30 percent of the U.S. 
population. The Commission found that contractual agreements granting 
cable operators exclusive access to MDUs are harmful to competition. 
Accordingly, we now prohibit the enforcement of existing exclusivity 
clauses, and the execution of new ones, as an unfair method of 
competition. Although I have some legal reservations about abrogating 
existing exclusive agreements only 4 years after permitting them, I 
agree that increased competition among video providers in MDUs will 
result in better service, innovative offerings to consumers, and lower 
prices.
    Also, at our October meeting, we adopted a video franchising order 
that levels the playing field by extending to incumbent providers many 
of the de-regulatory benefits we provided to new entrants in our first 
order on that issue last December. No governmental entities, including 
those of us at the FCC, should have any thumb on the scale to give a 
regulatory advantage to any competitor. Our latest order will provide 
regulatory certainty to market players, enhance video competition, 
accelerate broadband deployment and produce lower rates for consumers. 
Furthermore, as with our earlier action, I am confident that our recent 
action is fully supported by substantial legal authority.
Wireline Issues
    Universal Service Reform. As I have consistently stated, the 
Universal Service system has been instrumental in keeping Americans 
connected and improving their quality of life. However, it is in dire 
need of comprehensive reform. To reform the system, we must:

        1. slow the growth of the Fund;

        2. permanently broaden the base of contributors;

        3. reduce the contribution burden for all, if possible;

        4. ensure competitive neutrality; and

        5. eliminate waste, fraud and abuse.

    The Commission now has several options squarely before us. We have 
received two Recommended Decisions from the Federal-State Joint Board: 
one, on May 1, 2007, to adopt an interim, emergency cap on the amount 
of high-cost support that competitive eligible telecommunications 
carriers (CETCs) receive for each state based on average level of CETC 
support distributed in that state in 2006; and another on November 19, 
2007, which proposes more comprehensive permanent reform. We sought 
comments on the interim cap recommendation on May 14, 2007, and the 
comment cycle closed on June 21, 2007. I advocate seeking comment on 
the permanent reform recommendation quickly so that we can consider all 
the options to reform the system.
    Furthermore, we have a proposed order that would adopt an interim 
cap on CETCs at 2007 levels. Already this year, the Commission adopted 
a condition in both the Alltel order of October 26 and the AT&T-Dobson 
order of November 15, which subjects these wireless carriers to an 
interim cap. Potentially, 60 percent of the funds allocated to CETCs 
have been capped through these transaction reviews. Accordingly, it may 
make sense to work on permanent reform now in light of the fact that 
Fund expenditures will continue to slow down. Other proposals before 
the Commission are elimination of the identical support rule and 
adoption of reverse auctions. If we complete the comment cycle on the 
Joint Board's recommendation for permanent reform soon, we will be in a 
terrific position to consider the panoply of options during the first 
half of 2008.
    On November 19, 2007, the Commission announced the award of $417 
million for Rural Health Care Pilot Program projects. The purpose of 
these awards is to facilitate the construction of 69 statewide or 
regional broadband telehealth networks throughout the Nation. This will 
not only bring advanced telehealth care to rural areas, but it will 
also facilitate broadband deployment throughout rural America. I am 
pleased to have supported this pilot project and look forward to 
learning from the experience of this program how we can utilize the 
Rural Health Care fund in the future.
    Special Access. On July 9, 2007, the Commission issued a Public 
Notice seeking further comment in the Special Access proceeding. While 
the record contains some data, such as the GAO Study and carrier 
specific examples on a localized basis, we need a more complete record 
of exactly where special access facilities are located on a more 
granular basis before we can determine the appropriate level of long-
term regulation--or deregulation--for special access services. I look 
forward to continuing to work with my colleagues on this important 
matter.
    Forbearance. Closely related to special access is our recent action 
on several forbearance petitions that have required findings on the 
extent of competition in specific special access markets. The 
Commission has tried to strike a thoughtful balance. In the AT&T and 
Embarq/Frontier orders, we found that the number of competitors in the 
broadband services provided by the petitioners warranted limited relief 
from tariffing and discontinuance of facilities requirements. 
Specifically, we granted limited Title II and Computer Inquiry relief 
for existing packet-switched broadband telecommunications services and 
existing optical transmission services. In the ACS of Anchorage order, 
we partially granted relief from dominant carrier regulation of 
interstate switched access services in the Anchorage, Alaska study area 
and granted Title II and Computer Inquiry relief for specified 
enterprise broadband access services in the Anchorage study area. On 
the other hand, we have determined that certain requests for 
forbearance have exceeded the parameters of our authority to grant 
relief in Section 10. We have denied or excluded relief to ACS, AT&T, 
Embarq, Frontier and Verizon for their TDM-based service offerings, 
such as DS-0, DS-1 and DS-3 services.
    On December 10, the Commission unanimously denied Verizon's 
forbearance petitions seeking wholesale unbundling relief in six East 
Coast cities. The petitions were denied due to a lack of evidence 
demonstrating sufficient competition under the Qwest Omaha standard to 
warrant relief from Section 251(c)(3).
    While we're focused on forbearance, on November 27, 2007 the 
Commission took an important step to bring clarity to the uncertainty 
surrounding the forbearance petition process by initiating a rulemaking 
proceeding. Only Congress can amend Section 10, which is simple and 
clear in its mandate; but the Commission can take steps to improve its 
implementation. And that is what we are attempting to do by initiating 
this rulemaking. Among the important issues raised for public comment 
in the Notice are: the specificity required for relief requested by the 
petitioner; the level of justification required for grant of relief; 
and the necessity for affirmative Commission action granting or denying 
a petition. It is also appropriate to examine the effect that 
forbearance petitions have on our broader rulemaking responsibilities. 
I am hopeful that we will evaluate our forbearance regulations in a 
timely manner and implement rules that we find are necessary to improve 
the forbearance process.
    Dominant Carrier Relief for Long Distance Services. In August 2007, 
the Commission granted relief from dominant carrier regulation of the 
Bell Operating Companies' (BOCs') in-region, interstate, long distance 
services. Until this relief was granted, the BOCs were required to 
comply with structural, transactional and accounting requirements in 
Section 272 of the Act. This is a classic instance where regulation had 
been appropriate to protect emerging competitors and consumers, but 
where the relevant long distance market has become sufficiently 
competitive to warrant less onerous regulation, while continuing to 
protect consumers.
    Broadband deployment. In April, we adopted two items that signaled 
the Commission is taking important steps to update and refine our 
efforts to determine the current state of broadband deployment in the 
U. S., including the market, investment and technological trends of 
advanced telecommunications capabilities. In the Data Collection Notice 
of Proposed Rulemaking, we sought comment on how we can further refine 
our information collection on broadband deployment to more accurately 
reflect service to rural areas and to include advanced wireless 
technologies. In the Section 706 Notice of Inquiry, our focus is on how 
to define advanced telecommunications capability, the status of 
deployment of broadband capability to all Americans, the reasonableness 
and timeliness of the current level of deployment, and what actions can 
or should be taken to accelerate deployment. We are in the process of 
reviewing the comments in both of these proceedings as part of the 
Commission's ongoing effort to continue to increase the rate of 
broadband penetration and foster more choices for all types of 
consumers. We should continue to seize every opportunity to move 
America forward in this important area.
    In the meantime, in October, the Commission released its latest 
report on High-Speed Services for Internet Access. This report, which 
reflects the status of broadband deployment in the U.S. as of December 
31, 2006, demonstrates continued acceleration of broadband penetration. 
Specifically, the number of high-speed lines (those that deliver 
services at speeds exceeding 200 kbps in at least one direction) 
increased by 27 percent during the second half of 2006 and by 61 
percent during all of 2006, for a total of 82.5 million lines. The 
number of advanced services lines (those that deliver services at 
speeds exceeding 200 kbps in both directions) increased by 17 percent 
during the second half of 2006 and by 36 percent during the entire 
year, for a total of 59.5 million lines. As for geographic coverage, 
the Report estimates that high-speed DSL connections were available to 
79 percent of the households where incumbent LECs could provide local 
exchange service at the end of 2006, and that high-speed cable modem 
service was available to 96 percent of the households where cable 
operators could provide cable television service. While these figures 
are encouraging, we can and will do more to strengthen America's 
progress in broadband deployment by maximizing competition and 
encouraging investment.
Wireless Issues
    White spaces. I am delighted that the Commission is taking the 
additional time necessary to analyze and field test numerous additional 
prototype devices to operate in the ``white spaces'' of the TV 
broadcast spectrum. I have long advocated use of the white spaces, 
provided such use does not cause harmful interference to others. I am 
hopeful that a flexible, deregulatory, unlicensed approach will provide 
opportunities for American entrepreneurs to construct new delivery 
platforms that will provide an open home for a broad array of consumer 
equipment.
    At the same time, the Commission has a duty to ensure that new 
consumer equipment designed for use in this spectrum does not cause 
harmful interference to the current operators in the white spaces. I 
have enjoyed learning from various parties who are engaged in the 
healthy technical debate surrounding the best use of this spectrum. 
Assuredly, the discussions will become ever more intense as we move 
forward. But, at the end of the day, we will have a resolution. 
Inventors will continue to invent, and a workable technical solution 
will develop. We should let science, and science alone, drive our 
decisions. If we don't pollute science with politics, powerful new 
technologies will emerge, and American consumers will benefit as a 
result. And, who knows? This may spark a new wave of economic growth 
that we can't even imagine right now.
    700 MHz auction. 2008 will soon be here, and the Commission is on 
track to meet Congress' mandate to commence the 700 MHz auction no 
later than January 28. In fact, the auction is scheduled to start on 
January 24, 2008. The Commission spent a great deal of time this spring 
and summer hammering out new service and auction rules for this 
valuable spectrum. After careful deliberation, I respectfully disagreed 
with my colleagues regarding the best path to achieve wireless device 
and application portability.
    My original vision for the 700 MHz auction was for our rules to 
maximize investment, innovation, and consumer choice by promoting 
competition through the crafting of a wide variety of unencumbered 
market and spectrum block sizes. I am concerned that the open access 
requirements set forth in the new rules trade the benefits of rural 
deployment by small and regional licensees, and their strong record of 
providing service to their customers, for--at best--speculative gains. 
Let me be clear: I am not opposed to a winning bidder employing an open 
network voluntarily. I am pleased to learn that several possible new 
entrants plan to participate in the upcoming auction. Like every other 
market, the wireless marketplace will be energized by the positive 
disruption only new blood can bring.
    In the meantime, the wireless marketplace has continued to respond 
to consumer demand by delivering device and application portability. A 
broad array of wireless carriers offers numerous devices that are 
compatible with any Wi-Fi network. This capability allows consumers to 
wirelessly navigate the Internet just as they can on their home 
computer, and download software such as Voice over Internet Protocol 
applications, or popular search engines.
    In early November, the Open Handset Alliance introduced Android, a 
Linux-based software stack that consists of an operating system, 
middleware, a user interface and applications. The Android kit, which 
has been in development since 2006 and is expected to be released early 
next year, will allow software entrepreneurs to freely access the 
source code and customize applications for their individual purposes. 
Most recently, and after almost a year in the making, Verizon Wireless 
and AT&T Mobility each announced initiatives to allow customers to use 
any wireless device and to employ elective applications on their 
respective networks. Sprint Nextel has long operated with an open 
network as evinced by the carrier's supporting ``Java'' applications 
and Amazon's ``Kindle,'' for instance.
    Currently, the Commission's staff is busy analyzing auction 
applications, which were filed on December 3. I applaud and appreciate 
the work of the incredibly hard working Wireless Bureau team, and 
eagerly anticipate watching the auction process unfold.
    Early Termination Fees. In addition to wireless carriers, DBS 
providers, traditional phone companies, and cable providers all 
allegedly assess early termination fees. Earlier this year, Chairman 
Martin indicated his intention to tackle this thorny issue. I am 
pleased that, since that time, the market has responded. For example, 
four wireless companies (Verizon Wireless, and more recently AT&T 
Wireless, T-Mobile and Sprint) have individually announced consumer-
friendly policy changes. I would strongly encourage the stakeholders to 
continue their efforts. The private sector is better at solving such 
issues than the government.
Conclusion
    Thank you for having us here today, and I look forward to answering 
your questions.

    The Chairman. I thank you very much, Commissioner McDowell.
    Today's hearing may be the last opportunity for Senator 
Lott to participate in a Senate hearing as a Senator. And 
therefore, with the gratitude of this Committee for his 
leadership and his counsel, I recognize you, sir.

                 STATEMENT OF HON. TRENT LOTT, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Lott. Thank you very much, Mr. Chairman, for your 
many kindnesses over the years, and for being who you are. You 
are one of our heroes. We all admire you. It's been a pleasure 
serving with you. Your word is your bond, and your courtesies 
are endless. And I appreciate you allowing me to go first 
today. And I appreciate you having the Committee picture taken 
when I could be here, because I've really enjoyed this 
Committee. A lot of people think a lot of the different 
committees in the Congress, the House or Senate, are the most 
important Committee, but I don't believe there's a more 
enjoyable Committee with a wider degree of jurisdiction than 
this Committee, and I have only fond memories of all of my 
experiences here, especially those occasions when I couldn't 
win a vote on the Republican side, so I meandered over to the 
Democratic side----
    [Laughter.]
    Senator Lott.--and was trying to herd cats. It's been a lot 
of fun.
    And I do think that, for me at least, it's very poignant 
that on my last Commerce Committee hearing, we're having a 
hearing in the telecommunications area. It's an area I've 
really enjoyed working in over the years, and was involved in 
reform, and have had opportunity to work with each one of these 
Commissioners in their roles now, and previously, including the 
Democratic members of this Commission.
    I really think this is one of the best Commissions we've 
ever had. Do you disagree? Sure. Do you defend your positions 
vigorously? Of course. But you're all capable, thoughtful, and 
sometimes even listen to us.
    [Laughter.]
    Senator Lott. And so, I admire you all.
    And I'm--I want to say a bit on a personal note, too. A few 
years ago, I guess I was in a position of occasionally blocking 
nominations and messing up nominations, but I also had occasion 
to work with Tom Daschle to get a lot of nominations done. I 
remember, one day we did 81. One day. And one of the ones that 
I turned and supported was Commissioner Adelstein, and he's 
just done a magnificent job. I've been very proud of supporting 
him. He's up for renomination. The White House has sent his 
nomination up here. I don't know if I can influence it now, but 
I hope that, before I leave, our leaders on both sides will get 
together and do a nomination package, and it will include this 
very capable Commissioner, who will continue, I'm sure, to do 
an excellent job.
    So, thank you for allowing me to, you know, make those 
personal notes.
    Mr. Chairman and members of the Commission, last week we 
passed S. 2332, the Media Ownership Act of 2007. My record in 
this area is long, and obviously one that I feel very strongly 
about, so you know how I feel about the FCC moving in this 
area. And I've made all the typical arguments--timing argument, 
localism. I've made clear my concerns about cross-ownership. I 
have real questions about the justification for it and the 
motives of some of those that are trying to merge--not of the 
Commission; I mean, you're trying to have a process that is 
fair.
    It was noted by Commissioner Tate and others that you've 
had lots and lots of hearings. But I still don't see why you 
need to force this thing to a head December 18, not because 
you're going to change a lot of opinions by waiting a little 
bit more, but because you take the argument away. I've tried to 
force-speed things in my life and in this institution. It 
doesn't work. Just a little patience, a little more time. Why 
give us an argument to attack you all? Run the string out on 
localism.
    And it's been educational for me. I think some of my 
concerns, some of my arguments about, you know, localism have 
been addressed, and we haven't lost as much localism as, maybe, 
I thought we had, but I still--really concerned about the 
continued erosion in that area.
    So, I would plead with you to take a little more time, take 
away that argument, and then you're going to probably come to 
the same conclusion, which I will certainly still disagree 
with, and will--from a distance, will be supporting Senator 
Dorgan, still trying to block cross-ownership.
    I thought the reason for trying to get this done was the--
it was tied to the Tribune waiver. I didn't quite get that. My 
argument was--and, by the way, you know, I don't have any 
particular concerns or affection or angst about the Tribune; if 
it's justified, give them a waiver; if it's not, don't. I don't 
think they're tied together. Now you've given them the waiver, 
so what's the hurry?
    So, I think that argument has been pulled away a degree. 
Really simply--oh, and one thing that really confuses me, the 
FCC is worrying about the financial condition of the 
newspapers? What? I just don't quite--I've looked at the law--I 
don't see where this is an area you should be, you know, that 
engaged. It's communications. I don't--I'm not sure that print 
is included in that. But here's the other thing. I don't get 
why Republicans would be crying alligator tears over newspapers 
having problems.
    [Laughter.]
    Senator Lott. What? What are you doing? You know, look, 
they're losing readership because times have changed. It's 
technology. It's also because they give so much garbage, people 
get tired of, you know, putting up with it. In my area, we buy 
them to wrap our mullet with.
    [Laughter.]
    Senator Lott. Do I hope they survive? Sure. But, I mean, 
goodness gracious, I want to make sure we do have diversity in 
media, and diversity in choices, and fairness. And, yes, I do 
think it's important we have the maximum opportunity for all 
sectors of our economy, men and women, minorities, to be 
involved in this.
    So, I just--you know, you have suggested--or it's been 
suggested, maybe, well, we'll limit to, I guess, what, 20 
biggest markets. But I do think there's a lot of loopholes. The 
language is very mushy. I think maybe you've indicated that you 
are willing to make some changes on that, and I hope you would 
do that.
    One final point before I ask a couple of questions--and I 
don't want to take too much time--is the Universal Service 
Fund, too. This is a very critical area in my state, and a lot 
of states. I think we really--Congress needs to decide what we 
want to do in the future on Universal Service. I'd rather you 
wouldn't do it. You know, I--there's no question in my mind 
that, after Katrina--and the Katrina effect--has affected a lot 
of my emotional feelings about a lot of things, but the towers 
that we had in rural and coastal areas in Mississippi, thanks 
to USF and Cellular South--without it, we wouldn't have been 
able to communicate with anybody. And I just--I hope that you 
will be careful about, you know, capping one sector of the 
Fund--section of the Fund, rather than addressing a 
comprehensive package. You've already done it. Basically, you 
kept 52 percent. And I hope that you'll ease up on that.
    Now, just a couple of questions before I yield my time. Let 
me--Mr. Chairman, to you, you had indicated that you would be 
willing to work to close the loopholes in this media cross-
ownership proposal that exists for smaller markets. Would you 
confirm that again, and, maybe, kind of, suggest what some of 
those solutions might be?
    Mr. Martin. Sure. Thank you for the opportunity.
    I certainly am happy to end up trying to clarify and put 
more teeth in the concerns that have been raised by some of the 
Commissioners about the criteria that we would consider in the 
smaller markets, where there's not a presumption in favor of a 
waiver, or there's a presumption against that. And one of the 
criteria, for example, is whether there is going to be new news 
that's going to be added, is a newspaper buying a broadcast 
property that doesn't do any local news now? And I've said that 
I think one of the concerns that's been raised by some of the 
other Commissioners is, there's no specific amount of news 
you're talking about. And I said, I'm happy to end up--and I've 
had discussions with all the Commissioners about that--I'm 
happy to put a specific amount of criteria that we would expect 
on a weekly basis that someone would be adding local news to 
that broadcast property if they were going to be seeking a 
waiver of that. So, yes, I am committed to end up trying to 
work with my colleagues to make those stronger, and am happy to 
end up doing it. I think that's one of the specific examples 
that I'd be willing to do.
    Senator Lott. Well, in the future, I'll live more and more 
of my time in Jackson, Mississippi; I just want to make sure 
there's no waiver granted in Jackson.
    [Laughter.]
    Senator Lott. I want as much diversity in my choice of 
media as I can get down there.
    Commissioner Copps, on this USF issue, and the fact that, 
basically, the mergers have already--that have been capped, 
as--are already taking, what, 52 percent of that wireless fund. 
What--how do you see us proceeding in this USF area?
    Commissioner Copps. Well, what I'd like to do, Senator, is 
to have Congress and the Commission working together, because I 
think we are both part of the solution. We need a systematic, 
holistic approach, not just a little item here, a little item 
there, a pick-and-choose. I've always thought, if we had 
broadband as part of the system, contributing and receiving, if 
we got rid of the identical support rule, or modified it 
significantly, we really did the audits, that we'd be pretty 
far down the road, but if we had Congress coming in and saying 
we could collect on intrastate, as well as interstate, I think 
we would have the Universal Service Fund fixed for a pretty 
long time. But that's going to take a cooperative effort 
between us. But I think that should be done. I think it's 
urgent.
    I'm pleased that the Joint Board, at least, has put out a 
proposal that looks comprehensive. I hope it will be put out 
for comment. It's been sitting down at the Commission; it ought 
to be out for public comment, so you can see it and we can see 
it, and then, next session, maybe really get the ball moving on 
it.
    Senator Lott. I'll address this question to Commissioner 
Adelstein, but it really should go to the Chairman, or all of 
you. A number of us--Senators Rockefeller, Dorgan, Snowe, 
Smith, DeMint, Thune--sent a letter, February the--I think it--
was it--regarding the letter recently--November 15--regarding 
this post-February 17, 2009, dual-carriage obligation. We 
haven't gotten a response. Can you give us some idea of when 
we're going to get a written response about that? And are you 
considering--reconsidering its--the position regarding the 
waiver process?
    Commissioner Adelstein. We did an order on dual carriage 
that decided that there was going to be a requirement that 
cable companies carry both the digital and analog signals of 
digital broadcasters. I think that it's important that, as the 
digital transition goes forward, we make sure that all cable 
customers can continue to get access to broadcast signals. We 
don't want anybody to be cut off. And we took care of that. The 
cable industry worked with us to come up with a way of ensuring 
that, for 3 years, that would be accomplished.
    Senator Lott. Commissioner Tate, good luck. Keep these guys 
under control. I've got faith in you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Mr. Chairman, in a recent GAO report on the digital 
television transition, it appears that you took umbrage at the 
GAO's decision to provide a link to a 96-page written response, 
rather than printing the response in its entirety. And, 
particularly, I want to quote from your letter, which states, 
``Over the course of the past year, the Commission has 
committed extensive resources to working with GAO on this and 
other matters. We estimate that the Commission has devoted more 
than 6,100 staff hours responding to the GAO's request, and has 
provided more than 13,650 documents to the GAO. We estimate 
that American taxpayers have paid more than $500,000 for the 
Commission to respond to these requests. In light of the costs 
incurred to respond to GAO's requests, as well as the GAO 
standard cited above, the GAO should publish the agency's 
unedited written comments in its final report.''
    Mr. Chairman, I find the tone of that paragraph 
regrettable. GAO, like the FCC, is a creature of Congress, and 
I'm concerned that your response to the GAO not be read in any 
way to argue against the right, and indeed the obligation, of 
the Congress to exercise its oversight responsibilities. As a 
result, Mr. Chairman, I would like your assurance that the tone 
in your letter does not reflect an unwillingness to comply with 
future investigations by GAO or any other Congressionally 
directed agency.
    Mr. Martin. Of course it will--of course the Commission 
will end up complying with any investigation by GAO or any 
Congressional investigation. What I was concerned about, and 
what I was upset about, was not their willingness to publish it 
on the website; at the time, they had not offered that, when I 
submitted that letter. What I was concerned about was, we had 
spent an enormous amount of time providing them an excessive 
amount of information on the details of both our technical and 
our policy decisions that we're putting in place rules and 
responsibilities for the broadcasters in the industry to move 
forward with the DTV transition; and, as a result of that, I 
met with the auditor myself and said I didn't appreciate his 
conclusion, after talking most extensively about our work with 
NTIA on the public awareness campaign, to conclude, in the 
concluding paragraph, that we had no plan on a technical or 
policy basis, when we had done hundreds of rulemakings on those 
issues. And I said that that was not an accurate assessment. 
And I told him that personally. I said that if that was going 
to be their conclusion, that they had an obligation to give us 
an opportunity to respond and tell everyone about the many 
policy and technical rulemakings that we had completed--he said 
that he thought that was a fair point, and he would review it. 
I was then told, afterwards, that they would review--either 
consider taking it out of their conclusion or publishing our 
response. And I said that this was important from the staff's 
perspective who have been planning this DTV transition for 
many, many years and who felt that their conclusion, without 
any backup to that conclusion, short-shrifted the work that 
they've been doing for the last decade on the transition.
    He then informed us that they would not publish our 
response, because it was too expensive, because there were too 
many pages to our response, at which point we offered to pay 
for the GAO's publication of our response, ourselves, out of 
our budget. And then we were told no, and there was no offer to 
put it on the website. So, at that point, yes, I was frustrated 
that the Commission's opportunity to respond to allegations 
that I didn't think were founded in the report were not 
included. I think--and, as I discussed with the auditor at the 
time, the concerns he might have about the public awareness 
campaign were separate from whether we had, for example, given 
out the licenses--the digital television licenses for the 
broadcasters to be able to make the transition, whether we had 
put all the technical and policy rules in place, which I think 
the Commission has done. There's a lot of concerns and 
legitimately so, about whether the public is aware of what is 
about to transpire, and how we can make sure that they are 
doing all that they need to do to make the digital transition. 
But I think that the allegations that the Commission had not 
done the technical rules were not fair, and were not actually 
founded by the study, themselves. And the only response that 
was included in their response to my letter was, ``Well, we're 
doing a separate report on the technical issues, and we'll get 
into more details of that there.'' And I thought that, as a 
result, of course we'll end up cooperating, but I think it's 
important that the Commission's work that has been done is 
included.
    The Chairman. Thank you very much.
    Senator Stevens?
    Senator Stevens. Thank you, Mr. Chairman.
    It's nice to have you back. I don't think we've had a 
meeting with the Commission for 10 months. I do echo, to a 
certain extent, what Senator Lott has said. The bill that I 
introduced in 2003 would have banned newspaper cross-ownership 
of air media. It's been my opinion that mergers take place 
because of advertising revenue and decreased service. They, 
particularly, decrease the capability of these air media to 
have--and desire these air media to have local reporters to 
cover local activities once they're merged with the nationwide 
air media, that they--the newspaper process, I think, 
reflects--I mean, their situation reflects the decline in news 
being--to be presented through them of local concern. And I--we 
see advertising revenues going down, to the newspapers. 
That's--the main reason is, local people don't pay any 
attention to them anymore, because they don't contain, really, 
accurate local news.
    But, in any event, I do hope you'll listen to us. It would 
be my feeling that that December 18 date ought to be postponed 
until we can get some better understanding of where we're going 
on this. We can't--I don't think we can get any bill passed 
here before we leave, and I would hope that you would listen to 
us, even though I think that you probably have--Mr. Chairman, 
have the majority to do what you want to do. But I do think we 
ought to take a little more time on that cross-ownership 
business.
    Let me ask this. One of my major problems, of course, being 
from where--the state that I represent that's, after all, one-
fifth the size of the United States, we have been left out of 
the expansion of media in the past, but this digital transition 
presents some very interesting new opportunities for us, but 
also some very unique needs. We need to make sure that the--
that we do have a smooth transition in rural America, is what 
I'm saying to you. I think, if you look at the small cable 
companies, for instance, the DTV transition would mean that 
they would have to carry both the analog and digital signals, 
dual-carriage, for their over-the-air broadcasters, but many of 
them don't have that capacity. And I think we ought to take a 
good, long look at what's going to happen to the small cable 
people, as far as the transition is concerned.
    I do understand you've provided a waiver procedure. Could 
you explain that to me? For instance, we have two small cable 
companies in Alaska--Haines and Skagway. They have a situation 
where, if they have to have dual-carriage, they--I'm told 
they'll go out of business. What is going to be the policy with 
regard to that situation?
    Mr. Chairman?
    Mr. Martin. Sure. Well, I think that it's important to 
understand, first, that the Commission has not been changing 
its policy in regards to whether or not there'll be--or the 
concerns that have been raised about the extra capacity that 
might be required of any cable operator, small or large. I 
think it's important to understand that today a broadcaster 
puts out an analog signal, and the cable operators are required 
to carry that analog signal to all of their customers, both the 
analog customers that they have and the digital customers, the 
one who have set-top boxes. And they do that by carrying the 
signal either in two forms today or by giving their customers a 
set-top box that can read the analog signals.
    The requirement after the digital transition is no 
different. They're still required to take a broadcast signal 
and deliver it so that their customers can watch it, just like 
they do today.
    What we actually said is that the transition of the 
broadcaster from putting out an analog signal to a digital 
signal shouldn't be one that is an excuse for the cable 
operator to no longer carry that signal to some of its homes. 
They should continue to do what they're doing today with the 
digital signal.
    What we have said is that, if a cable operator comes to us 
and says that they, for example, weren't doing that to some of 
their current homes, and that this would cause a burden on 
them, that's different than what they're doing today; we would 
take that into account; for example, if they didn't have enough 
capacity. But the rule we actually put in place--what you're 
referring to as the dual-carriage rule--actually doesn't impose 
or take up any more of their capacity after the digital 
transition as what they have been using to deliver those 
signals to everyone's home today. And I think that the 
arguments, that it's going to take up more capacity on their 
system, are inaccurate. Our viewability requirement that we put 
in place just says they don't get any capacity back because the 
broadcaster has moved from analog to digital. They still have 
to carry it to all of those homes. If someone can come to us 
and show that it does create a burden for them, and they don't 
have that capacity, we'll, of course, take that into account, 
and that's why we put the waiver process in place.
    Senator Stevens. But I wonder whether you have the 
capability to listen to all these small carriers on a waiver 
basis, and I would hope you'd take a look at the waiver 
procedure so that it would not, really, put an extra burden on 
these small companies to come back here and make an appearance. 
And it does seem to be an extraordinary burden for these small 
companies to seek a waiver under the current situation.
    Let me go to another subject. That is, we have--we created 
a Congressionally mandated working group to recommend technical 
standards for wireless alerts, and I understand that is still 
before you. We--that was part of our port security bill last 
year. Senator Inouye and I and Members of the Committee worked 
hard on that. I do want to know, When will that network become 
a reality?
    Mr. Martin. Well, there were very strict timelines that 
were put in place in that legislation, that the Commission 
would have a technical working group, they would make 
recommendations to the Commission, and the Commission would 
adopt those recommendations. I think that we're on track to 
make those deadlines. The recommendation came in from the 
Technical Advisory Committee recently. There's an item in front 
of the commissioners for us to consider putting that out for 
further notice and comment so we can adopt those technical 
standards. I think that we'll end up doing that in the time-
frame that was required by the statute.
    I can't give you an answer for sure on whether or not, or 
when, that will become a reality. Part of the legislation was 
that that was still the option of the wireless industry, to opt 
in to providing those warnings; I don't know for sure whether 
any of the industry will actually opt in to providing it or 
not. I actually am, obviously, hopeful that they do. And I'm 
sure--I think Congress is, as well, but I can't give you a 
guarantee of whether that will happen or not.
    Senator Stevens. In terms of the--this transition, the 
digital transition, we have concerns that--particularly in 
Alaska, that the rural people, particularly village people, 
will not have an opportunity to, really, be informed about this 
transition. And I know we've provided a $40 voucher to help 
them get it, but that doesn't help them get it when they're not 
on a road system, they're on a--really, in very isolated places 
throughout the country. What is going to be done about those 
people, as far as the transition? Any of you particularly 
working on the rural situation?
    Mr. Copps?
    Commissioner Copps. Yes, if I could answer that, what you 
have to have there is outreach. I recently had the opportunity 
to go to the United Kingdom, where they're doing a transition 
to the digital television system between 2007 and 2012. And 
they go in to rural areas and all the areas. They contact each 
household at least twice, personally. They will help the aged 
and the handicapped to hook up the equipment to get the job 
done.
    The important part is outreach. In a country of 60 million 
people, they're spending $400 million to contact every 
household twice, to do consumer surveys, and they do it town by 
town, region by region, handouts, public opinion--not ``public 
opinion,'' but surveys to see how people reacted, and all.
    Here, we're going to pull the lever one day, February 17, 
2009, and hope to gosh that everything goes right. And it's 
never going to happen. We can have more likelihood that 
there'll be less disruption if we really start taking this 
seriously, but we ought to be doing some demonstration 
projects. Why can't we do a demonstration project in rural 
Alaska or West Virginia or any state? Why can't we pick a city, 
pick a town? Some of these digital broadcasters are ready to 
broadcast. Because otherwise we're just asking for trouble.
    As I said in my statement, I think this will be the 
granddaddy of all consumer backlash issues, when those TV sets 
go blank. There's too many questions still out there. You 
mentioned the small cable operators. We tried to provide them 
some specific relief, instead of the questions of the waivers. 
We still haven't really teed up DBS. The people who aren't into 
local-local on DBS, they're getting their local news on rabbit 
ears, we can't tell them that everything's fine as long as they 
have satellite, because they're going to lose their local. So, 
we have got to get a coordinated program.
    I was part of the Y2K program in the previous 
administration, and I know what a program looks like. It has 
leadership, it has coordination, and it has outreach. And 
this--we don't have that right now.
    Senator Stevens. Well, that may have been our mistake in 
not earmarking some of that money for that transition, beyond 
just the vouchers. The money is earmarked, although there is a 
cascading of that money, if it's enough. I think there will be 
some money available for that to take place. Now, that problem 
of allocation is something we could address here.
    I do believe you all should help us determine what is 
required to get to rural America and keep rural America 
informed. The British system is, you know, dealing with a small 
island. My state's about ten times the size of Great Britain. 
You know, you can't use Great Britain as an example with me. 
I'm sorry; you're a great friend, but I--that won't work. There 
has to be something beyond the Federal Government dealing with 
this, and I think it ought to be cooperation with the industry 
and cooperation with the providers of the digital sets. And 
there should be a plan. I do agree. I hope that you all, 
really, will reconsider how a--get a plan for rural America. It 
does not exist now, and it must exist. So, that's where the 
hell's going to come from when those sets go blank.
    Commissioner Copps. But I think you're right, the point is, 
someone has to be in charge. And it doesn't have to be a 
federally dictated program, it has to be a public-sector/
private-sector partnership. But that private sector needs to 
know who in the government is running the government part of 
it. And that's what we're lacking.
    Senator Stevens. We have to have up-front money, and that's 
a mistake. Probably, the mistake is right here, in allocating 
that money the way we did, but we were interested in making 
sure that everyone had access to a--the black box. But the 
black box is not going to do you any good unless you know how 
to use it, and I do believe we ought to have some national 
system to make sure everybody understands that.
    And, by the way, the $40 may not be enough. In some areas, 
it may cost a lot more to get that box to those people. I--we--
I would urge you to give us some advice on what we should do.
    Last--I'm taking too much time--we have, I understand, a 
threat about the discontinuing of some of the national calling 
cards in our state alone. Now, I thought we worked it out so 
that we had a concept that the same rates would apply 
everywhere on everything. Are you going to permit calling cards 
to be available only in 49 States?
    Mr. Martin. No. And I think you're absolutely right, that 
the rate integration requirements in the law say that they've 
got to be providing that to all 50 states, and----
    Senator Stevens. But that was----
    Mr. Martin.--with no exceptions.
    Senator Stevens.--well, that's what's really started the 
whole thing, back when Senator Inouye and I cosponsored that 
resolution about Universal Service making certain that we had 
ubiquitous service all over the country available everywhere, 
no matter where they were, in terms of communications. Now, the 
calling card is part of that. I hope you will carry--you'll 
stick to that and tell the companies: if they issue those 
calling cards, they must issue them in all 50 states. And I 
would hope you'd take action against anyone that doesn't.
    Mr. Martin. Yes, sir, we'll follow up on that--because, 
that's right, they are----
    Senator Stevens. Thank you, Mr. Chairman.
    Mr. Martin.--they are required to do that everywhere.
    The Chairman. Thank you.
    Senator Rockefeller?

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman.
    I want to, actually, just, sort of, make a few comments. 
Maybe questions, maybe not.
    First of all, you're one of the most powerful groups 
around, and the American people don't particularly know that. 
And yet, you affect the way this country is going, which is not 
necessarily in a great direction.
    Before I start, I want to thank the Chairman and others for 
the Rural Healthcare Program that the Chairman mentioned. That 
was actually part of what Olympia Snowe and I contemplated, 
back in 1996, when we did the original Snowe-Rockefeller Act, 
or whatever it was. And that was meant to be part of the 
Universal Service Fund, and it never emerged, it's been lying 
fallow all these years. And I give the Commission tremendous 
credit for now breaking it out and putting it across the 
country, because it changes the lives of people in 
extraordinarily rural places, and allows them to get medical 
decisionmaking and imaging on a long-distance basis. And so, I 
thank you very much for that.
    Now, from the bills that they pay for phone and cable, to 
their ability to reach public safety in times of need, from the 
content of what gets broadcast into the living rooms of their 
homes, to the broadbrand networks that can bring equal 
opportunity to our largest cities and smallest rural towns, you 
oversee everything. The decisions you make are absolutely vital 
to this Nation's future. Because we entrust you with these vast 
powers, we also expect a lot from you. And should. Yet I, for 
one, am growing increasingly concerned that the FCC is not 
focused enough on making sure that consumers, in fact, as some 
of the Commissioners testified, have real choices in 
communications, that the competitive marketplace exists, and 
that companies' public-interest obligations, which I have 
always held to be very sacred, has been washed by the way.
    Americans deserve public-interest obligations from 
broadcasters, and they're not getting it. And we used to--we 
used to talk a lot about it. We used to do it. We don't, 
anymore.
    Over the last 8 years of this Administration, the FCC's 
general presumption has been to deregulate. I agree with the 
comments on December 18, the deregulation of the communications 
industry. We were told that, by setting on a deregulatory path, 
consumers would have more choices. Well--they would also have 
lower prices, and they would have greater opportunities. Now, 
deregulation is not a bad thing, nor is regulation a bad thing. 
But I believe it's time to chart a new course, Mr. Chairman, 
because this one-way deregulatory policy has shortchanged too 
many consumers, and it hurts, in a modern world. I fear that 
communications policy is following in the footsteps of rail 
policy in this country, and that's not a good thing to come 
from me, because that's a 22-year fight, where I've made very 
little progress, and I don't intend to repeat that experience.
    Deregulation and consolidation was great for railroads' 
bottom lines, it was awful for customers and for consumers, be 
they companies, people, whatever. The Surface Transportation 
Board is supposed to protect the interests of consumers and 
rail customers, but it does not, and never has, and has never 
worried about it, and has made no pretense of not doing it, and 
have let all of the excuses about revenue inadequacy that the 
railroads bring just float right by them, pay no attention to 
them. The STB protects the interests of the railroads that 
they're supposed to regulate.
    I'm becoming increasingly concerned that the FCC appears to 
be more concerned about making sure that policies they advocate 
serves the needs of the companies that they regulate and their 
bottom lines, rather than the public interest. We cannot allow 
that to happen.
    Now, it's very interesting to listen to all--the five of 
you, because they're extremely different opinions, and I assume 
there's a lot of turbulence and argument. And I know that. But 
there's not, sort of, a clear direction.
    Mr. Chairman, I believe that this Committee should spend 
next year developing an FCC reauthorization bill that addresses 
the structure of the agency, its mission, the terms of the 
Commissioners, and how to make the agency a better regulator, 
advocate for consumers, and a better resource for Congress.
    In 2009, we're going to have a new Administration. In all 
likelihood, we will have a new Chairman. We have two pending 
FCC nominations. Without passing judgment on any of the 
nominees or Commissioners, I believe that it's best to postpone 
action on the nominees until a new Administration is 
determined. I believe that we can spend 2008--because it's 
going to be a very difficult year to get anything done at all, 
so it's a very good time for us to be able to think through 
exactly what the FCC is, what we want from it, and then 
proceed. So, I mean, it's really about the reorganization of 
the agency and to give the new Administration a chance to put 
its mark on the communications policy.
    I don't know, I just--there are so many places that just 
don't have service, and, because telecommunications is such an 
erudite subject, people don't really know a lot about it. Now, 
they did when some 34,000 screens went blank in West Virginia, 
and then they knew a great deal about that particular subject. 
But what we seem to do here is, we pick on particular parts of 
regulatory policy, or, particular parts of what you do, but we 
don't look at the whole picture, the whole direction. And 
that's what I think we should be doing next year.
    Now, rather than arguing over process and personality, I 
think we'd do much better to urge the FCC to get back to work 
on the issues that matter to consumers. And they're the same 
basic ones that have always been there and which are sometimes 
handled, and mostly not. One, access to affordable broadband. 
Second, high cable bills. Third, inappropriate content being 
broadcast into their homes. It's very strange and upsetting to 
me that, when that subject comes up in this Committee, that 
there's very little sympathy toward that. First Amendment is 
mentioned, and all the rest of it. And, in the meantime, 
there's degradation taking place within values and structure of 
families. And I think a lot of that comes directly from 
television. And over content, you have the ability to regulate 
it; you do not over violence, but that can be changed. Fourth, 
I think strong consumer protection for wireless consumers is 
essential. And then, finally, I think Universal Service is the 
bottom line on everything. Ideas of capping it are outrageous. 
It is the only chance that Americans have to make their voices 
heard and to get access to telecommunications. This isn't 
happening in parts of Maine, it's not happening in parts of 
West Virginia. The talk from telecommunications companies is 
magnificent, they have huge press conferences, announce huge 
broadband programs, which, for the most part, just follow 
business lines and profit-making lines. And, in some cases, 
they'll go into a rural county and do a rural county, and then 
you, sort of, feel good about that. But, on the other hand, 
it's just one rural county out of 55 in West Virginia, and then 
you look closely, and then you find that the place where you 
were a VISTA volunteer in that county is not covered because 
it's too remote.
    So, I mean, I just think we have to take a whole new look, 
Chairman Inouye, at the FCC, and our obligations, their 
obligations, what we can do about it. I'm not happy with what's 
happening. Yes, I'm upset about media consolidation. It's 
causing havoc in our state, none of it helpful. And, actually, 
I was very interested--and I won't ask this question, I'll just 
pose the fact--that some of the Commissioners were talking 
about the enormous amount of communication that went back and 
forth. I think Commissioner Tate was saying hundreds of 
thousands of views and this and that. Commissioner Copps was 
saying, ``Well, we really haven't heard much at all.'' And what 
that does is, just gives me a sense of discontinuity and lack 
of common purpose within the FCC. Yes, you're individuals, 
you're three-two in your political division, but this is just a 
little bit more important than all of that. And so, I propose 
that, next year, we get very serious about reforming and making 
the FCC what it should be.
    Thank you, Mr. Chairman.
    The Chairman. I can assure you it will be done.
    Senator Kerry?

               STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. Thank you very much, Mr. Chairman.
    I think Senator Rockefeller obviously raised a lot of very 
important points, a couple of which I want to, sort of, pursue 
in the form of a question, if I can, a little bit.
    Commissioner Copps, in response to--I mean, I heard 
Commissioner Tate talk about the period of time that's been 
taken, the numbers of witnesses that were heard, the ten 
studies. I've also heard people call into question the 
propriety of those studies, and most of the information of the 
witnesses appears to be loaded against the decision that the 
Commission appears to be moving on. Can you comment on that? 
Can you help the Committee to understand why you or 
Commissioner Adelstein have a problem, perhaps, with the 
process, to this moment?
    Commissioner Copps. Well, I think you have to start off 
with the premise that the industry that we are looking at here 
is probably the most important and influential industry in the 
United States of America, from the standpoint of influencing 
our culture and nourishing our democratic dialogue. So, we need 
to take the time and ask the questions. And I think----
    Senator Kerry. Are you suggesting that it hasn't adequately 
been done?
    Commissioner Copps. Yes, I am--I'm not just suggesting 
that, I'm stating it outright. I think, when you're looking at 
an industry that controls half a trillion dollars of public 
airwaves, and we're looking to see the future ownership pattern 
of this, and who's going to have access to it, it doesn't 
impress me to have six hearings around the country and then we 
ignore a lot of the public comment, it doesn't impress me when 
you say we spend two- or three- or four-hundred thousand 
dollars to come to terms with that. When I worked up here, I 
remember, any industry that came in and wanted us to do 
something would always be brandishing a million-dollar or a 
two-million-dollar study, or something like that, for a much 
more narrowly focused type of exercise. So, this is really big-
ticket. And yes, we did some studies, and yes, there was some 
initial contact about where those studies should go, but that's 
not where the studies went. They weren't as targeted. And so, I 
think the process was deficient, and I think we are leaving 
these huge problems that have been pending even longer than 
media ownership--minority ownership, public-interest 
obligations, localism--leaving those for another day and 
rushing ahead to encourage more consolidation that has caused 
those other problems in the first place. So, I think the 
process has not been a good one.
    Senator Kerry. Now, Commissioner Tate, you, in your 
testimony, said very clearly, I think I quote, that ``a modern 
communications system is critical to our country.'' We have 
gone from fourth to, depending on the study, 16th to 21st in 
broadband penetration in our country. That's obviously, on its 
face, moving in the wrong direction. Other countries have far 
more efficient, and have put far more efficient systems in 
place. You can go into a field in some countries, in Europe and 
elsewhere, and sit there and download into your computer at a 
rate that is unprecedented, and you can't even do it in major 
cities in America. Shouldn't that be the primary focus of the 
Commission right now, reaching all Americans with modern 
communications, not necessarily intervening in a dispute 
between owners over consolidation? Consolidation certainly 
doesn't do what broadband would do for the country.
    Commissioner Tate. Certainly, Senator Kerry, I agree that 
broadband is crucial to all areas of our economy.
    Senator Kerry. Well, why isn't there a plan in place, after 
all these years, to make it reach everybody, as the President 
said in 2004? He said, we will have it universally accessible 
by 2007. It's now the end of 2007, and there's still no plan.
    Commissioner Tate. Well, it's interesting that, in many 
parts of the country--for instance, I think that you probably 
know about the ConnectKentucky example, where, by the end of 
this year, the Commonwealth of Kentucky, which is fairly rural 
and poor, will have broadband access across the whole state. My 
home State of Tennessee is also involved in that same 
initiative, called Connected Tennessee. So, I think that in 
many parts of the country, there is a lot of leadership and 
there are a lot of ideas. Obviously----
    Senator Kerry. Regional and local, by and large. Would you 
say there is a national plan that's emanating from the FCC and 
from the----
    Commissioner Tate. Well, and, I think, through many of our 
other items that we take up, whether it's opening our video 
franchising so that we can get more competitors who can then 
also be broadband providers.
    Senator Kerry. Well, let me, kind of, get to the nub of 
this, if I can. Senator Lott, Senator Stevens, Senator Inouye, 
others on the Committee, of long experience on this Committee, 
editorial comment across the country, countless numbers of 
organizations, countless numbers of witnesses have all objected 
to the way the FCC is about to proceed, Mr. Chairman. We have 
actually passed out of this Committee a request to have an 
extended period of time now to try to complete the localism and 
diversity issues before you consolidate.
    Now, who is it who created the FCC, Mr. Chairman?
    Mr. Martin. Congress did.
    Senator Kerry. And Congress created the FCC for what 
purpose?
    Mr. Martin. To regulate the telecommunications and media 
areas.
    Senator Kerry. In the interests of the American people.
    Mr. Martin. In the public interest, yes.
    Senator Kerry. Correct. For their safety, security, and for 
other purposes, correct?
    Mr. Martin. That's correct.
    Senator Kerry. And the Congress has expressed its will here 
with respect to this Commission's potential action, has it not?
    Mr. Martin. This Committee has passed a bill out of the 
Committee that says that there should be a new process put in 
place for our media ownership reviews. Congress----
    Senator Kerry. And you're hearing from a bipartisan chorus, 
are you not----
    Mr. Martin. Congress----
    Senator Kerry.--that----
    Mr. Martin. Congress also expressed its will in 1996, where 
they required us to undergo a biannual review of our media 
ownership rules and to make any changes in those rules when we 
find those rules are no longer necessary.
    Senator Kerry. Yes.
    Mr. Martin. So, there's also that part that we have an 
obligation to do, as well.
    Senator Kerry. But, nowhere in the FCC rules, either in 
1934 or in 1996, is there anything that suggests that you have 
a rationale or a motivation to make a decision that saves 
newspapers. I mean, you've come into this Committee today, and 
the first part of your testimony was an articulation of the 
trouble the newspapers are in. Can you show me--I mean, I went 
back and looked at it--can you show me, here, where there's any 
mention of the word ``newspapers''----
    Mr. Martin. The----
    Senator Kerry.--in the 1996 or 1934 Acts?
    Mr. Martin. I think we have an obligation to understand 
what the impact of some of our rules have on the industries 
that we regulate, including when we put in place the rules back 
in the 1970s, they prohibited a newspaper from purchasing a 
broadcast property, the impact that that may have had 
inadvertently, on newspapers. And I----
    Senator Kerry. But the purpose of that was not with respect 
to the regulation of the newspaper. The purpose of that was 
with respect to the consolidation of power in the dissemination 
of information.
    Mr. Martin. I think that's right. And that's the reason why 
I think----
    Senator Kerry. Well, what does that have to do with people 
being fired or with loss of reporters or with the economics of 
a newspaper?
    Mr. Martin. I think it's also in making sure that the local 
news-gathering is occurring, and robust. And I actually think 
that the Commission has an obligation to understand what the 
impact of its rules are. And I think, in this instance, we do 
have an obligation to make sure and balance the importance of 
independent voices in the local community, which the Commission 
has under its precedent, traditionally looked at being beyond 
just the broadcasters, but also the newspapers and other 
independent voices.
    Senator Kerry. Well, let's get to that. If that's true, and 
that is your obligation--and I believe it is, part of it--but 
it doesn't go to the question of cross-ownership. The question 
of cross-ownership is to fulfill the larger obligation of the 
FCC to protect the sourcing of information to the American 
people so that you don't have a concentration of power.
    Now, data in the official FCC record, particularly gathered 
from the 2000 Section 257 studies, indicates that the primary 
factors influencing female and minority broadcast ownership are 
media market concentration, access to capital and equity, and 
access to deals. And as the markets become more concentrated, 
the cost of stations as acquisition targets become artificially 
inflated, driving away potential new entrants in favor of 
existing large chains. So, in effect, the concentration has the 
effect of diminishing the ability of smaller and single-station 
owners to compete for advertising and programming contracts. 
So, you're in the middle of an analysis of this--the diversity 
and the localism. And, notwithstanding that your responsibility 
is to the public to make sure that diversity and localism are 
well served, you're about to make a decision, for no--
absolutely understandable rationale, and against the will of 
Congress and most of the witnesses, to actually increase the 
concentration, which will make worse the localism and diversity 
issues, without even having completed those studies.
    So, my question to you is, why would you not--would you 
agree, today, in the face of those realities and many more--I 
can go on about what happens to the concentration and 
diversity--would you agree with the opinion expressed from 
Senator Lott, Senator Stevens, the Chairman, Senator 
Rockefeller, and others, to postpone this decision from several 
days from now and allow these next studies to take place and 
complete the diversity and complete the localism analysis? 
Would you agree to that?
    Mr. Martin. No. And, if I can respond, I'm not sure I agree 
with some of the other statements that were made in the 
beginning, before you got up to the question, as well. But I--
--
    Senator Kerry. Well, what is so----
    Mr. Martin. But I----
    Senator Kerry.--compelling--what is so----
    Mr. Martin. But I----
    Senator Kerry.--compelling that you have to move in several 
days?
    Mr. Martin. If I can respond, I think that there are 
several concerns that I would end up having with some of the 
statements you've made.
    First of all, in characterizing the overall consolidation, 
that may have occurred since the 1996 Telecommunications Act 
was put in place, we're not actually lifting any of those other 
rules as far as allowing any other--further consolidation on 
radio, on television, at the national or the local level.
    Senator Kerry. I know----
    Mr. Martin. We are concerned about----
    Senator Kerry. Yes, I know that.
    Mr. Martin.--the cross----
    Senator Kerry. I know what you're doing. You've got 20 
cities that you targeted, but you also have a waiver process in 
here. That----
    Mr. Martin. No----
    Senator Kerry.--waiver process would allow you to make any 
kind of political decision you want with respect to the waiver.
    Mr. Martin. The Commission has always had a waiver process. 
People can always come in with a waiver. Indeed, I think it's 
actually tightening it, and some of the comments that were 
filed in response to what I have put out actually said that the 
waiver process with a presumption against granting waivers is a 
tighter standard than we currently have when a waiver is 
provided.
    Senator Kerry. What do you say to that, Commissioner Copps?
    Commissioner Copps. I don't think we even have something 
that would qualify for the term of ``waiver.'' This is just 
overcoming a finding, with some very loose criteria. Is there 
financial distress? That's undefined. Will there be more local 
news produced? Is that 2 minutes or 5 minutes or 10 minutes? 
So, it's just so porous as to be, I think, meaningless.
    Senator Kerry. What do you say to that, Commissioner 
Adelstein?
    Commissioner Adelstein. I would agree. I mean, another one 
of the conditions is financial condition. What does that mean? 
There's also no definition, in terms of what level of 
concentration of the market wouldn't be allowed. There are no 
quantifiable standards anywhere. So, three Commissioners, at 
will, could do a waiver in any market--no matter how small--
including Jackson, Mississippi, or anywhere in West Virginia or 
western Massachusetts. I think it opens the door everywhere. We 
need to tighten those standards.
    Senator Kerry. Commissioner Martin, what I quoted to you, 
in terms of what happens to the concentration of the market, 
is, in fact, the official FCC record, which you're choosing to 
ignore.
    Mr. Martin. No, we're not ignoring it. I think that there's 
no question that the concentration that has occurred makes it 
more difficult for small businesses, including minorities and 
women, to be able to be active and involved in the media 
ownership.
    Senator Kerry. So, why would you not want to wait until you 
understand the impact better of the diversity and localism 
analysis? What is so compelling----
    Mr. Martin. I actually----
    Senator Kerry.--in the face of all of the other imperatives 
of communications in America, to move, you know, several days 
from now rather than 180 days from now, 90 days from now?
    Mr. Martin. We have not just proposed a change to the 
newspaper/broadcast cross-ownership rule. I have also put forth 
proposals that would address both the localism study that this 
Congress has been encouraging us to complete and on the 
minority ownership proceeding, including adopting many of the 
recommendations that were put forth by our own diversity 
committee.
    Senator Kerry. But you realize the fundamental rationale 
that you gave when you came in here was the dilemma that 
newspapers have faced, which, incidentally, a lot of people 
would contest. A lot of people would say that, all across this 
country, newspapers are making lots of money, doing quite well. 
They've had to retrench somewhat; yes, they've had to adjust. 
But, as in any business, they're finding their outlets and 
means of making money. In fact, one of the most profitable 
entities in America today are some of these small newspapers in 
cities and towns across America which are cash cows.
    Mr. Martin. I think that the newspaper industry is having a 
significantly difficult time in continuing some of its local 
news-gathering----
    Senator Kerry. But where is it----
    Mr. Martin.--but I think----
    Senator Kerry.--in your jurisdiction under the FCC to put 
that ahead of the interest of diversity and localism and to 
deal with the problem of concentration?
    Mr. Martin. I'm not putting that ahead. I think we have to 
put it in balance, and we have to take all of those things 
into----
    Senator Kerry. Then why would you not take a few extra 
days, which is the will of the Congress and the will on a 
bipartisan basis?
    Mr. Martin. I think it's important for us to try to move 
forward on all of these issues, both including what's involved 
in increasing the opportunities for minority ownership and 
what's involved for responding to the concerns that have been 
raised on localism, and responding to the courts and the 
Commission's previous decision that said that the absolute ban 
on newspaper cross-ownership is no longer appropriate and that 
reasonable analysis----
    Senator Kerry. Yes, but that court----
    Mr. Martin.--says that that's----
    Senator Kerry. That's the Prometheus decision you're 
referring to?
    Mr. Martin. Yes.
    Senator Kerry. All right. Well, it's my understanding that 
parties on both sides believe you're in violation of the 
Administrative Act as a consequence of not doing away entirely 
with it, as a consequence of that decision.
    Mr. Martin. It----
    Senator Kerry. So, I mean, you just seem to be digging a 
hole deeper and deeper here----
    Mr. Martin. No----
    Senator Kerry.--rather than trying to work this through in 
a logical way.
    Mr. Martin. You're right, the industry is saying that we're 
in violation of the law for not----
    Senator Kerry. The Administrative Procedures Act.
    Mr. Martin.--for not removing the ban in its entirety and 
allowing for newspapers to buy any broadcast property in any 
market around the country----
    Senator Kerry. But doesn't----
    Mr. Martin.--but they're saying that the Third Circuit and 
the law would require that. I think what we're trying to do is 
find a balance, as you said, between the concerns about, how we 
respond to the changing dynamic that's occurred in the 
marketplace since our rule was put in place--which is what the 
statute requires us to do that was passed in 1996--and the 
concerns that have been raised about the impact of this on 
small businesses and minorities and women. And I think that's 
the very reason why I've put forth a proposal that I think 
balances both of those.
    Senator Kerry. Well, unfortunately, most of the advocates 
on behalf of those entities do not share your view that you 
are, in fact, advancing their cause; on the contrary, they feel 
that this is going to disadvantage them significantly.
    And what's very hard for me to understand is why you would, 
sort of, chose to swim against the tide, so to speak, in 
something as important as what Senator Rockefeller and others 
have described this as. I mean, this is big stuff. Last time 
you guys moved, sort of, on your own like this, there was a 
spontaneous grassroots revolution across the country; and the 
Republicans, who then ran the Congress, joined together with 
the Democrats, and they overrode what you did.
    It would seem to me you would want to try to find something 
that's just got a little better consensus, a sense of 
representing America's interests, not some sort of narrow 
interest. And it disturbs me greatly that you're just, sort of, 
so headstrong about this that, with even your own Commission to 
split--I mean, why not try to get a unanimous Commission? Why 
not try to get a decision----
    Mr. Martin. I actually always work to try to get a 
unanimous Commission, and this issue is no different. And I 
think that you're absolutely right, it would be great if there 
would be a consensus. I'm not convinced that, on media 
ownership, there ever will be a consensus. Indeed, I've gone to 
my colleagues in the past, even on the process and the policy 
issues--all of my colleagues--starting as late as last summer 
and early fall, saying, ``Let's discuss--what would be a 
unanimous process? What would be a unanimous approach?'' And, 
actually, I'm not convinced that there's much prospect of that. 
Indeed, the concerns that have been raised about what they are 
characterizing as loopholes in the waiver process, I've said 
I'm happy to work with them to coordinate what those processes 
should end up being, in any way they would like, but that would 
mean they would have to engage in the substance, not merely 
just demand additional process and additional time for the next 
6 to 9 months. And I'm happy to end up doing that; however, I'm 
not yet convinced that we will ever reach a consensus on the 
media ownership issue. I think it may be just too politically 
divisive. And I do think it's important that we have an 
obligation to respond, as Congress told us to, and the courts 
are waiting, for more than 3 years now, and I think that's what 
we should do.
    Senator Kerry. Well, I've used more than my fair share of 
time here, and I apologize for that. But I--I think you are 
inviting another Congressional response. And I regret, 
enormously, that--I don't know, Commissioners Adelstein and 
Copps, do you want to respond to what the possibilities are 
here?
    Commissioner Copps. This should be about substance. And 
where I have been on this has been no secret, I think, to the 
Chairman or any of my other colleagues on the Commission for 
months and months and months. We are willing to vote on media 
ownership when we deal with these long pending problems of 
minority ownership and the lack of localism, because they have 
been exacerbated by consolidation. So, I think it's not just 
about process or division or inability to get an agreement 
there. This goes to the substance of the matter.
    Incidentally, I would add, if I could just make a quick 
comment, because there's been a lot of argument to the contrary 
about the health of the newspaper industry. We are not the 
Federal Newspaper Commission, I understand that. But I would 
just quote from a letter to the editor that the head of the 
Newspaper Association of America wrote to The Washington Post, 
last July 2. He said, ``The reality is that newspaper companies 
remain solidly profitable and significant generators of free 
cash-flow.'' Operating profit margins seem to be near 20 
percent, which is pretty good. I wish I had some investments 
that were doing 20 percent. So, it's not a one-sided story. Of 
course there are challenges and necessities for adjustment, but 
that's just to balance out what was said earlier.
    And a final point, on divisiveness, I'll tell you one place 
where this issue is not divisive, and that is across the United 
States of America. There's a new poll out, just within the last 
couple of weeks, that shows that 70 percent of Americans, 
regardless of political party, regardless of liberal or 
conservative affiliation, think that media consolidation is a 
problem; 42 percent, I think, said it is a really serious 
problem; and 57 percent favored laws to prohibit newspaper/
broadcast cross-ownership in specific markets.
    Commissioner Adelstein. In terms of the process, I think, 
to respond, certainly we have laid out a process today that we 
could get agreement on, bipartisan agreement. The Committee 
laid out a process, which we endorse, today.
    So, there is a deal that we could reach right now. And I'm 
willing to talk to the Chairman about an alternative process, 
as well. He's been very good at building consensus. He's my 
friend, we have a good working relationship. Ninety-five 
percent of what we do is bipartisan and unanimous. So, he's 
done a good job of building unanimous decisions. I don't see 
why we can't do that again here. I really don't think it's 
outside the scope of possibility to work together to try to put 
aside our differences. But, in order to do that, we cannot, I 
think, operate in defiance of this Committee's instruction that 
we not go forward on December 18. I think we need to have time 
to do it right, we need to make sure that we get the elements 
of localism and the elements of diversity in place first. 
That's going to take a little bit of time, not, maybe, every 
minute that the Committee asks for. We could work with you, and 
I'd like to work with the Chairman, on trying to see if we 
can't come up with an accommodation. We work best when we work 
together, and it's not too late.
    Senator Kerry. Well, Mr. Chairman, I wish you would heed 
all of these pleas. And I will just say to you, in closing, 
that it is really clear from the evidence that if the 
Commission intends to promote ownership diversity, you can't 
accomplish that goal while simultaneously increasing market 
concentration. It just doesn't--it's just a complete 
contradiction. And with these analyses that we've requested 
outstanding, it just seems extraordinary to me that we're not 
able to have your agreement to wait a few days. Listen to the 
American people. Listen to the Congress.
    Thank you, Mr. Chairman.
    The Chairman. Senator Lautenberg?

               STATEMENT OF HON. BARBARA BOXER, 
                  U.S. SENATOR FROM CALIFORNIA

    Senator Boxer. Mr. Chairman, can I just ask, what's the 
order of recognition? Because we were all here for the 
photograph. I was here for all the opening statements. I was 
called out----
    The Chairman. This was the----
    Senator Boxer.--to do a phone call.
    The Chairman.--list that was given to me.
    Senator Boxer. I know, but I asked your staff. I don't 
quite get it.
    The Chairman. The next person is Senator Lautenberg.
    Senator Lautenberg. Thank you.
    Senator Boxer. And then what happens----
    The Chairman. Following----
    Senator Boxer.--after that?
    The Chairman.--that is Senator Snowe, Senator Klobuchar, 
Senator Boxer, Senator Cantwell.

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thanks very much, Mr. Chairman.
    Not to be able to read the indignation and ire of the 
Committee as we review this pending date strikes me as less 
than a forthright review of the situation, Mr. Chairman. And 
we've had many discussions about things. And I've found you in 
a--typically, in a mode that says, ``OK, let's look at this 
problem or that problem.'' And I just wonder whether--is there 
anything pending by way of a merger or an acquisition that 
would be helped by a decision on the 18th of December?
    Mr. Martin. There's no particular transaction that is 
pending before us, but it is having an impact on the industry, 
the fact that these rules have been unclear for quite some 
time. And, indeed, we've had several companies, for example, 
announce that they're going to start to spin off their 
broadcast properties from their newspaper properties because 
they see no prospect of the Commission taking any action 
anytime soon. That was announced by several companies earlier 
this fall. So, I think it does have a significant impact, 
whether we are, in fact, going to go forward or not. But, no, I 
can't say there's a particular transaction that would be 
impacted.
    Senator Lautenberg. Mr. Chairman, I thank you for enabling 
us to have held a hearing in New Jersey, and that Commissioners 
Copps and Adelstein were able to attend the public forum on the 
license renewal of WWOR-TV. And it's the only high-powered 
commercial station licensed in New Jersey. New Jersey, with 9 
million people, not identified as a media market, has a very 
bad review of events that are considered news available to the 
public there, and 200 people turned out to the forum. And now 
that the forum's been held, what's the next step for your 
consideration of WWOR's license renewal application?
    Mr. Martin. I think that we are going to have to end up 
considering whether or not they met the conditions that were 
put on that license. As you and I have discussed in the past, 
they had a specific requirement that they were supposed to 
provide extra additional news coverage above and beyond what 
would normally be required of the State of New Jersey, to make 
sure it didn't become just a New York station. There's been 
evidence submitted in the record, along with the comments at 
the public hearing, that emphasize that they believe that 
licensee has not done that. We'll have to do a debate here at 
the Commission, a discussion about whether or not they have met 
that criteria, and, if they did not, what should be the 
ramification and result of that.
    Senator Lautenberg. The information that was developed said 
that there was more New Jersey news produced by New York-based 
stations than there was at WWOR. And a condition for their 
license was very specific. It had to be a New Jersey station, 
the facility had to be based in New Jersey, the news 
department. And what's been happening with the present 
ownership is, they've tried to slip past things, and they were 
in the process of moving the news department to New York City. 
They have a logo that said, ``New York 9.'' And, what a 
coincidence, just the day before we had the hearing, they 
dropped the New York news identification.
    So, what else do we have to have that says to us that this 
license will not be renewed. It's extended now, as part of the 
original license, but what assurance do we have that we're 
going to be able to make certain that, before that license is 
renewed, that they will meet the standards?
    Mr. Martin. I think that we do need to end up making sure 
that there are more specific requirements put in place. I 
haven't reviewed all of the record, but, from the studies that 
you have shown me and that I've looked at, it does appear that 
they did not meet the requirements of providing the news 
specific to New Jersey. And I think, then, the Commission's 
going to have to decide what steps they need to end up taking, 
as you say, to make sure that they're going to meet those in 
the future, and that may require something more specific to be 
included. And we'd be anxious to hear from your offices on what 
you think would be most appropriate.
    Senator Lautenberg. Is it possible to have yardsticks that 
are specific, that can be placed in the consideration for 
renewal?
    Mr. Martin. Yes. There was a condition that was originally 
placed, just of a general one. You could put one in place that 
would actually have something that would be very specific 
instead this time, and that could be measured in reporting 
requirements, so that they would have to come back and report, 
and there wouldn't be an elongated period of time again before 
they came back and provided what was going on.
    Senator Lautenberg. Commissioner Copps, you were there, you 
heard the public response, you saw the material that was 
produced to make the case on behalf of a more rigid standard 
for the renewal of the license. Is there anything there that 
would suggest to you that these conditions have been met, or 
that there was a willingness by the present ownership to step 
up to the plate here and do what is required?
    Commissioner Copps. Well, I think--first of all, let me 
say, I think that was one of the best public hearings that 
we've had in a long, long time. I found the public commenters 
really articulate and impassioned. And I hope that all of my 
colleagues will look very closely at the public record, perhaps 
more closely than we've looked at the public record on media 
ownership, just to understand the depth of the feeling that 
people have up there. Obviously, this is a pending item, so 
there are some limitations on our ability to discuss this, but 
I think you know where I come from, from the standpoint of 
localism and the necessity to encourage local news, community 
activities, and all that. So, the hearing was very helpful from 
that standpoint. And I look forward to working with the 
Chairman and my other colleagues to make sure that, when this 
license proceeding is over--and I hope that will be sooner 
rather than later--that it will lead to an enhancement of 
localism in New Jersey.
    Senator Lautenberg. Commissioner Adelstein, you were there. 
Do you have any observations that you'd like to make here?
    Commissioner Adelstein. Why, sure. I appreciate the 
Chairman's willingness to get that hearing scheduled in New 
Jersey. It was the first such hearing that we've held. It was 
quite dramatic. A lot of people from your state felt that their 
needs weren't being met, in terms of news from that station, 
and that they were getting more news on New York stations than 
on the one station that's required by law to serve New Jersey. 
As you mentioned, that's a very unusual statute, and I think 
all of us have to recognize the importance of ensuring that it 
is adhered to. I think there has to be real and substantial 
requirements placed upon that licensee in order to ensure that 
the people in New Jersey are served, in terms of their news and 
information and localism, including what's happening in New 
Jersey, not across the river in New York.
    Senator Lautenberg. Yes. Thank you.
    And, Commissioner Tate, we haven't had a chance to talk 
about it. Mr. McDowell, we have. And I hope that we'll get this 
resolved in a relatively short period of time so we can do it.
    And one last question, Mr. Chairman. New Jersey's a net 
contributor of almost $200 million a year to the Universal 
Service Fund. And I know it's been discussed here at some 
length. And as the Fund keeps growing, the burden on New Jersey 
and other donor states gets bigger and bigger. There are many 
proposals for reforming the Fund, including temporary caps, 
longer-term proposals. When can I tell my constituents that 
they're going to see some action from the FCC to stop this 
growth of the Fund and the cost to my constituents?
    Mr. Martin. I do support trying to take some steps 
immediately to put a stop to some of the growth of the Fund. We 
have increasing amounts of money flowing to some companies that 
were not required to provide any of the costs of what they're 
doing with that money, and I think that is a concern, and I 
think that we should at least put a cap on that part of the 
program. I don't know for sure--I've got proposals in front of 
the Commissioners right now--that they would do that. I've 
voted that. If others end up voting it, then you could tell 
your taxpayers that. There are concerns about it by others that 
are concerned about implications for stopping the flow of some 
of the Universal Service money. But I do think we need to take 
some steps to at least make sure that everyone who is getting 
Universal Service money provides us with their actual costs, so 
we know what they're spending the money on.
    Senator Lautenberg. Mr. Chairman, I don't want to take--I 
would like to take the time, but it's an imposition on 
colleagues, so we'll review that question in writing with the 
other Commissioners.
    The Chairman. Thank you.
    Senator Lautenberg. I thank you for the----
    The Chairman. Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you, Mr. Chairman.
    Thank you, Commissioners, for being here. I had three areas 
of questions. One was rural broadband, and Senator Kerry did a 
good job of covering that. I continue to be concerned in our 
state, not only with the availability, but how slow the service 
is, and how our ranking with the rest of the world has fallen 
instead of improved. And I support the work that we're doing 
with the mapping requirements, and also some of the work that's 
coming out of the House. But I hope we will pursue that later.
    I want to, particularly, focus on the cell phone issue. 
And, as you know, Senator Rockefeller and I introduced a bill 
that I think has some pretty simple, straightforward, consumer 
protection rules in it, given that this industry hasn't really 
been regulated. And one of the requirements is to prorate the 
early termination fees. I know some of the companies, Verizon 
and AT&T, have now started to do this. So, I don't understand 
why there would be a problem to put that into law.
    And I know that the wireless industry has asked the FCC to 
rule that these early termination fees are rates charged, and, 
therefore, that the state regulation is preempted. And I'm 
wondering what the status is of this proceeding.
    And I will tell you that I continue, because we're doing 
this bill, to get people coming into my office with complicated 
bills that they can't figure out and huge early termination 
fees. We've got the case that was reported in the paper, of the 
consumer that tried to fake their own death by drawing up their 
own death certificate, to get out of an early termination fee. 
Even that didn't work.
    And so, I'm wondering what is the status of this proceeding 
as we push through our legislation? And do you view these ETFs 
as rates charged, and, therefore, that would be exempt from 
state regulation?
    Chairman Martin?
    Mr. Martin. I think that the problems related to early 
termination fees are significant. I am concerned about it. 
They're actually proliferating, not just in the wireless 
industry, but we're beginning to see them pop up across other 
sectors, as well. And I think that they are problems.
    I think that the Commission would, potentially, be able to 
regulate them as a fair business practice under Section 201 of 
the Communications Act. I've had multiple discussions, both 
with consumer advocates and with the industry about it, 
including several sessions with both of them. The consumer 
advocates, actually, have encouraged the Commission to not rule 
on what would be reasonable under Section 201, because they're 
concerned about wanting to make sure they preserve the 
opportunity for their state litigation to go forward.
    I actually think that the Commission, though, if there were 
enough complaints filed, and we wanted to, we probably would 
have authority, under Section 201, to talk about what was a 
reasonable practice. But I don't necessarily agree that it's a 
part of their rate, as you would say.
    Senator Klobuchar. All right. Anyone wanted to add to that? 
No?
    Could I also ask about the area of the handset portability? 
I remember, I was practicing in this area at the time when 
number portability came up. Everyone claimed the sky was 
falling. And now we have this issue of the handset portability. 
And I just think that most American consumers are--as you know, 
are unable to take their phones with them if they change 
service. And I'm wondering how you feel about this handset 
portability. In our bill, Senator Rockefeller and I have 
actually simply asked the FCC to look at this. But I think 
there's just going to be more and more of a clamor, whether 
it's consumers surgically operating on their own phones or 
whatever's going on here, to try to move toward this. And it, 
again, is another consumer issue. And what's happening with 
this over at the FCC?
    Mr. Martin. Again, I agree with you that this is an 
increasing problem, and that consumers are in demand of it. 
That's the very reason why we put requirements in the upcoming 
spectrum auction--for almost a third of the spectrum that we're 
going to be auctioning--that whoever wins that spectrum will be 
required to have a more open platform and have an open handset 
requirement. I think that the Commission's goal, and we stated 
at the time, was, we thought providing a more open handset 
environment would lead, not only to that individual provider, 
but also push the industry to do that, as well. And I think 
we've already seen some of the benefits of that, in terms of 
both the recent announcement by the technology companies, where 
they've developed an open handset standard that would be 
utilized, and, indeed, by Verizon, who's now announced that 
they're going to follow and incorporate that standard into 
their existing network. So, I think the Commission has taken 
steps on that, and I think that's important.
    If Congress gives us the authority to--and tells us we need 
to directly require that--even of the existing licensees, we'll 
obviously implement it. But I think we're going to see some of 
the changes that are going to occur as a result of the steps we 
took in the context of the upcoming auction already.
    Senator Klobuchar. Anyone?
    Commissioner Copps. There may be a connection between these 
two issues you talked about--affordability and early 
termination fee--because if you take that phone with you, we 
should make sure that there's no early termination fee that's 
going to be attached to that; the logic being the fee is to 
subsidize the telephone. But if you're bringing your own phone, 
there's no need to do that.
    Senator Klobuchar. OK. All right. The last area I wanted to 
ask about was just the digital TV transition. As I've told this 
committee before, there are 430,000 households in Minnesota 
that are going to be affected by this, and I can just tell you, 
most of them are not in areas where they have a big store right 
around the corner that they're checking out so they find this 
out, and they don't have podcasts set up. And I just don't 
think they know much about--that this is going to happen, their 
TV's going to go off.
    And I know, Commissioner Copps, that you just recently went 
to study the transition in the United Kingdom. And are there 
lessons to be learned from that? What do you think we need to 
do here? Are you concerned about what's going on?
    Commissioner Copps. We chatted a little bit about that 
earlier, but there are tremendous lessons to be learned. And I 
think it's not because there are differences in sizes between 
countries or anything like that. The point is that, in the 
United Kingdom there is a DTV transition that takes place over 
a period of some 5 years, region by region, station by station, 
with lots of public information so people know what's coming, 
they know a DTV transition is coming. I think probably over 
half of Americans have no idea a DTV transition is coming in a 
little more than a year now. That is going to be, potentially, 
highly upsetting and highly enraging to many of them.
    So, we have to--we have to find a way to get the word out. 
We have to provide the kind of help that they're providing in 
the United Kingdom. If you're old or if you're disabled, they 
will come in and actually connect the new attachments that need 
to be connected. They do the consumer surveys to see what's 
working and what's not working, and they correct at every 
stage. Someone is in charge. Here, nobody is in charge. And 
that's our biggest problem. This has to be a partnership. It 
shouldn't be a government program. I don't think it can be 
entirely private sector. It should be a partnership. And that's 
what we had with the Y2K program that, back in the previous 
Administration, I worked on. That was a program that had 
leadership, it had direction, and it had accountability. Most 
of those----
    Senator Klobuchar. And I also know----
    Commissioner Copps.--things are lacking.
    Senator Klobuchar.--Senator McCaskill is very concerned 
about this. She has a lot of people in Missouri. She's 
presiding over the Senate right now. I'm going to try to spell 
her so she can come back. But what is happening with having a 
single person in charge and accountable here, right here in the 
United States?
    Commissioner Copps. Well, we don't have that. I think 
that's exactly what we need to have. Ideally, if I was in 
charge I would push for a White House Task Force so that 
everybody could be coordinated and everybody would know that 
there's a DTV transition coming--we knew there was a Y2K. If we 
flubbed that, we were going to have a mad President of the 
United States, and Vice President of the United States, so we'd 
better get it right. Not that there weren't lots of other 
motivations to get it right, too. But that helped, because 
there was accountability and oversight. Every week, we were 
dragged, as the deadline came closer to 2000, over to John 
Koskinen's shop in the White House, and we really shared 
information, and everybody knew there was leadership. That's 
what we need here. They have that in Great Britain. They have a 
fellow who's in charge of it--Ford Ennals is his name; he's on 
television all the time; he's a recognized public figure--so 
people know this is happening.
    Senator Klobuchar. Commissioner Adelstein?
    Commissioner Adelstein. You don't have to just take it from 
us, the Government Accountability Office has said that there is 
nobody in charge, and that they really believe there needs to 
be. And the Government Accountability Office, GAO, said the FCC 
really is the best positioned agency to take that role. So, I'm 
hopeful that we can do that, that we can step up to the plate. 
There needs to be a lot of coordination. It doesn't have to be, 
necessarily, a czar running it top-down, but there has to be 
someone in charge, where the buck stops, at least in terms of 
the broader issues. And we need to coordinate with the private 
sector, as well. It's not a command-and-control thing, where we 
tell them what to do, or dictate the message, but to ensure the 
message is coordinated, because we have so many different 
interests. As Vice Chairman Stevens said, we don't have much 
money to do this. There's $5 million. But the private sector 
has nearly a billion dollars they've committed to do this, 
which is an enormous amount. We need to make sure that that 
message is coordinated. And GAO said that there is, right now, 
not a process in place to ensure that message is consistent and 
coordinated. The government can't dictate it, but I think we 
could work with these organizations, who are open to working 
with us, to try to ensure that there's a coherent message, that 
there's a coherent plan. And we need to do that immediately, 
because there's no more time to waste.
    Senator Klobuchar. OK. Just one last follow-up. At the 
beginning, I asked, with the cell phone proceeding, the ETF, 
what is the status of that, timing-wise? When is that going to 
be done?
    Mr. Martin. Well, I'm not sure that I anticipate the 
Commission ruling saying that they were part of the rates, 
which I think is what you were asking.
    Senator Klobuchar. OK.
    Mr. Martin. But I can get back to you on it, on a better 
timeframe.
    But, as I said, the consumer groups who are concerned about 
this actually have encouraged the Commission not to act. But I 
can follow up with you about that, if you'd like.
    Senator Klobuchar. Thank you.
    Thank you very much----
    The Chairman. Thank you.
    Senator Klobuchar.--Mr. Chairman.
    The Chairman. Senator Boxer?
    Senator Boxer. Thank you, Mr. Chairman.
    On DTV, I just want to echo the sentiments of my 
colleagues. You've got a train coming down the track at you, 
Chairman. And I'll just tell you right now, you're going to be 
blamed for this if it's not handled right. If it was me, I'd 
slow down your other thing that you look like you're jamming 
through, on the cross-ownership, sit down with your colleagues, 
reach consensus, not on the outcome--I agree with you, you may 
never be able to--but certainly on the way to proceed. We 
reached a consensus here on that. Pay attention to that. And I 
think, if you don't do this, there's going to be a disaster 
coming our way. It's a nightmare, and I just--that's an 
opinion.
    But I really want to focus my questions on concerns about 
transparency and openness at the FCC that I've, kind of, tried 
to do all along.
    Chairman Martin, as you're well aware, in September 2006, I 
made public two media ownership studies, prepared by FCC staff 
at taxpayer expense, that were shoved in a drawer because their 
conclusions ran counter to certain interests. Now, I just want 
to make sure I understand this. Is it true that you, sir, and 
the Commission, choose who the Inspector General will be over 
at the FCC?
    Mr. Martin. The Inspector General statute requires that 
when there is someone who resigns as Inspector General, the new 
agency head appoints the new----
    Senator Boxer. Right.
    Mr. Martin.--Inspector General.
    Senator Boxer. So, you have appointed--you and the 
Commissioners have to agree--is that right?----
    Mr. Martin. Yes.
    Senator Boxer.--on the--OK. Well, I just want to say that, 
to me, this is the fox guarding the chicken coop, and I'm going 
to introduce legislation to change that. Over in my Committee, 
Environment and Public Works, the Inspector General is 
nominated by the President and has to be confirmed by the 
Senate, by the Committee.
    And this is why it's important, and listen to this: In 
October of this year, the FCC Inspector General came to brief 
me on the findings of his investigation into the matter that I 
talked about, shelving those reports that had a conclusion that 
you, I know, sir, don't agree with. Unfortunately, that 
investigation raised more questions than it answered.
    For example, the IG uncovered a December 2003 e-mail from 
then-media bureau chief Ken Feree, in which he stated he did 
not want to release the 2003 radio report, which raised some 
questions about this consolidation, in terms of localism, 
because he didn't like the results. We have the writing of Mr. 
Feree. He wrote, ``I am not inclined to release this report 
unless the story can be told in a much more positive way. This 
is not the time to be stirring the pot on radio consolidation. 
All in all, this is a bad time to release something like 
this.''
    Imagine. You get a report, and you don't agree with it, so 
you deep-six it.
    So, the IG now, who's appointed by you all, despite the 
clear evidence that this was shoved in a drawer, he said that 
Mr. Feree, who was a political appointee, did nothing wrong. I 
had a big argument with the IG in my office. I never had a 
situation like that. I never saw such a coverup from an 
inspector general. Well, he's not independent. Now I get it.
    Now, we don't even know who else knew this happened, 
because the IG made a bizarre decision not to follow up and 
interview key FCC staff, including your fellow Commissioners. 
So, the IG, who you appointed, and your Commissioners agreed 
to, does an investigation, finds out that a political appointee 
essentially said, ``Don't make this public, because I don't 
like the outcome,'' finds nothing wrong with it, and then 
doesn't interview anybody else.
    So, here we are now trying to conduct oversight over an 
agency that, in my opinion, has shirked its responsibility to 
protect the public interest.
    Now, I'd like to ask Commissioners Adelstein and Copps, 
what do you think about the IG's report on the shelved studies? 
And were you troubled that the IG didn't go ahead and question 
you all or the rest of the Commissioners, or didn't question 
staff?
    Commissioner Adelstein. I was very troubled by the report, 
Senator Boxer. I felt that the evidence in the report was not 
reflected in the report's conclusions. I couldn't understand 
how he could conclude that everything was done properly, when 
there is that clear evidence, that you read, that the reason it 
was deep-sixed was because it was inconsistent with what they 
wanted to do: more media consolidation. It was clearly 
improper. And I think that the fact that the report was so at 
odds with its own evidence indicates that there wasn't a fair 
analysis, that it truly wasn't an independent analysis. It was 
a very strange and, I think, inappropriate finding by the IG.
    Senator Boxer. Commissioner Copps, do you agree with that?
    Commissioner Copps. I would agree with that.
    Senator Boxer. Commissioner Martin?
    Mr. Martin. I think that the Inspector General said that 
there had been no law violated. I think that, actually, he 
highlighted the evidence and some of his concerns. I think that 
it's important for the Inspector General to actually describe 
what the legal standards are for a violation of any Commission 
employee, and whether or not that has actually occurred should 
actually be the Inspector General, not the Commissioner----
    Senator Boxer. Well, wait a minute. You're focusing on 
whether a law was broken. The whole point was to find out 
whether something was deep-sixed for political reasons. You 
don't have to--not everything they do has to do with whether a 
law is broken.
    Mr. Martin. I thought that he was saying the law wasn't 
broken, but he actually highlighted the evidence, including 
making sure--bringing to everyone's attention the e-mail that 
you read, which certainly implies that Ken Feree had deep-sixed 
the report. And I actually, again, just to point out--the same 
as we did when we talked about this a year ago--I don't know 
what happened in that context. I wasn't----
    Senator Boxer. But the bottom line is----
    Mr. Martin.--Chairman at the time.
    Senator Boxer.--yes, the report was deep-sixed, we got the 
e-mail, we see why. It was very obvious. Nobody was hiding 
anything. ``This isn't going to help us in our debate, so let's 
bury it.'' And then, the IG, who is appointed by you all, now 
decides--he found exactly what happened, and then he walks away 
from the whole investigation. It's absurd. And so, I'm just 
saying, I'm going to push hard for an independent Inspector 
General. This is ridiculous.
    And, again, I hope I don't need to reiterate what 
colleagues said. My God, you--you're rushing in one front, 
you're slowing on another front. You've got it all mixed up, 
sir. And I hope you'll heed what we're saying here, because it 
is bipartisan.
    Thank you.
    Senator Boxer [presiding]. And I'll turn this over now to 
Senator Cantwell, then she can turn it over to Senator Nelson.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Senator Boxer.
    Chairman Martin, I want to just pick up on a point that 
Senator Kerry made, and just ask you a question. Do you see any 
circumstances in which you'd be willing to delay the vote for 
this proposed rule change before the hearing? Do you see any 
circumstances in which you would change that?
    Mr. Martin. Oh, sure. Listen, what I've said is that my 
plan is to end up moving forward. I'm going to continue to have 
my discussions with all the Commissioners about a consensus, 
not just on the process, but on the substance. So, sure, 
there's the potential or possibility there could be 
circumstances. But, at this point, I would say that, no, I 
anticipate that we would end up moving forward, and that, at 
this point, that's my plan.
    Senator Cantwell. In your testimony, you talk about 
listening to your colleagues, and you said that you 
incorporated input from them. What input did you incorporate?
    Mr. Martin. When we were beginning the process of the 
studies during the Notice of Proposed Rulemaking that we 
released in July 2006, all of the Commissioners voted on what 
would be the topics. After that, I approached all of the 
Commissioners and said, ``What would you like the topics of the 
studies to be?'' No Commissioners gave us anything in writing. 
Several had suggested--made suggestions orally about what they 
wanted, to extend and expand the number of topics. We 
incorporated that. I put that in a written memo. I circulated 
it to all my colleagues, again asked for input. No one gave me 
any written comments. One of the Commissioners said he wanted 
to make sure--and, again, expand some of the topics, which we 
then incorporated again. When we then went forward and said we 
wanted to identify what individuals, if they had any, to 
perform the studies. I relied upon the chief economist at the 
time to try to come up with academics around the country to do 
it. Several of my colleagues had suggestions of people they 
wanted to do some of the studies. Every suggestion that my 
colleagues put forward of any individual in the country who 
they wanted to do a study, we contacted to see if they'd be 
willing to do a study. Several of them said no, several of them 
said yes. The ones who said yes, we contracted with, asked them 
to do studies. One of the ones----
    Senator Cantwell. Can I--since I don't----
    Mr. Martin.--one of the people that----
    Senator Cantwell.--I don't want to take as much time----
    Mr. Martin. Oh, I'm sorry.
    Senator Cantwell.--as my colleague Senator Kerry did. Could 
I ask them to respond to that? Because that was a pretty good 
elaboration.
    Commissioner Copps. I would take exception to trying to 
portray this as a completely open and participatory process. 
There was some initial outreach on subjects of studies. I think 
we responded--I thought we had--with a list of about 12 or 15 
very targeted kinds of studies. And that was kind of the end of 
that until we saw what the studies that were selected were 
going to be. Most of them were kind of ill-targeted, I thought, 
and several of them went to the ``robustness'' of this or that, 
and really didn't ask the important questions that needed to be 
asked in the context of media ownership. So, while I think 
there was some outreach, to imply that this was a small-d, 
democratic, fully participatory, we all make the decisions 
about who's going to do the studies and what gets studied, I 
think, is not 100 percent accurate.
    Senator Cantwell. Commissioner Adelstein?
    Commissioner Adelstein. I didn't find my ability to give 
meaningful input really afforded. I felt that there was very 
little time between the time we were asked about it and the 
time that all of a sudden, just several days later, a whole 
list of authors appeared. Clearly, all the work had already 
been done about who they wanted to ask, and, by the time these 
decisions were made, I had no meaningful input into the 
authors. And the authors were not, for the most part, except 
for one that was suggested by Commissioner Copps, experts in 
the field of media ownership. They were, in fact, broad 
generalists in economics, and a lot of the best experts that 
were, I heard, asked about whether they wanted to participate, 
were given conditions to operate under in which they felt they 
couldn't possibly do the right level of work. The initial take 
on the ownership studies was set forth by our chief economist, 
who wrote a memo, which was found under FOIA, that said that 
she was offering thoughts and ideas about, ``how the FCC can 
approach relaxing newspaper/broadcast cross-ownership 
restrictions.'' So, the person who put together the concept of 
how these studies would be done did it with an outcome in mind. 
I think that if you look at the studies, they weren't properly 
peer-reviewed. Federal law requires, in the Data Quality Act, 
that all these studies go through a peer review before they're 
disseminated. And we didn't. That wasn't done until afterwards, 
and a lot of the peer reviewers were consulting back and forth 
with the authors, in violation of Federal guidelines.
    So, this process, I don't think was conducted with 
transparency. I don't think it was conducted properly. I know 
that there are questions being asked over in the other body, in 
the investigative committees there. I don't think that the 
studies really accurately reflect the knowledge base that's 
available in academia about these issues. And, in fact, 
consumer groups looking at the studies found major flaws in 
them, even though they were given very little time. They were 
given a very short period of time to review them, and they 
weren't given the proper data to review, until later in the 
process, under very restrictive conditions.
    So, I don't think that this process was open and 
transparent.
    Senator Cantwell. The reason I'm asking that is, it seems 
like we are taking one piece of data and trying to twist it or 
use it as a scapegoat to come to a conclusion. And I guess, 
Chairman Martin, I'm directing this at you. Your statement says 
``Allowing very limited cross-ownership may help forestall the 
erosion in local news coverage by enabling companies to share 
these local news-gatherings across multimedia platforms.'' And 
it seems as if you are trying to use the Internet as a 
scapegoat to say that somehow the competition that the Internet 
is providing to the newspaper industry, that technology that's 
provided a new distribution channel for print media now to be 
online, is somehow blowing up their business model, and that 
the solution to that is that you ought to allow big media 
companies to get bigger. And I would say that this change in 
technology, which is a benefit to the underlying notion of 
allowing 1,000 flowers to bloom and lots of different opinions, 
is going to be a change, and that many newspapers are working 
through those new business models. Technology change does mean 
that some existing business models are challenged, but it 
doesn't mean that you should throw the baby out with the bath 
water. So, you're basically saying, ``Yes, let big media 
companies own newspapers,'' because somehow the Internet is 
making it more of a challenge.
    Now, Commissioner Copps came up with those statistics, or 
one of the--I think it was Commissioner Copps--and I would just 
like to note that, in 2006, supposedly a very disastrous year 
for newspapers, they did average profit margins, for publicly 
traded companies, of 17.8 percent. And if you contrast that for 
the rest of corporate America, that's about, over the last 25 
years, 8.3 percent. So, there's something that's not right 
here. I can imagine, with those numbers, 17.8 percent, yes, I 
can imagine a lot of big media companies would like to own 
newspapers. The truth is, their numbers aren't so bad. And, as 
a distribution channel, they still represent a very interesting 
delivery system, and one that I say should still have a shot as 
they try to broaden into their online distribution business 
models.
    But, to say that the consolidation, which will bring about 
a concentration of voices, is somehow--that that particular 
logic is in keeping with the notion of competition, diversity, 
and localism, I'm having a very tough time understanding. So, 
I'm happy to hear your response to that.
    Mr. Martin. Sure. I think that it's Congress, actually, in 
the 1996 Act, that required the Commission to review its rules 
and modify, and eliminate them, the ownership rules, to the 
extent that the competition had changed the marketplace. And I 
believe that is one of the things that Congress charged the 
Commission with doing, updating its rules and actually removing 
them when they were no longer necessary because of competition.
    The rule that we put in place in 1975, the media 
marketplace has--no doubt, has changed dramatically since then. 
The Internet is one significant part of it, so are the number 
of opportunities, in terms of broadcast outlets, so are the 
opportunities, in terms of cable television and satellite 
television that were not available in 1975, when the rule was 
put in place.
    The Commission has, in the past--and, actually, almost 
every Chairman at the Commission since 1996, both Republican 
and Democrat, have all concluded that there needs to be some 
modification to the newspaper/broadcast cross-ownership rule, 
in light of the changes in the marketplace that have occurred 
since 1975, and the fact that this is the only rule that has 
not been changed since 1996. All of the rest of our ownership 
rules have been, and this is the only one that hasn't. And, as 
a result, I think that Congress actually charged us with that. 
Yes, the Internet competition does demand that we re-evaluate 
our rules to see if they're still necessary. And I think it is 
harder to make the case that they're still necessary in the top 
20 markets for a newspaper to be prohibited from buying the 
number five, six, seven broadcast station in those markets.
    Senator Cantwell. I think you're getting it absolutely 
wrong. And I don't see logic in your answer of why big 
broadcast corporations ought to consolidate and own more media 
because of the Internet. That doesn't make any sense. The 
Internet is about competition, but, at this point in time, 
we're talking, still, about nascent business models. And you're 
saying, let's allow some of the big corporations to gobble up 
one other distribution channel, just because you're going to 
use the Internet as a boogeyman in this case. And when the 
truth is that what you're doing is allowing for more 
consolidation of existing distribution channels that are a lot 
more mature than the nascent Internet, even though it's been 
around, the business models are still developing. So, I have, 
like my colleagues, a great deal of concern about this 
proposal, and think that the basis for it--I am troubled by the 
studies and the analysis, if your fellow colleagues there are 
saying that there hasn't been enough, particularly, consumer 
content. The one thing that I think is clear here, that as the 
Digital Age continues to play out, the one thing that has to be 
in place, the one thing that absolutely has to be in place, is 
stronger consumer protections. But this seems to be going in 
the absolute wrong direction.
    And, Mr. Chairman, I think I'll actually stop with that and 
turn it over to my colleague.
    The Chairman [presiding]. Thank you.
    Senator Cantwell. Or allow you to turn it over to him.
    The Chairman. Senator Nelson?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Mr. Chairman, since I'm the cleanup hitter 
here, what this whole thing seems to boil down, to me, is, it's 
a question of the company's interest versus the reader's and/or 
consumer's interest. And in the information that has been put 
out here, we see a question of timing, we see a question of, 
how do you calculate revenue? We see a question of access to 
data. We see a question of documentation withheld in order to 
present a certain picture. And, of course, whenever you pick a 
decision of where you want to go, you can make statistics, or 
withholding of statistics, prove your particular point. And 
when you get right down to it, as a country boy would look at 
it, it seems to be that it is a question of, do you want to be 
on the side of the companies or do you want to be on the side 
of the consumers?
    Now, Mr. Chairman Martin, your comments were not due until 
Tuesday. Is that enough time to consider the comments before a 
December 18 vote?
    Mr. Martin. When we are doing a proceeding at an open 
meeting, 1 week before that open meeting, we always end up 
having Sunshine come to a close, which means that people can't 
provide comments to us any longer in writing. I think that that 
is not unusual. I think, in this case, what is unusual is that 
I took the extra step of actually publishing the rule that I 
had proposed to my fellow Commissioners. That's not something 
that we typically do. And, actually, I had done that to make 
sure that everyone was able to have an appreciation for what I 
was proposing for the Commission--what action the Commission is 
to take. And I think that it was important to try to do that, 
to shed as much light on what we were proposing, in part 
because there were many concerns that we were doing things, and 
going further in consolidation, than I was actually proposing.
    But I do think that that's not unusual. Sunshine always 
come down a week before we end up voting on something at an 
open meeting. I think that this is obviously an unusually 
contentious issue. Many people are interested and involved. But 
I think that the Commission should make sure that we're trying 
to do it and proceed in as open a manner as possible.
    Senator Nelson. So, you think, on an issue that is this 
big, that a week to consider all those comments is sufficient?
    Mr. Martin. Yes, I think that we should----
    Senator Nelson. OK. You----
    Mr. Martin.--be able to--I think we should----
    Senator Nelson.--said yes.
    Mr. Martin.--I think we should be able to, yes.
    Senator Nelson. You said yes. And I would respectfully 
suggest that a lot of people would feel very uncomfortable with 
a week. Well, let me ask you this. In your testimony, you're 
talking about these newspapers universally losing money. Did 
you look at the revenue that's being generated by the Internet 
websites?
    Mr. Martin. Yes, what I talked about was some of their 
circulation declines that have occurred on their regular 
newspapers. They obviously have had increased circulation in 
advertising as a result of their websites. As I understand it 
from the industry, that doesn't completely replace the 
advertising dollars they've lost. But, more importantly, what 
you also can reference is, if you look at the press accounts of 
individual newspapers--the San Francisco Chronicle has reported 
that it's losing a million dollars a day. I can only tell you 
what the public reports are, but I think that is including all 
of their advertising revenues, for example, including the 
Internet advertising.
    Senator Nelson. OK, that's not the question. The question 
is, did you use, in the calculation of the newspapers losing 
money, did you include the revenue that they have from their 
Internet sites?
    Mr. Martin. From my testimony, when I said those newspapers 
were losing money, yes, that was taking into account how much 
those were losing. But they were based on public press 
accounts.
    Senator Nelson. So, the answer is ``yes'' or ``no''? I 
don't understand your answer.
    Mr. Martin. Yes, it takes into account their advertising 
dollars, as I understand it, but those figures are all taken 
from public press accounts.
    Senator Nelson. So, the answer is ``maybe''? Because it was 
based on published press accounts?
    Mr. Martin. No, I'm saying that, yes, I understand it is 
there, but I'm basing that just on what was available publicly.
    Senator Nelson. Well, you guys are the deciders. Isn't that 
something that you should know?
    Mr. Martin. Yes, I think it does take into account the fact 
that they are losing more money on their daily circulation, 
even when you take into account that they're gaining some money 
from advertising on the Web. Yes, I think that's what the 
newspapers are saying.
    Senator Nelson. Well, I have newspapers in Florida that are 
telling me that, although they're not making up the difference, 
they are--and I have one newspaper that's telling me that it is 
actually getting more advertising dollars from the Internet 
than it is from their actual printed newspaper. So, wouldn't 
that be an important decision, to have the facts nailed down 
absolutely?
    Mr. Martin. I'm not disagreeing that some newspapers might. 
I'm saying the newspapers that I cited in my testimony, I 
think, are, on balance, losing money, which means they're not 
making as much money on the Internet as they're losing on their 
daily circulation.
    Senator Nelson. OK. Let's take up another issue. To provide 
access to the underlying data, that's actually required by the 
Data Quality Act. So, are you going to ensure that these 
proceedings are complying with the Data Quality Act?
    Mr. Martin. We are. I think you're talking about the peer-
review process for the studies that we did undergo, and we have 
made sure that that data is available to everyone. There was a 
concern that some of the data that was used was copyrighted, 
and we had to work through the legal aspects of making sure 
that that was made available. But we did make all of that data 
available, for the peer-review process of the studies that were 
conducted.
    Senator Nelson. Would the Data Quality Act require you to 
have the information about the revenue that newspapers are 
getting from the Internet?
    Mr. Martin. It requires us to provide any data--we have 
disclosed whatever data that we have on the issues, and I don't 
think there was a particular study that was done that was 
saying that--across the industry, that was answering the 
question that you're asking.
    Senator Nelson. So, the answer to the question, ``Does the 
Data Quality Act require that kind of information?'' is what?
    Mr. Martin. I don't think the Data Quality Act required us 
to collect that kind of information.
    Senator Nelson. So, the answer--your answer here to the 
Committee is ``no.''
    Mr. Martin. I think that it requires us to provide that 
data for peer-review process--whatever data was relied upon, 
for peer-review process, which I think is what we've done.
    Senator Nelson. All right, I'll take that as a ``maybe.''
    Let me ask you about information that has not been 
provided, that has been withheld. Is it correct that, as of 
today, 1,400 pages of responsive documents have been withheld? 
Is that true?
    Mr. Martin. There was a FOIA that was provided to the 
Commission more than a year and a half ago about all the 
underlying documents and data related even to the previous 
media ownership and localism reviews. The Commission responded 
to it in a FOIA context, we took the documents and provided 
them in our normal legal course. There's 800 pages of that 
1,400--840 pages--that are copyrighted data that we are not 
legally allowed to provide to others; another 300 of those 
pages are the Commission staff's running of numbers of that 
copyrighted data--again, we're not legally allowed to provide. 
The remaining few hundred pages are e-mails and copies of e-
mails and copies of memoranda that have the internal 
deliberative process that we never provide in the context of a 
FOIA. You're talking about a FOIA that was going on. The person 
who asked for that in the FOIA process, we've given them--what 
we're legally required to give them. As for the copyrighted 
data, we actually went back, and I asked the lawyers, ``Was 
there any way to give them the copyrighted data, even though 
we're not allowed to?'' And the lawyers weren't able to 
determine a way, under a FOIA, that we would provide data that 
we are allowed to give to other people under the copyright that 
we got it from, the source. But--so, that data has not been 
provided in the FOIA process, no.
    Senator Nelson. So, those 1,400 pages will not be provided 
to the public before December 18, is what you have said, and 
you've given the reasons for it.
    Mr. Martin. Those 1,400 pages aren't going to be provided, 
because, under the FOIA laws, we are not either required or 
supposed to be providing them when we have data that we've 
gotten from a source that we're legally not supposed to give to 
other people, because they sell this data to other people, if 
we bought data from somebody, and then we just turned around 
and provided it to the public, that would mean they wouldn't be 
able to sell that data to others. So, when we buy it from 
someone, they tell us that it's still copyrighted, we can't 
just provide it to the public. If we do that, they won't sell 
it. They're not able to sell it. We would take away their 
business of selling the data. So, no, we can't provide that 
underlying data. I know people would like us to give it to 
them, so they wouldn't have to go buy it, but we can't do that, 
legally, because we purchased it, and part of the purchase 
agreement was, we won't just release it to the public. Other 
people have to go back to that source and buy it, as well.
    Senator Nelson. In some of those notes that you said were 
personal notes, is that--are you claiming, under attorney-
client privilege?
    Mr. Martin. It's not under attorney-client. Under FOIA 
litigation, anything that's so-called ``deliberative process,'' 
the internal e-mails back and forth, you're not required to 
provide to the public as part of a FOIA request. When anybody 
can write in and say, ``I want all your official documents,'' 
you don't have to provide e-mails back and forth between staff.
    Senator Nelson. Thank you for your time. And I'll conclude 
with this. There was a GAO report that noted leaks of 
Commission's information to lobbyists with interests before the 
Commission. And you indicated that you're going to put out a 
weekly list of items circulating among the Commissioners for a 
vote. Does this solve, in your opinion, the underlying problem?
    Mr. Martin. I think so. The underlying problem was they 
said that only certain lobbyists knew when there was a decision 
in front of the Commission for consideration. I've always done 
my best to make sure that the public interest groups were 
aware, as well. Many times, I've actually called them, myself. 
Even in this media ownership proceeding, when I came up with 
the time-frame for us to be deciding this, back in September, 
and I alerted my other fellow Commissioners to it, I actually 
personally called several of the consumer groups to make sure 
they understood this was what I was thinking. I've always done 
my best to end up doing that. But I think it does solve the 
problem, to make sure everyone is aware of the proceedings that 
are in front of the Commission.
    Senator Nelson. So, you don't think any further reform 
practices are needed with regard to the GAO report.
    Mr. Martin. I think this addresses their concern. I think 
there's always things the Commission can work on to try to find 
ways to end up making sure that everyone's informed about what 
we're doing. But I think that this addressed their concern that 
was included in that GAO study.
    Senator Nelson. Does anybody on the Commission feel like 
that there ought to be reform measures that should be adopted 
in the wake of this GAO report? Anybody who would like to 
address that, besides the Chairman?
    Commissioner Adelstein. Well, one other recommendation that 
I think might make sense is that we announce when we, what's 
called ``white-copy'' items. In other words, before we consider 
something at an open meeting, the Commissioners are to be given 
3 weeks notice. It would be nice if everybody knew when we were 
given notice, so that they would have the opportunity, then, to 
ramp up and have the opportunity to have input during that 
period. Knowing what's on the circulation list doesn't 
necessarily indicate to them what is actually going to be on 
our upcoming open meeting agenda. They might not find that out 
until what's called the Sunshine Notice is given, which is 1 
week out. At that point, they can't contact us, they can't even 
get to us without us asking them questions. So, ironically, the 
first time they find out something's coming up on our agenda is 
the very minute that they can no longer contact us.
    So, I think if we were to do that 3 weeks out--and it's 
something I've discussed with my colleagues--I think that might 
be even more helpful.
    Mr. Martin. I think that might end up being a helpful 
suggestion. Commissioner Adelstein and I have talked about it. 
I don't think that was the issue that GAO was concerned about. 
GAO was concerned that they didn't even know there was an issue 
in front of the Commission. Because we're publishing everything 
that's in front of us, everyone would know what's in front of 
us, so if there was an issue that you were following that you 
wanted to make sure you understood the Commission might be 
considering, we would alert you to that. Commissioner Adelstein 
suggested that, and that might be a helpful suggestion, to make 
sure they know that we might be anticipating ``deciding this 
issue that's on that list on this day'' earlier. I think that 
could be helpful to do. I don't think GAO actually was critical 
of that aspect of our decisionmaking process, but that might be 
helpful.
    Senator Nelson. Mr. Chairman, with all these questions 
raised by a Committee of the U.S. Senate, do you intend to 
continue with this proceeding on December 18?
    Mr. Martin. As I said, I plan, at this point, to continue 
on with the proceeding, but I certainly am going to talk to all 
my colleagues about it, and I think it's important for us to 
engage both on the process and on the substance to try to 
determine what's the appropriate way to proceed, see where 
there's consensus on the Commission. But, yes, at this point, I 
think it's important for us to still proceed.
    Senator Nelson. In your mind, do you think that, of the 
concern that has been expressed by this Committee, that it has 
any veracity, in your opinion?
    Mr. Martin. Oh, I have no doubt that the Committee is being 
truthful and it's raising its concerns. I think, though, this 
process has been, actually, more open and more transparent and 
more inclusive than any other of the decisionmaking processes 
that the Commission engages in. And I think that we have, 
actually, done our very best to make sure that the public has 
an opportunity, not only to know what we're thinking about 
doing, but, in a very specific way, actually knowing the exact 
proposal.
    I also think that the Commission has an obligation to, not 
only look at the concerns that have been raised at the public 
hearings about being opposed to media consolidation and 
concentration, in general. Many of the complaints are about 
things that have already occurred and that Congress itself put 
in place as limits. Many of the concerns that were raised, for 
example, at the public hearings about radio concentration are a 
result of the radio caps that Congress put into the law in 
1996. That was one of the overwhelming concerns that we heard 
over and over again.
    I've proposed no further changes to any of those rules, but 
I think that it is incumbent upon us to recognize that there 
may be rules we have that the courts have actually said are no 
longer justified--they've supported the Commission's decision 
on that--and that are not responding to, or are actually 
creating some additional problems in the industries. And I 
think that we need to end up responding to that.
    Senator Nelson. Do you think a cloud has been placed over 
the appropriateness of your actions if you force this to a 
decision on December 18?
    Mr. Martin. I think that during my time at the Commission, 
every time the Commission has ever considered anything related 
to media ownership, there's been a cloud over the Commission. I 
don't think that's the first time.
    I think it's the most contentious issue we end up dealing 
with, and I've done my best to do so in a open and transparent 
fashion. But I think it is important on us, at some point, to 
proceed.
    Senator Nelson. Mr. Chairman----
    The Chairman. Yes.
    Senator Nelson.--thank you for the opportunity, as one 
Member of this Committee, to get some answers.
    Thank you.
    The Chairman. Thank you.
    Senator McCaskill?

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you, Mr. Chairman.
    You all are so popular, I never dreamt that I could go 
preside at noon, for an hour and a half almost, and still get 
back, and you would still be here. I don't know whether to 
congratulate you or console you.
    [Laughter.]
    Senator McCaskill. You know, and I've got to say, just as a 
comment, Chairman Martin, to say that this process is more open 
and transparent than other actions taken by the FCC, I've got 
to tell you, I think that's a pretty low bar. I think openness 
is a real problem. I think, you know, there is a sense I have 
that this whole area--it's almost like smoke signals. And if 
you know the right code with the smoke signals, if you're the 
right lobbyist or the right person in the right industry, you 
have much more of a finger on the pulse of what's going on over 
there than, maybe, sometimes even your fellow commissioners. 
And I think that's a huge problem for a public agency that's 
dealing with something as important as public communications 
and the access of the public to all kinds of media outlets. It 
appears to me this is a runaway train.
    I want to talk about DTV a little bit. I am really worried 
that your penchant and obsession with this media ownership 
thing has moved DTV off the burner, to the detriment of the 
public. And let me go over a few realities.
    I know you're cranky about the GAO report, but I've got to 
tell you, I've read the report, I've looked at your response, 
and I get what they're saying.
    First, there's no final public education rule. OK? I think 
you will agree with that, correct?
    Mr. Martin. I'm sorry, there's no final what?
    Senator McCaskill. Public education rule on DTV.
    Mr. Martin. There's no final public education rule. There 
is an item in front of the Commissioners to vote, that I voted, 
that would have the requirements of PSA requirements, as I 
think others, and you, I believe, in a letter to us have 
written us, encouraging us to do. But, no, it has not been 
adopted by the Commission.
    Senator McCaskill. We are 17 days from the beginning of 
this program. Seventeen days from the beginning of this 
program, and there is no final public education rule, but yet, 
we can make sure that we do this media ownership at the next 
meeting.
    Mr. Martin. If you're talking about the public education of 
the converter-box program, that actually is something that the 
NTIA has not only the responsibility for, but the funds for. If 
you're talking about public education of the conversion that 
will occur in 2009, that's the public education campaign I was 
talking about. The converter-box program is not something we 
either control or have any funds for.
    Senator McCaskill. But you--but these are not two unrelated 
items. Public education requires that the public understand 
both programs. Why in the world would the coupon program even 
resonate with them if we aren't even to the point that we're 
ready to educate the public about why in the world a coupon 
would even be necessary? I mean, I think, to say that the 
responsibility for public education is just NTIA, which, by the 
way, the guy that runs NTIA said, ``I'm done, I'm gone,'' right 
before the whole thing happens. He's outta here. Talk about 
feeling like you have a deck chair on the Titanic, you know, I 
don't think that you have a sense of urgency----
    Mr. Martin. But this----
    Senator McCaskill.--about the public----
    Mr. Martin. I think----
    Senator McCaskill.--communication about this.
    Mr. Martin. I think that's not true, that we don't have a 
sense of urgency, but I do think that we also have to respect 
that, actually, the Commission had come to Congress and had 
asked for, in our budget, money to do a public education 
campaign, and twice we received zero in our budget to do a 
public education campaign. Instead, through the process that 
was done in the budget that set the 2009 deadline, the money 
for public education was explicitly given to the Department of 
Commerce and not to the Commission. It was considered by the 
Committees, and it was decided to go to the Department of 
Commerce.
    Senator McCaskill. Well, I still----
    Mr. Martin. We have no funds for it. What we can do is try 
to require the industry to end up implementing it.
    Senator McCaskill. The public education rule for a program 
that is just over a year away from full implementation, the 
idea that it's not even on the agenda at next week's meeting, I 
think, is troubling.
    Second, you haven't finalized the rules and requirements 
for channel allotment for broadcasters. Is that correct?
    Mr. Martin. No, we finalized the DTV Table of Allotments in 
August. Some broadcasters may have filed individual petitions 
for reconsideration, which we'll deal with after we get an 
opportunity for notice and comment. But we finalized that DTV 
Table of Allotments in August.
    Senator McCaskill. Well, we have 11 commercial stations in 
Missouri that need approval before they can build out their DTV 
facilities. Eleven stations in my state. And we are a year and 
a few months away from liftoff.
    I also want to point out that the construction permits--you 
haven't even finalized the rules for construction permits yet. 
Is that correct?
    Mr. Martin. No. I think that we--I thought that we had, in 
the final, most of those rules. We've got an annual periodic 
review, we're doing our third periodic review in anticipation 
of the DTV transition, that, again, the Commission had 
indicated to Congress that we would finalize by the end of this 
year, we would circulate it around by the end of this year and 
finalize it, which I, again, have circulated to the 
Commissioners for consideration.
    Senator McCaskill. You began circulating the third periodic 
review last week, December 4. You released the NPRM in May, 7 
months ago, and it's not even on the agenda next week. Now, 
this is urgent. This whole thing about making sure newspapers 
are profitable, I'm not sure that should be on the front burner 
when you've got this kind of massive program that's going to 
impact literally hundreds of thousands of my constituents, and 
it doesn't appear it's getting the prioritization that it 
deserves, based on how important it is.
    Mr. Martin. I would respond that I think that the 
Commission moving from a Notice of Proposed Rulemaking to a 
final order in 7 months is actually indicating that that's 
something that's a high priority. When we put out a Notice of 
Proposed Rulemaking, it takes about 30 days for it to be 
published in the Federal Register. Then people usually have to 
comment on it, 30 or 60 days, along with, then, replies, and 
then us doing an order off of that, is actually moving it very 
swiftly. I think that's actually an indication of how important 
that is, when we put that out in May and we're moving to final 
order already.
    And I actually think that we have also significantly begun 
some of the consumer education efforts. We've had our staff in 
all of the field offices go around to--for example, into the 
senior centers and into places all around the individual states 
where they're located. They've visited thousands of sites and 
provided information. They've made hundreds of presentations in 
those communities. I think, without any funds, we are actually 
doing a very good job of trying to educate consumers, at this 
point.
    Senator McCaskill. Well, you know, I hope you're right, but 
I am worried that we don't have the prioritization of the 
items, what actions must be completed before January 1, 2008, 
or before February 1, 2009. I don't think you've done enough on 
risk mitigation. I thought the GAO report was fair and 
comprehensive, and I think that you've listed a lot of things 
that you had done, but there is no strategic plan there, 
there's no hardline goals, there's no performance measures that 
you have put. There is not a comprehensive plan that you have 
come forth with, with those kinds of things that would give us 
the assurances that we need on DTV. There is not a plan. And, 
again, the things that are supposed to be done are late.
    You know, and let me talk a little bit about transparency. 
I know Senator Nelson just referred to it. Why--when you just 
publish the list you're talking about, I mean, it's my 
understanding--and I've glanced at one of these--it's a very 
long list, and it includes stuff that's old, that's not really 
going to be considered. Why--you know, why not do what 
Commissioner Adelstein said, why don't you actually say, ``OK, 
we're going to vote on these things, this is going to be on the 
agenda,'' and give them as much notice as possible, everyone. 
And, finally, my question is--and I would like every 
Commissioner to answer this--why aren't the votes public? I 
don't get that?
    Mr. Martin. Well, first, I'm happy to make public what the 
Commissioners have voted on and which ones they haven't. 
Indeed, I think that's a good idea. I don't have any problem 
with that. I think you should ask the other Commissioners, to 
make sure that they're OK with that, as well, but I'm perfectly 
happy to make sure everyone knows what items have been voted, 
or not.
    You're right, many of the items are very, very old. They're 
very, very old, because it's very difficult to get the 
Commissioners to vote on items that are on circulation. I think 
that that's an increasing challenge for the Commission, but I 
think it's important for us to continue to try moving forward 
on the issues. And I think that it's critical for us to try to 
make sure that we are moving forward on all of them, so I think 
it's helpful for everyone to know just how many are on 
circulation. And I don't have any problem with everyone knowing 
who has voted what. I think that's helpful.
    Senator McCaskill. Is it--Commissioner Copps, are you OK 
with votes being public in the Commission meetings, as to what 
was voted on and how everyone voted on each item?
    Commissioner Copps. Certainly, I have no problem with that. 
I think we ought to be striving for openness, transparency, and 
clarity, and that would assist that.
    Senator McCaskill. Commissioner Adelstein, do you have any 
problem with votes being public and everyone knowing what was 
voted on and how everyone voted?
    Commissioner Adelstein. I think it's a good idea to let 
people know as much as possible.
    Can I add something on the third periodic review? I think 
that you're exactly right on priorities. I'm extremely 
concerned that we have asked broadcasters to take on an 
enormous responsibility, and we haven't given them the 
instructions as to how they're to do it. This could have been 
done a long time ago. This should have been done faster. We 
spent a lot of time over the fall worried about a lot of 
different issues, and this wasn't one of them. I talked to the 
bureau months ago about getting this done. I testified before 
this Committee in October, and I said that this wasn't done. 
Now only 41 percent of full-power TV stations are positioned to 
broadcast in digital, and the remaining stations are at varying 
levels of preparedness. They've got issues with tower 
construction, antenna and equipment replacement, channel 
relocation and coordination with Canada and Mexico. We talked 
about this with Senator Hutchison, as you might recall, at the 
last hearing. There are a lot of big issues. And instead of 
dealing with those, we've been obsessively trying to let 
newspapers buy broadcast stations. I cannot understand the 
priorities. Your constituents will suffer if we don't get this 
done, because, in most of Missouri, they're not going to be 
able to do construction in the wintertime, and this winter's 
out. So, they should have already been given this guidance long 
ago.
    I think that it should be what we're voting on December 18, 
rather than this. We actually should have voted on it even 
earlier. I've been calling for it, for some time.
    Now, the current proposal before us is problematical. I'll 
tell you, that, after waiting this long, leaving broadcasters 
in a very difficult position, what we have before us is very 
regulatory and not very flexible, in terms of giving 
broadcasters the flexibility they need. Now that we've got them 
up against the wall and we're asking them, nationwide, to do 
this all at once, I think we need to afford them a little bit 
more flexibility. And I hope we can all work together to make 
this item a little bit more responsive to some of the concerns 
that broadcasters have raised, and we need to move on it 
immediately. This is an urgent priority, much more a priority 
than allowing big media to get bigger.
    Senator McCaskill. Commissioner Tate, are you willing to 
have all the votes done publicly, with how everyone voted being 
made part of the public record?
    Commissioner Tate. Well, I want the public to know it 
already is, and then our statements are also all put online, so 
the public knows how we vote on every issue.
    Senator McCaskill. Well, but should the votes be public?
    Commissioner Tate. Well, at our meeting, they are public, 
and then we also vote on a myriad of other things that are on 
circulation.
    Senator McCaskill. So, you have no problem with every vote 
that's being done, everything being given to the public on how 
you vote, yes.
    And you, Commissioner?
    Commissioner McDowell. No problem.
    Senator McCaskill. OK, great.
    Well, I think that the openness and the transparency would, 
maybe, deal with some of the frustration that you've heard from 
this hearing today. And I will tell you, you are a remarkable 
public leader, if, in light of public opposition and the 
bipartisan opposition that you have heard today, from what you 
are about to do on December 18, if you move ahead and do it, 
you're a braver man than I am.
    [Laughter.]
    Senator McCaskill. Thank you all very much.
    The Chairman. Thank you very much.
    This has been a long session, but it was historic, in the 
sense that the attendance rate was much better than any other 
hearing, I believe, in the history of this Committee. It says 
much about your Commission.
    And I want to thank you for your patience and for your 
responses to our questions.
    However, as you've noted, some of the Members were not able 
to stay for the full hearing and had to leave, and they have 
asked that their questions be submitted. And, if I may, I will 
be submitting those questions and would want a response, if at 
all possible, by the middle of January, just for the record.
    Once again, thank you very much.
    Hearing is adjourned.
    [Whereupon, at 1:35 p.m., the hearing was adjourned.]
                            A P P E N D I X

Prepared Statement of Hon. Jim DeMint, U.S. Senator from South Carolina
    Mr. Chairman, thank you for holding this hearing. I appreciate all 
the Commissioners being here this morning.
    Mr. Chairman, I ask that my full statement be included for the 
record. Thank you.
    The signals being sent lately by the FCC are mixed. Deregulation, 
albeit very timid, is being pursued on the media consolidation front, 
while every possible angle to increase regulations on the video market 
seems to be pursued. I urge the Commission to let the free market grow 
and allow consumers to enjoy new benefits and innovations in 2008.
Media Ownership
    Our media environment is more complex than anyone could have 
dreamed 30 years ago. Then, the average citizen perhaps had a one 
newspaper, 3 TV broadcasters, and a handful of radio stations in their 
local community.
    It was a time before:

   widespread cable or satellite TV (both are now available to 
        practically every household, offering hundreds of channels)

   satellite radio (also now available to all)

   the Internet (offering limitless information from limitless 
        sources)

    To suggest that American citizens in 2007 have limited, or even 
decreasing, access to voices is laughable.
    The Commission is right to amend the dated cross-ownership ban. By 
listening to some of my colleagues, you may think that the changes 
being proposed are earth-shattering. Of course, they are not.
    There are currently many examples of cross-owned local newspaper 
and TV properties already existing in the United States. Over 30 
percent of U.S. households live in those communities. I do not believe 
democracy is suffering because of it.
    I would like to point out that the Commission could go further, 
however. I think we should stop regulating competing media segments 
differently, based on transmission technologies they use.
    For example, the two satellite radio companies in America are close 
to getting their merger approved. They use different transmission 
technology than local radio stations, but they compete with each other. 
I would like to know why regulators allow one segment to essentially 
have ownership deregulation, but another to face limits that have the 
effect of hurting consumer choice and market competitiveness.
Regulation in the Video Market
    It is unnecessary and harmful for the government, through the FCC, 
to get involved in private business negotiations. The competitive 
market rewards those offering the best product and punishes those that 
do not. These incentives provide the impetus for agreements to be 
reached between programmers and distributors in nearly all cases.
    It is also unnecessary and harmful for regulators to mandate the 
way companies in a competitive industry offer their product to 
consumers, whether at the retail or wholesale level. I believe ``a la 
carte'' is a great idea and I would like to have someone offer it at my 
home in South Carolina. But, the government mandating it is a bad idea 
that needs to be buried.
    Again, thank you, Mr. Chairman, for holding this hearing today. I 
look forward to the testimonies and discussion this morning.
                                 ______
                                 
  Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
    Thank you, Mr. Chairman, for holding this oversight hearing for the 
Federal Communications Commission. I also want to thank all five FCC 
Commissioners for taking time to appear before this committee this 
morning. The hearing today provides a timely opportunity for the 
Commission to address recent actions that have concerned many members 
on this committee as well as the general public.
    One of the more pressing matters is the FCC's attempt to ease 
restrictions on certain long-standing media ownership rules. This 
committee last month held a hearing on this very issue, where many 
members of this committee voiced concern about any relaxing of current 
media ownership rules, particularly because of the negative impact on 
localism, diversity, and competition in broadcasting.
    However, less than a week after that hearing, a proposal to lift 
the newspaper-broadcast cross-ownership ban in the top 20 media markets 
was announced. Worse yet, the FCC allocated only 28 days for the public 
to comment on this new proposal. No matter what side of the issue you 
are on, to provide such an abbreviated time-frame for the public to 
weigh in on the specific proposal Chairman Martin has offered is very 
disconcerting, especially considering FCC precedent.
    For example, last month, the FCC provided sixty days for public 
comment and reply for a Notice of Proposed Rulemaking for amending pole 
attachments rules. On December 4, the Commission gave forty 5 days for 
public comment and reply on a rulemaking proposal to indefinitely 
extend the very popular Do-Not-Call list registration period. And, in 
November 2006, the FCC granted ninety days for public comment and reply 
on the effects of communications towers on migratory birds.
    It defies logic that the FCC would place this on an accelerated 
path. Historically, the Commission has provided 60 to 90 day comment 
periods. By hastily concluding this proceeding, the Commission is 
inevitably muting the public's voice and in doing so is wilfully 
negating its principle responsibility to uphold the public interest.
    It appears to me that the FCC is having severe difficulty 
understanding the communications from the Congress as well as the 
American people and even the Courts. I know that at a localism hearing 
in Portland, Maine this past summer, my constituents communicated 
significant concerns about any further weakening of the media ownership 
rules. Aside from shareholders and employees of broadcasting companies, 
I can think of no sector of society that could possibly be clamoring 
for further monopolization of America's media markets. When the FCC 
erroneously considered this issue back in 2003, the Commission received 
more than 2 million public comments on the issue--the vast majority of 
which opposed further media consolidation.
    While the Third Circuit Court of Appeals, in its Prometheus 
decision, concluded that ``reasoned analysis supports the Commission's 
determination that the blanket ban on newspaper/broadcast cross-
ownership was no longer in the public interest,'' it also stated, in 
its decision, that it could not uphold the Cross-Media Limits 
themselves because the Commission did not provide a reasoned analysis 
to support the limits that it chose.
    Furthermore, the Court stated that its remand of the FCC's ``cross-
media limits also gives the Commission an opportunity to cure its 
questionable notice.'' Most observers would agree that 28 day's notice 
for public comment for significant rule changes and 5 day's notice for 
localism and media ownership hearings in Washington, D.C. and Seattle, 
WA is unreasonably deficient. Therefore, many of us were compelled to 
convey our concern through the Media Ownership Act of 2007, which was 
reported favorably out of this committee last week. This bill requires 
a 90 day public comment and reply period on the Commission's proposed 
final rule and a separate proceeding on localism, which must be 
completed before any changes to media ownership rules. I hope it and 
this hearing result in the FCC reconsidering this rulemaking.
    Another crucial issue is the status of the DTV Transition. While a 
lot of progress has been made recently, there are still several 
critical issues that persist. There is a lack of clear leadership or 
central government authority managing the transition efforts--instead 
it's more of a partnership between the FCC and Department of Commerce, 
which could lead to consumer confusion about whom to contact regarding 
particular issues and problems. We have yet to discern how the 
government will work with industry and other organizations to provide 
greater assistance to the more vulnerable groups such as seniors, 
people with disabilities, minorities, and low-income families that will 
require that help. Also, over the summer, the FCC found that label 
compliance of retailers was not impressive. With the holiday season 
currently underway, hopefully that has improved dramatically.
    I appreciate the benefit of your testimony today and I look forward 
to hearing from the panel on these topics as well as other timely 
issues. Thank you, Mr. Chairman.
                                 ______
                                 
Consumers Union, Consumer Federation of America, Free Press
                                                  December 12, 2007
Hon. Daniel Inouye,
Chairman,

Hon. Ted Stevens,
Vice Chairman,
Senate Committee on Commerce, Science, and Transportation
Washington, DC.

Dear Chairman Inouye and Vice Chairman Stevens:

    We offer this letter for the official record of the hearing on 
``Federal Communications Commission Oversight'' to be conducted by the 
Committee tomorrow. This is the outline of a response to Chairman Kevin 
Martin's latest proposal to relax media ownership rules by three of the 
largest groups representing consumers on media policy issues.
    Despite Chairman Martin's apparent effort to propose a compromise 
modification of the newspaper/broadcast cross-ownership ban, 
fundamental flaws in the Commission's data gathering, administrative 
procedures and ambiguities in the plan make it impossible for us to see 
how this proposal could serve the public interest goals of promoting 
diversity, competition and meaningful local and minority programming 
opportunities. Unless Chairman Martin remedies procedural flaws, 
eliminates dangerous and vague exceptions, and thoroughly expands 
meaningful minority ownership and local programming needs, his plan 
will not serve the public interest or meet minimum legal fairness 
requirements for FCC rules.
    On November 13, 2007, Chairman Kevin Martin offered the public a 
proposal to relax the newspaper/broadcast cross-ownership rule. He did 
so outside the normal channels of agency procedure, publicizing the 
proposal instead through a press release and an Op-Ed in The New York 
Times.\1\ The proposal and the time table for public comment were not 
conducted using standard Commission process, nor were they published in 
the Federal Register or put out on Public Notice. The Chairman declared 
that he would permit 30 days for public comment, due December 11th. 
Immediately thereafter, the ``sunshine rules'' would apply in advance 
of a December 18th vote and the public would have no further 
opportunity to comment or to reply to the comments of other 
stakeholders.
---------------------------------------------------------------------------
    \1\ Kevin J. Martin, ``The Daily Show,'' New York Times, Nov. 13, 
2007, Available at http://www.nytimes.com/2007/11/13/opinion/
13martin.html; Federal Communications Commission, ``Chairman Kevin J. 
Martin Proposes Revision to the Newspaper/Broadcast Cross-Ownership 
Rule,'' News Release, Nov. 13, 2007, Available at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-278113A1.pdf.
---------------------------------------------------------------------------
    We believe this process is fundamentally inadequate and runs at 
cross-purposes with the public interest as a simple matter of proper 
review and consideration. The process used to put the proposal out can 
in no way replace a proper opportunity to comment on an actual proposed 
rule. Indeed, the act of the Chairman putting out a proposed rule in an 
Op-Ed rather than in a Notice of Proposed Rulemaking smacks of abuse of 
administrative process, which has typified this proceeding for the past 
5 years. The process fouls committed by this agency on everything from 
data collection to research agendas to peer review are legion. It is 
our view that a December 18th vote on media ownership rules--as 
proposed by the Chairman--is not in the public interest.
    Beyond our procedural concerns, the Chairman's proposal to allow 
case-by-case review of newspaper/TV mergers in all media markets 
suffers from a number of critical infirmities. The benefits he claims 
for it in his Op-Ed are not demonstrated in the record. The assertions 
that cross-owned combinations produce more news and that they benefit 
the financial viability of the newspaper business are simply not borne 
out by the facts and in no way justify reducing the diversity of 
viewpoint in our community. Our analysis shows that long-term cross-
ownership situations do not increase the amount of news in the market 
as a whole, or even by the individual station, and the stations tend to 
slant the news they produce. We note that both broadcast stations and 
newspapers (to the extent the Commission even has jurisdiction over 
these entities) continue to be very profitable businesses that do not 
deserve a bail out at the expense of the public interest. Further, 
there has never been any explanation for how the checks and balances 
provided by independent voices in different local media will be 
replaced in consolidated markets. The idea that the Internet is a 
suitable substitute for local news and original reporting doesn't pass 
even the lowest evidentiary bar. These are the central issues in 
setting the limits on cross-ownership. Chairman Martin's proposal does 
not meet any of these public interest tests.
    It is notable that the new proposal appears to permit media 
concentration only in the largest markets. However, this facial 
difference from the proposal of the previous FCC (which would have 
swept away ownership limits in all but the smallest markets) does not 
appear to hold up under scrutiny. Those mergers that are not permitted 
presumptively would be subject to a four part test. The criteria it 
proposes to use to ensure that mergers do not harm the public interest 
are vague and unspecified, and therefore unlikely to afford protection 
from harm. Of greatest concern, perhaps, is the fact that this new four 
part test could possibly be met almost entirely with unilateral 
assertions from merging companies (``Yes, we will do more news after 
consolidation.'' ``Yes, we are having financial difficulties.''). 
Effectively, this new waiver standard could permit waivers in most 
markets in the country.
    Finally, we look in vain for any mention of minority ownership in 
this proposed rule, despite the fact that both the Congress and the 
courts have repeatedly asked the Commission to address the issue. The 
agency's record on the issue of minority broadcast ownership can best 
be described as one of willful neglect. People of color own just 3 
percent, and women just 5 percent of all TV stations, even though those 
groups make up 35 percent and 51 percent of the U.S. population, 
respectively. Sadly, those striking numbers had to be compiled by Free 
Press because the Commission has never conducted an accurate census of 
minority owners. The FCC has clear statutory and moral obligations to 
address the woefully inadequate levels of minority and women-owned 
broadcast outlets before it moves forward with any further changes in 
its media ownership rules.
    For this proposal to be worthy of consideration by the public and 
the Congress, the FCC should first correct its process problems and 
complete the record with regard to localism and minority ownership. 
From there, if the Chairman is determined to press forward quickly, it 
is imperative that strong limits on media mergers are preserved with 
very narrow exceptions based on important public policy goals that 
would prevent the most dangerous consolidation that could harm our 
democracy. Among those provisions that would be a starting place for 
consideration, the Commission should maintain the top four-firm 
exclusion concept as a hard line and impose a high standard with regard 
to other mergers, eliminating the loose waiver process. To the extent 
that a newspaper/TV combination will add news production to a TV 
station that has not produced local news during the period of its 
license (as opposed to merely adding news to an outlet that already 
does news), it should raise the merits for its consideration. The 
Commission should study the impact of top market mergers on minority 
owners and the quantity/quality of local news to determine the economic 
impact at the market level.
    To prevent excessive concentration, the FCC should adopt a ten 
voice test--which is consistent with the DOJ/FTC Merger Guidelines for 
the threshold where a market is defined as unconcentrated (more than 10 
voices). The voice count should be based on a measure of market 
concentration that reflects all types of media outlets, their audiences 
and their relative contribution to the overall media marketplace. Only 
by adopting such an approach to counting of voices will the FCC ensure 
that its market analysis reflects the reality of media markets and 
achieves the public policy goal of promoting ``the widest possible 
dissemination of information from diverse and antagonistic sources.'' 
Within this conceptual frame, the Commission should adhere strictly to 
the thresholds of impermissible concentration in the Merger Guidelines.
    The current Martin plan will not serve the public interest or meet 
minimum legal fairness requirements for FCC rules. We therefore call on 
Congress to make sure that the FCC addresses all of these concerns 
before promulgating new media ownership rules.
            Sincerely,

Gene Kimmelman,

Vice President for Federal and International Policy,

Consumers Union.

Mark Cooper,

Research Director,

Consumer Federation of America.

  

Ben Scott,

Policy Director,

Free Press.

cc: Senate Commerce, Science, and Transportation Committee Members
                                 ______
                                 
                                                  December 11, 2007
Hon. Daniel K. Inouye,
Chairman,

Hon. Ted Stevens,
Vice Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Chairman Inouye and Vice Chairman Stevens:

    We write to express our concerns with the FCC's proposal to impose 
a ``temporary'' or ``interim'' cap on high-cost Universal Service 
funding for wireless carriers and other competitive entrants and with 
the Joint Board's recent recommendation that the FCC go further and 
impose a permanent cap on all Universal Service support, with dramatic 
reductions in support for wireless in rural areas. Some of the 
signatories to this letter have recently appeared before your 
committee, and all of the undersigned feel it important to let you know 
that both proposals are contrary to the clear direction Congress, and 
your committee in particular, provided to the FCC with the enactment of 
the Telecommunications Act of 1996.
    At the outset, any FCC proposal that purports to be ``temporary'' 
or ``interim'' is suspect. The FCC suggests that the interim cap would 
only last until long-term reforms are adopted, yet it has neither a 
deadline nor an incentive to complete long-term Universal Service 
reform. This is no small matter, given that key portions of the FCC's 
promise to reform high-cost support contained in numerous orders 
between 1997 and 2001 remain just that--promises. Since 2001, the FCC 
has not adopted a single order reforming Universal Service 
distributions for areas served by rural telephone companies. Worse yet, 
we have yet to see any recent proposal that comports with the 1996 
Act's principle of competitive neutrality and key Universal Service 
principles that were codified as Section 254 of the Communications Act 
(47 U.S.C.  254).
    Both of you have previously expressed strong support for 
competitive neutrality. H.R. 5252, approved last year by the full 
Committee, and S. 101, introduced earlier this year by Senator Stevens, 
both require that ``Universal Service support mechanisms and rules 
neither unfairly advantage nor disadvantage one provider over another, 
and neither unfairly favor nor disfavor one technology over another.'' 
Proposals to freeze Universal Service support only for a select group 
of providers, but not for others, would violate this bedrock principle.
    A cap on support for wireless competitive eligible 
telecommunications carriers in high cost, rural, and insular areas 
would violate the clear principle that Congress set forth in Section 
254 that rural consumers are entitled to communications services and 
prices that are comparable to those available in urban areas. A CETC-
only cap will impede the deployment of wireless services needed for 
personal and public safety, limit consumers' choices, harm constituents 
who seek to obtain and maintain jobs but lack wireline service, and 
hinder rural America's ability to compete in the global economy.
    We applaud Senator Stevens' statement at the Committee hearing on 
June 12, 2007, that imposing a funding cap on ``new carriers [who] come 
in with new technology . . . [is like] someone's putting their head in 
the ground. This is an ostrich approach as far as I'm concerned.'' In 
the twenty-first century, consumers increasingly are selecting wireless 
as their voice service of choice. Yet rural areas are typically 3 years 
behind more urban areas in wireless deployment. A cap on funding only 
to competitive carriers would result in the delay or cancellation of 
wireless network construction in high-cost areas that would otherwise 
be underway. As you know, wireline carriers have now drawn $25 billion 
from the Federal Fund since 1999, while wireless carriers have drawn 
less than $3 billion. Adoption of a CETC-only cap would further this 
inequity, unfairly skew the marketplace, and improperly favor one 
technology over another. That is why at least eleven other members of 
the Committee have also written to urge the FCC not to adopt a 
wireless-only funding cap.
    Perhaps most important, a CETC-only cap would slow momentum toward 
appropriate reform of the Universal Service system that is needed to 
more effectively promote both broadband and mobile services across the 
country. We strongly agree with the concerns Senator Inouye expressed 
at the same June 12 Committee hearing that ``we cannot let short-term 
proposals free us from the need to address long term reform.''
    Unfortunately, recently released proposals for long term reform 
have similar problems. On November 20, the Federal-State Joint Board on 
Universal Service released its Recommended Decision, proposing long 
term reform of the Universal Service distribution methodology. Although 
the Joint Board's recognition of the value of supporting broadband and 
mobility is laudable, if adopted, the recommendations would eviscerate 
competitive neutrality and create an incredibly complex system for 
distributing support that will ultimately lock many areas into 
government subsidized monopoly telephone service--precisely the problem 
that the 1996 Act was attempting to cure.
    The Board's proposals are particularly harmful to wireless 
consumers, who contribute almost $3 billion to the Fund each year, but 
in many areas have yet to see a benefit. The proposals would deprive 
wireless consumers of the funding needed to improve, expand, and 
operate wireless networks in most rural areas, and would deny consumers 
access to quality services in rural areas comparable to those available 
in urban areas. The Joint Board's recommendations would unfairly 
eliminate support for the operating costs of wireless service, while 
preserving or expanding the dollars funneled to the traditional 
landline voice services that rural consumers use less and less every 
year. They would limit support for broadband service to a patently 
inadequate $300 million per year. And they would impose a permanent cap 
on the entire Universal Service Fund, without ever addressing whether 
that concept is consistent with the Congressional directive in Section 
254 that support be ``sufficient'' to ensure that consumers can receive 
the supported services.
    The Board's idea that regulators are going to select a single 
provider in each area to receive support for wireline, broadband, and 
mobility, respectively, turns the 1996 Act on its head. Further, their 
proposal to delegate to State commissions the ability to select a 
favored recipient of funding for each service in each area, with few if 
any uniform Federal standards is fraught with opportunities for 
jurisdictional and regulatory conflict and creates serious risks that 
deployment of voice, wireless, and broadband services will not be 
ubiquitous. A properly functioning and modern national Universal 
Service system must enable rural consumers to select the service and 
service provider that best suit their needs. Universal Service 
mechanisms are supposed to work with competition, not impede it by 
favoring one technology or provider over another.
    In sum, we view the Joint Board's recommendations as evidence of a 
well-intentioned process that regrettably ill serves your constituents 
and our customers. The Board provided but 18 pages of sparsely outlined 
recommendations that will require years of rulemaking and litigation to 
reach a conclusion. Now that the Joint Board has concluded its work, 
the process requires responsible stewardship if there is to ever be 
meaningful reform that benefits consumers. We respectfully call upon 
you to take a leading role in providing new guidance to the FCC on long 
term reform and ensuring that the FCC upholds the law that Congress 
wrote.
    We appreciate your continuing support and we pledge to continue 
working with you, the Joint Board and the FCC to achieve these worthy 
goals.
            Sincerely,

John Altamura,
President,
Airadigm Communications, Inc.

Richard N. Massey,
Chief Strategic Officer and General Counsel,
Alltel Communications, Inc.

Ron Smith,
President,
Bluegrass Cellular, Inc.

Victor (Hu) Meena,
President,
Cellular South Licenses, Inc.

Michael J. Small,
President and Chief Executive Officer,
Centennial Communications Corporation.

Jonathan D. Foxman,
President and Chief Executive Officer,
Chinook Wireless.

Bryan Corr,
President,
Corr Wireless Communications.

Dan Rule,
General Manager,
Golden State Cellular.

Laura Phipps,
Executive Vice President/General Manager,
Leaco Wireless.

Larry Lueck,
Manager, Government Relations,
New-Cell, Inc., d/b/a Cellcom.

Frank DiRico,
President,
N.E. Colorado Cellular d/b/a Viaero Wireless.

Jerry Whisenhunt,
General Manager,
Pine Cellular Phones, Inc.

Richard Watkins,
Vice President,
Smith Bagley, Inc.

Robert G. Dawson,
Chief Executive Officer,
SouthernLINC Wireless.

John E. Rooney,
President and Chief Executive Officer,
United States Cellular Corporation.
  
  
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                          Hon. Kevin J. Martin
    Question 1. Last year, a provision to reform the FCC's forbearance 
authority was included in the Committee's telecom reform bill. 
Specifically, it would have eliminated the ``deemed granted'' language 
in Section 10 in order to ensure a fairer process at the FCC. I 
recently introduced legislation that will eliminate this provision, so 
we can avoid a situation where the agency erases its rules simply by 
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
    Answer. As you know, section 10 establishes a process by which a 
forbearance petition ``shall be deemed granted if the Commission does 
not deny the petition'' within a maximum of 15 months. The Commission 
must follow the Communications Act of 1934, as amended, including the 
forbearance provisions codified in section 10 of the Act. I agree that 
it is preferable for the Commission to issue a decision. To enable the 
Commission to do so, it is policy to circulate to all of the 
Commissioners draft Orders addressing forbearance petitions at least 21 
days prior to the statutory deadline, and to remind them of the 
statutory deadline at that time. In addition, Commissioners are 
regularly provided with lists of upcoming statutory deadlines for 
forbearance petitions.
    The Commission has routinely adopted Orders granting or denying 
forbearance petitions within the statutory deadline. Since I have been 
Chairman, every forbearance petition that has been granted has been 
preceded by an up-or-down vote. Only one forbearance petition has been 
deemed granted by operation of law. That petition, Petition of the 
Verizon Telephone Companies for Forbearance under 47 U.S.C.  160(c) 
from Title II and Computer Inquiry Rules with Respect to Their 
Broadband Services, WC Docket No. 04-440 (Verizon Forbearance 
Petition), was ``deemed granted'' after the Commission, by a recorded 
2-2 vote, failed to adopt a draft Order that would have granted the 
petition in part and denied it in part.
    The circumstances surrounding the Verizon Forbearance Petition were 
unique, given that only four Commissioners were available to vote. 
Further, there has never been a grant or denial of a forbearance 
petition during my tenure as Chairman in the absence of an up-or-down 
vote. On December 7, the D.C. Circuit upheld the Verizon forbearance 
relief, specifically finding that ``[t]here is no indication that the 
Commission or individual Commissioners have abused this provision or 
have acted in bad faith.''
    The Commission takes very seriously its obligation to faithfully 
implement the Communications Act of 1934, as amended, including the 
forbearance provisions codified in section 10 of the Act. I will 
continue to ensure that forbearance proceedings will be conducted in a 
fair and open manner and that decisions are made on the basis of a 
sound record.

    Question 2. Earlier this year, the FCC released a Notice of 
Proposed Rulemaking examining so-called ``two-way, plug-and-play 
standards'' for cable navigation devices. Do you support implementation 
of Section 629 in a way that will create a retail market for ``two-way, 
plug-and-pay'' devices and allow for greater competition and consumer 
choice? Do you believe that FCC oversight is sufficient to ensure that 
any standards and specifications are created and changed through a fair 
process that treats all affected parties equitably?
    Answer. I support implementation of Section 629 of the 
Communications Act in a way that will help create a retail market for 
two-way plug-and-play devices and allow for greater competition and 
consumer choice. In fact, that is precisely the mandate Congress 
provided the Commission when it approved Section 629. When adopting the 
unidirectional solution that the consumer electronics industry and 
cable industry agreed upon, the Commission anticipated that the parties 
would negotiate and agree to a similar agreement on bidirectional 
compatibility of cable television systems and consumer electronics 
equipment. The path to a bidirectional agreement has presented business 
and technical hurdles that were not present in the unidirectional 
discussions.
    The Commission needs to continue to work to ensure that any 
standards and specifications are created and changed through a fair 
process that treats all parties equitably.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                          Hon. Kevin J. Martin
    Question 1. On September 5, 2007, I sent you a letter concerning 
TracFone's Eligible Telecommunications Petition to provide wireless 
Lifeline telephone service to low income consumers in eight states 
including Massachusetts. I have not yet received a response to this 
letter. Please provide me with an update regarding this situation.
    Answer. I have presented my colleagues at the Commission a proposed 
Order that addresses some Universal Service issues. That Order would 
grant the petitions of TracFone Wireless to be designated as an ETC for 
Lifeline support in New York, Florida, Connecticut, Virginia, 
Massachusetts, Alabama, North Carolina, and Tennessee.

    Question 2. I've been told that telephone companies and cable 
companies now have or will soon have the ability to engage in ``deep 
packet inspection'' of the content of Internet consumers' 
communications on a regular basis, and am concerned that there are no 
privacy protections in place to prevent providers from monitoring, 
capturing and then internally using or disclosing the content of users' 
communications. Chairman Martin, would you support action, and even 
more importantly, do you intend to take action, to establish a rule 
preventing providers from monitoring and/or using the content of 
consumers' Internet communications unless and until the user 
voluntarily agrees to waive the privacy of their communications?
    Answer. It is important to safeguard the privacy of consumer's 
communications. As Chairman, I have taken important steps to strengthen 
the Commission's safeguards that protect the privacy of consumers' 
communications. Section 222 of the Communication Act of 1934, as 
amended, establishes a duty of every telecommunications carrier to 
protect the confidentiality of its customers' customer proprietary 
network information, or CPNI. The Commission has adopted comprehensive 
rules implementing section 222. In March 2007, the Commission extended 
the application of these privacy rules to providers of interconnected 
VoIP service. As a result, companies that provide telephone service 
over the Internet generally are prohibited from using or disclosing 
CPNI without customer approval. We also strengthened these rules by 
requiring carriers to obtain explicit consent from a customer, rather 
than less restrictive opt-out consent, before disclosing a customer's 
CPNI with their partners for the marketing of communications services.
    The Commission is exploring what if any consumer privacy protection 
rules are necessary in the broadband context.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                          Hon. Kevin J. Martin
    Question 1. On December 18 you held a vote on a major change to the 
nations' media ownership rules, despite substantial concern here in the 
Senate. The Commerce Committee passed S. 2332, the Media Ownership Act 
of 2007, on December 4. We have over 20 bipartisan cosponsors. We asked 
you to delay this vote to consider important issues of localism and 
minority ownership and allow a proper period of comment on the rules. 
Why was it so important to move ahead on December 18 despite this 
opposition? Why could you not delay this vote beyond December 18?
    Answer. While I appreciate your and others' concerns about my 
decision to hold a vote on the media ownership Report and Order at the 
December 18 meeting, I do not believe that further delaying that 
decision would have been appropriate.
    Over the past year and a half the Commission has had to grapple 
with the most contentious and divisive issue to come before it: the 
review of the media ownership rules. The Commission's Media Ownership 
Order adopted on December 18, 2007, strikes a balance between 
preserving the values that make up the foundation of our media 
regulations while ensuring those regulations keep apace with the 
marketplace of today.
    Section 202(h) of the 1996 Telecommunications Act, as amended, 
requires the Commission to periodically review its broadcast ownership 
rules to determine ``whether any of such rules are necessary in the 
public interest as a result of competition.'' It goes on to read, ``The 
Commission shall repeal or modify any regulation it determines to be no 
longer in the public interest.''
    In 2003, the Commission conducted a comprehensive review of its 
media ownership rules, significantly reducing the restrictions on 
owning television stations, radio stations and newspapers in the same 
market and nationally. Congress and the court overturned almost all of 
those changes.
    There was one exception. The court specifically upheld the 
Commission's determination that the absolute ban on newspaper/broadcast 
cross-ownership was no longer necessary. The court agreed that ``. . . 
reasoned analysis supports the Commission's determination that the 
blanket ban on newspaper/broadcast cross-ownership was no longer in the 
public interest.''
    It has been over 4 years since the Third Circuit stayed the 
Commission's previous rules and over 3 years since the Third Circuit 
instructed the Commission to respond to the court with amended rules.
    It is against this backdrop that the FCC undertook a lengthy, 
spirited, and careful reconsideration of our media ownership rules.
    In 2003, when we last conducted a review of the media ownership 
rules, many expressed concern about the process. Specifically, people 
complained that there were not enough hearings, not enough studies, and 
not enough opportunity for comments and public input. When we began 
eighteen months ago, the Commission committed to conducting this 
proceeding in a manner that was more open and allowed for more public 
participation.
    I believe that is what the Commission has done. First, we provided 
for a long public comment period of 120 days, which we subsequently 
extended. We held six hearings across the country: one each in Los 
Angeles, California; Nashville, Tennessee; Harrisburg, Pennsylvania; 
Tampa Bay, Florida; Chicago, Illinois; and Seattle, Washington. And, we 
held two additional hearings specifically focused on localism in 
Portland, Maine and in Washington, D.C. The goal of these hearings was 
to more fully and directly involve the American people in the process.
    We listened to and recorded thousands of oral comments, and allowed 
for extensions of time to file written comments on several occasions. 
We've received over 166,000 written comments in this proceeding.
    We conducted ten independent studies. I solicited and incorporated 
input from all of my colleagues on the Commission about the topics and 
authors of those studies. We put those studies out for peer review and 
for public comment and made all the underlying data available to the 
public.
    Although not required, I took the unusual step of publishing the 
actual text of the one rule I thought we should amend. Because of the 
intensely controversial nature of the media ownership proceeding and my 
desire for an open and transparent process, I wanted to ensure that 
Members of Congress and the public had the opportunity to review the 
actual rule prior to any Commission action.
    After engaging in this extensive process and providing the public 
with unprecedented opportunities for input, the time had come to 
respond to the Third Circuit's remand, which is now more than three-
and-a-half years old, and complete the review of our media ownership 
rules which Congress has directed us, by statute, to undertake. 
Moreover, I felt strongly that we must provide certainty for a media 
industry that has for several years operated in a climate of 
uncertainty.

    Question 2. You say you provided a lengthy public comment period of 
120 days, which you extended to 167 days. You also held six hearings 
and finished the two localism hearings. But how could the public be 
expected to adequately comment on your proposed rules if you issued the 
proposed rules at the end of the process?
    Answer. On July 24, 2006, the Commission issued its Further Notice 
of Proposed Rulemaking in the media ownership proceeding. That Further 
Notice satisfied the Commission's notice-and-comment obligation under 
the Administrative Procedures Act, which requires notice of the ``terms 
or substance of the proposed rule or a description of the subjects and 
issues involved.'' 5 U.S.C. 553(b)(3) (emphasis added). Although not 
required, I took the unusual step of sharing with the public the actual 
text of the one rule I thought we should amend. Because of the 
intensely controversial nature of the media ownership proceeding and my 
desire for an open and transparent process, I wanted to ensure that 
Members of Congress and the public had the opportunity to review the 
actual rule prior to any Commission action. This was above and beyond 
any applicable legal requirement.
    Indeed, the Commission has no obligation to go through that extra 
step before we adopt an order. The Commission rarely goes through the 
extra step that we did here of publishing the actual rule so that 
people could see it before Commission action.
    Finally, issuing proposed rules earlier in the process might not 
have been effective. The Commission commenced a review of its media 
ownership rules, held public hearings throughout the country, and 
completed ten ownership studies in order to gain public input into the 
impact of media ownership on the three core goals which its ownership 
rules seek to further--competition, localism and diversity. Only after 
the Commission compiled a substantial record, took hours and hours of 
testimony, and completed the ownership studies were we able to 
determine whether to revise any of the media ownership rules and if so 
how.

    Question 3. You say you held six hearings across the country at a 
cost of more than $200,000. I worry that the $200,000 was totally 
wasted as you're now ignoring the input of the public. They testified 
against consolidation. You didn't hear people coming out and saying 
they wanted the newspaper to own the television station. You heard 
massive opposition to consolidation. You'll say that you didn't hear 
people constantly sounding off against cross-ownership, but why would 
you hear that--you never told them what you were concentrating on. How 
could you vote on a rule to relax the cross-ownership ban having heard 
the massive opposition to consolidation and then brag about spending 
money on hearings?
    Answer. When we began our review of the media ownership rules more 
than 18 months ago, we committed to conduct the proceeding in a more 
transparent and publicly accessible manner. The Commission reviewed the 
record carefully and listened to the concerns of the public. It is 
partly because of public input that we have, in every context except 
the newspaper/broadcast cross-ownership rule, kept the ownership limits 
exactly the same.
    Moreover, we made certain that those directly affected by 
newspaper/broadcast cross-ownership had their voices heard. Three of 
the six public hearings on media ownership were held in markets where 
there is currently newspaper/broadcast cross-ownership.
    You are correct to note that most people commented on consolidation 
in general. And, I believe we responded to the majority of people 
concerned with consolidation generally, by not changing the local TV 
rule, the local radio rule, the local TV/radio rule, the national TV 
cap, or the national cable cap. At the same time, we also took into 
account the Third Circuit's decision affirming the Commission's prior 
decision to eliminate the ban on newspaper/broadcast cross-ownership. 
When we examined all of the evidence, we found that a modest relaxation 
of the outright ban on newspaper/broadcast cross-ownership in the 20 
largest markets in the country in narrow circumstances would not harm 
competition and could further localism and diversity. Notably, for 
example, in Seattle only a few people even mentioned newspaper cross-
ownership, and one in fact supported relaxation.

    Question 4. You spent almost $700,000 on ten independent studies, 
but you had the results already pinned down. In a letter to me and 
Senator Lott you say that with the 10 economic studies the FCC 
commissioned, ``the Commission exerted no control over the study 
designs or the authors' conclusions.'' And yet the Georgetown Institute 
for Public Representation submitted a FOIA request and found evidence 
that the FCC's Chief Economist at the time, Leslie Marx, when planning 
for the studies started from the results the agency wanted and worked 
backward. According to a July 2006 research plan, Marx began the 
research process with ``thoughts and ideas'' about ``how the FCC can 
approach relaxing newspaper/broadcast cross-ownership restriction.'' 
She then identified ``some studies that might provide valuable inputs 
to support a relaxation of newspaper/broadcast ownership limits.'' The 
studies outlined in the document were then implemented by the FCC, and 
at least one researcher identified as being on the ``A-list'' was 
chosen to carry them out. Now why wouldn't you start from a position of 
neutrality? The court didn't order you to relax the cross-ownership 
rule.
    Answer. In its Report and Order in the 2002 biennial review of 
media ownership rules, the Commission concluded that, ``a blanket 
prohibition on the common ownership of broadcast stations and daily 
newspapers in all communities and in all circumstances can no longer be 
justified as necessary to achieve and protect diversity. Although we 
continue to believe that diversity of ownership can advance our goal of 
diversity of viewpoint, the local rules that we are adopting herein 
will sufficiently protect diversity of viewpoint while permitting 
efficiencies that can ultimately improve the quality and quantity of 
news and informational programming.'' (Report and Order at para. 355).
    The Prometheus court affirmed the Commission's decision to 
eliminate the newspaper/broadcast cross-ownership rule, holding that 
``reasoned analysis supports the Commission's determination that the 
blanket ban on newspaper/broadcast cross-ownership was no longer in the 
public interest.'' Additionally, the court upheld the Commission's 
determination that the prohibition was not necessary to protect 
diversity.
    Thus, unless it determined that its previous conclusion was 
incorrect, the Commission needed to determine how to approach relaxing 
the cross-ownership prohibition and adopting any new limits.

    Question 5. You say you held Chairman Powell's final two hearings 
on localism, but the Washington, D.C. hearing was hardly an actual 
hearing. It was an FCC meeting with some public participation and a 
recounting of the docket comments. You had a number of panelists at 
that hearing who asked for more to be done on localism. You since 
issued an order on disclosure requirements--requiring the broadcasters 
to report what they're actually doing. This is good. The results of 
these reports will be useful, but shouldn't you have the results of 
these reports before you move to change the media ownership rules?
    Answer. When Chairman Powell announced the localism hearings, he 
committed that the final hearing would be in Washington, D.C. Moreover, 
as with every other hearing, we opened the hearing to public comment 
and every person who wanted to speak was given the opportunity to do 
so.
    I agree that the Commission needed to consider the important issue 
of localism. Last month, the Commission adopted a Report on Broadcast 
Localism and Notice of Proposed Rulemaking. In this item, after 
analyzing the record compiled in the localism proceeding, including the 
more than 83,000 written comments received in response to its Notice of 
Inquiry and the testimony received at the six field hearings conducted 
throughout the country, the Commission took a number of actions to 
enhance localism. Specifically, the item directs the Media Bureau to 
revise ``The Public and Broadcasting,'' a publication made available by 
the Commission and licensees, to better educate members of the public 
about the obligations of licensees, including that involving localism, 
and describing the Commission's processes in enforcing those 
requirements and in acting on applications for the renewal of station 
licenses. In addition, the item also establishes a contact person 
within the Commission to respond to public inquiries, including those 
regarding renewal proceedings. Finally, the Commission directs the 
Media Bureau to create a software program, to be made available to the 
public, to assist potential applicants in locating available 
frequencies for new commercial FM stations.
    In the item, the Commission also seeks comment on its tentative 
conclusions that: (1) qualified LPTV stations should be granted Class A 
status, which requires them to provide 3 hours per week of locally-
produced programming; (2) licensees should establish permanent advisory 
boards (including representatives of underserved community segments) in 
each station community of license with which to consult periodically on 
community needs and issues; and (3) the Commission should adopt license 
renewal application processing guidelines that will encourage all 
broadcasters to provide news, public affairs, political, and other 
types of locally-oriented programming.
    It also seeks comment on other proposals designed to enhance 
localism, including those that would: (1) expand the requirement that 
licensees seeking renewal of their licenses make local announcements to 
better involve the public in renewal proceedings, by requiring the 
posting of such announcements on the licensee's website, and providing 
links to the Commission's website; (2) require that a station's main 
studio be located within its community of license; (3) require that 
stations affiliated with networks be provided network programming 
sufficiently in advance of airing to allow each station to review the 
material and determine its appropriateness; (4) regulate the practice 
of voice-tracking and, if so, in what manner; and (5) require licensees 
to provide data regarding their airing of the music and other 
performances of local artists and how they compile their station 
playlists and whether the local nature of a station's music programming 
should be considered in any renewal application processing guidelines.
    The Report also refers to recent Commission actions in other 
proceedings that will enhance broadcast localism, including those in 
which the Commission: (1) increased the amount of information regarding 
locally oriented programming that licensees must place in their public 
files, and requiring that much of such files be placed on the Internet 
(Standardized and Enhanced Disclosure Requirements for Television 
Broadcast Licensee Public Interest Obligations, MM Docket Nos. 00-168 
and 00-44, Report and Order adopted November 27, 2007 (for television); 
Digital Audio Broadcasting Systems and Their Impact on the Terrestrial 
Broadcast Service, Second Report and Order, First Order on 
Reconsideration and Second Further Notice of Proposed Rulemaking, 22 
FCC Rcd 10344 (2007) (for radio); (2) adopted and proposed various 
actions designed to enhance media ownership diversity (Promoting 
Diversification of Ownership in the Broadcasting Services, MB Docket 
No. 07-294, Report and Order and Third Notice of Proposed Rulemaking 
adopted December 18, 2007); (3) revised the leased access rules to 
facilitate the ability of independent programmers' material to be 
carried on cable systems (Leased Commercial Access: Development of 
Competition and Diversity in Video Programming Distribution and 
Carriage, MB Docket No. 07-42, Report and Order, adopted November 27, 
2007); and (4) modified the rules that govern the LPFM service, to 
foster the development of stations in that service and their offering 
of locally oriented programming (Creation of A Low Power Radio Service, 
Third Report and Order and Second Further Notice of Proposed 
Rulemaking, released December 11, 2007)).
    Finally, the Report discusses other ongoing proceedings in which 
rule changes are being considered that would enhance localism efforts 
including those: (1) looking to require that radio licensees maintain a 
physical presence at their stations during all hours of operation 
(Amendment of Parts 73 and 74 of the Commission's Rules to Permit 
Unattended Operation of Broadcast Stations and to Update Broadcast 
Station Transmitter Control and Monitoring Requirements, Report and 
Order, 10 FCC Rcd 11479 (1995) for radio; the Report seeks comment on 
whether such a requirement should be extended to television); (2) 
examining the rules governing which television stations are offered to 
subscribers by cable and satellite operators (under consideration); (3) 
considering the use of FM translator facilities by AM stations 
(Amendment of Service and Eligibility Rules for FM Broadcast Translator 
Stations, Notice of Proposed Rulemaking, 22 FCC Rcd 15890) (2007); (4) 
reviewing the rules regarding the Emergency Alert System (Review of the 
Emergency Alert System, Second Report and Order and Further Notice of 
Proposed Rulemaking, 22 FCC Rcd 13275 (2007); (5) considering the 
adequacy of the Commission's sponsorship identification/payola rules 
(Commission reminds Broadcast Licensees, Cable Operators and Others of 
Requirements Applicable to Video News Releases and Seeks Comment on the 
Use of Video News Releases by Broadcast Licensees and Cable Operators, 
Public Notice, 20 FCC Rcd 8539 (2005); and (6) studying the appropriate 
interference status between FM translator and LPFM stations (Creation 
of A Low Power Radio Service, Third Report and Order and Second Further 
Notice of Proposed Rulemaking, released December 11, 2007).
    In addition, as you mention, in November 2007, the Commission 
adopted a Report and Order which requires television broadcasters to 
provide more information on the local programming they are broadcasting 
and facilitate the public's access to that information. The Commission 
is committed to establishing and maintaining a system of local 
broadcasting that is responsive to the unique interests and needs of 
individual communities. That action ensures the public is well informed 
about how well television stations are serving their local communities 
and will make broadcasters more accountable to their viewers.

    Question 6. The Media Ownership Act of 2007 requires the FCC to 
seek 90 days of comment on proposed changes to its broadcast ownership 
rules; complete a separate rulemaking on localism, with a study at the 
market level and 90 days of comment on localism, prior to rule changes 
being issued for comment; and convene an independent panel to make 
recommendations on increasing the ownership of broadcast media by women 
and minorities. Why did you have a problem with doing any of these 
tasks?
    Answer. Section 202(h) of the 1996 Telecommunications Act, as 
amended, requires the Commission to periodically review its broadcast 
ownership rules to determine ``whether any of such rules are necessary 
in the public interest as a result of competition.'' It goes on to 
read, ``The Commission shall repeal or modify any regulation it 
determines to be no longer in the public interest.''
    In 2003, the Commission conducted a comprehensive review of its 
media ownership rules, significantly reducing the restrictions on 
owning television stations, radio stations and newspapers in the same 
market and nationally. Congress and the court overturned almost all of 
those changes.
    There was one exception. The court specifically upheld the 
Commission's determination that the absolute ban on newspaper/broadcast 
cross-ownership was no longer necessary. The court agreed that ``. . . 
reasoned analysis supports the Commission's determination that the 
blanket ban on newspaper/broadcast cross-ownership was no longer in the 
public interest.''
    It has been over 4 years since the Third Circuit stayed the 
Commission's previous rules and over 3 years since the Third Circuit 
instructed the Commission to respond to the court with amended rules.
    I agree that the Commission must act to ensure that broadcasters 
serve both localism and diversity. At our December 18 meeting, the 
Commission adopted items designed to enhance broadcast localism and 
foster greater diversity in ownership. I did not believe, however, that 
it was appropriate to further delay the Commission's decision on its 
media ownership rules until the Commission completed a separate 
rulemaking and study on localism. The Commission is required by statute 
to review its media ownership rules. Moreover, the Third Circuit's 
remand was more than three-and-a-half years old when we acted.
    Finally, the FCC already has an independent panel that makes 
recommendations on increasing diversity--the Advisory Committee for 
Diversity in the Digital Age. And, as I noted above, on December 18, we 
adopted an item that seeks to implement many of that Committee's 
recommendations on how to increase minority and female ownership of 
broadcast outlets.

    Question 7. You say, ``allowing very limited cross-ownership may 
help to forestall the erosion in local news coverage by enabling 
companies to share these local news gathering costs across multiple 
media platforms.'' But why is it the job of the FCC to even examine the 
profits of newspaper companies? You regulate the broadcast companies 
and yet you're obsessed with the strength of the newspaper industry.
    Answer. The 32-year-old rule governing newspaper/broadcast cross-
ownership affects both broadcast stations and newspapers. The 
Commission has been regulating what a newspaper is allowed to own for 
more than three decades. Given that fact, I believe that it is 
important that the Commission assess and evaluate how the rule has 
impacted not just broadcasters but also newspapers. The record in our 
proceeding shows that daily newspapers play a particularly critical 
role in local news-gathering, and that without them, Americans would be 
worse off. We would be less informed about our communities and have 
fewer outlets for the expression of independent thinking and diverse 
viewpoints. I believe a vibrant print press is one of the institutional 
pillars upon which our free society is built. To the extent that the 
newspaper/broadcast cross-ownership rule has hurt the viability of 
newspapers and eroded the vital service they provide to their 
communities, we must take this into account.

    Question 8. Why did you put out your proposed rules in a New York 
Times op-ed and then in an FCC press release? Why not in the Federal 
Register?
    Answer. Although not required, I took the unusual step of sharing 
with the public the actual text of the one rule I thought we should 
amend. Because of the intensely controversial nature of the media 
ownership proceeding and my desire for an open and transparent process, 
I wanted to ensure that Members of Congress and the public had the 
opportunity to review the actual rule prior to any Commission action.

    Question 9. You have heard concerns that your proposal opens up 
cross-ownership to much more than the top 20 markets. At the House 
hearing you said you would work with your fellow Commissioners to 
ensure this wasn't the case. I don't agree with any cross-ownership at 
all. Not in the top 30, not in the top 20. I think I'm saying the same 
thing as the 1,000 people who came to the hearing in Los Angeles and 
the 1,100 people who turned out in Seattle. Why are we not being heard?
    Answer. We have reviewed the record carefully and have listened to 
the concerns of the commenters. This is in part why we have, in every 
context except the newspaper/broadcast cross-ownership rule, kept the 
ownership limits the same. From the outset of the current phase of the 
rulemaking, the Commission committed to conduct the proceeding in a 
more transparent manner that provided considerable opportunity for 
public participation. We heard a wide range of views on the substantive 
issues--from individual citizens, industry, and public advocacy 
groups--and I believe that the rules we adopted reflect an appropriate 
balancing of the concerns we heard from all sides. The outcome also 
rests on consideration of the extensive empirical data in the record 
and attention to the Third Circuit's remand decision.
    In particular, I have sought the input of my colleagues at the 
Commission on the shape of all of the rules, including all of the 
existing regulations that we kept intact--such as the TV duopoly rule, 
the local radio rules, the TV/radio cross-ownership restriction, and 
the dual network ban. I note that in several cases these newly approved 
rules are a step back from the Order that the Commission adopted in 
2003. Moreover, when several Commissioners sought modifications to my 
proposal for modestly revising the newspaper/broadcast cross-ownership 
rule, I listened. In an effort to strengthen the rule and address 
concerns about viewpoint diversity in local markets, I incorporated 
changes suggested by my colleagues.
    The record in the proceeding reveals that newspapers are struggling 
and that, across the industry, circulation is down and advertising 
revenue is shrinking. Allowing limited newspaper/broadcast cross-
ownership only in the 20 largest markets may help to forestall the 
erosion in local news coverage by enabling companies to share local 
newsgathering costs across multiple media platforms. The revised rule 
balances the need to support the availability and sustainability of 
local news while not significantly decreasing or harming viewpoint 
diversity. Finally, we have committed to review and evaluate each 
transaction on its merits, and determine whether the specific 
transaction is in the public interest.
    Finally, the majority of the people in Los Angeles and Seattle 
expressed concern about consolidation generally, and I believe we have 
responded by not changing the local TV rule, the local radio rule, the 
local TV/radio rule, the national TV cap, or the national cable cap.

    Question 10. On August 10, 2006, the Georgetown Institute for 
Public Representation presented you with a FOIA request. You had 20 
days to respond. After 99 days you gave them some documents. You are 
sitting on 1,400 pages that the FCC still has not released. When will 
you release these documents?
    Answer. I do not plan to release these documents. Of the pages to 
which you refer, 840 contain copyrighted materials, and the public 
release of such material would violate our contract. Another 300 pages 
involve the use of the copyrighted data by Commission staff in various 
analyses. The remaining materials are internal e-mails and memoranda. 
Like other government agencies, the Commission does not produce these 
materials in response to FOIA requests. FOIA provides a statutory 
exemption for deliberative process materials (Exemption 5) because to 
do otherwise would stifle the interactions, deliberations, and debate 
that produce good public policy. I would also note that this matter is 
currently in litigation and the Commission of course will comply with 
any court decision.

    Question 11. You addressed Universal Service in your testimony. 
What do you intend to do with the Joint Board's recommendations?
    Answer. The Commission will put the recommendations out for public 
comment.

    Question 12. Regarding the recent decision on the Verizon six-city 
forbearance petition the agency recently ruled on, I am pleased those 
petitions were denied. As you know, I have shared with you my concern 
over these forbearance petitions being used to short-cut a full agency 
review of local access policies because of the unique features of the 
forbearance process. I am gratified to know that the FCC recently 
initiated a rulemaking on establishing rules to govern the FCC's 
consideration of forbearance petitions and I hope this can be concluded 
promptly. Can we count on this rulemaking to be completed soon?
    Answer. The Commission is moving forward with respect to the 
rulemaking regarding procedural rules to govern the conduct of 
forbearance proceedings initiated under section 10 of the Act. The next 
steps include collecting public comments and reply comments. Comments 
will be due 30 days after publication of the notice in the Federal 
Register and reply comments will be due 15 days after comments. We 
continue to take seriously our task of conducting proper and rigorous 
analyses in evaluating petitions for forbearance under the statute, 
consistent with the mandate to forbear from applying unnecessary 
regulations where the statutory criteria are satisfied.

    Question 13. Recently concerns about unfair discrimination have 
been raised in relation to Verizon Wireless blocking the text messaging 
service of the pro-choice group, NARAL. Verizon Wireless quickly 
corrected the problem, but the fact that it happened raises major 
alarms. On October 16, 2007, Senator Snowe and I sent a letter to the 
FCC asking for your views on this issue. I have not received a 
response. Will we receive that response letter soon? Can you tell me 
your views?
    Answer. A response to the letter sent by you and Senator Snowe has 
been transmitted to your office under separate cover. The Commission 
adopted an Internet Policy Statement with four policy principles aimed 
at protecting consumers' access to the lawful Internet content of their 
choice, and ensuring the free flow of information across networks. The 
activities attributed to Verizon Wireless, however, involved wireless 
text messages rather than access to Internet content. Although neither 
Congress nor the Commission has addressed text messaging, I believe 
that the principle of ensuring consumer access to content on the 
Internet generally applies to providers of text messaging services as 
well. For this reason, I have directed the Enforcement Bureau to 
initiate an investigation into such practices. In addition, the 
Commission will be seeking public comment on a Petition for Declaratory 
Ruling filed by several public interest groups to clarify the 
regulatory status of text messaging services, including short-code 
based services sent from and received by mobile phones.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                          Hon. Kevin J. Martin
    Question 1a. In adopting proposals designed to ensure opportunities 
for minorities and women to own broadcast stations, we understand that 
the FCC is proposing to provide certain preferences for ``small 
businesses'' as defined by the Small Business Administration. The SBA 
defines small businesses as those with annual revenues of $6.5 million 
or less in radio and $13 million or less in television. 13 C.F.R.  
124.103. The FCC estimates that as many as 95 percent of radio stations 
and 66 percent of television stations fall within this definition. See 
2006 Quadrennial Regulatory Review, Further Notice of Proposed 
Rulemaking, 21 FCC Rcd 8834, Supplemental Initial Regulatory 
Flexibility Analysis, App. B, at para. 51-54. (July 24, 2006). How will 
the preferences for small businesses, which the majority of existing 
licensees can take advantage of, increase opportunities for minorities 
and women to own broadcast stations?
    Answer. To determine eligibility, the Commission does not evaluate 
an individual radio or TV station's revenues but the revenue of the 
owner and its affiliates.

    Question 1b. Has the Commission considered using different or 
additional criteria to increase the likelihood that its proposal will 
in fact increase ownership by minorities and women? If so, what 
criteria? If not, why not?
    Answer. The Commission on December 18, 2007, adopted a Third FNPRM, 
along with the Diversity Order, seeking comment on whether the 
Commission can or should expand the definition of eligible entities to 
specifically identify the groups eligible to benefit from measures 
designed to enhance diversity. The Third FNPRM acknowledged the 
recommendations of commenters for a race-conscious definition of 
socially and economically disadvantaged business (``SDB''). The Third 
FNPRM notes however that race-based classifications are subject to 
strict scrutiny and will be judicially upheld only if they are narrowly 
tailored measures that further compelling government interests. Thus, 
the Commission has decided to employ a race- and gender-neutral 
definition in the rules adopted on December 18 to avoid Constitutional 
difficulties that might create impediments to the timely implementation 
of the steps taken to diversify broadcast ownership. Indeed, even the 
Diversity and Competition Supporters acknowledge that a race-conscious 
definition ``cannot be implemented immediately.'' The Third FNPRM also 
seeks comments on any alternative definition of eligible entity that 
may better advance the Commission's goals of promoting ownership 
diversity and new entry, including the ``full-file review'' concept.

    Question 2a. The Minority Media and Telecommunications Council 
(MMTC) has argued that minority-owned stations are even less well 
represented among SBA-defined small businesses than they are in the 
industry as a whole. According to a Free Press study, although 
minorities own about 7.78 percent of commercial radio stations, only 
5.88 percent of stations that fall within the SBA's small business 
definition are minority-owned. Thus, MMTC argues that the FCC's 
proposal is actually regressive. See MMTC Supplemental Comments (filed 
Nov. 20, 2007). Do you believe that using the SBA small business 
definition will result in increased station ownership by minorities? 
How?
    Answer. It is not the case that minority-owned radio stations are 
less well represented among SBA-defined small businesses than they are 
in the industry as a whole. Free Press made a fundamental error in 
concluding that minorities own 5.88 percent of the commercial radio 
stations qualifying as small businesses under SBA's definition. To 
determine eligibility under the definition, Free Press mistakenly 
looked at an individual radio station's revenues, rather than the 
revenues of the station's owner, which include the revenues of the 
owner's other businesses and affiliations. Based on BIA figures as of 
December 1, 2007, and using Free Press' data, we calculate that at 
least 8.5 percent of commercial radio stations owned by SBA-defined 
small businesses are minority owned. Furthermore, it is impossible to 
estimate how many minority-owned new entrants may form to take 
advantage of the Commission's diversity initiatives, thereby increasing 
the percentage of minority-owned small businesses.

    Question 2b. Has the Commission considered using a race-neutral 
``full file review,'' as MMTC has proposed, to give preference to 
persons who have overcome significant social and economic 
disadvantages? If not, why not?
    Answer. In the Third FNPRM, the Commission seeks public comment on 
the advisability of adopting the ``full file review'' approach, among 
other options.

    Question 3. Right now, who is actually leading the DTV transition 
effort? Is the FCC leading it? Is NTIA? Private industry? How do we fix 
this, and actually assign responsibility?
    Answer. Congress decided to divide the responsibilities of the DTV 
transition among several agencies, assigning the Commission some 
responsibilities and NTIA some responsibilities. For example, in the 
Deficit Reduction Act of 2005, Congress specifically allotted NTIA one 
hundred million dollars ($100,000,000) to spend on administrative 
expenses for the digital transition and the converter box program, 
including five million dollars ($5,000,000) ``for consumer education 
concerning the digital television transition and the availability of 
the digital-to-analog converter box program.'' Deficit Reduction Act of 
2005, Public Law 109-171, Sec. 3005(c)(2)(A), Feb. 8, 2006. In 
addition, Congress anticipated that the administrative expenses might 
be even greater than $100 million and therefore gave NTIA the ability 
to spend an extra $60 million on such expenses.
    Nevertheless, the Commission has been working both on our own and 
in coordination with industry, other governmental agencies, and 
consumer groups to advance the transition and promote consumer 
awareness.

    Question 4. As you are probably aware, Florida is currently the 
largest ``net payer'' state into the Universal Service Fund. Florida 
pays in more than $300 million more to the USF than it receives in 
disbursements. Getting beyond the idea of a ``cap'' of some sort--which 
may raise competitive issues--it seems like one other way of achieving 
efficiencies is through more effective targeting of support. How do you 
feel about this approach?
    Answer. I support long-term reform, which would include measures to 
more effectively and efficiently target support to achieve the goals of 
Universal Service. I continue to believe the right long-term answer for 
such reform of high-cost Universal Service support is to move to a 
reverse auction methodology. I believe that reverse auctions could 
provide a technologically and competitively neutral means of 
controlling the current unsustainable growth in the Fund and ensuring a 
move to most efficient technologies over time.
    Changes in technology and increases in the number of carriers that 
receive Universal Service support have placed significant pressure on 
the stability of the Universal Service. A large and rapidly growing 
portion of the high-cost support program is now devoted to supporting 
multiple competitors to serve areas in which costs are prohibitively 
expensive for even one carrier. These additional networks in high-cost 
areas don't receive support based on their own costs, but rather on the 
costs of the incumbent provider, even if their costs of providing 
service are lower. In addition to recommending an interim cap, the 
Joint Board has recognized the problems of maintaining this identical 
support rule.
    I have circulated among my colleagues at the Commission an Order 
that adopts the recommendation of the Joint Board to place an interim 
cap on the amount of high-cost support available to competitive 
eligible telecommunications carriers (ETCs). Further, the Commission 
has voted to seek comment on two Notices of Proposed Rulemaking, one 
that would require that high-cost support be based on each carrier's 
costs in the same way that rural phone companies' support is based, and 
one that would explore the use of reverse auctions for distributing 
support. I'm supportive of measures to control the growth of the Fund 
in order to preserve and advance the benefits of the Fund and protect 
the ability of people in rural areas to continue to be connected.

    Question 5. Please provide an update on the status of the special 
access proceeding. Also, if the Commission is waiting on particular 
sets of data to complete the proceeding, please indicate what data sets 
are missing and what action the Commission is taking to obtain that 
data.
    Answer. In January 2005, the Commission adopted a Notice of 
Proposed Rulemaking, which, among other things, sought comment on the 
special access regulatory regime, including whether the Commission 
should maintain or modify the Commission's pricing flexibility rules 
for special access services. A majority of the Commissioners asked to 
seek further comment in this proceeding, and the Commission released a 
Public Notice on July 9, 2007, setting an expedited comment cycle for 
interested parties to refresh the existing record. Comments were filed 
on August 8, 2007, and reply comments on August 15, 2007. After the 
Commission received these comments, I provided an options memo to all 
of the Commissioners by September 2007. To date, there is no option 
that is supported by a majority of Commissioners.

    Question 6. Are you currently considering regulations that would 
require cable programmers and operators to offer ``a la carte'' 
programming? If so, what is the statutory and factual basis for those 
regulations?
    Answer. There is no pending item before the Commission that would 
require cable television system operators or any other multichannel 
video programming distributors (``MVPDs'') to offer programming on an 
``a la carte'' basis to their subscribers.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          Hon. Kevin J. Martin
    Question 1. At the December 5 House Energy and Commerce Committee 
hearing, Representative Inslee asked you a question regarding the 
timeline in writing and placing your November 13 Op-Ed piece in The New 
York Times. You did not seem to have a ready answer. As you have had 
some time to reflect, let me try it again. At the time you made your 
opening remarks at the public hearing in Seattle on the afternoon of 
November 9, how far along was your staff in the drafting of the 
proposed rules released on November 13? Had you already approved the 
proposed rule or were the proposed rules still awaiting your approval? 
Also, by that time had Commission staff contacted The New York Times 
regarding the placement of the Op-Ed that was published on November 13? 
When did your office first contact the Times about the placement of the 
Op-Ed on the change to media ownership rules? And when your office 
contacted the Times, was it shopping around a completed Op-Ed or was it 
pitching a proposal?
    Answer. A draft of the Op-Ed was submitted to The New York Times on 
November 9. I submitted the Op-Ed for publication in the newspaper and 
released my proposed rules (on November 13) to further public 
discussion and debate on these contentious issues. I took the 
extraordinary step of publishing the Op-Ed and releasing my proposed 
rules in order to share my views on these issues with the public in an 
open and transparent manner. This also began the process of engaging my 
colleagues regarding what action, if any, the Commission would 
ultimately decide regarding media ownership. After months of hearings 
and public comment, the Commission had an opportunity to consider my 
proposed rules and could either accept, reject, or modify the proposal. 
As with other proposed rules, the Commission moves forward to decide 
issues only when a majority of Commissioners agree on a course of 
action.

    Question 2. How did the Commission conclude that there is a 
presumption that it is in the public interest that the current ban on 
newspaper/broadcast cross-ownership in the same market be lifted in the 
top twenty media markets? Why not the top ten? Why not the top thirty? 
And why did the Commission conclude that at having eight independent 
voices in these media markets should be one of the conditions? Why not 
ten voices? Did the Commission consider the impacts on small business, 
the increased consolidation of media outlets may have on local 
advertising rates?
    Answer. The Commission has applied the positive presumption only in 
the largest markets based on the evidence in the record that the twenty 
largest markets contain a robust number of diverse media sources and 
that the diversity of viewpoints would not be jeopardized by certain 
newspaper/broadcast combinations. The record also shows that newspaper/
broadcast combinations can create synergies that result in more news 
coverage for consumers. In short, the new rule lifts the complete ban 
but does so in a modest manner in order to ensure both that the 
Commission's goals of competition, localism, and diversity are not 
compromised and that the Commission may achieve the economic benefits 
of allowing certain combinations.
    The Commission's determination to draw that line at the top twenty 
markets is reasonable and well supported by the record, based on an 
examination of the media marketplace in the largest DMAs in the 
country. Specifically, the Commission found notable differences between 
the top 20 markets and all other DMAs, both in terms of voices and in 
terms of television households. For example, while there are at least 
10 independently owned television stations in 18 of the top 20 DMAs, 
none of the DMAs ranked 21 through 25 have 10 independently owned 
television stations. Additionally, while 17 of the top 20 DMAs have at 
least two newspapers with a circulation of at least 5 percent of the 
households in that DMA, four of the five DMAs ranked 21 through 25 have 
only one such newspaper. Moreover, the top 20 markets, on average, have 
15.5 major voices (independently owned television stations and major 
newspapers), 87.8 total voices (all independently owned television 
stations, radio stations, and major newspapers), and approximately 3.3 
million television households. Markets 21 through 30, by comparison, 
have, on average, 9.5 major voices, 65.0 total voices, and fewer than 
1.1 million television households, representing drops of 38.5 percent, 
25.9 percent, and 56.3 percent from the levels in the top 20 markets, 
respectively. Markets 31 through 40 and 41 through 50 have average 
numbers of voices for each category similar to markets 21 through 30, 
and even fewer television households on average, 837,800 and 679,200, 
respectively. Markets 50 through 210 show even more dramatic drops 
with, on average, 6.7 major voices, 31.2 total voices, and 
approximately 231,000 television households. These figures represent 
drops of 56.4 percent, 61.7 percent, and 90.7 percent from the levels 
in the top 20 markets, respectively.
    The Commission selected the number eight for the major media voice 
count because this will assure that the largest television markets 
continue to enjoy an adequate diversity of local news and information 
sources. As noted above, there are at least 10 independently owned 
television stations and two major newspapers in the great majority of 
the top 20 markets. Further, all of those markets have at least eight 
television stations and one major newspaper. As we do not want to allow 
a significant decrease in the number of independently owned major media 
voices in any of those markets, we will only presume that a transaction 
is in the public interest if at least eight major media voices will 
remain post-transaction. In addition, in the context of the local 
television ownership rule, the Commission retained its eight voice-
count test. Specifically, the local TV ownership rule requires a 
minimum of eight independently owned-and-operated television stations 
to ensure that robust competition exists in the local television 
marketplace. By also adopting an eight voice count test for the 
newspaper/broadcast cross-ownership rule, the Commission generally took 
a cautious approach, trying to maintain consistency with the rules that 
it left unchanged.
    The Commission did consider the impact of newspaper/broadcast 
cross-ownership on competition, finding that most advertisers do not 
view newspapers and television stations as close substitutes. The 
Commission had previously made this finding in 2003 and the Third 
Circuit subsequently affirmed it. Because newspapers and broadcasters 
do not compete for advertising sales, the Commission does not expect 
its modest relaxation of the ban on newspaper/broadcast cross-ownership 
to have any impact on local advertising rates.

    Question 3. After reading your New York Times Op-Ed it sounded like 
the reason the FCC issued these proposed rules was to save the 
endangered newspaper industry, an industry the Commission does not 
regulate. Has the number of morning dailies published increased or 
decreased between 1990 and 2005? Has the circulation of morning dailies 
increased or decreased between 1990 and 2005? Do you believe the 
business case for morning dailies is different than that of evening 
dailies?
    Answer. The number of morning dailies increased from 559 in 1990 to 
817 in 2005, while the number of evening dailies decreased from 1,084 
in 1990 to 645 in 2005 for an overall net decline of about 180 daily 
newspapers. The circulation of morning dailies increased from 41.3 
million in 1990 to 46.1 million in 2005, while the circulation of 
evening dailies decreased from 21.0 million in 1990 to 7.2 million in 
2005 for an overall decline in daily circulation of about 9 million.
    I believe the business case for morning dailies is different than 
that of evening dailies. There are more morning newspapers now, and 
fewer evening dailies, than in the past. The trend appears to be part 
of a long and ongoing shift in demand for more timely news reporting 
coupled with the rise of alternative delivery modes for news.

    Question 4. Do you believe that the newspaper industry is 
profitable today?
    Answer. The industry is recording pre-tax profit margins in the 
high teens, but the print newspaper business is ailing. Circulation is 
declining, advertising is flat, and some analysts suggest that 
newspapers appear to have entered a period of ``protracted decline.'' 
In 2006, the traditional indicators were all negative: circulation fell 
even faster than in previous years; industry revenues were flat--a poor 
showing in a non-recession year; and, on the print side, retail, 
national and automotive classified ads all showed weakness.
    Industry analysts attribute the more recent, steeper declines to 
many factors, not one or two. Some news consumers, particularly the 
young, have moved online. Only 35 percent of persons aged 18 through 34 
read newspapers on a daily basis. The current generation of young 
adults also includes more people who have no interest in news. ``Free'' 
dailies (i.e., advertising-only papers) are a competitive factor, too, 
especially in larger cities. The net result is not so much that people 
are giving up on newspapers altogether as that they read them less 
often. Seven-day-a-week subscribers have become a smaller group; many 
have switched to getting the paper a few days a week and skipping 
others. The most severe losses were in large metropolitan markets like 
Los Angeles, Boston, San Francisco and Philadelphia. The top 50 
newspapers in circulation lost an average of 3.6 percent daily 
circulation, almost 1 percentage point more than the industry average. 
In the two previous years, the three national papers had managed to 
stay even, but not in 2006. Circulation was off 3.2 percent at the New 
York Times, 1.9 percent at The Wall Street Journal, and 1.3 percent at 
USA Today.

    Question 5. How many daily newspapers in the top twenty media 
markets failed in the past decade? What were their names?
    Answer.

  Top 20 TV DMAs--Daily Newspapers in 1996 That Are Not Dailies in 2007
------------------------------------------------------------------------
  DMA
 Rank       DMA          City        County      ST        Newspaper
------------------------------------------------------------------------
    1   New York     Mamaroneck   Westchester     NY   Mamaroneck Daily
                                                        Times
    1   New York     Mt. Vernon   Westchester     NY   Mt. Vernon Argus
    1   New York     New          Westchester     NY   New Rochelle
                      Rochelle                          Standard Star
    1   New York     Ossining     Westchester     NY   Citizen Register
    1   New York     Peekskill    Westchester     NY   The Star
    1   New York     Port         Westchester     NY   Daily Item
                      Chester
    1   New York     Tarrytown    Westchester     NY   Tarrytown Daily
                                                        News
    1   New York     Yonkers      Westchester     NY   Herald Statesman
    2   Los Angeles  Hemet        Riverside         CA Hemet News
    2   Los Angeles  Los Angeles  Los Angeles       CA Los Angeles Daily
                                                        Commerce *
    2   Los Angeles  San Pedro    Los Angeles       CA San Pedro News
                                                        Pilot
    2   Los Angeles  Santa        Los Angeles       CA Santa Monica
                      Monica                            Outlook
    2   Los Angeles  Temecula     Riverside         CA Temecula
                                                        Californian
    5   Dallas       Arlington    Tarrant         TX   Arlington Morning
                                                        News
    5   Dallas       Bonham       Fannin          TX   Bonham Favorite
    6   San          Antioch      Contra            CA Antioch Ledger
         Francisco                 Costa                Dispatch
    7   Boston       Haverhill    Essex           MA   Haverhill Gazette
   10   Houston      Bay City     Matagorda       TX   Bay City Daily
                                                        Tribune
   10   Houston      Texas City   Galveston       TX   Texas City Sun
   12   Phoenix      Chandler     Maricopa        AZ   Arizonan Tribune
   12   Phoenix      Gilbert      Maricopa        AZ   Gilbert Tribune
   12   Phoenix      Scottsdale   Maricopa        AZ   Scottsdale
                                                        Progress Tribune
   12   Phoenix      Tempe        Maricopa        AZ   Tempe Daily News
                                                        Tribune
   14   Seattle      Bellevue     King            WA   Eastside Journal
   14   Seattle      Kent         King            WA   South County
                                                        Journal
   18   Denver       Gunnison     Gunnison          CO Gunison Country
                                                        Times
   19   Orlando      Sanford      Seminole        FL   Sanford Herald
   20   Sacramento   Turlock      Stanislaus        CA Turlock Journal
------------------------------------------------------------------------
* This publication appears to be a specialty publication that may not be
  within the scope of the rule.
Sources: Editor & Publisher 77th Ed. 1997; BIA database 12/07 plus FCC
  staff research.

    Question 6. How many waivers to the newspaper/broadcast cross-
ownership rules has the Commission granted prior to 2007?
    Answer. When the Commission adopted the newspaper/broadcast cross-
ownership prohibition in 1975, the Commission grandfathered 
approximately 133 existing combinations. Of those grandfathered 
combinations, 36 are in existence today.
    After 1975 and prior to 2007, the Commission granted four permanent 
waivers of the newspaper/broadcast cross-ownership rule, two of which 
are still in existence. Those still in existence are the permanent 
waivers granted to News Corporation for its cross-ownership of WNYW-TV 
and The New York Post in New York, and to Stafford Broadcasting for its 
cross-ownership of the Daily News and WSCG(AM) in Michigan. Two 
permanent waivers are no longer in existence (one in Chicago, involving 
WFLD-TV and two daily newspapers in Chicago, and one in Bloomsburg, PA, 
involving Station WCNR(AM) and the Press-Enterprise).
    In addition, the Commission has granted a number of temporary 
waivers and most of these have expired. There are three temporary 
waivers that were granted prior to 2007 and that are still in effect: a 
waiver to News Corporation for its cross-ownership of WWOR-TV and The 
New York Post, and waivers to Morris Communications for its cross-
ownership of media outlets in two locations, (1) the Amarillo Daily 
News & Globe Times and KGNC(AM) and KGNC(FM), and (2) the Topeka 
Capital-Journal and WIBW(AM) and WIBW(FM).
    Finally, the Commission has typically granted temporary waivers to 
allow companies to divest properties or otherwise come into compliance 
with our ownership rules.

    Question 7. Both policymakers and industry rely heavily on testing 
performed by the Office of Engineering Technology. It is essential that 
their work is beyond reproach. And over the years they have maintained 
a great reputation for the quality of their technical work and not 
getting mixed up in the politics. Last February, when you testified in 
front of the Committee, I asked you about the Commission moving forward 
with the testing of prototype devices for use in the so-called white 
spaces. There are several members on the Committee, including myself, 
who support the use of unlicensed fixed and personal portable devices 
in the vacant spectrum in a way that allows them to co-exist with over-
the-air broadcast television stations. You committed to timely testing 
of the devices and several of us applauded that action. As you know a 
series of tests were conducted over the summer, with the net result 
being more testing and more delays. Did your office offer any guidance 
to OET during the planning, execution, or evaluation of the testing of 
the white space prototype devices?
    Answer. I did not offer any substantive guidance to OET during the 
planning, execution, or evaluation of the testing of the white space 
prototype devices. The Chairman's office was kept apprised of the 
progress of the tests and was made aware in mid-June 2006 that the 
devices were not consistently detecting TV broadcasts or wireless 
microphones. The Chairman's office relied on the expertise of OET's 
engineers to complete the testing and prepare an initial report for 
public comment.

    Question 8. I understand from the press that a number of companies 
have submitted prototype devices to the Commission for testing in the 
last few days. Can you commit to a prompt testing regime and a final 
order in the first quarter of next year?
    Answer. The Commission supports the efficient and innovative use of 
spectrum including white spaces. The FCC Laboratory recently received 
prototype white space devices from Microsoft, Philips, Motorola, and 
Adaptrum, and we anticipate we may receive one or two additional device 
from other parties. The Office of Engineering and Technology plans to 
conduct both laboratory tests and field tests on these devices in an 
open and transparent manner. While we are committed to moving forward 
as expeditiously as possible, I can not predict a specific time-frame 
for adoption of final rules. Any rules the Commission establishes to 
provide for the operation of unlicensed devices in the TV bands must be 
vetted by all five FCC Commissioners. I can assure you that we will 
thoroughly consider all of the engineering data, test results (i.e., 
both laboratory testing and field testing), and responses submitted in 
the record before adopting final rules.

    Question 9. If you recall, a prior prototype delivered to the 
Commission was broken, but the staff never told anyone outside the 
Commission and wasted weeks testing a device they knew was broken. Can 
you commit that, this time, if the staff has a problem in making the 
device work they will tell the company involved about it--so no time is 
wasted?
    Answer. The Commission is committed to working with all parties to 
continue the process of investigating the potential performance 
capabilities of TV white space devices in an open and transparent 
manner. Both laboratory testing and field testing of prototype white 
space devices will be open to observation by any interested party. To 
the extent that the Office of Engineering and Technology has a problem 
making a prototype device work, it will tell the particular company 
involved.

    Question 10. What steps is OET taking to ensure that the various 
stakeholders are satisfied with the transparency of the process for the 
next series of tests that will begin in January?
    Answer. The Commission is committed to working with all parties to 
continue the process of investigating the potential performance 
capabilities of TV white space devices in an open and transparent 
manner. On October 5, 2007, the Office of Engineering and Technology 
issued a Public Notice inviting the submittal of prototype white space 
devices for laboratory testing and field testing. That same day, Office 
of Engineering and Technology staff met with parties to the proceeding 
to discuss the further round of testing.
    Both laboratory testing and field testing of prototype white space 
devices will be open to observation by any interested party and the 
press. Any updates or changes to the testing schedule for the prototype 
TV white space devices will be publicly disseminated and available on a 
dedicated FCC Internet site.

    Question 11. A recent GAO report cited that no comprehensive plan 
exists for the digital television transition. The GAO stated ``Among 
other things, a comprehensive plan can detail milestones and key goals, 
which provide meaningful guidance for assigning and coordinating 
responsibilities and deadlines and measuring progress. Such planning 
also includes assessing, managing, and mitigating risks, which can help 
organizations identify potential problems before they occur and target 
limited resources''. This week the Commission released a written 
response to the GAO report. Chairman Martin, at this point in time, 
what do you consider to be the top five risk factors with respect to 
American consumers getting through the digital television transition 
with minimal disruption? Which of these risk factors fall under the 
jurisdiction of the FCC? How is the FCC managing and mitigating these 
risks?
    Answer. I consider the following to be the top five essential 
aspects of and risks for the digital transition: (1) Construction and 
Operation of Broadcasters' Digital Broadcast Facilities; (2) Ability of 
Consumer Equipment to Receive Digital Signals; (3) Availability of 
Digital to Analog Converter Boxes; (4) Viewability of Digital Signals 
for Analog Cable Customers; and (5) Consumer Education and Outreach.

    (1) Construction and Operation of Broadcasters' Digital Broadcast 
Facilities:

        One of the most important responsibilities of the Commission, 
        with respect to the Nation's transition to digital television, 
        has been to shepherd the transformation of television stations 
        from analog broadcasting to digital broadcasting. Currently, 95 
        percent of all full power television stations (1,636 stations) 
        are broadcasting in digital, and over 99 percent of stations 
        (1,706 stations) have been assigned a final post-transition 
        channel for operations.

        It has taken a series of complicated steps, spanning over two 
        decades, in order to get to this point. First, the Commission 
        worked with industry leaders and with other countries to adopt 
        a standard for digital operations. Second, the Commission 
        planned the process for recovering analog spectrum, with a 
        focus on jump starting digital transmissions. Accordingly, the 
        Commission established eligibility for and assigned digital 
        channels, with this process ultimately resulting in a final 
        post-transition channel for each broadcast station throughout 
        the country for post-transition operations. Third, the 
        Commission established construction deadlines for stations to 
        build and operate pre-transition digital facilities. The 
        Commission stayed very involved with this process by providing 
        oversight for the buildout of pre-transition facilities. The 
        Commission then turned to work on post-transition operations, 
        and established mechanisms and deadlines for stations to elect 
        and build final, post-transition facilities. This entire 
        process has involved the Commission processing over 10,000 DTV 
        modification applications, license applications and special 
        temporary authority authorizations to expedite digital build 
        out. The process has also involved intricate international 
        negotiations with Mexico and Canada. The Commission adopted the 
        final DTV Table of Allotments, which assigns virtually every 
        full-power television station a final channel for post-
        transition digital operations.

        And, more recently, the Commission released the Third DTV 
        Periodic Report and Order, which mandates strict, final 
        deadlines for stations to complete construction of digital 
        facilities. In this order, Commission made technical 
        adjustments to its rules and policies to enable broadcasters to 
        take the actions necessary to complete the conversion from 
        analog to digital. The Commission is doing everything in its 
        power to ensure that broadcasters successfully transition their 
        stations to full digital operations.

    (2) Ability of Consumer Equipment to Receive Digital Signals:

        The Commission also must ensure that consumers who buy and 
        correctly install the equipment to receive digital signals will 
        be able to receive a good quality signal on February 18, 2009. 
        This is the Commission's responsibility, along with retailers 
        and equipment manufacturers.

        First, the Commission adopted rules limiting and ultimately 
        eliminating the importing and shipping of analog-only 
        television receivers and equipment. The Commission's DTV tuner 
        requirement took effect according to a phase-in schedule that 
        applied the requirement first to receivers with the largest 
        screens and then to progressively smaller screen receivers and 
        other television receiving devices that do not include a 
        viewing screen, i.e., VCRs and DVD players, to minimize the 
        impact of the requirement on both manufacturers and consumers. 
        Thus, responsible parties were prohibited from importing or 
        shipping television receivers without DTV tuners pursuant to 
        the following schedule: (1) receivers with screen sizes 36" or 
        more--effective July 1, 2005; (2) receivers with screen sizes 
        between 25" and 25"--effective March 1, 2006; and (3) all other 
        television receivers and other video devices capable of 
        receiving television signals--effective March 1, 2007.

        In May 2007 we issued NALs against two companies--Syntax 
        Brillian Corp. (approx. $2.9 million) and Regent USA, Inc. 
        ($63,650)--for apparent violation of our rules in this area. 
        One of these companies has already paid the fine and we are 
        working on a forfeiture order with respect to the other 
        company. In addition, we are in the process of investigating 
        potential violations against another two companies.

        Second, with respect to retailers, the Commission adopted a 
        Labeling Order that requires retailers to fully inform 
        consumers about the DTV transition date at the point of sale of 
        analog televisions. Specifically, the Commission found that, at 
        the point of sale, many consumers were not aware that analog-
        only televisions would not be able to receive over-the-air-
        television signals without the use of a digital-to-analog 
        converter box after February 17, 2009. Accordingly, the 
        Commission required sellers of television receiving equipment 
        that does not include a digital tuner to disclose at the point-
        of-sale that such devices include only an analog tuner and 
        therefore will require a converter box to receive over-the-air 
        broadcast television after the transition date.

        With respect to this labeling requirement, the Commission has 
        inspected over 1,000 retail stores and websites and issued 
        several hundred citations notifying retailers of violations for 
        failing to comply with our requirements. Because retailers are 
        not licensees, we must give them a citation prior to issuing a 
        Notice of Apparent Liability (NAL). NALs are pending against 
        seven large retailers for apparently violating the Commission's 
        labeling requirements. These fines, in the aggregate, total 
        over $3 million. We have also circulated NALs to an additional 
        seven retailers, totaling over $500,000. In addition, the 
        Enforcement Bureau has issued another six NALs on delegated 
        authority. It is my hope that through our vigorous enforcement 
        actions, retailers will take concrete actions to avoid consumer 
        confusion as the digital transition draws near.

        Finally, we are ensuring that manufacturers make digital tuners 
        in compliance with the Commission's V-Chip regulations. As you 
        know, the Commission's rules require digital television 
        manufacturers to include the V-Chip in their equipment and to 
        ensure that their devices can adjust to changes in the content 
        advisory system. As a result of these investigations, we have 
        circulated NALs against three manufacturers, totaling over $11 
        million.

        Swift enforcement of all our DTV-related rules is critical to 
        ensuring that consumers have the equipment necessary to view 
        digital signals on February 18, 2009.

    (3) Availability of Digital-to-Analog Converter boxes:

        Congress specifically assigned NTIA with primary responsibility 
        for development of the program for availability of digital-to-
        analog converter boxes. In the Deficit Reduction Act of 2005, 
        Congress specifically allotted NTIA one hundred million dollars 
        ($100,000,000) to spend on administrative expenses for the 
        digital transition and the converter box program, including 
        five million dollars ($5,000,000) ``for consumer education 
        concerning the digital television transition and the 
        availability of the digital-to-analog converter box program.'' 
        Deficit Reduction Act of 2005, Public Law 109-171, Sec. 
        3005(c)(2)(A), Feb. 8, 2006. (Congress anticipated that the 
        administrative expenses might be even greater than $100 million 
        and therefore gave NTIA the ability to spend an extra $60 
        million on such expenses). Thus, Congress explicitly gave NTIA 
        the responsibility for the coupon box program.

    (4) Viewability of Digital Signals for Analog Cable Customers:

        Last fall, the Commission adopted an order ensuring that all 
        local broadcast stations carried pursuant to this Act are 
        ``viewable'' by all cable subscribers. Specifically, in order 
        to guard against the risk that analog cable consumers may not 
        be able to view their local television stations after the 
        transition, our Viewability Order requires cable operators to 
        either: (1) carry the digital signal in analog format, or (2) 
        carry the signal only in digital format, provided that all 
        subscribers have the necessary equipment to view the broadcast 
        content.

        According to Commission staff calculations, while there are 
        approximately 15 million households with more than 30 million 
        television sets that rely on over-the-air signals, there are 
        over 40 million homes with 120 million television sets that 
        subscribe to analog cable. Thus, in the absence of Viewability 
        Order, some broadcast stations would have become unwatchable on 
        these 120 million television sets. And, millions of consumers 
        would have been disenfranchised.

        With the adoption of this order, cable operators will be 
        obligated to ensure that all of their customers will be able to 
        watch all broadcast stations after the digital transition. This 
        item ensures that all Americans with cable--regardless of 
        whether they are analog or digital subscribers--are able to 
        watch the same broadcast stations the day after the digital 
        transition that they were watching the day before the 
        transition. Thus, cable operators may not simply cutoff the 
        signals of must-carry broadcast stations after the digital 
        transition.

    (5) Consumer Education and Outreach:

        Consumer education and outreach is one of the Commission's top 
        priorities, but it is one that we share with NTIA and industry. 
        Although NTIA has taken the lead with respect to consumer 
        education concerning the converter box program, the Commission 
        has been actively promoting general consumer awareness of the 
        upcoming transition through education and outreach efforts. Our 
        overarching goal in these activities is to reach consumers who 
        are likely to be unaware of the upcoming digital transition, 
        including: (1) senior citizens; (2) non-English speaking and 
        minority communities; (3) people with disabilities; (4) low-
        income individuals; and (5) people living in rural and tribal 
        areas.

        We have been employing a variety of methods to reach these 
        communities. Specifically, we have been focusing our resources 
        on three primary activities: attending conferences and hosting 
        events, disseminating information via the news media, and 
        partnering with industry, consumer, and other groups.

        Conferences and Other Events. With respect to conferences and 
        events, Commission staff has been attending as many conferences 
        as possible to distribute DTV educational materials. We are 
        also utilizing the agents in the Commission's field offices 
        around the country to expand the scope of our consumer 
        education efforts. Designated representatives in each our 24 
        field offices have been targeting communities that risk getting 
        left behind in the DTV transition, such as senior citizens. Our 
        field agents have been distributing information materials to 
        senior centers, libraries and other venues. They then follow up 
        these visits by giving DTV presentations to further inform 
        these communities.

        Through the work of our field agents, we are able to reach 
        consumers in a total of 36 states--ranging from Alaska to 
        Florida. We have already distributed information to over 2,670 
        senior centers, senior organizations, and community groups and 
        given nearly 275 DTV presentations. And, through a series of 
        workshops held at the Commission with stakeholders, we will 
        have focused on how we can best reach and educate these groups 
        of consumers. We have already held three workshops and 
        announced dates for the remaining two workshops.

        News Media Activities. We are also working with the news media 
        to highlight the upcoming transition in ongoing news coverage. 
        Specifically, we are coordinating with a variety of media 
        outlets including newspapers, broadcasters, and working with 
        various members of the industry on public service announcements 
        (PSAs).

        Our efforts focus primarily on media that target specific at-
        risk populations. For example, senior citizens and Hispanic 
        consumers, among others, are most likely to be 
        disproportionately impacted by the transition.

        Government, Industry, and Consumer Group Partnerships. The 
        partnerships we have formed, and will continue to form, are a 
        critical part of our consumer education and outreach efforts. 
        We rely on these partnerships--which may be with government 
        agencies, industry or consumer groups--to help us disseminate 
        DTV education information and to inform us of events and 
        conferences that are taking place where we can distribute 
        materials and interact with consumers directly.

        We are, of course, coordinating closely with NTIA. The FCC and 
        NTIA have communicated extensively on the implementation of the 
        DTV transition and will continue our close coordination as the 
        transition deadline approaches. We have a Memorandum of 
        Understanding relating to our duties and responsibilities in 
        testing the converter boxes under the coupon program. With 
        respect to consumer education, our shared goal is to ensure 
        that consumers are able to receive from both agencies 
        consistent, easy to understand information about what the 
        transition is, why it is happening, how it may affect them, and 
        what they need to do to prepared.

        We are also working with the U.S. Administration on Aging, 
        which has a network of over 650 state and area agencies on 
        aging, tribal elder organizations, and thousands of providers 
        around the country who work with seniors and their caregivers 
        on a daily basis. We are not only providing this network with 
        DTV informational materials that can be distributed nationwide, 
        but we have also offered to partner with them to conduct joint 
        presentations on the DTV transition throughout the country. 
        Similarly, we are working with the Bureau of Indian Affairs 
        which has agreed to disseminate DTV information packets to 
        their members through their 50 offices nationwide.

        Our government partnerships are not limited to the national 
        level, however. We have contacted nearly 125 local Chambers of 
        Commerce covering all 50 states and the District of Columbia as 
        well as state and local-level consumers affairs and elderly 
        departments. We have asked these organizations to help us 
        distribute DTV information materials and link to www.dtv.gov on 
        their webpage. We intend to continue pursuing such 
        relationships to reach as many consumers as possible.

        Also, since June 2007, the FCC has reached out to over 1,100 
        organizations, with over 900 of them governmental agencies and 
        organizations at the Federal, state, tribal and local levels to 
        request their assistance in educating the consumers they serve 
        about the DTV transition. As a result of our efforts, we are 
        forming partnerships with many of these organizations in order 
        to better inform their constituents about the DTV transition. 
        For example, we have formed a partnership with the U.S. Postal 
        Service, and are working with them on displaying DTV 
        information posters at over 37,000 Post Offices throughout the 
        Nation and in Puerto Rico.

        Another example of how we are coordinating with other entities 
        is the two advisory committees--the Consumer Advisory Committee 
        (CAC) and the Intergovernmental Advisory Committee (IAC)--that 
        we recently chartered and instructed to focus their current 
        terms on the digital transition. The CAC recently submitted 
        recommendations to the Commission in our DTV Education 
        proceeding. Though the work of these committees, the Commission 
        will gain valuable insights that will further its goal of 
        ensuring that all consumers are aware of the transition.

        Finally, on the Commission has initiated rulemaking proceedings 
        designed to better educate consumers about the transition. For 
        example, discussed above, earlier this year the Commission 
        issued a Labeling Order, which requires manufacturers and 
        retailers to affix a consumer alert to televisions with analog-
        only broadcast tuners. And, we recently initiated a DTV 
        Education proceeding. This item sought comment on whether to 
        require the industry to use bill inserts, public service 
        announcements, and other techniques to educate consumers about 
        the transition. I hope and expect that the Commission will be 
        adopt this DTV Education Order imminently.

    Question 12. Should the common carrier exemption be removed from 
the Federal Trade Commission? What, if any, would be the disadvantage 
to consumers if the exemption is removed?
    Answer. The common carrier exemption, along with similar exemptions 
for banking and other targeted industries, recognizes the unique role 
of the FCC in regulating common carriers. Elimination of the exemption 
could result in confusion if carriers are required to comply with 
potentially conflicting rules and regulations. Such confusion would 
benefit neither the industry nor the consumers they serve. That being 
said, the FCC and the FTC even now have overlapping areas of interest 
and jurisdictions, and frequently coordinate on a variety of issues, 
such as the Do Not Call provisions of the Telemarketing Sales Rule, 
caller identification or ``caller ID'' spoofing, and the sale of phone 
records by data brokers. I agree with Chairman Majoras that ``[w]e have 
worked together effectively in the past and will continue to do so.'' 
\1\
---------------------------------------------------------------------------
    \1\ http://www.ftc.gov/speeches/majoras/060821pffaspenfinal.pdf at 
page 20.

    Question 13. The Joint Board has published an important 
recommendation that deals with potential revisions to the Federal 
Universal Service high-cost fund in a comprehensive way. You attached 
your opinion to the Joint Board's recommendation and voted to send it 
to the full Commission for its deliberation over the next 12 months. 
When do you plan to send it out for comment, and what specific schedule 
do you foresee at the Commission on this subject? In other words, is 
the Joint Board recommendation on a fast track for review by the 
Commission?
    Answer. The Commission will put the recommendations out for public 
comment. As you note, the Commission must act on the recommendation 
within 1 year. Further, the Commission has voted to seek comment on two 
Notices of Proposed Rulemaking, one that would require that high-cost 
support be based on each carriers' costs in the same way that rural 
phone companies' support is based, and one that would explore the use 
of reverse auctions for distributing support.

    Question 14. On November 1, 2007, the Homeland Security Bureau 
released a Further Notice of Proposed Rulemaking related to the 
reconfigured 800 MHz band plan on the U.S.-Canada border region in 
order to achieve the Commission's goals for band reconfiguration. The 
terrain in the Puget Sound area combined with the proximity of densely 
populated areas on both sides of the border, makes frequency 
coordination and interference more difficult to manage than many other 
border areas without this combination of geographic features. How will 
the Commission's border region plan minimize such interference? Will 
testing be required to validate the plan?
    Answer. The Further Notice of Proposed Rulemaking (FNPRM) for the 
U.S.-Canadian border area proposes a region-by-region approach that 
takes into account the unique terrain of the Puget Sound area. To 
prevent cross-border interference between U.S. and Canadian operations, 
the proposal calls for U.S. licensees in the border area to be rebanded 
to channel assignments on U.S. primary spectrum, while Canadian 
licensees will continue to operate on Canadian primary spectrum. In 
addition, the band plan proposal for Border Region 5, which includes 
Washington State, is based in large part on a prior band plan submitted 
by the NPSPAC regional planning committee for Washington (NPSPAC Region 
43). Region 43 has also filed comments on the FNPRM proposal, which the 
Commission will consider along with comments by other area licensees in 
adopting a final band plan. Once the band plan is finalized, the 
rebanding process requires the 800 MHz Transition Administrator (TA) to 
take geography, system proximity, and other relevant factors into 
account in assigning frequencies to rebanding licensees. System testing 
is also a typical component of the process where necessary to verify 
that the licensee's post-rebanding facilities will match the capability 
of its pre-rebanding facilities.

    Question 15. There are municipal 800 MHz radio systems operating in 
Washington State that serve the entire state (Washington State 
Department of Transportation) or communities with populations that 
straddle both sides of line, 140 km line south of the U.S.-Canada 
border. Will the Commission include an assessment of the impact of any 
final border region plan will have on systems with operations that 
extend beyond the border region?
    Answer. Yes. In adopting a final band plan for the U.S.-Canadian 
border area, the Commission will consider the impact of the band plan 
on statewide and other systems that operate in both border and non-
border areas. The 800 MHz Transition Administrator (TA) will also take 
this issue into account in assigning specific channels to these 
licensees.

    Question 16. The Boeing Company is an integral part of a public 
safety response in areas surrounding their various facilities within 
the border region. How do you ensure that any final border region plan 
provides interference protection to Boeing equivalent to that provided 
to public safety?
    Answer. The Commission's orders provide that all licensees, 
including Boeing, will receive the same level of interference 
protection under the post-rebanding rules that they were afforded prior 
to rebanding. Moreover, the new band plan will reduce actual 
interference by providing more separation between commercial cellular 
systems and other 800 MHz band users than existed previously. Finally, 
once the final border area band plan is adopted, the 800 MHz Transition 
Administrator (TA) will take Boeing's system configuration and 
operational needs into account in assigning replacement channels to 
Boeing.

    Question 17. After the rebanding in Wave 4 is completed, do you 
expect that the affected parties will have access to the same amount of 
spectrum as before?
    Answer. Yes. The Commission's orders provide that rebanding 
licensees will receive comparable spectrum assignments, i.e., the same 
number of channels under the new band plan that were assigned to them 
under the old band plan. This principle applies to border and non-
border area systems alike.

    Question 18. When the Commission adopted and revised the 700 MHz 
Service Rules and Band Plan in the Second Report and Order on July 31, 
2007, among other things, it consolidated the narrowband frequency 
allocation in the 700 MHz public safety band, requiring existing 
narrowband public safety licensees to shift their frequencies of 
operation and reconfigure their systems. Several public safety 
licensees, including Pierce Transit in Washington State, that were in 
the midst of deploying their narrowband systems found themselves in an 
impossible situation with respect to not being able to deploy the 
remainder of their network and also with respect to ensuring there are 
adequate fund available to reimburse affected licensees for 
reconfiguring and rebanding their existing systems. What is the 
timeline for the Commission to address the petitions for 
reconsideration submitted by public safety licensees regarding this 
issue?
    Answer. The time period for oppositions and replies to petitions 
for reconsideration of the Second Report and Order expired on October 
26, 2007. The Commission is giving careful consideration to Pierce 
Transit's petition for reconsideration and the associated record, as 
well as to its request for waiver. The Commission has already granted a 
partial waiver to the Commonwealth of Virginia on November 14, 2007, to 
continue deployment of its system until Virginia's petition for 
reconsideration is resolved. In granting that relief, we emphasized 
that the prohibition on new narrowband operations after August 30 was 
not intended to create hardship or delay systems needed to protect the 
safety of life and property. This sentiment will inform our resolution 
of the other pending petitions before us, including Pierce Transit's.

    Question 19. With regard to Universal Service Fund potential 
reforms, you have expressed your preference for a numbers-based 
assessment approach as a new contribution methodology. Are you aware of 
the potential negative impact that a numbers-based approach could have 
on the users of low volume and free services? For example, in my state, 
Community Voice Mail provides free essential telephone voice mail 
service to the homeless.
    Answer. I have urged that the Commission consider assessing 
contributions based primarily on working telephone numbers rather than 
interstate revenue. You raise concerns that a numbers-based approach 
would shift the cost burden to low income people, the elderly, and 
other low-volume users. The Commission is considering these concerns, 
as well as other options for maintaining a sufficient and sustainable 
collection mechanism. The Commission needs to ensure that consumers, 
including low income consumers and those in rural and high-cost areas, 
have access to quality services at affordable rates.

    Question 20. In the event that the FCC moves forward with a 
numbers-based contribution approach, will you incorporate limited 
relief to allow exemptions for low use services?
    Answer. I support reforming the current contribution system and 
moving to a more competitively and technology neutral system based on 
telephone numbers. Specifically, such an approach would help maintain 
the stability of the fund by assessing all technologies used to make a 
phone call on a similar basis. Nevertheless, as the Commission reviews 
the various proposals to reform the current assessment system, it will 
examine the potential impact of any course of action on all consumers.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                          Hon. Kevin J. Martin
    Question 1. In October, I wrote to you expressing concerns about a 
proposed new 10,000 watt commercial radio station on the 1700 AM 
frequency in Rockland County, New York. If approved, this station would 
force off the air eight Travelers Information Stations in New Jersey--
stations that are critical for public safety and emergency management. 
Have you had the opportunity to review my letter, and what is the 
current status of this proposed station?
    Answer. Because your correspondence raised ex parte issues, the 
Commission's Office of the General Counsel responded to your letter on 
December 10, 2007.

    Question 2. There has been recent activity--both at the FCC and in 
the courts--regarding the rebanding of the 800 MHz spectrum. When do 
you expect the rebanding to be completed?
    Answer. The Commission had previously established June 26, 2008, as 
the deadline for completion of rebanding in non-border regions. 
Although Sprint Nextel has filed an appeal in the D.C. Circuit, which 
will be heard later this year, the June 2008 deadline remains in 
effect, and we expect a substantial number of licensees to complete the 
process by that date. We also anticipate that some public safety 
licensees with large and complex systems may require additional time to 
complete the rebanding process. In such cases, the Commission will 
consider licensee requests for waiver of the deadline, provided that 
licensees can show that their requests are reasonable and that they 
have been diligent in their rebanding efforts.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Thomas R. Carper to 
                          Hon. Kevin J. Martin
    Question. The Federal Communications Commission should be commended 
for issuing its recent Notice of Proposed Rulemaking that considers 
whether to authorize Big LEO Mobile Satellite Services operators to 
provide ancillary terrestrial services on more of their assigned 
spectrum. As you are aware, one such operator, Globalstar, and its 
partner, Open Range Communications, need this authority in order to 
pursue their plan to bring broadband services to more than 500 rural 
communities across the country. Given the Commission's stated 
commitment to promote the rapid deployment of advanced broadband 
services to unserved and underserved areas, will you assure the 
Committee that you will do all that it takes to complete this 
proceeding in the time required for Globalstar and Open Range to move 
forward with their business plan?
    Answer. The Commission is committed to promoting the rapid 
deployment of advanced broadband services to unserved and underserved 
areas. In November 2007, the Commission released a NPRM seeking comment 
on the relevant technical issues raised by Globalstar's request for 
additional ATC. The NPRM was in response to Globalstar's request that 
we initiate a rulemaking to expand the authority for Globalstar to 
operate ATC spectrum from 11 GHz to all of the frequencies where 
Globalstar is authorized to operate MSS, including those frequencies 
Globalstar shares with other users and services. The comment cycle for 
the NPRM closed on January 3, 2008. We received comments from nine 
parties this past December, and we received reply comments from seven 
parties. We are actively reviewing the record now, and will make all 
efforts to resolve Commission action on this rulemaking promptly in 
order for Globalstar and Open Range to move forward with their business 
plan.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Ted Stevens to 
                          Hon. Kevin J. Martin
    Question. Kawerak, Inc., a non-profit consortium in Alaska has 
requested me to submit this question to the Commission:
    Does the Commission have the statutory authority to provide 
Universal Service support to non-profit corporation tribal consortiums, 
serving remote areas of Alaska, that provide education, welfare, 
wellness, law enforcement, natural resources and economic development 
services?
    Kawerak is one of Alaska's tribal consortiums who provides several 
services to remote areas of Alaska, and has expressed concern about 
their ineligibility to receive Universal Service support because they 
are unable to meet the precise definitions of health care or 
educational service providers. Please address the requirements which 
these tribal consortiums must meet in order to receive support.
    If these tribal consortiums are unable to meet the Commission's 
current requirements, please address whether a waiver process is 
available for these entities.
    Please also describe the specific steps which non-profit 
corporation tribal consortiums must take to apply for, and receive, 
support from the Universal Service Fund.
    Answer. The United States and the Commission have a long history 
and tradition of ensuring that rural areas of the country, and in 
particular tribal lands, are connected and have similar opportunities 
for communications as other areas. Our Universal Service program works 
to promote investment in rural and tribal infrastructure and ensure 
access to telecommunications services that are comparable to those 
available in urban areas today, as well as provide a platform for 
delivery of advanced services.
    The eligibility criteria for any organization, including Kawerak, 
to receive Federal Universal Service support is set forth in the 
Telecommunications Act of 1996, as amended (1996 Act).
    For the Universal Service Rural Health Care Program, section 254 of 
the 1996 Act lists seven different types of entities that are eligible 
to receive support. Specifically, the Act states that ``[t]he term 
`health care provider' means--

        (i) post-secondary educational institutions offering health 
        care instruction, teaching hospitals, and medical schools;

        (ii) community health centers or health centers providing 
        health care to migrants;

        (iii) local health departments or agencies;

        (iv) community mental health centers;

        (v) not-for-profit hospitals;

        (vi) rural health clinics; and

        (vii) consortia of health care providers consisting of one or 
        more entities described in clauses (i) through (vi).''

47 U.S.C.  254(h)(7)(B). The Commission's Universal Service Rural 
Health Care Program rules parallel this statutory definition of health 
care provider. See 47 C.F.R.  54.601(a)(2).

    For the Universal Service schools and libraries (E-Rate) program, 
section 254 of the 1996 Act states that elementary and secondary 
schools are eligible for support, but states that ``[t]he term 
`elementary and secondary schools' means elementary schools and 
secondary schools, as defined in . . . the Elementary and Secondary 
Education Act of 1965.'' 47 U.S.C.  254(h)(7)(A). That Act in turn 
provides that the definition of elementary and secondary schools is 
defined ``as determined under State law.'' 20 U.S.C.  7801(18), (38).
    Commission staff stands ready to assist Kawerak, and any other 
potential rural health care or E-Rate participant, in working within 
the confines of the statute and program rules to obtain Universal 
Service support. For your information, I have attached an overview of 
the funding processes for the rural health care and E-Rate programs.
    I understand that Kawerak has been found eligible to receive 
Universal Service in the past. Kawerak, as part of a consortium 
representing a dozen tribal organizations, received commitments for 
over $200,000 in rural health care support from 1999 through 2006. I 
expect that Kawerak would continue to be eligible to receive rural 
health care Universal Service support in the future. Similarly, I 
understand that, the Bering Strait School District, with whom Kawerak 
partners, has received over $9 million in E-rate support since the 
program's inception.
                                 ______
                                 
                Universal Service Administrative Company
Overview of the Rural Health Care Program Process
    Rural health care providers and service providers that participate 
in the Rural Health Care Program have certain requirements and 
responsibilities that must be met in order to receive support in a 
timely manner. Below is an overview of the process.
    All health care providers (HCPs) or consortia of HCPs seeking to 
participate in the Rural Health Care Program must complete the 
Description of Services Requested and Certification Form (Form 465) to 
request bids from service providers for services to be used for the 
provision of health care. A separate Form 465 must be completed for 
each physical location within the consortia that is eligible to receive 
support.
    When a Form 465 is received from a new applicant, USAC confirms 
eligibility. Once USAC reviews a Form 465 and determines it is 
complete, it is posted on the USAC website and a letter is sent to the 
health care provider to confirm the posting. The posting invites 
service providers to bid to provide services. The posting date starts 
the 28-day competitive bidding process. All health care providers 
expecting support must complete the 28-day posting requirement before 
entering into an agreement to purchase services with a service 
provider.
    A health care provider must consider all bids received and select 
the most cost-effective method to meet its requirements. The most cost-
effective method is defined by the FCC as the method of least cost 
after consideration of the features, quality of transmission, 
reliability, and other factors relevant to choosing a method of 
providing the required services.
    To be eligible to receive telecommunications support, the selected 
carrier must be a ``Common Carrier''. Any telecommunications service 
and/or Internet access necessary for the provision of health care is 
eligible for support, but equipment charges are not eligible for 
support. All Internet service providers are eligible to participate in 
the program; however, only the monthly charge is eligible for support.
    Once the service providers and services are selected, the health 
care provider completes and submits the Funding Request & Certification 
Form (Form 466) and/or an Internet Service Funding Request & 
Certification Form (Form 466-A). These forms specify the type(s) of 
service ordered, the cost, the service provider(s), the terms of any 
service agreements, and certifies that the selections were the most 
cost-effective offers received.
    USAC reviews the Form 466 and/or 466-A packet for accuracy. Upon 
approval, USAC mails the health care provider a Funding Commitment 
Letter (FCL) and a copy of the Receipt of Service Confirmation Form 
(Form 467). A copy of the FCL is also sent to the service provider.
    After the service begins from the service provider, the health care 
provider submits Form 467 to USAC. Form 467 must be submitted in order 
to receive discounted services. USAC cannot process Form 467 unless a 
Funding Commitment Letter has been issued.
    Once Form 467 is received, reviewed, and approved, USAC will send 
the health care provider and its service provider(s) a health care 
support schedule. At this point, the service provider can begin 
crediting the bill with the monthly recurring support amount or issue a 
check for the discount. As soon as the service provider has issued a 
credit or check to the health care provider, the service provider 
invoices USAC.
    USAC will then credit or reimburse the carrier's Universal Service 
Fund (USF) account. Those that do not have such an active USF account 
and have not been issued a SPIN number by USAC must fill out an FCC 
Form 498 and then reimbursement will be issued by check or direct 
deposit.
                   Applicants--Schools and Libraries
Step 1: Determine Eligibility
    Federal and state laws determine eligibility of schools, school 
districts, and libraries.
Schools
    In general, a school is eligible for Schools and Libraries support 
if it meets the following eligibility requirements:

   Schools must provide elementary or secondary education as 
        determined under state law.

   Schools may be public or private institutional day or 
        residential schools, or public charter schools.

   Schools must operate as non-profit businesses.

   Schools cannot have an endowment exceeding $50 million.

    In many cases, non-traditional facilities and students may be 
eligible.

   Eligibility of Head Start, Pre-Kindergarten, Juvenile 
        Justice, and Adult Education student populations and facilities 
        depends on state law definitions of elementary or secondary 
        education.

   An Educational Service Agency, which may operate owned or 
        leased instructional facilities, may be eligible for Schools 
        and Libraries support if it provides elementary or secondary 
        education as defined in state law.
Libraries
    Libraries must meet the statutory definition of library or library 
consortium found in the 1996 Library Services and Technology Act (Pub. 
L. 104-208) (LSTA) to meet eligibility requirements for Schools and 
Libraries support.

   Libraries must be eligible for assistance from a state 
        library administrative agency under that Act.

   Libraries must have budgets completely separate from any 
        schools (including, but not limited to, elementary and 
        secondary schools, colleges and universities).

   Libraries cannot operate as for-profit businesses.
Step 2: Develop a Technology Plan
    The application process for Schools and Libraries support begins 
with a technology assessment and a technology plan.
    Schools, school districts, and libraries that want to apply for 
Schools and Libraries support, commonly referred to as ``E-Rate,'' must 
first prepare a technology plan. An approved technology plan sets out 
how information technology and telecommunications infrastructure will 
be used to achieve educational goals, specific curriculum reforms, or 
library service improvements.
    A technology plan designed to improve education or library services 
should cover the entire funding year (July 1 to June 30) but not more 
than 3 years. The plan must contain the following five elements:

   Goals and realistic strategy for using telecommunications 
        and information technology.

   A professional development strategy.

   An assessment of telecommunication services, hardware, 
        software, and other services needed.

   Budget resources.

   Ongoing evaluation process.

    The technology plan must be approved by an USAC-certified 
technology plan approver before discounted services can begin. The 
state is the certified technology plan approver for libraries and 
public schools. Non-public schools and other entities that do not 
secure approval of their technology plan from their states may locate 
an USAC-certified technology plan approver here.
    Applicants that seek Schools and Libraries Program support only for 
basic telephone service do not need a technology plan.
Step 3: Open a Competitive Bidding Process (Form 470)
    Applicants must file the Description of Services Requested and 
Certification Form (Form 470) to begin the competitive process and must 
ensure an open and fair competitive bidding process for specific 
products.
    Applicants must file a new Form 470 each funding year for requests 
for tariffed or month-to-month services and for new contractual 
services. When the Form 470 is filed, USAC will make it available to 
interested service providers by posting it to the USAC website.
    Applicants must:

   Describe specific services or functions for support.

   Identify the correct category of services: 
        telecommunications, Internet access, internal connections, or 
        basic maintenance of internal connections.

   Identify recipients of services for support.

   Follow all applicable state and local procurement laws.

   Wait 28 days after the Form 470 is posted to the USAC 
        website or after public availability of your Request for 
        Proposals (RFP), whichever is later, before selecting a vendor 
        or executing a contract (see Step 4: Select the Most Cost-
        Effective Service Provider).

    Applicants may:

   Use RFPs or other solicitation methods tailored to specific 
        needs and circumstances in addition to the required Form 470.

    The Form 470 must be completed by the entity that will negotiate 
for eligible products and services with potential service providers. A 
service provider that participates in the competitive bidding process 
as a bidder cannot be involved in the preparation or certification of 
the entity's Form 470.
    A new Form 470 is not required if an applicant intends to seek 
discounts on services provided under a multi-year contract executed 
under a posted Form 470 in a prior funding year.
Step 4: Select the Most Cost-Effective Service Provider
    Applicants must select the most cost-effective provider of the 
desired products or services eligible for support, with price as the 
primary factor.
    Waiting Period. At the conclusion of the 28-day waiting period 
after the Description of Services Requested and Certification Form 
(Form 470) is posted on the USAC website, the applicant may select a 
vendor for tariffed or month-to-month services or execute a contract 
for new contractual services.
    Bid Evaluation. Applicants must construct an evaluation for 
consideration of bids received in response to the posting of the Form 
470 that makes price the primary factor in the selection of a vendor.
    Contract Guidance. Applicants may also choose vendors from a State 
Master Contract, execute multi-year contracts pursuant to a Form 470, 
and enter into voluntary contract extensions, but certain additional 
contract requirements apply. In all cases, applicants must comply with 
state and local procurement laws.
    Document Retention. Applicants must save all documentation 
pertaining to the competitive bidding process and vendor selection for 
5 years. Applicants must certify and acknowledge on the Form 470 and 
the Services Ordered and Certification Form (Form 471) that they may be 
audited and that they must retain all records that can verify the 
accuracy of information provided.
Step 5: Calculate the Discount Level
    An applicant that applies for Schools and Libraries Program support 
for eligible services must calculate the discount percentage that it 
and the schools or libraries it represents are eligible to receive.
    Applicants use the Services Ordered and Certification Form (Form 
471) to calculate the discount and begin by listing the recipients of 
services for support. FCC rules include a discount matrix that takes 
into consideration poverty level and the urban or rural location of the 
participating entity. For detailed information about how to calculate 
the percentage discount and complete the Block 4 Worksheet of Form 471, 
read Form 471 Instructions for the Block 4 Worksheet.
Schools
   The primary measure for determining Schools and Libraries 
        support discounts is the percentage of students eligible for 
        free and reduced lunches under the National School Lunch 
        Program (NSLP), calculated by individual school.

   A school district applicant calculates its shared discount 
        by calculating a weighted average of the discounts of all 
        individual schools included in the school district.
Libraries
   Library branches or outlets must obtain and use the NSLP 
        data for the public school district in which they are located 
        to calculate the discount.

   A library system applicant calculates its shared discount by 
        calculating an average of the discounts of all library branches 
        or outlets included in the system.
Consortia
   A consortium calculates its shared discount by calculating 
        the average of the discounts of all eligible libraries and 
        schools that are included in its membership.
Urban or Rural
   Every school or library in the United States is located in 
        either a rural or an urban area, based on Metropolitan 
        Statistical Area (MSA) data.

   The applicant must determine if the individual school or 
        library is rural or urban to properly calculate its percentage 
        discount.
Non-instructional Facilities
    Non-instructional facilities that serve educational purposes may be 
eligible to receive discounts on telecommunications and Internet access 
services (Priority 1 services).
Step 6: Determine the Eligible Services
    Applicants may request discounts for eligible products and services 
delivered to eligible entities for eligible purposes.
    Applicants file a Services Ordered and Certification Form (Form 
471) to request discounts on the cost of eligible services to be 
delivered to eligible schools, libraries, and consortia of these 
entities. Eligibility for discounts requires that the product or 
service is eligible and that it is put to an eligible use at an 
eligible location by an eligible entity.
    Four categories of eligible services have been established by the 
Federal Communications Commission (FCC):

   Telecommunications Services.

   Internet Access.

   Internal Connections.

   Basic Maintenance of Internal Connections.

    Services and products may be eligible, not eligible, or 
conditionally eligible for support. The schools and libraries Eligible 
Services List provides details about eligible equipment and services 
and the conditions under which they are eligible.
    Eligibility is based on criteria established by statute and FCC 
rules.
Step 7: Submit Application for Support (Form 471)
    The Services Ordered and Certification Form (Form 471) is the key 
form used to assure that schools and libraries receive appropriate 
Universal Service Fund support, comply with eligibility requirements, 
and take steps to use the supported services effectively.
What to File
Form 471--Services Ordered and Certification Form
    The Form 471:

        1. May be filed online or on paper.

        2. Must be certified by an authorized person to be considered 
        complete.

        3. Must be postmarked or submitted online prior to the close of 
        the application filing window for the funding year to be 
        considered as filed within the window.

Form 471 Item 21 Attachment
    Services and products for which discounts are requested must be 
described on the Item 21 Attachment. Beginning with Funding Year 2006, 
the Item 21 Attachment may be created and submitted online.
Form 471 Item 25 Certification
    Applicants must certify that they have secured access to the 
resources necessary to pay for:

        1. The non-discounted portion of the costs for requested 
        eligible services within the funding year.

        2. The ineligible products and services necessary to make 
        effective use of the eligible services requested.
After You File
Receipt Acknowledgement Letter
    USAC will issue a Form 471 Receipt Acknowledgment Letter (RAL) to 
both the applicant and service provider upon successful data entry of 
the Form 471 and certification. Applicants should review the RAL and 
submit allowable corrections to USAC.
Step 8: Undergo Application Review
    Each application is reviewed to ensure that Universal Service Fund 
support is committed only for eligible products and services as well as 
eligible uses by eligible entities.
Review of All Applications
    USAC reviews all Services Ordered and Certification Forms (Forms 
471) to verify the accuracy of discount percentages and ensure that 
support is committed only for eligible products and services. USAC is 
committed to issuing timely Funding Commitment Decision Letters but its 
ability to meet that goal depends on efficient processing of 
application reviews.
    Applicants can help speed up application reviews by:

   Submitting a complete Form 471 including required 
        certifications and Item 21 Attachments for each funding 
        request.

   Responding to requests for additional or clarifying 
        information within 15 days.

   Verifying that USAC has correct contact information.
Selective Reviews
    USAC selects some applicants for a Selective Review to ensure that 
they are following certain FCC program rules. Applicants are asked to 
provide the following information covering all of the billed entity's 
Forms 471 for the funding year:

   Documentation regarding their competitive bidding and vendor 
        selection process.

   Documentation of their ability to pay their share of the 
        cost of the products and services eligible for schools and 
        libraries program support.

   Proof that they have obtained the (ineligible) hardware, 
        software, professional development, electrical capacity or 
        other retrofitting, and maintenance necessary to make effective 
        use of the requested discounts.

    View a sample Selective Review Information Request. Service 
providers may not provide responses to Selective Review Information 
Requests.
    The result of a Selective Review may be that funding is approved or 
denied. The applicant may also receive a Resource Deficiency Advisory 
that explains the areas USAC finds to be deficient. Applicants should 
consider increasing their level of investment in identified areas since 
USAC may follow up in subsequent years regarding the necessary 
resources.
    Applicants may not receive direct or indirect help from service 
providers to pay their non-discounted share.
Step 9: Receive Your Funding Decision
    Following application review, USAC issues one or more Funding 
Commitment Decision Letters (FCDLs) to both the applicant and the 
service provider(s).
    Program funding commitment decisions are issued in ``waves,'' or 
regular cycles. Generally, funding year commitment waves will run on a 
regular bi-weekly schedule until such time that the only remaining 
applications are those held for heightened scrutiny.
    For all certified, in-window applications, FCC rules of priority 
are observed in processing funding requests:

   Priority One--all eligible telecommunications and Internet 
        access services are fully funded first.

   Priority Two--eligible requests for internal connections and 
        basic maintenance of internal connections from applicants with 
        highest discount levels receive next priority.

    Applicants should carefully review their Funding Commitment 
Decision Letter (FCDL) for details of approved or denied requests. 
Prior to the start of services for which Universal Service Fund support 
is approved, the applicant should review its technology plan status and 
its status concerning compliance with the Children's Internet 
Protection Act (CIPA).
    If an applicant believes that its funding request has been 
incorrectly reduced or denied, the applicant can appeal the decision to 
USAC or to the FCC.
Step 10: Begin Receipt of Services
    Before USAC can pay invoices, the billed entity must confirm: the 
start date of services, approval of the technology plan, and compliance 
with the Children's Internet Protection Act (CIPA).
    To help USAC ensure that Universal Service Fund support is paid 
only for services that have actually been delivered, applicants must 
verify the start date of services and submit a Receipt of Service 
Confirmation Form (Form 486).
    Technology plans must be approved before services start and before 
the applicant submits the Form 486. Applicants must be able to provide 
a technology plan approval letter issued by a USAC-certified technology 
plan approver. If the approval letter is posted on a website, the 
applicant should print and retain a copy.
    CIPA certifications are made on either Form 486 or the 
Certification by Administrative Authority to Billed Entity of 
Compliance with the Children's Internet Protection Act (Form 479) 
depending on whether the applicant is the billed entity.

   If the applicant is the billed entity, it must certify on 
        Form 486 that it is in compliance with CIPA or that CIPA does 
        not apply because funding requests are only for 
        telecommunications services.

   If the applicant is not the billed entity, it must submit 
        Form 479 to the billed entity; the billed entity, as the 
        Administrative Authority, then submits Form 486 to USAC with 
        the CIPA certification. Applicants that are not the billed 
        entity do not submit Form 479 to USAC.

    Applicants should read Form 486 Filing Information, Form 486 
Instructions, and Form 479 Instructions for further information 
including required filing dates.
Step 11: Invoice USAC
    After eligible services have been delivered, service providers and 
school and library applicants may submit invoices for Universal Service 
Fund (USF) support.
    FCC rules require USAC to pay Universal Service support to service 
providers and not directly to applicants. However, two invoice methods 
and program forms exist:
Service Provider Invoice (SPI) (Form 474)
    Service providers may submit Form 474 to USAC seeking payment for 
services:

   After the service provider provides the services or 
        equipment to the applicant.

   After the billed entity submits the Receipt of Service 
        Confirmation Form (Form 486) verifying the service start date.

   After the service provider has provided a discounted bill to 
        the billed entity.
Billed Entity Applicant Reimbursement (BEAR) Form (Form 472)
    The billed entity and the service provider must jointly submit the 
BEAR form:

   Following the receipt of discounted eligible services.

   After the billed entity submits the Form 486.

   After the billed entity has paid the total amount (including 
        the applicant's non-discount share and the amount of USF 
        support to be paid by USAC) to the service provider.
Determining Invoice Method
    Applicants should work with service providers to include a 
provision in contracts or service agreements specifying whether 
customer bills will be the total cost of services or only the 
customer's non-discount share. Service providers may provide applicants 
with discounted bills and submit the SPI to request payment from USAC 
for the amount of USF support to be paid. Service providers and 
applicants may jointly submit the BEAR when the applicant has paid the 
entire cost of services to the service provider. In all cases, USAC 
pays support to the service provider.
Service Delivery and Invoice Deadlines
    The date of the Funding Commitment Decision Letter determines 
deadlines for service delivery and invoices. Under certain conditions, 
applicants may request extensions of program deadlines.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                          Hon. Kevin J. Martin
    Question 1. While the issue of media ownership is not new and the 
most recent proceeding has been open for approximately 18 months, only 
28 days were provided for the public to comment on your specific 
proposal to partially lift the newspaper/broadcast cross-ownership ban, 
which has been in place for 32 years. This is deeply troubling due to 
the critical nature of this issue and past FCC precedent.
    For example, last month, the FCC provided 60 days for public 
comment and reply for a proposal on amending pole attachments rules. 
Earlier this month, the Commission gave 45 days for public comment and 
reply on a rulemaking proposal on indefinitely extend the unanimously 
popular Do-Not-Call List registration period. And, in November 2006, 
the FCC granted 90 days for public comment and reply on the effects of 
communications towers on migratory birds.
    Since the FCC has historically given 60-90 days for public comment 
and reply on critical proceedings and proposals, isn't it only 
appropriate to do the same with the specific proposal you announced 
last month? What is the impetus for providing only 28 days for the 
public to comment on a specific proposal that was released only last 
month? If the Commission delayed its vote on the media ownership 
proposal and provided more time for the public to comment on it, what 
harm would result?
    Answer. While I appreciate your and others' concerns about my 
decision to hold a vote on the media ownership Report and Order at the 
December 18th meeting, I do not believe that further delaying that 
decision would have been appropriate.
    Over the past year and a half the Commission has had to grapple 
with the most contentious and divisive issue to come before it: the 
review of the media ownership rules. The Commission's Media Ownership 
Order adopted on December 18, 2007, strikes a balance between 
preserving the values that make up the foundation of our media 
regulations while ensuring those regulations keep apace with the 
marketplace of today.
    Section 202(h) of the 1996 Telecommunications Act, as amended, 
requires the Commission to periodically review its broadcast ownership 
rules to determine ``whether any of such rules are necessary in the 
public interest as a result of competition.'' It goes on to read, ``The 
Commission shall repeal or modify any regulation it determines to be no 
longer in the public interest.''
    In 2003, the Commission conducted a comprehensive review of its 
media ownership rules, significantly reducing the restrictions on 
owning television stations, radio stations and newspapers in the same 
market and nationally. Congress and the court overturned almost all of 
those changes.
    There was one exception. The court specifically upheld the 
Commission's determination that the absolute ban on newspaper/broadcast 
cross-ownership was no longer necessary. The court agreed that ``. . . 
reasoned analysis supports the Commission's determination that the 
blanket ban on newspaper/broadcast cross-ownership was no longer in the 
public interest.''
    It has been over 4 years since the Third Circuit stayed the 
Commission's previous rules and over 3 years since the Third Circuit 
instructed the Commission to respond to the court with amended rules.
    It is against this backdrop that the FCC undertook a lengthy, 
spirited, and careful reconsideration of our media ownership rules.
    First, we provided for a long public comment period of 120 days, 
which we subsequently extended. We held six hearings across the 
country: one each in Los Angeles, California; Nashville, Tennessee; 
Harrisburg, Pennsylvania; Tampa Bay, Florida; Chicago, Illinois; and 
Seattle, Washington. And, we held two additional hearings specifically 
focused on localism in Portland, Maine and in Washington, D.C. The goal 
of these hearings was to more fully and directly involve the American 
people in the process.
    We listened to and recorded thousands of oral comments, and allowed 
for extensions of time to file written comments on several occasions. 
We've received over 166,000 written comments in this proceeding.
    We conducted ten independent studies. I solicited and incorporated 
input from all of my colleagues on the Commission about the topics and 
authors of those studies. We put those studies out for peer review and 
for public comment and made all the underlying data available to the 
public.
    Although not required, I took the unusual step of publishing the 
actual text of the one rule I thought we should amend. Because of the 
intensely controversial nature of the media ownership proceeding and my 
desire for an open and transparent process, I wanted to ensure that 
Members of Congress and the public had the opportunity to review the 
actual rule prior to any Commission action.
    After engaging in this extensive process and providing the public 
with unprecedented opportunities for input, the time had come to 
respond to the Third Circuit's remand, which is now more than three-
and-a-half years old, and complete the review of our media ownership 
rules which Congress has directed us, by statute, to undertake. 
Moreover, I felt strongly that we must provide certainty for a media 
industry that has for several years operated in a climate of 
uncertainty.

    Question 2. Some have suggested that lifting the cross-ownership 
ban would improve the dreadfully low percentages of woman and minority-
owned media since a woman or minority-owned newspaper could now buy a 
broadcast station or vice versa. However, a June 2006 report by the 
Free Press found that woman and minority owners are more likely to own 
fewer stations per owner than their white and corporate counterparts--
they are more likely to own just a single station. This singular 
ownership also seems to be the case for minority owned newspapers.
    The report seems to suggest that financial reasons are behind the 
inability of these groups to purchase additional media properties. They 
just simply can't afford to expand given certain market and industry 
conditions. Data also shows that the woman and minority-owned media 
outlets typically are in more rural areas.
    If women and minority owners aren't able to expand their media 
operations due to financial reasons, and the current proposal only 
lifts the cross-ownership ban in the top 20 markets, then how is the 
proposal going to adequately address the disparity that exits with 
women and minority media ownership?
    Answer. I have not suggested that lifting the cross-ownership ban 
would increase the percentage of women and minority owned media.
    I share your concerns about increasing the opportunities for women 
and minorities to own broadcast outlets. On December 18, 2007, the 
Commission adopted a range of initiatives intended to enhance 
opportunities for broadcast ownership for small businesses, including 
women- and minority-owned entities. Many of the actions taken in this 
Report and Order were recommended to the Commission by the Advisory 
Committee for Diversity in the Digital Age. Among other things, the 
item: (1) changes the construction permit deadlines to allow ``eligible 
entities,'' defined as entities that meet the Small Business 
Administration's criteria as small businesses that acquire expiring 
construction permits additional time to build out the facility; (2) 
revises the Commission's equity/debt plus attribution standard to 
facilitate investment in ``eligible entities''; (3) modifies the 
Commission's distress sale policy to allow certain licensees--those 
whose license has been designated for a revocation hearing or whose 
renewal application has been designated for a hearing on basic 
qualifications issues--to sell the station to an ``eligible entity'' 
prior to the commencement of the hearing; (4) adopts an Equal 
Transactional Opportunity Rule that bars race or gender discrimination 
in broadcast transactions; (5) adopts a ``zero-tolerance'' policy for 
ownership fraud and ``fast-tracks'' ownership-fraud claims; (6) 
requires broadcasters renewing their licenses to certify that their 
advertising sales contracts do not discriminate on the basis of race or 
gender; (7) encourages local and regional banks to participate in SBA-
guaranteed loan programs in order to facilitate broadcast and 
telecommunications-related transactions; (8) gives priority to any 
entity financing or incubating an ``eligible entity'' in certain 
duopoly situations; (9) considers requests to extend divestiture 
deadlines in mergers in which applicants have actively solicited bids 
for divested properties from ``eligible entities''; and (10) revises 
the exception to the prohibition on the assignment or transfer of 
grandfathered radio station combinations, permitting assignment or 
transfer of grandfathered radio station combinations intact to any 
buyer, not just an eligible entity as currently permitted, provided 
that such a buyer files an application to assign the excess stations to 
an eligible entity, or to an irrevocable divestiture trust for purposes 
of ultimate assignment to an eligible entity, within 12 months after 
consummation of the purchase of the grandfathered cluster.

    Question 3. In its repeal and remand of the FCC's 2003 media 
ownership rule changes, the Third Circuit Court of Appeals, in its 
Prometheus decision, stated that it ``cannot uphold the Cross-Media 
Limits themselves because the Commission does not provide a reasoned 
analysis to support the limits that it chose.'' In addition, the court 
stated ``our decision to remand the Cross-Media Limits also gives the 
Commission an opportunity to cure its questionable notice.'' What do 
you believe is the reasoned analysis that supports this change to the 
media ownership rules?
    Answer. As the Commission noted in the Media Ownership Order in 
this proceeding, ``we received many comments from a broad range of 
commenters, including broadcasters, newspapers, public interest groups, 
unions, and individual citizens. While many commenters believe that 
relaxation of the media ownership rules is necessary to promote our 
goals and that the current rules must be revised or eliminated under 
the statutory standard, many other commenters expressed significant 
concerns about the general level and potential consequences of media 
consolidation, including concerns that such consolidation results in a 
loss of viewpoint diversity and negatively affects competition. In 
addition, the Commission conducted or commissioned ten studies and 
received numerous other studies in the record of the proceeding. The 
Commission also conducted six media ownership hearings around the 
country and heard widely divergent testimony from a number of 
commenters and speakers at open microphones as to whether the media 
ownership rules should be relaxed, retained, or even tightened. We have 
carefully reviewed these comments, as well as the studies and the 
testimony. Our approach herein is a cautious approach. By modestly 
loosening the 32-year prohibition on newspaper/broadcast cross-
ownership, our approach balances the concerns of many commenters that 
we not permit excessive consolidation with concerns of other commenters 
that we afford some relief to assure continued diversity and investment 
in local news programming.''
    Based on all of the foregoing, we concluded that the newspaper/
broadcast cross-ownership ban should be modestly relaxed and that our 
other media ownership rules should remain unchanged. As the Commission 
stated, ``. . . we cannot ignore the fact that the media marketplace is 
considerably different than it was when the newspaper/broadcast cross-
ownership rule was put in place more than thirty years ago. Back then, 
cable was a nascent service, satellite television did not exist and 
there was no Internet. Indeed, the newspaper/broadcast cross-ownership 
rule is the only rule not to have been updated in 3 decades, despite 
the fact that FCC Chairmen--both Democrat and Republican--have 
advocated doing so.''
    Consumers have benefited from the emergence of new sources of news 
and information. But according to almost every measure newspapers are 
struggling. For example, at least 300 daily papers have stopped 
publishing over the past thirty years and circulation and advertising 
revenues at approximately half of all U.S. dailies has dropped 
precipitously in recent years. Permitting cross-ownership can preserve 
the viability of newspapers by allowing them to share their operational 
costs across multiple media platforms. In the order, the Commission 
explained that ``the revised newspaper/broadcast cross-ownership rule 
would allow a newspaper to purchase a radio station in the largest 20 
cities in the country or a television station in such cities--but not 
one of the top four television stations--as long as 8 independent major 
voices remain in the market. This relatively minor loosening of the ban 
on newspaper/broadcast cross-ownership in markets where there are many 
voices and sufficient competition will help strike a balance between 
ensuring the quality of local news gathering while guarding against too 
much concentration.''
    The Commission has applied the positive presumption only in the 
largest markets based on the evidence in the record that the twenty 
largest markets contain a robust number of diverse media sources and 
that the diversity of viewpoints would not be jeopardized by certain 
newspaper/broadcast combinations. The record also shows that newspaper/
broadcast combinations can create synergies that result in more news 
coverage for consumers. In short, the new rule lifts the complete ban 
but does so in a modest manner in order to ensure both that the 
Commission's goals of competition, localism, and diversity are not 
compromised and that the Commission may achieve the economic benefits 
of allowing certain combinations.
    The Commission's determination to draw that line at the top twenty 
markets is reasonable and well supported by the record, based on an 
examination of the media marketplace in the largest DMAs in the 
country. The Commission stated in the order that it had ``evaluated the 
range of media outlets available in the top 20 DMAs, and concluded that 
diversity in those largest markets is healthy and vibrant in comparison 
to all other DMAs. For example, while there are at least 10 
independently owned television stations in 18 of the top 20 DMAs, none 
of the DMAs ranked 21 through 25 have 10 independently owned television 
stations. Additionally, while seventeen of the top 20 DMAs have at 
least two newspapers with a circulation of at least 5 percent of the 
households in that DMA, four of the five DMAs ranked 21 through 25 have 
only one such newspaper. Moreover, the top 20 markets, on average, have 
15.5 major voices (independently owned television stations and major 
newspapers), 87.8 total voices (all independently owned television 
stations, radio stations, and major newspapers), and approximately 3.3 
million television households. Markets 21 through 30, by comparison, 
have, on average, 9.5 major voices, 65.0 total voices, and fewer than 
1.1 million television households, representing drops of 38.5 percent, 
25.9 percent, and 56.3 percent from the top 20 markets, respectively. 
Markets 31 through 40 and 41 through 50 have average numbers of voices 
for each category similar to markets 21 through 30, and even fewer 
television households on average, 837,800 and 679,200, respectively. 
Markets 50 through 210 show even more dramatic drops, with on average, 
6.7 major voices, 31.2 total voices, and approximately 231,000 
television households, representing drops of 56.4 percent, 61.7 
percent, and 90.7 percent from the top 20 markets, respectively. The 
diversity in the number and types of traditional media outlets in the 
largest markets ensures that the public is well served by antagonistic 
viewpoints. Markets outside of the top 20 DMAs do not feature diversity 
to such an extent.
    We have selected the number eight for the major media voice count 
because we are comfortable that assuring that minimum number of major 
media voices in the top 20 markets--along with the other unquantified 
media outlets that are present in those markets--will assure that these 
markets continue to enjoy an adequate diversity of local news and 
information sources. As noted above, there are at least 10 
independently owned television stations and two major newspapers in the 
great majority of the top 20 markets. Further, all of those markets 
have at least eight television stations and one major newspaper. As we 
do not want to allow a significant decrease in the number of 
independently owned major media voices in any of those markets, we will 
presume that a merger is in the public interest only if at least eight 
major media voices will remain post-merger.''

    Question 3a. It doesn't seem that providing only 28 days to have 
the public comment on the specific changes to the media ownership rule 
that you propose, or only 5 day's notice for the localism and media 
ownership hearings in Washington, D.C. and Seattle, WA wouldn't satisfy 
the requirements of the court--wouldn't you agree?
    Answer. While I appreciate your and others' concerns about my 
decision to hold a vote on the media ownership Report and Order at the 
December 18th meeting, I do not believe that further delaying that 
decision would have been appropriate.
    Over the past year and a half the Commission has had to grapple 
with the most contentious and divisive issue to come before it: the 
review of the media ownership rules. The Commission's Media Ownership 
Order adopted on December 18, 2007, strikes a balance between 
preserving the values that make up the foundation of our media 
regulations while ensuring those regulations keep apace with the 
marketplace of today.
    Section 202(h) of the 1996 Telecommunications Act, as amended, 
requires the Commission to periodically review its broadcast ownership 
rules to determine ``whether any of such rules are necessary in the 
public interest as a result of competition.'' It goes on to read, ``The 
Commission shall repeal or modify any regulation it determines to be no 
longer in the public interest.''
    In 2003, the Commission conducted a comprehensive review of its 
media ownership rules, significantly reducing the restrictions on 
owning television stations, radio stations and newspapers in the same 
market and nationally. Congress and the court overturned almost all of 
those changes.
    There was one exception. The court specifically upheld the 
Commission's determination that the absolute ban on newspaper/broadcast 
cross-ownership was no longer necessary. The court agreed that ``. . . 
reasoned analysis supports the Commission's determination that the 
blanket ban on newspaper/broadcast cross-ownership was no longer in the 
public interest.''
    It has been over 4 years since the Third Circuit stayed the 
Commission's previous rules and over 3 years since the Third Circuit 
instructed the Commission to respond to the court with amended rules.
    It is against this backdrop that the FCC undertook a lengthy, 
spirited, and careful reconsideration of our media ownership rules.
    First, we provided for a long public comment period of 120 days, 
which we subsequently extended. We held six hearings across the 
country: one each in Los Angeles, California; Nashville, Tennessee; 
Harrisburg, Pennsylvania; Tampa Bay, Florida; Chicago, Illinois; and 
Seattle, Washington. And, we held two additional hearings specifically 
focused on localism in Portland, Maine and in Washington, D.C. The goal 
of these hearings was to more fully and directly involve the American 
people in the process.
    We listened to and recorded thousands of oral comments, and allowed 
for extensions of time to file written comments on several occasions. 
We've received over 166,000 written comments in this proceeding.
    We conducted ten independent studies. I solicited and incorporated 
input from all of my colleagues on the Commission about the topics and 
authors of those studies. We put those studies out for peer review and 
for public comment and made all the underlying data available to the 
public.
    Although not required, I took the unusual step of publishing the 
actual text of the one rule I thought we should amend. Because of the 
intensely controversial nature of the media ownership proceeding and my 
desire for an open and transparent process, I wanted to ensure that 
Members of Congress and the public had the opportunity to review the 
actual rule prior to any Commission action.
    After engaging in this extensive process and providing the public 
with unprecedented opportunities for input, the time had come to 
respond to the Third Circuit's remand, which is now more than three-
and-a-half years old, and complete the review of our media ownership 
rules which Congress has directed us, by statute, to undertake. 
Moreover, I felt strongly that we must provide certainty for a media 
industry that has for several years operated in a climate of 
uncertainty.

    Question 4. In July of this year, the Commission released ten 
research studies on media ownership, which were intended to inform the 
Commission's comprehensive review of its broadcast ownership policies 
undertaken in its rulemaking proceeding. The studies, which were 
conducted by outside researchers and by Commission staff, examined a 
range of issues that impact diversity, competition, and localism--the 
three important policy goals of those rules.
    The Consumer Federation of America, Consumers Union and Free Press 
jointly filed comments to the FCC in regards to these 10 studies. The 
commenters called the studies a ``collection of inconsistent, 
incompetent and incoherent pieces of research cobbled together to prove 
a foregone conclusion.'' More so, they stated that the peer reviews of 
the studies did not follow required procedures and, due to this, 
violated Office of Management and Budget guidelines on the 
implementation of the Data Quality Act. What is your assessment on the 
integrity of how the studies were conducted?
    Answer. The Commission, in its Media Ownership Order, rejected the 
complaints filed by Free Press, Consumer Federation of America, and 
Consumers Union claiming that the Commission violated the Data Quality 
Act (``DQA'') and guidelines issued by the Office of Management and 
Budget (``OMB'') implementing the DQA. Free Press alleges that the 
Commission violated the DQA by failing to give interested parties 
sufficient time to ``reproduce'' the results of those studies. The 
Commission concluded that ``neither the DQA nor the OMB guidelines 
requires a Federal agency to allot time in a rulemaking proceeding for 
third parties to reproduce the results of studies released by the 
agency. Moreover, the facts belie the allegation that Free Press had 
insufficient time to review the studies.''
    The Commission ``made available for inspection the bulk of the non-
proprietary data underlying the studies beginning on July 31, 2007, and 
released the proprietary data under a Protective Order by September 6, 
2007. In response to a request from Free Press, the Media Bureau 
extended the deadline for submitting comments on the studies from 
October 1 to October 22, 2007, and extended the deadline for reply 
comments from October 16 to November 1, 2007. Thus, Free Press had 46 
days after September 6 to prepare comments and 10 more days to prepare 
reply comments. Free Press took full advantage of the extended comment 
period--it filed nearly 2,500 pages of comments on the studies. We find 
that Free Press had adequate time to review the data underlying the 
studies and to reproduce their results.''
    The Commission also ``rejected the complaints filed by Free Press 
and other commenters that the Commission failed to comply with the peer 
review guidelines promulgated by OMB. The OMB Bulletin provides for the 
peer review of disseminations of scientific information containing 
`findings or conclusions that represent the official position of one or 
more agencies of the Federal Government.' It requires Federal agencies 
to ensure that its official disseminations have met rigorous standards 
of quality control through a peer review mechanism or to put the public 
on notice that the information has not been through a rigorous quality 
review. The Bulletin expressly provides that it is intended to improve 
the internal management of the Executive Branch and that it does not 
create any enforceable legal rights.''
    The Commission concluded that ``Free Press incorrectly claims that 
the Commission acted contrary to the OMB Bulletin by releasing the 10 
media ownership studies prior to completing peer reviews of the 
studies. The Commission posted the media ownership studies to its 
website on July 31, 2007, shortly after they were completed, in order 
to give the public and the peer reviewers access to their contents 
expeditiously. The Commission issued a Public Notice that same day 
requesting public comment on the studies. The Public Notice 
specifically stated that the studies had not yet been peer reviewed; 
accordingly, the public was accurately informed that the studies at 
that point did not necessarily meet rigorous quality review standards. 
In addition, it was clear from the disclaimers on some of the studies 
that those particular studies did not represent the agency's official 
view. In order to forestall any confusion on this point, the Commission 
posted an explanatory disclaimer with regard to each of the studies on 
the web page that is the public's primary access point to them, making 
it clear that they do not represent the Commission's official views, 
and were not being disseminated as such. Furthermore, the Media Bureau 
extended the comment period on the studies until November 1, 2007. The 
extension of time allowed a total of 58 days from the posting of the 
peer reviews on September 4, 2007, and more than 90 days from the 
posting of the studies for public review and comment on July 31, 
2007.''
    Moreover, the Commission noted that ``it accepts ex parte filings 
from members of the public past the end of the formal comment period, 
which gives parties an opportunity to supplement the record with 
additional information. Thus, the public has been afforded ample time 
to review and comment on the studies after completion of the peer 
reviews.''
    Furthermore, the Commission concluded that ``the record clearly 
indicates that the public had ample notice of our peer review plans, 
although Free Press attempts to make much of the fact that the peer 
review plans were not filed on a separate web page. Beginning with the 
initial Public Notice announcing the commissioning of the 10 studies on 
November 22, 2006, the Commission continuously informed the public of 
its peer review process through periodic Public Notices and updates to 
its Media Ownership website. The Commission posted on its website the 
study topics (November 22, 2006); the completed studies (July 31, 
2007); the peer review charge letters (August 28, 2007); and the 
completed peer review reports (September 4, 2007). The Commission's 
July 31, 2007 Public Notice established a pleading cycle for public 
comment on the studies. The peer review charge letters and peer review 
reports were made available to the public on the Commission's website 
well before the end of the comment period. In addition, charge letters 
were posted to the website in advance of the posting of the actual peer 
review reports. Accordingly, the public was adequately informed of the 
peer review process being conducted, and has had adequate opportunity 
to comment on the elements of the FCC's peer review process in this 
proceeding.''
    The Commission also noted that ``Free Press's complaint does not 
raise concerns about the validity of the Commission's peer review 
process, and there is no basis for any. The OMB Bulletin expressly 
provides that agencies have ``broad discretion'' to use particular peer 
review mechanisms suitable to a particular information product. The 
Commission has exercised its discretion in a reasonable manner in the 
course of this proceeding. All of the studies that the Commission 
requested to be conducted were peer reviewed by unaffiliated experts, 
and four of them were peer reviewed by multiple reviewers. One study 
was revised as a result of the peer review, and the authors of another 
study submitted new calculations with their responses to the peer 
reviews. Twenty-two quantitative studies submitted by third parties in 
the docket were peer reviewed, and the results were posted for further 
public comment. The Commission's peer review process has improved the 
quality of the studies submitted to the Commission for its information 
in this proceeding. Although Free Press would have preferred a far more 
elaborate and time-consuming peer review process, this process was not 
required under the OMB Bulletin nor would it have improved appreciably 
upon the Commission's robust, extended process for independent review 
and public comment.''

    Question 4a. These groups also performed research, utilizing the 
FCC's own data, which actually showed relaxing the newspaper/broadcast 
cross-ownership rules resulted in a net loss in the amount of local 
news that is produced across local markets by broadcast stations. The 
commenters stated ``at the market level, cross-ownership results in the 
loss of an independent voice as well as a decline in market-wide news 
production.'' Have you all reviewed these comments? At the very least, 
these claims raise serious doubts as to the validity of any relaxation 
of media ownership rules and begs for closer examination of the data 
before you enact any changes to the media ownership rules--wouldn't you 
agree?
    Answer. The Commission carefully reviewed the comments of the 
Consumer Federation of America, Consumers Union, and Free Press 
(``CU''). The Commission concluded that ``[d]ue to numerous 
difficulties with CU's analysis, we find that we cannot rely on its 
conclusions.''
    First, ``[i]t is not clear what measure CU used for total quantity 
of local news, but it appears that the measure is limited to broadcast 
television news, which measures only a portion of local news, and 
ignores local news from newspapers, radio, local cable news stations, 
and other sources. As a result, CU's measurements are incomplete, and 
we cannot rely upon them.''
    Second, ``. . . the thrust of CU's argument is that if cross-
ownership does not increase total local news (as CU measures it), the 
ban should be maintained. This argument may have been formed because CU 
statistical results do not show a statistically significant effect of 
cross-ownership. This lack of statistical significance may arise from 
CU's choice of specification and measure of local news, and as such may 
be unreliable.''
    Finally, ``Media General submits a critique of CU's criticisms that 
agrees with these findings. In his Econometric Review, Dr. Harold 
Furchtgott-Roth states that CU makes several economic and econometric 
mistakes that undermine the reliability of its results. First, he 
states that CU's decision to examine the effect of cross-ownership by 
aggregating to the market level is incorrect. CU's revised regressions 
fail to measure total news and diversity of news at the market level. 
In addition, he states that one of the strongest predictors of the 
quantity of broadcast news in a market would be the number of stations 
in the market. That variable, however, is omitted in the specifications 
by CU, resulting in regressions that are much less precise. We agree 
that it is improper to aggregate to the market level without adjusting 
for the number of outlets in the market.''

    Question 5. One of the statements being made about the DTV 
transition is that ``Television sets connected to cable, satellite or 
other pay TV service do not require converters.'' However, it is my 
understanding this may not be totally true for certain satellite 
subscribers, primarily in rural areas like the town of Presque Isle, 
Maine due to the issue of local-into-local service, which is when a 
satellite company provides its subscribers with all of the local 
broadcast TV stations in that market.
    While satellite companies do offer local-into-local in most of the 
media markets, it is not available to all 210 media markets--it seems 
as if the service is not available to approximately 60 rural markets in 
about 30 states.
    Is this correct? And if so, what impact will the DTV transition 
have on households that subscribe to satellite in areas that do not 
have local-into-local service? If they have a TV with an analog tuner 
will they also need to purchase a converter box? Is the FCC working 
with the satellite companies to make sure they expand the local-into-
local service to cover all 210 media markets before the DTV transition? 
If not, wouldn't this be an appropriate thing to do to alleviate any 
consumer confusion that would result from inaction?
    Answer. Although neither of the two major satellite television 
carriers, DIRECTV and DISH Network, offers local-into-local service in 
all of Nielsen's 210 Designated Market Areas (``DMAs''), 179 markets 
receive local-into-local service and more than 97 percent of U.S. 
households are in markets in which satellite-delivered local stations 
are available.
    DIRECTV offers local-into-local service in 144 DMAs today, and is 
in the process of launching local-into-local service in an additional 
six markets for a total of 150 DMAs. DISH Network currently provides 
local-into-local service in 167 markets.
    The reason for less than 100 percent local-into-local service is 
that, unlike the statutory cable ``must-carry'' requirements that 
require all cable systems throughout the country to carry local 
stations, the statutory requirements for satellite carriage give 
satellite carriers a choice of whether or not to carry local stations 
in a market. Specifically, Congress enacted the Satellite Home Viewer 
Improvement Act of 1999 (``SHVIA'') to allow, but not require, 
satellite carriers to offer local stations pursuant to a statutory 
copyright license. Satellite carriers that choose to use the statutory 
copyright license to offer one or more stations in a market must carry 
all the stations in the market that request carriage. This is known as 
``carry one, carry all.'' In 2004, Congress amended the statute to 
require carriage (``must carry'') in Alaska and Hawaii.
    We have asked the satellite carriers about their plans for 
eventually serving all of the 210 markets and will continue to work 
with them as they develop improved technology.

    Question 6a. Over the summer it was reported that FCC staff 
inspected about 1,100 retail stores around the country, as well as 
retailers' websites, to monitor compliance with FCC DTV label rules. As 
a result of those inspections, the Commission issued more than 260 
citations notifying retailers of violations, which results in about a 
76 percent compliance rate.
    Obviously, not the best figure, mainly with the holiday season that 
we are in the middle of. People buying a new TV may not be aware or 
will be misinformed that their new TV will not accept over-the-air 
digital signals and therefore need to buy more equipment to accommodate 
the transition. Has the FCC performed any additional inspections to 
determine if the label compliance rate has improved any?
    Answer. We are continuing to inspect retail stores and websites to 
assess compliance with our DTV label rules.
    As of February 5, 2008, the Commission has conducted 1,688 
inspections of retailer stores and websites to assess compliance with 
the DTV label rules. Based on our inspections, we believe that retailer 
compliance with the DTV label rules has improved since our inspections 
began.
    We have now issued 309 citations for violations of the DTV label 
rules. Additionally, some inspections identified violations by 
retailers against which the Commission had already issued a citation. 
In those cases, no citation was issued because the violations will be 
addressed in a Notice of Apparent Liability for forfeiture. We also 
have fourteen NALs on circulation for such violations and released six 
more NALs in October.
    Most of these violations, however, occurred during the summer 
months. More recent inspections have found relatively few problems. 
Indeed, we have re-inspected several stores that previously had 
violations and found them fully compliant with our rules.

    Question 6b. Also has the Commission recorded any consumer 
complaints and confusion about DTV versus HDTV? While most high-
definition TVs can receive digital signals not all the can and the 
concern is that it might lead to confusion at the retailer or at home.
    Answer. Although we have not received any specific complaints on 
this issue, we have heard anecdotally at outreach events about some 
consumer confusion regarding DTV and HDTV. We let consumers know that 
if they want to purchase a new TV, a digital television (also known as 
a ``standard definition'' TV) is all that is required, and that these 
TVs are comparably priced to similar sized analog televisions.

    Question 7. Over the past several months there have been incidents 
that have raised serious concern about the phone and cable companies' 
power to discriminate against content. In September, Verizon Wireless 
arbitrarily chose to block a series of text messages on the grounds 
that the subject matter was too controversial. While the carrier, to 
its credit, reversed this decision, this illustrates its power as a 
content gatekeeper. Then came the news that AT&T reserves the right it 
its Terms of Service to discontinue the service of customers that 
criticize the company. In October, the Associated Press reported that 
Comcast was interfering with the popular file-sharing, peer-to-peer 
service BitTorrent.
    Senator Dorgan and I have requested that this committee hold a 
hearing to consider the issue of content discrimination and investigate 
these incidents further to determine if they were based on legitimate 
business and network management policies or part of practices that 
would be deemed unfair and anti-competitive.
    We also wrote you a letter, dated October 14, requesting the 
Commission's position on the Verizon Wireless-NARAL text messaging 
incident. To this date we have not heard any response from your office. 
Do you know the status of that response? Also, do you feel that any of 
these events could have been appropriately and effectively addressed by 
the FCC's Four Internet Freedom Principles or any other FCC regulation 
that is in place?
    Answer. A response to the letter sent by you and Senator Dorgan was 
transmitted to your office under separate cover. The Commission adopted 
an Internet Policy Statement with four policy principles aimed at 
protecting consumers' access to the lawful Internet content of their 
choice, and ensuring the free flow of information across networks. The 
activities attributed to Verizon Wireless, however, involved wireless 
text messages rather than access to Internet content. Although neither 
Congress nor the Commission has addressed text messaging, I believe 
that the principle of ensuring consumer access to content on the 
Internet generally applies to providers of text messaging services as 
well. For this reason, I have directed the Enforcement Bureau to 
initiate an investigation into such practices. In addition, the 
Commission has sought public comment on a Petition for Declaratory 
Ruling filed by several public interest groups to clarify the 
regulatory status of text messaging services, including short-code 
based services sent from and received by mobile phones.

    Question 8. It was recently disclosed a proposal is circulating 
that would reinstate cable system ownership limits at 30 percent of the 
national market. Many, including myself, have been long been concerned 
about the lack of wireline cable competition and rising price of cable 
service.
    Specifically, the FCC recently stated that ``the average cost of 
cable has almost doubled from 1995 to 2005, increasing 93 percent, 
while the cost of other communication services fell. The cable industry 
needs more competition and we will continue to act to bring more 
competition and its benefits to consumers.''
    The initial cable ownership cap stemmed from a FCC change in 1992 
as a result of the 1992 Cable Act, which directed the FCC to establish 
limits on the number of subscribers a cable operator may serve and on 
the number of channels a cable operator may devote to affiliated 
programming. What are the pros and cons of implementing a cable 
ownership cap to bringing more competition, and benefits or lower 
prices to consumers?
    Answer. Congress passed the Cable Television Consumer Protection 
and Competition Act of 1992 to promote increased competition in the 
cable television and related markets. The 1992 Cable Act added 
structural rules intended to address the consequences of increased 
horizontal concentration and vertical integration in the cable 
industry. A principal goal of this statutory framework was to foster a 
diverse, robust, and competitive market in the acquisition and delivery 
of multichannel video programming.
    Congress intended the structural ownership limits of Section 613(f) 
to ensure that cable operators did not use their dominant position in 
the multichannel video programming distribution (``MVPD'') market, to 
impede unfairly the flow of video programming to consumers.
    Specifically, Congress directed that ``[i]n prescribing rules and 
regulations . . . the Commission shall, among other public interest 
objectives . . . ensure that no cable operator or group of cable 
operators can unfairly impede, either because of the size of any 
individual operator or because of joint actions by a group of operators 
of sufficient size, the flow of video programming from the video 
programmer to the consumer . . . ensure that cable operators affiliated 
with video programmers do not favor such programmers in determining 
carriage on their cable systems or do not unreasonably restrict the 
flow of the video programming of such programmers to other video 
distributor . . . take particular account of the market structure, 
ownership patterns, and other relationships of the cable television 
industry, including the nature and market power of the local franchise, 
the joint ownership of cable systems and video programmers, and the 
various types of non-equity controlling interests . . . account for any 
efficiencies and other benefits that might be gained through increased 
ownership or control . . . make such rules and regulations reflect the 
dynamic nature of the communications marketplace . . . not impose 
limitations which would bar cable operators from serving previously 
unserved rural areas; and . . . not impose limitations which would 
impair the development of diverse and high quality video programming.'' 
Communications Act  613(f)(2)(A)-(G), 47 U.S.C.  533(f)(2)(A)-(G).

    Question 8a. Back in 1992, there was little, if any, competition in 
the cable industry. Now, we have seen satellite TV providers reach 
approximately 30 million subscribers and telephone companies rolling 
out digital TV services. How might a 1992 cable ownership cap directive 
affect the cable industry in a 2007 market?
    Answer. In today's 2007 marketplace, the average cost of cable is 
increasing dramatically. The Commission has found, ``overall, cable 
prices increased more than 5 percent last year and by 93 percent since 
the period immediately prior to Congress's enactment of the 
Telecommunications Act of 1996. Expanded basic prices rose more than 6 
percent or twice the rate of inflation last year. Prices are 17 percent 
lower where wireline cable competition is present. DBS competition does 
not appear to constrain cable prices--average prices are the same as or 
slightly higher in communities where DBS was the basis for a finding of 
effective competition than in noncompetitive communities. Finally, 
increases in programming expenses were equivalent to more than half of 
the overall increase in prices for the basic and expanded basic 
tiers.''
                                 ______
                                 
    Response to Written Question Submitted by Hon. David Vitter to 
                          Hon. Kevin J. Martin
    Question. Louisiana has the fifth highest rate of households 
without access to a phone in the nation, so payphones remain a vital 
communication method in many communities. As I have pointed out before, 
payphones were the only way many families were able to communicate 
after the hurricanes in 2005. I am told that payphone service providers 
in my state will find it difficult to continue to deploy payphones at 
current levels if they are not fairly compensated as the rules require.
    I understand that payphone service providers are compensated for 
their non-coin calls from a rule developed by the FCC. Those rules 
require payphone providers to collect from several hundred different 
carriers and prepaid card providers, but payphone service providers may 
not legally block the phone numbers of providers who do not compensate 
them. This policy is good for payphone users, but it requires a 
concurrent effort by the FCC to ensure that payphone service providers 
are fairly compensated to be able to maintain service.
    I have been told that, even after the revised rules from 2004, 
payphone service providers are dealing with many carriers and prepaid 
payphone card providers who continue to avoid paying the required 
compensation. As I understand the situation, the FCC has initiated very 
few actions to enforce these payphone compensation rules. Please let me 
know what specific actions have been taken within the last year to 
rectify the problem of non-payments and what action you may anticipate 
will be necessary going forward.
    Answer. On September 30, 2003, in the Tollgate Order, the 
Commission adopted the current payphone compensation rules to ensure 
that payphone service providers (PSPs) are fairly compensated for each 
and every completed, payphone-originated call, as required under 
section 276 of the Telecommunications Act of 1996. The Tollgate Order 
and its implementing rules became effective on July 1, 2004.
    On September 13, 2006, the Commission's Wireline Competition Bureau 
released a Public Notice reminding carriers of their obligations under 
the payphone rules, and also reiterating that it will not hesitate to 
take enforcement action, including imposing forfeitures, should 
carriers fail to comply with their compensation and reporting 
obligations.
    The Commission addresses both formal and informal complaints 
between industry participants, including compensation disputes between 
payphone service providers and carriers, and investigates possible 
violations of the Commission's rules and the Communications Act of 
1934, as amended, (the Act), including the Commission's payphone 
compensation rules.
    In February 2007, the Commission issued an order in a formal 
complaint proceeding requiring a carrier to pay payphone service 
providers and their agents more than $2.7 million in damages plus 
prejudgment interest for billing and collection.
    Additionally, during this period, 38 informal complaints seeking 
payphone compensation were filed. Informal complaints are geared toward 
allowing the parties to attempt to resolve disputes among themselves 
through negotiations and without resort to formal complaint litigation, 
if possible. In that regard, 14 of the informal complaints filed in 
2007 have already been resolved by the parties, and a number of others 
are currently under active negotiations. Under the Commission's rules 
complainants may file formal complaints if the negotiations do not 
succeed.
    The Commission recognizes the importance of payphones and we are 
committed to enforcing the payphone compensation rules. The Commission 
must ensure that the mandate of section 276 of the Act, ``to promote 
the widespread deployment of payphone services'' by ``ensur[ing] that 
all payphone service providers are fairly compensated for each and 
every completed intrastate and interstate call using their payphone'' 
is realized.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                          Hon. Kevin J. Martin
    Question 1. The FCC has commissioned 10 economic studies on media 
ownership and its effect on news and other programming. According to 
these studies, how does cross-ownership effect local content and 
political slant? Does this outcome differ by the size of the media 
market? In other words, how does the cross-ownership ban impact local 
content and political slant in the largest 20 markets compared to 
effects in smaller markets around the country? What has been the 
experience of markets which had companies grandfathered in under old 
media ownership rules?
    Answer. The Commission concluded that ``[t]hree Media Ownership 
studies analyzed the effects of newspaper/broadcast cross-ownership on 
television news coverage and local content.'' Study 6 (``The Effects of 
Cross-Ownership on the Local Content and Political Slant of Local 
Television News,'' authored by Jeffrey Milyo) examined the effects of 
cross-ownership on local news. The study ``concluded that `local 
television newscasts for cross-owned stations contain on average about 
1-2 minutes more news coverage overall, or 4 to 8 percent more than the 
average for non-cross-owned stations.' The author further concluded 
that newspaper cross-ownership is also `significantly and positively 
associated with both local news coverage and local political news 
coverage,' finding that cross-owned stations show 7 to 10 percent more 
local news than do non-cross-owned stations. The study author also 
found that on average, cross-owned stations broadcast about 25 percent 
more coverage of state and local politics. The author also generally 
noted that newspaper/broadcast cross-ownership is associated with more 
candidate coverage, more candidate speaking time and more coverage of 
opinion polls.' '' Study 6 also focused on the political slant of TV 
stations and concluded that television stations cross-owned with 
newspapers exhibit a slight and statistically insignificant Republican-
leaning slant in content.
    The Commission concluded that Study 3 (``Television Station 
Ownership Structure and the Quantity and Quality of TV Programming,'' 
authored by Gregory Crawford) ``analyzed the relationship between the 
ownership structure of television stations and quantity and quality of 
television programming between 2003 and 2006, finding that cross-owned 
television stations broadcast (approximately 3.0 percentage points) 
more local news programming''.
    The Commission found that ``Study 4.1 (``The Impact of Ownership 
Structure on Television Stations' News and Public Affairs Programming'' 
authored by Daniel Shiman) collected data on the news and public 
affairs programming provided by television stations and analyzed the 
relationship between the quantity of such programming and the ownership 
structure of each television station. After examining the programming 
of approximately 1,700 stations between 2002 and 2005, the author 
concluded that cross-owned stations provided 11 percent (18 minutes) 
more news programming per day than other stations.''
    The Commission recognized ``that there is disagreement in the 
studies. On balance, however, we conclude that the weight of evidence 
indicates that cross-ownership can promote localism by increasing the 
amount of news and information transmitted by the co-owned outlets.''

    Question 2. The financial troubles and perceived threats to the 
viability of newspapers and broadcasts have played a significant role 
in the proposed changes of media ownership rules. Some sources contend 
that despite declining ad revenues and readership, newspapers remain 
profitable. However, others contend that these media outlets have only 
been able to remain profitable at the expense of quality and quantity 
of news they produce. What do you perceive the financial position of 
newspapers to be in today's market? How does this vary based on the 
size of the media market? To what extent will these proposed changes 
alleviate these troubles?
    Answer. The record in the proceeding reveals that newspapers are 
struggling and that, across the industry, circulation is down and 
advertising revenue is shrinking. Some analysts suggest that newspapers 
appear to have entered a period of ``protracted decline.'' In 2006, the 
traditional indicators were all negative: circulation fell even faster 
than in previous years; industry revenues were flat and, on the print 
side, retail, national and automotive classified ads all showed 
weakness.
    Industry analysts attribute the more recent, steeper declines to 
many factors, not one or two. Some news consumers, particularly the 
young, have moved online. Only 35 percent of persons aged 18 through 34 
read newspapers on a daily basis. ``Free'' dailies (i.e., advertising-
only papers) are a competitive factor, too, especially in larger 
cities. The net result is not so much that people are giving up on 
newspapers altogether as that they read them less often. Seven-day-a-
week subscribers have become a smaller group; many have switched to 
getting the paper a few days a week and skipping others.
    The most severe losses in 2006 were in large metropolitan markets 
like Los Angeles, Boston, San Francisco and Philadelphia. The top 50 
newspapers in circulation lost an average of 3.6 percent daily 
circulation, almost 1 percentage point more than the industry average. 
In the two previous years, the three national papers had managed to 
stay even, but not in 2006. Circulation was off 3.2 percent at The New 
York Times, 1.9 percent at The Wall Street Journal, and 1.3 percent at 
USA Today.
    In adopting the new waiver standard for newspaper/broadcast cross-
ownership, the Commission stated that it continued ``to find evidence 
that cross-ownership in the largest markets can preserve the viability 
of newspapers without threatening diversity by allowing them to spread 
their operational costs across multiple platforms. In doing so, they 
can improve or increase the news offered by the broadcaster and the 
newspaper. Numerous media owners provide examples of cost savings and 
shared resources leading to more local coverage and better quality news 
coverage. . . . [T]he record indicates that the largest markets contain 
a robust number of diverse media sources and that the diversity of 
viewpoints would not be jeopardized by certain newspaper/broadcast 
combinations. The record also shows that newspaper/broadcast 
combinations can create synergies that result in more news coverage for 
consumers.''

    Question 3. Chairman Martin: Mr. Chairman your proposal only deals 
with the top 20 markets. Was there some clear difference between the 
top 20 markets and the remaining markets or was this a more arbitrary 
standard? Why are ownership rules not being revised for smaller 
markets?
    Answer. The Commission has applied the positive presumption only in 
the largest markets ``based on the evidence in the record that the 
largest markets contain a robust number of diverse media sources and 
that the diversity of viewpoints would not be jeopardized by certain 
newspaper/broadcast combinations.''
    In the Order, the Commission ``found notable differences between 
the top 20 markets and all other DMAs, both in terms of voices and in 
terms of television households.'' For example, the Order states that 
``while there are at least 10 independently owned television stations 
in 18 of the top 20 DMAs, none of the DMAs ranked 21 through 25 have 10 
independently owned television stations.'' Additionally, the Order 
states that ``while 17 of the top 20 DMAs have at least two newspapers 
with a circulation of at least 5 percent of the households in that DMA, 
four of the five DMAs ranked 21 through 25 have only one such 
newspaper.'' Moreover, according to the Order, ``the top 20 markets, on 
average, have 15.5 major voices (independently owned television 
stations and major newspapers), 87.8 total voices (all independently 
owned television stations, radio stations, and major newspapers), and 
approximately 3.3 million television households.'' The Commission 
states that ``[m]arkets 21 through 30, by comparison, have, on average, 
9.5 major voices, 65.0 total voices, and fewer than 1.1 million 
television households, representing drops of 38.5 percent, 25.9 
percent, and 56.3 percent from the levels in the top 20 markets, 
respectively. Markets 31 through 40 and 41 through 50 have average 
numbers of voices for each category similar to markets 21 through 30, 
and even fewer television households on average, 837,800 and 679,200, 
respectively. Markets 50 through 210 show even more dramatic drops 
with, on average, 6.7 major voices, 31.2 total voices, and 
approximately 231,000 television households.'' The Commission notes 
that ``[t]hese figures represent drops of 56.4 percent, 61.7 percent, 
and 90.7 percent from the levels in the top 20 markets, respectively.''
    The Commission adopted a presumption that it is inconsistent with 
the public interest for an entity to own newspaper and broadcast 
combinations in markets outside the top 20 DMAs ``to protect 
competition and media diversity.'' Indeed, the Commission stated in the 
Media Ownership Order that ``diversity has been especially important in 
the context of newspaper/broadcast cross-ownership, given the reliance 
the public has placed on these media as sources of local news and 
information.'' The Order states that ``[t]his reliance may be 
particularly acute in markets below the top 20 DMAs.'' Specifically, 
the Order states that ``[t]he top 20 DMAs share a robustness in media 
and outlet diversity that is not matched in smaller markets.'' The 
Commission was not ``certain that the degree of media consolidation 
that the largest, more competitive markets can withstand is yet 
mirrored in smaller markets, and thus,'' it found in the Order ``that 
there should be a presumption against newspaper/broadcast cross-
ownership in markets below the top 20.''

    Question 4. The Universal Service Fund is obviously very important 
for rural states like South Dakota. What general troubles do you see 
arising with the fund and its solvency? What would you recommend to 
help alleviate these troubles? What are your thoughts on the 
recommendations put forth by the Federal-State Joint Board in November?
    Answer. The Commission recently adopted several proposals to reform 
the high-cost Universal Service program. It is essential that we take 
actions that preserve and advance the benefits of the Universal Service 
program.
    The United States and the Commission have a long history and 
tradition of ensuring that rural areas of the country are connected and 
have similar opportunities for communications as other areas. Our 
Universal Service program must continue to promote investment in rural 
America's infrastructure and ensure access to telecommunications 
services that are comparable to those available in urban areas today, 
as well as provide a platform for delivery of advanced services.
    Changes in technology and increases in the number of carriers that 
receive Universal Service support, however, have placed significant 
pressure on the stability of the Fund. A large and rapidly growing 
portion of the high-cost support program is now devoted to supporting 
multiple competitors to serve areas in which costs are prohibitively 
expensive for even one carrier. These additional networks don't receive 
support based on their own costs, but rather on the costs of the 
incumbent provider, even if their costs of providing service are lower. 
In addition to recommending an interim cap, the Federal-State Joint 
Board on Universal Service (Joint Board) has recognized the problems of 
maintaining this identical support rule.
    I am supportive of several means of comprehensive reform for the 
Universal Service program. I have circulated among my colleagues at the 
Commission an Order that adopts the recommendation of the Joint Board 
to place an interim cap on the amount of high-cost support available to 
competitive eligible telecommunications carriers (ETCs). And we 
recently adopted a Notice of Proposed Rulemaking that would require 
that high-cost support be based on a carrier's own costs in the same 
way that rural phone companies' support is based. I'm supportive of 
both measures as a means to contain the growth of Universal Service in 
order to preserve and advance the benefits of the fund and protect the 
ability of people in rural areas to continue to be connected.
    I continue to believe the long-term answer for reform of high-cost 
Universal Service support is to move to a reverse auction methodology. 
I believe that reverse auctions could provide a technologically and 
competitively neutral means of controlling the current growth in the 
fund and ensuring a move to most efficient technologies over time. 
Accordingly, I am pleased that we adopted a Notice of Proposed 
Rulemaking to use reverse auctions to distribute Universal Service 
support.
    I also support the Joint Board recommendation to revise the current 
definition of supported services to include broadband Internet access 
service. Congress did not envision that services supported by Universal 
Service would remain static. Instead, it views Universal Service as an 
evolving level of communications services. With each passing day, more 
Americans interact and participate in the technological advances of our 
digital information economy. Deployment of these telecommunications and 
information technologies support and disseminate an ever increasing 
amount of services essential to education, public health and safety. A 
modern and high quality communications infrastructure is essential to 
ensure that all Americans, including those residing in rural 
communities, have access to the economic, educational, and healthcare 
opportunities available on the network. Our Universal Service program 
must continue to promote investment in rural America's infrastructure 
and ensure access to communications services that are comparable to 
those available in urban areas, as well as provide a platform for 
delivery of advanced services.
    The broadband program recommended by the Joint Board is tasked 
primarily with disseminating broadband Internet access services to 
unserved areas. This is a laudable goal as we work to make broadband 
services available to all Americans across the Nation. As proposed, the 
program would have limited resources. Additional support for this 
broadband program could be made available by requiring competitive ETCs 
to demonstrate their own costs and meet the support threshold in the 
same manner as rural providers.
    I am also pleased that the Joint Board supports reverse auctions as 
a mechanism by which the new broadband and mobility funds would be 
administered. I continue to support the use of reverse auctions to 
determine high-cost Universal Service funding for eligible 
telecommunications carriers. I believe that reverse auctions provide a 
technologically and competitively neutral means of restraining Fund 
growth and prioritizing investment in rural and high-cost areas of the 
country.

    Question 5. Many people are concerned that the digital TV 
transition is not going as smoothly as would be hoped and a number of 
steps still need to be taken including the issuance of rules regarding 
the processing of construction permit applications and the assignment 
of channels to broadcasters. Why have these issues not been resolved 
yet? When do you expect them to be resolved? Will this allow the 
industry enough time to transition to digital TV?
    Answer. With respect to channel assignments, the Commission adopted 
the DTV Table of Allotments in August 2007, which provided post-
transition channel assignments for all eligible full-power 
broadcasters.
    The Commission also recently released the Third DTV Periodic Report 
and Order, which mandates strict, final deadlines for stations to 
complete construction of digital facilities. In this order, the 
Commission made technical adjustments to its rules and policies to 
enable broadcasters to take the actions necessary to complete the 
conversion from analog to digital. The Commission is doing everything 
in its power to ensure that broadcasters successfully transition their 
stations to full digital operations.

    Question 6. The FCC appears to be reregulating some aspects of 
broadcasting which were deregulated under President Reagan and have 
helped the broadcast industry remain competitive over the past 25 
years. With the influx of new technologies and mediums, why has the FCC 
chosen now to begin reregulation? Have there been any specific 
detrimental effects that have prompted this? Why has the FCC 
increasingly turned to government mandates instead of market based 
solutions to help resolve these problems?
    Answer. Establishing and maintaining a system of local broadcasting 
that is responsive to the unique interests and needs of individual 
communities is an extremely important policy goal of the Commission.
    Along with competition and diversity, localism is one of the three 
goals underlying all of our media ownership rules. In the context of 
our media ownership review, I was asked by my colleagues and Members of 
Congress to revive the localism proceeding initiated and stopped under 
the previous Chairman several years ago.
    I completed the remaining two hearings the previous Chairman 
committed to holding back in 2003. In addition, my colleagues and I 
completed the localism inquiry begun under the previous Chairman.
    In order to promote localism, the Commission took two important 
steps. First, the Commission adopted an order requiring television 
broadcasters to better inform their communities about how the 
programming they air serves them. Specifically, television stations 
will file a standardized form on a quarterly basis that details the 
type of programming that they air and the manner in which they do it. 
This form will describe a host of programming information including the 
local civic affairs, local electoral affairs, public service 
announcements (whether sponsored or aired for free) and independently 
produced programming.
    Second, the Commission adopted a Report summarizing the record 
compiled as a result of its Notice of Inquiry regarding localism and 
six field hearings on the subject. Although that record shows that many 
broadcasters provide substantial locally oriented programming, it also 
contains comments and testimony suggesting that a number of stations 
may fail to fully meet their localism obligations, particularly in the 
provision of local news, political and other public affairs 
programming. In response to these concerns, the Commission also adopted 
a Notice of Proposed Rulemaking that includes specific recommendations 
as to what broadcasters should be, and most frequently are, doing to 
serve the interests and needs of their local communities. For example, 
the Commission proposed that each licensee establish a community 
advisory group comprised of local leaders with which it will 
periodically consult.

    Question 7. Earlier this year, the FCC's Office of Engineering 
(OET) released a report which shows that allowing unlicensed devices 
into the television spectrum may interfere with the television signal 
in 80-87 percent of a television station's service area. Additionally, 
a July report from the FCC demonstrated that prototypes that utilize 
``sensing'' technology did not effectively detect TV signals. Do you 
perceive this to be a threat to the DTV transition? If so, what is the 
FCC doing to ensure that the DTV transition is not jeopardized by 
unlicensed consumer digital devices?
    Answer. As we approach the digital transition, the Commission 
should keep in mind that one of the top priorities of Congress and the 
Commission is ensuring that the DTV transition is successful. Any rules 
the Commission establishes to provide for the operation of unlicensed 
devices in the TV bands must protect against harmful interference to 
the authorized broadcast services that already operate in this 
spectrum. These services include full-power TV stations, low-power TV 
stations, and wireless microphones. The Commission is developing an 
extensive technical record through our pending rulemaking. The Office 
of Engineering is currently performing both laboratory and field tests 
of several prototype TV band devices to evaluate the interference 
potential. Both laboratory testing and field testing of prototype white 
space devices will be open to observation by any interested party. I 
can assure you that we will thoroughly consider all of the engineering 
data, test results (i.e., both laboratory testing and field testing), 
and responses submitted in the record before adopting final rules.
                                 ______
                                 
   Response to Written Question Submitted by Hon. Gordon H. Smith to 
                          Hon. Kevin J. Martin
    Question. When can we expect to see a decision in the special 
access docket? Section 254(a)(2) of the Communications Act requires 
that the Commission ``complete any proceeding to implement 
recommendations from any Joint Board on Universal Service within 1 year 
of receiving such recommendations.'' The Joint Board on Universal 
Service delivered its recommended decision on high-cost reform on 
November 19, 2007. When will the Commission solicit public comment on 
this decision?
    Answer. In January 2005, the Commission adopted a Notice of 
Proposed Rulemaking, which, among other things, sought comment on the 
special access regulatory regime, including whether the Commission 
should maintain or modify the Commission's pricing flexibility rules 
for special access services. A majority of the Commissioners asked to 
seek further comment in this proceeding, and the Commission released a 
Public Notice on July 9, 2007, setting an expedited comment cycle for 
interested parties to refresh the existing record. Comments were filed 
on August 8, 2007, and reply comments on August 15, 2007. After the 
Commission received these comments, I provided an options memo to all 
of the Commissioners by September 2007. To date, there is no option 
that is supported by a majority of Commissioners.
    On January 29, 2008, the Commission released a Notice of Proposed 
Rulemaking seeking comment on the Joint Board's Recommended Decision. 
Comments are due within 30 days of Federal Register publication and 
reply comments are due 30 days later.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                         Hon. Michael J. Copps
    Question 1. Last year, a provision to reform the FCC's forbearance 
authority was included in the Committee's telecom reform bill. 
Specifically, it would have eliminated the ``deemed granted'' language 
in Section 10 in order to ensure a fairer process at the FCC. I 
recently introduced legislation that will eliminate this provision, so 
we can avoid a situation where the agency erases its rules simply by 
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
    Answer. I certainly do not think it is fair for the FCC to make 
wholesale changes to communications policy merely by failing to act on 
a forbearance petition. Permitting a forbearance petition to go into 
effect pursuant to section 10's ``deemed granted'' provision is akin to 
providing industry the pen and giving it the go-ahead to rewrite the 
law. I believe Congress entrusted the FCC to implement the law, but it 
did not tell us to delegate far-reaching policy changes to the 
companies that fall under our jurisdiction. Therefore I believe that S. 
2469, ``Protecting Consumers through Proper Forbearance Procedures 
Act'' is an essential step to ensuring that far-reaching FCC 
forbearance decisions are not made through omission or inaction. I am 
also eager to have the Commission complete the rulemaking it currently 
has underway to consider changes to the Commission's forbearance 
procedures.

    Question 2. Earlier this year, the FCC released a Notice of 
Proposed Rulemaking examining so-called ``two-way, plug-and-play 
standards'' for cable navigation devices. Do you support implementation 
of Section 629 in a way that will create a retail market for ``two-way, 
plug-and-pay'' devices and allow for greater competition and consumer 
choice? Do you believe that FCC oversight is sufficient to ensure that 
any standards and specifications are created and changed through a fair 
process that treats all affected parties equitably?
    Answer. I strongly support implementation of Section 629 in a way 
that will create a retail market for two-way ``plug-and-play'' devices 
and allow for greater competition and consumer choice. It has now been 
almost 12 years since Congress directed the Commission to assure that 
equipment used to access video programming and other services offered 
by multi-channel video providers is available to consumers at retail. 
And yet today consumers cannot walk into their local retailer and 
purchase a television set that will receive two-way digital cable 
services without renting a set-top box from their local cable operator. 
The absence of plug-and-play capability could discourage consumers from 
investing in new digital equipment at precisely the time we are 
attempting to minimize the legacy analog equipment in the marketplace. 
A flourishing market for two-way devices would spur tremendous 
innovation and other competitive benefits for consumers.
    I also believe that the FCC has the responsibility to ensure that 
any standards or specifications we adopt treat all affected parties 
equitably, and that we should have mechanisms in place to ensure 
continued FCC oversight.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                         Hon. Michael J. Copps
    Question. As you are probably aware, Florida is currently the 
largest ``net payer'' state into the Universal Service Fund. Florida 
pays in more than $300 million more to the USF than it receives in 
disbursements. Getting beyond the idea of a ``cap'' of some sort--which 
may raise competitive issues--it seems like one other way of achieving 
efficiencies is through more effective targeting of support. How do you 
feel about this approach?
    Answer. I believe that the Universal Service system needs to be 
fundamentally reformed so that the fund is both sustainable and 
rational for the future. An important piece of comprehensive reform is 
certainly finding more efficient ways for distributing high-cost 
support. I also believe that a critical change must be to include 
broadband in the Universal Service program. Broadband is essential to 
the mission of Universal Service for the 21st century, just as plain 
old telephone service was the mission of USF in the 20th century. I'm 
pleased that the Joint Board recently agreed with me on a bipartisan 
basis and now supports broadband as part of the system. In terms of 
targeting the support, I believe that support should first go where it 
can do the greatest good. Many of our rural companies are doing a good 
job of getting broadband out to most of their territory as best as I 
can tell. But we repeatedly hear from companies that they are bringing 
broadband out to only 80 percent or 85 percent of their service area 
and that it's just not economic to go to the most rural areas. 
Therefore, ensuring that support is targeted well so that broadband 
goes to these unserved and largely underserved areas is important.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                         Hon. Michael J. Copps
    Question 1. A recent GAO report cited that no comprehensive plan 
exists for the digital television transition. The GAO stated ``Among 
other things, a comprehensive plan can detail milestones and key goals, 
which provide meaningful guidance for assigning and coordinating 
responsibilities and deadlines and measuring progress. Such planning 
also includes assessing, managing, and mitigating risks, which can help 
organizations identify potential problems before they occur and target 
limited resources''. This week the Commission released a written 
response to the GAO report. At this point in time, what do you consider 
to be the top five risk factors with respect to American consumers 
getting through the digital television transition with minimal 
disruption? Which of these risk factors fall under the jurisdiction of 
the FCC? How is the FCC managing and mitigating these risks?
    Answer. As an initial matter, I would like to clarify that although 
a document was released entitled `FCC Response to GAO's Report on the 
Digital Television Transition,' I did not see that document before it 
was released and do not necessarily endorse the assertions it contains.
    In response to your specific questions regarding the DTV 
transition, here are five of my major concerns right now:

        1. National commitment/coordination. An overarching concern is 
        that the DTV transition is not yet being treated as the 
        national priority that it is. I was heavily involved in the Y2K 
        effort, a comprehensive, public sector-private sector 
        partnership with accountability, clear lines of authority, and 
        daily coordination at the highest levels. The DTV transition 
        needs to be that kind of urgent national priority. Ideally, we 
        would have an Inter-Agency Task Force headed out of the White 
        House. Absent that, it seems to me that the FCC is the only 
        entity in a position to get the job done. Unfortunately, I see 
        no indication that the FCC will be undertaking such an effort.

        2. Consumer education. Consumer awareness of the transition 
        continues to lag, and we lack a coordinated consumer education 
        plan--particularly for hard-to-reach communities--that will 
        ensure that the American people are prepared for the switch-
        over. The FCC has certain resources at its disposal and can 
        compel its licensees and other stakeholders to do much more. We 
        have an Order before us that would take several positive steps, 
        which I hope we will act on as soon as possible.

        3. Broadcaster build-out. Hundreds of stations are not yet 
        ready for the transition and many will need major construction 
        and/or equipment upgrades over the next 13 months. This is an 
        issue squarely within the FCC's jurisdiction. Recently, we 
        issued an Order in the Third DTV Periodic Review to provide 
        broadcasters with the rules of the road for the final build-
        out. Had the transition been a higher priority, I believe we 
        could have adopted these rules and the Final DTV Table of 
        Allotments much earlier than we did. The additional time would 
        have permitted a smoother transition for consumers.

        4. Test market. The current plan is to turn off every full-
        power analog broadcast signal in the country on February 17, 
        2009, without running a single test market first. A test market 
        would help us learn which consumer outreach messages worked and 
        which did not, which populations had particular difficulties, 
        whether consumers were having converter box installation and/or 
        reception issues, and on and on. Legally, the FCC may be able 
        to compel the creation of a test market, but, at this point, I 
        doubt such a step could be achieved without the cooperation of 
        all relevant stakeholders. We are exploring the idea both 
        internally at the FCC and with outside parties.

        5. LPTV (including Class A)/TV translator stations. There are 
        potentially thousands of LPTV and TV translator stations that 
        will not be turning off their analog signals on February 17, 
        2009. I am concerned about the challenge of educating those 
        stations' viewers about what actions they should take and when. 
        Moreover, in markets with both full-power and LPTV/Class A and/
        or translator stations, I am concerned that many viewers of 
        those stations will install a converter box without an analog 
        tuner or analog pass-through and thus unwittingly lose access 
        to their LPTV/Class A and/or translator stations when the 
        switch-over occurs. The converter box program is within the 
        jurisdiction of the Commerce Department. A petition has been 
        filed at the FCC, however, alleging that converter boxes 
        lacking analog reception capability would violate the All-
        Channel Receiver Act.

    Question 2. Should the common carrier exemption be removed from the 
Federal Trade Commission? What, if any, would be the disadvantage to 
consumers if the exemption is removed?
    Answer. The decision to have a common carrier exemption applicable 
to the Federal Trade Commission is one made by Congress and is part of 
the statute governing the Federal Trade Commission. I certainly 
understand concerns that as the marketplace changes consumers may be 
left unprotected when the FCC chooses not to regulate in a particular 
area. I have been one of the leading proponents of stronger consumer 
protections. However, I believe that removing the exemption would 
disadvantage consumers in a number of respects. Were the common carrier 
exemption removed there could be substantial overlap in the 
responsibilities of the two Commissions causing significant confusion 
for consumers. Particularly problematic would be a situation where the 
FCC and the FTC issued contrary or conflicting rules covering the same 
subject matter. In addition, were the FTC to have jurisdiction over 
telecommunications areas that the FCC currently regulates, industry 
stakeholders would be able to forum shop in order to achieve the most 
favorable result for them rather than for consumers. The Federal 
Communications Commission has approximately 2,000 experts in the field 
of communications, many of whom are focused on the regulation of the 
telecommunications industry. While a decision on the FTC's common 
carrier exemption is ultimately Congress's, I believe that the FCC's 
expertise continues to make it the best suited to develop, implement 
and promote telecommunications policies that serve consumers and the 
public interest.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Frank R. Lautenberg 
                        to Hon. Michael J. Copps
    Question 1. New Jersey is a net contributor of almost $200 million 
a year to the Universal Service Fund (USF). There are many proposals 
for reforming USF, including temporary caps and longer-term proposals. 
When can I tell my constituents that they will see some action from the 
FCC to stop the exponential growth of this Fund?
    Answer. There is no question that the need for Universal Service 
reform has been contemplated for far too long. That is why, as a member 
of both the FCC and the Federal-State Joint Board on Universal Service, 
I have been pushing for comprehensive reform of the Universal Service 
system. I frankly believe that the Joint Board spent far too much time 
over the last eighteen months debating reverse auctions and an interim 
cap on high-cost support. If it had focused initially on comprehensive 
reform we might be a lot further down the road than we are today. That 
said, the Joint Board did release a recommendation for comprehensive 
Universal Service reform to the FCC in November 2007. I am disappointed 
that the Joint Board recommendation has not yet been put out for 
comment by the FCC. I believe the Commission should do so immediately. 
The Commission should then take up long-term, comprehensive Universal 
Service reform with the Joint Board's recommendation as a starting 
point. The fact that we have not done so already is very disappointing 
to me and represents a lost opportunity in my book.

    Question 2. There has been recent activity--both at the FCC and in 
the courts--regarding the rebanding of the 800 MHz spectrum. When do 
you expect the rebanding to be completed?
    Answer. I am firmly committed to completing the 800 MHz rebanding 
process in a way that will (1) eliminate the risk of harmful 
interference between public safety and commercial users as quickly as 
possible and (2) cause no service interruptions to public safety users 
and no diminution in the quality of their radio systems or their 
ability to serve and protect the public. In achieving these goals, we 
also need to be mindful of the needs of existing commercial users and 
take steps to minimize the impact on them as well.
    As we approach the mid-2008 deadline, the FCC has received (and 
almost certainly will continue to receive) a significant number of 
waiver requests from public safety and commercial users in this band. I 
look forward to working with the Bureau and my colleagues to make sure 
that we resolve these individual requests in a way that is fair to the 
parties in each case. At the same time, we also need to be mindful of 
the effect of each decision on the rebanding process as a whole. I 
believe we will be able to develop a reasonable set of criteria for 
deciding individual waiver requests that will move the rebanding 
process to completion in the shortest possible time-frame that is 
consistent with the principles noted above.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Thomas R. Carper to 
                         Hon. Michael J. Copps
    Question. The Federal Communications Commission should be commended 
for issuing its recent Notice of Proposed Rulemaking that considers 
whether to authorize Big LEO Mobile Satellite Services operators to 
provide ancillary terrestrial services on more of their assigned 
spectrum. As you are aware, one such operator, Globalstar, and its 
partner, Open Range Communications, need this authority in order to 
pursue their plan to bring broadband services to more than 500 rural 
communities across the country. Given the Commission's stated 
commitment to promote the rapid deployment of advanced broadband 
services to unserved and underserved areas, will you assure the 
Committee that you will do all that it takes to complete this 
proceeding in the time required for Globalstar and Open Range to move 
forward with their business plan?
    Answer. I am a long-time supporter of allowing satellite providers 
to develop ancillary terrestrial component (ATC) operations. I am also 
dedicated to making sure that Americans who live in rural areas have 
access to high-quality, low-cost broadband services. Indeed, for 
several years I have been calling for a more active government role in 
expanding broadband penetration in rural areas, including through the 
use of grant programs such as the Rural Utilities Service (RUS).
    Accordingly, I am extremely excited by the possibility that ATC 
operations in the Big LEO band can bring WiMax-based wireless broadband 
to rural areas across the Nation. And I am firmly committed to 
resolving our NPRM in time for these companies to move forward with 
their plans. Indeed, I was comfortable supporting the item released in 
November 2007--which modified the Big LEO bandplan as well as sought 
comment on Globalstar's ATC petition--only after receiving assurances 
from the Bureau and the Chairman's office that it would be possible to 
act on this NPRM before the deadlines imposed by the financing process 
would expire. I look forward to receiving a draft item in early 2008 
that will allow the Commission to resolve these issues in a way that 
allows the broadest possible ATC authorization consistent with 
protecting other users of the band and adjacent bands.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Ted Stevens to 
                         Hon. Michael J. Copps
    Question. Kawerak, Inc., a non-profit consortium in Alaska has 
requested me to submit this question to the Commission:
    Does the Commission have the statutory authority to provide 
Universal Service support to non-profit corporation tribal consortiums, 
serving remote areas of Alaska, that provide education, welfare, 
wellness, law enforcement, natural resources and economic development 
services?
    Kawerak is one of Alaska's tribal consortiums who provides several 
services to remote areas of Alaska, and has expressed concern about 
their ineligibility to receive Universal Service support because they 
are unable to meet the precise definitions of health care or 
educational service providers. Please address the requirements which 
these tribal consortiums must meet in order to receive support.
    If these tribal consortiums are unable to meet the Commission's 
current requirements, please address whether a waiver process is 
available for these entities.
    Please also describe the specific steps which non-profit 
corporation tribal consortiums must take to apply for, and receive, 
support from the Universal Service Fund.
    Answer. Universal Service is one of the pillars of the 
Telecommunications Act of 1996. Consistent with the statute, my 
overriding objective has been to bring the best, most accessible and 
cost-effective communications system in the world to all Americans, 
including those who live in rural and urban areas and on tribal lands, 
those with low incomes and those with disabilities. It is essential 
that entities that provide these types of services and who are eligible 
for Universal Service support receive such support.
    With regard to the specific questions concerning Kawerak, Inc.'s 
eligibility under the Universal Service program, the Commission is 
guided by Section 254(h)(7) of the Communications Act, as amended, 
which defines the types of entities that are eligible for support under 
the Schools and Libraries and Rural Health Care Programs. With regard 
to the Schools and Libraries Program, the Commission relies upon the 
operative state law in Alaska in determining whether an entity meets 
the definition of an elementary or secondary school.\1\ The FCC's rules 
specifically allow for eligible schools and libraries to form 
consortia.\2\ Therefore, if a non-profit corporation tribal consortium 
meets the definition of elementary or secondary schools pursuant to 
Alaska law it appears that the consortium would be eligible for Federal 
Universal Service support.
---------------------------------------------------------------------------
    \1\ See 47 U.S.C.  254(h)(7)(A), providing that ``elementary and 
secondary schools'' is defined by section 9101 of the Elementary and 
Secondary Education Act of 1965, as amended. Section 9101 of the ESEA 
is now codified, as amended, in 20 U.S.C.  7801, which provides that 
the definition of elementary and secondary schools is based upon state 
law. See also 47 CFR  54.501 (concerning eligibility for services 
under to the Schools and Libraries Program).
    \2\ 47 CFR  54.501(d).
---------------------------------------------------------------------------
    With regard to the Rural Health Care Program, section 254(h)(7)(B) 
provides that a `` `health care provider' means--(i) post-secondary 
educational institutions offering health care instruction, teaching 
hospitals, and medical schools; (ii) community health centers or health 
centers providing health care to migrants; (iii) local health 
departments or agencies; (iv) community mental health centers; (v) not-
for-profit hospitals; (vi) rural health clinics; and (vii) consortia of 
health care providers consisting of one or more entities described in 
clauses (i) through (vi).'' (emphasis added). Thus, it appears that the 
Commission has the statutory authority to provide Universal Service 
support pursuant to the Rural Health Care program to a non-profit 
corporation tribal consortium that meets the definition of a health 
care provider in section 254(h)(7)(B).
    The Universal Service Administrative Company (USAC) is responsible 
for administering the Universal Service program. Detailed guidance on 
the process for applying for and receiving support under the Schools 
and Libraries Program can be found at http://www.usac.org/sl/. Similar 
information concerning the Rural Health Care Program can also be found 
at http://www.usac.org rhc/. My office would also be pleased to assist 
your office or Kawerak, Inc. in obtaining any additional information it 
may need concerning these issues.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                         Hon. Michael J. Copps
    Question 1. While the issue of media ownership is not new and the 
most recent proceeding has been open for approximately 18 months, only 
28 days were provided for the public to comment on your specific 
proposal to partially lift the newspaper/broadcast cross-ownership ban, 
which has been in place for 32 years. This is deeply troubling due to 
the critical nature of this issue and past FCC precedent.
    For example, last month, the FCC provided 60 days for public 
comment and reply for a proposal on amending pole attachments rules. 
Earlier this month, the Commission gave 45 days for public comment and 
reply on a rulemaking proposal on indefinitely extending the 
unanimously popular Do-Not-Call List registration period. And, in 
November 2006, the FCC granted 90 days for public comment and reply on 
the effects of communications towers on migratory birds.
    Since the FCC has historically given 60-90 days for public comment 
and reply on critical proceedings and proposals, isn't it only 
appropriate to do the same with the specific proposal you announced 
last month?
    Answer. I agree that the public should have been given at least 60-
90 days to comment on the Chairman's proposal. I also believe that the 
Commission should have fully considered those comments before reaching 
any tentative conclusions. Instead, not only was the public comment 
period truncated, but the Chairman circulated a draft decision 2 weeks 
before the public comments were even due.

    Question 1a. What is the impetus for providing only 28 days to the 
public to comment on a specific proposal that was released only last 
month?
    Answer. I do not know. This is best answered by the Chairman.

    Question 1b. If the Commission delayed its vote on the media 
ownership proposal and provided more time for the public to comment on 
it, what harm would result?
    Answer. I do not believe that any harm would have resulted from 
providing the public additional time to comment. To the contrary, I 
believe that additional time would have permitted a far more measured 
and rational process than we had and ultimately a better result.

    Question 2. Some have suggested that lifting the cross-ownership 
ban would improve the dreadfully low percentages of woman and minority-
owned media since a woman or minority-owned newspaper could now buy a 
broadcast station or vice versa. However, a June 2006 report by the 
Free Press found that woman and minority owners are more likely to own 
fewer stations per owner than their white and corporate counterparts--
they are more likely to own just a single station. This singular 
ownership also seems to be the case for minority owned newspapers.
    The report seems to suggest that financial reasons are behind the 
inability of these groups to purchase additional media properties. They 
just simply can't afford to expand given certain market and industry 
conditions. Data also shows that the woman and minority-owned media 
outlets typically are in more rural areas.
    If women and minority owners aren't able to expand their media 
operations due to financial reasons, and the current proposal only 
lifts the cross-ownership ban in the top 20 markets, then how is the 
proposal going to adequately address the disparity that exits with 
women and minority media ownership?
    Answer. I do not believe that the new rule will measurably improve 
the dismal state of women and minority media ownership in this country. 
To the contrary, the new rule contemplates that big newspaper owners 
can start targeting the smaller TV and radio stations in a market--the 
very stations that women and minorities would be more likely to target 
as an entry point into broadcasting. The new rule will serve to drive 
up prices for these stations, making entry by women and minorities that 
much more difficult.

    Question 3. In its repeal and remand of the FCC's 2003 media 
ownership rule changes, the Third Circuit Court of Appeals, in its 
Prometheus decision, stated that it ``cannot uphold the Cross-Media 
Limits themselves because the Commission does not provide a reasoned 
analysis to support the limits that it chose.'' In addition, the Court 
stated ``our decision to remand the Cross-Media Limits also gives the 
Commission an opportunity to cure its questionable notice.'' What do 
you believe is the reasoned analysis that supports this change to the 
media ownership rules?
    Answer. I do not believe that the FCC majority's new rule was 
supported by the record or sound policy judgments. We were told that 
permitting newspapers to merge with a broadcast station in the same 
city will give them access to a revenue stream that will let them 
better fulfill their newsgathering mission. At the same time, we are 
also assured, our rules will require ``independent news judgment'' (at 
least among consolidators outside the top 20 markets). I do not believe 
that we can have our cake and eat it too--the economic benefits of 
consolidation without the reduction of voices that one would ordinarily 
expect when two news entities combine.
    To the extent that the two merged entities remain truly 
``independent,'' then there won't be the cost savings that were 
supposed to justify the merger in the first place. On the other hand, 
if independence merely means maintaining two organizational charts for 
the same newsroom, then we won't have any more reporters on the ground 
keeping an eye on government. The likely result, in my view, is that 
the two entities' newsrooms will be almost completely combined, with 
round after round of job cuts in order to cut costs. More consolidation 
will mean more lost jobs. That is the real economic justification for 
media consolidation within a single market.
    The news isn't so good for other businesses in the consolidated 
market, either. At the end of the day, the combined entity is going to 
have a huge advantage in producing news--and the other stations will 
make a reasonable calculation to substantially reduce their investment 
in the business. This is why experts have been able to demonstrate--in 
the record before the FCC, using the FCC's own data--that cross-
ownership leads to less total newsgathering in a local market. And that 
has large and devastating effects on the diversity and vitality of our 
civic dialogue.
    Finally, I think reports of the imminent death of traditional 
newspapers are decidedly premature. The truth remains that the profit 
margins for the newspaper industry last year averaged around 17.8 
percent; the figure is even higher for broadcast stations. As the head 
of the Newspaper Association of America put it in a Letter to the 
Editor of The Washington Post in 2007: ``The reality is that newspaper 
companies remain solidly profitable and significant generators of free 
cash-flow.''
    Were newspapers momentarily discombobulated by the rise of the 
Internet? Probably so. Are they moving now to turn threat into 
opportunity? Yes, and with signs of success. Far from newspapers being 
gobbled up by the Internet, we ought to be far more concerned with the 
threat of big media joining forces with big broadband providers to take 
the Internet we know down the same road of consolidation and control by 
the few that has already inflicted such heavy damage on our traditional 
media.

    Question 3a. It doesn't seem that providing only 28 days to have 
the public comment on the specific changes to the media ownership rule 
that you propose, or only 5 day's notice for the localism and media 
ownership hearings in Washington, D.C. and Seattle, WA wouldn't satisfy 
the requirements of the court--wouldn't you agree?
    Answer. Yes. The proceeding was moving at a measured pace that was 
marred by an unseemly rush to judgment over the second half of 2007. 
Not only were there significant procedural problems such as those you 
identify, but we failed to take meaningful action on localism and 
minority and female ownership before once again relaxing our structural 
ownership rules for Big Media.

    Question 4. In July of this year, the Commission released ten 
research studies on media ownership, which were intended to inform the 
Commission's comprehensive review of its broadcast ownership policies 
undertaken in its rulemaking proceeding. The studies, which were 
conducted by outside researchers and by Commission staff, examined a 
range of issues that impact diversity, competition, and localism--the 
three important policy goals of those rules.
    The Consumer Federation of America, Consumers Union and Free Press 
jointly filed comments to the FCC in regards to these 10 studies. The 
commenters called the studies a ``collection of inconsistent, 
incompetent and incoherent pieces of research cobbled together to prove 
a foregone conclusion.'' More so, they stated that the peer reviews of 
the studies did not follow required procedures and, due to this, 
violated Office of Management and Budget guidelines on the 
implementation of the Data Quality Act. What is your assessment on the 
integrity of how the studies were conducted?
    Answer. I have serious concerns about the way the studies were 
formulated, commissioned, and peer reviewed. For instance, I believe 
that the studies should have been subject to peer review before they 
were released publicly, not afterwards. I also am deeply concerned 
about some of the evidence uncovered by consumer groups pursuant to a 
FOIA request that raised questions about whether the studies were 
formulated with a pre-determined result in mind.

    Question 4a. These groups also performed research, utilizing the 
FCC's own data, which actually showed relaxing the newspaper/broadcast 
cross-ownership rules resulted in a net loss in the amount of local 
news that is produced across local markets by broadcast stations. The 
commenters stated ``at the market level, cross-ownership results in the 
loss of an independent voice as well as a decline in market-wide news 
production.''
    Have you all reviewed these comments? At the very least, these 
claims raise serious doubts as to the validity of any relaxation of 
media ownership rules and begs for closer examination of the data 
before you enact any changes to the media ownership rules--wouldn't you 
agree?
    Answer. I did indeed review the record and found the comments very 
illuminating. They demonstrated that the FCC-commissioned studies may 
have focused on the wrong questions. To me, the more important question 
is not whether a particular combination produces more local news, but 
the effect of the combination on the total amount of local news in the 
market.

    Question 5. One of the statements being made about the DTV 
transition is that ``Television sets connected to cable, satellite or 
other pay TV service do not require converters.'' However, it is my 
understanding this may not be totally true for certain satellite 
subscribers, primarily in rural areas like the town of Presque Isle, 
Maine due to the issue of local-into-local service, which is when a 
satellite company provides its subscribers with all of the local 
broadcast TV stations in that market.
    While satellite companies do offer local-into-local in most of the 
media markets, it is not available to all 210 media markets--it seems 
as if the service is not available to approximately 60 rural markets in 
about 30 states.
    Is this correct? And if so, what impact will the DTV transition 
have on households that subscribe to satellite in areas that do not 
have local-into-local service? If they have a TV with an analog tuner 
will they also need to purchase a converter box?
    Answer. It is correct that not all 210 media markets have 
satellite-delivered local-into-local service. Because the two providers 
sometimes provide service to different markets, I believe that 
approximately 182 of the 210 markets have local-into-local service from 
one service or the other. Subscribers who do not subscribe to local-
into-local service and currently receive broadcast signals with an 
analog off-air tuner will need a converter box to receive full-power 
stations after the transition date.

    Question 5a. Is the FCC working with the satellite companies to 
make sure they expand the local-into-local service to cover all 210 
media markets before the DTV transition? If not, wouldn't this be an 
appropriate thing to do to alleviate any consumer confusion that would 
result from inaction?
    Answer. In the recent sale of DIRECTV to Liberty, I supported a 
condition that would have required DIRECTV to provide local-into-local 
service to all markets within a reasonable time period. Unfortunately, 
that condition was not adopted. In our recent Order on DTV Consumer 
Education, my colleagues did adopt my proposal that DBS operators take 
specific steps to inform those subscribers without local-into-local 
service of their options for the coming switch-over to DTV.

    Question 6. Over the summer it was reported that FCC staff 
inspected about 1,100 retail stores around the country, as well as 
retailers' websites, to monitor compliance with FCC DTV label rules. As 
a result of those inspections, the Commission issued more than 260 
citations notifying retailers of violations, which results in about a 
76 percent compliance rate.
    Obviously, not the best figure, mainly with the holiday season that 
we are in the middle of. People buying a new TV may not be aware or 
will be misinformed that their new TV will not accept over-the-air 
digital signals and therefore need to buy more equipment to accommodate 
the transition. Has the FCC performed any additional inspections to 
determine if the label compliance rate has improved any?
    Answer. I must defer to the Chairman's response on the further 
investigative activities of the Enforcement Bureau.

    Question 6a. Also has the Commission recorded any consumer 
complaints and confusion about DTV versus HDTV? While most high-
definition TVs can receive digital signals not all the can and the 
concern is that it might lead to confusion at the retailer or at home.
    Answer. I defer to the Chairman's response on consumer complaints 
received on this issue. I do agree that the distinction between DTV and 
HDTV is a continuing source of confusion for many consumers. I believe 
that the lack of a coordinated DTV public-private partnership could 
lead to a consumer backlash the likes of which our country has seldom 
seen.

    Question 7. Over the past several months there have been incidents 
that have raised serious concerns about the phone and cable companies' 
power to discriminate against content. In September, Verizon Wireless 
arbitrarily chose to block a series of text messages on the grounds 
that the subject matter was too controversial. While the carrier, to 
its credit, reversed this decision, this illustrates its power as a 
content gatekeeper. Then came the news that AT&T reserves the right in 
its Terms of Service to discontinue the service of customers that 
criticize the company. In October, the Associated Press reported that 
Comcast was interfering with the popular file-sharing, peer-to-peer 
service BitTorrent.
    Senator Dorgan and I have requested that this Committee hold a 
hearing to consider the issue of content discrimination and investigate 
these incidents further to determine if they were based on legitimate 
business and network management policies or part of practices that 
would be deemed unfair and anti-competitive.
    We also wrote you a letter, dated October 14, requesting the 
Commission's position on the Verizon Wireless-NARAL text messaging 
incident. To this date we have not heard any response from your office. 
Do you know the status of that response?
    Answer. I understand that your October 14th letter was to Chairman 
Martin and therefore I am unable to address the status of his response. 
I am deeply concerned, however, by the regulatory policies that confer 
such content and conduit control on a few huge network providers.

    Question 7a. Also, do you feel that any of these events could have 
been appropriately and effectively addressed by the FCC's Four Internet 
Freedom Principles or any other FCC regulation that is in place?
    Answer. The FCC's Internet Policy Statement of 2005, better known 
as the Four Internet Freedom Principles, has been essential toward 
protecting the openness of the Internet. As you may know, I played an 
important role in their adoption. In addition, with the Commission's 
reclassification of wireless Internet services as a Title I service it 
became clear that wireless services fall squarely under the protections 
afforded by these principles (though the FCC declined my suggestion to 
make this implication explicit).
    The Commission has initiated an investigation into allegations that 
Verizon Wireless's and Comcast's operation of their networks with 
regard to the NARAL text messaging and BitTorrent's file sharing 
applications, respectively, are violations of the Four Principles. The 
Commission recently held a hearing at Harvard Law School concerning 
whether these activities are considered reasonable network management 
pursuant to these principles. The Commission also plans to hold a 
similar hearing at Stanford Law School shortly. Whether the Commission 
is able to effectively address these allegations in accordance with the 
Four Principles remains to be seen. While I am hopeful that we will be 
successful in this endeavor, I do believe that it is time to update the 
Commission's principles to ensure that the FCC can address the many 
complicated network management issues that are likely to arise.
    Specifically, the time has come at the FCC for a specific 
enforceable principle of nondiscrimination. This principle should allow 
for reasonable network management, but make crystal clear that 
broadband network operators cannot shackle the promise of the Internet. 
After establishing a nondiscrimination principle, the next step is 
admittedly more difficult. The FCC's job is to figure out when and 
where the line is drawn between discrimination and reasonable network 
management. That's why the Commission should also establish a 
systematic, expeditious, case-by-case approach for adjudicating claims 
of discrimination. That way, over time, we would develop a body of case 
law that would provide clear rules of the road for those who operate on 
the edge of the network, namely consumers and entrepreneurs, and those 
who operate the networks.
    I certainly appreciate your leadership on this issue and welcome 
any further guidance that you wish to offer to ensure that the FCC 
protects the openness of the Internet for years to come.

    Question 8. It was recently disclosed a proposal is circulating 
that would reinstate cable system ownership limits at 30 percent of the 
national market. Many, including myself, have been long been concerned 
about the lack of wireline cable competition and rising price of cable 
service.
    Specifically, the FCC recently stated that ``the average cost of 
cable has almost doubled from 1995 to 2005, increasing 93 percent, 
while the cost of other communication services fell. The cable industry 
needs more competition and we will continue to act to bring more 
competition and its benefits to consumers.''
    The initial cable ownership cap stemmed from a FCC change in 1992 
as a result of the 1992 Cable Act, which directed the FCC to establish 
limits on the number of subscribers a cable operator may serve and on 
the number of channels a cable operator may devote to affiliated 
programming. What are the pros and cons of implementing a cable 
ownership cap to bringing more competition, and benefits or lower 
prices to consumers?
    Answer. The structural ownership limits of Section 613(f) were 
intended to ensure that cable operators did not use their dominant 
position in the multichannel video programming distribution market to 
impede unfairly the flow of video programming to consumers. At the same 
time, Congress recognized that multiple system ownership could provide 
benefits to consumers by allowing efficiencies in the administration, 
distribution, and procurement of programming, and by providing capital 
and a ready subscriber base to promote the introduction of new 
services.
    I believe that the 30 percent limit recently adopted by the 
Commission represents a careful balance between (1) ensuring that no 
cable operator, because of its size, is able to unfairly impede the 
flow of video programming to consumers; and (2) ensuring that cable 
operators are able to expand and benefit from the economies of size 
necessary to encourage investment in new video programming and the 
deployment of other advanced services.

    Question 8a. Back in 1992, there was little, if any, competition in 
the cable industry. Now, we have seen satellite TV providers reach 
approximately 30 million subscribers and telephone companies rolling 
out digital TV services. How might a 1992 cable ownership cap directive 
affect the cable industry in a 2007 market?
    Answer. We have revised the cable ownership calculation over the 
years to reflect marketplace developments. Most significantly, we now 
count all MVPD subscribers--including satellite TV subscribers and 
telcos--towards the overall number of subscribers in the market for 
purposes of calculating the horizontal limit. In other words, a cable 
operator can control subscribers accounting for 30 percent of all MVPD 
subscribers, not just 30 percent of cable subscribers. In addition, to 
the extent that new entrants are taking market share from incumbent 
cable operators, it will make it less likely that the limits will be 
breached, and, to the extent that these new entrants are competing 
cable systems (like some telcos) the cable limits would apply to them 
as well.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                         Hon. Michael J. Copps
    Question 1. The Commission's Regulatory Flexibility Analysis for 
the November 30 must-carry order says that ``Every effort will be made 
to minimize the impact of any adopted proposals on cable operators.'' 
How much will it cost for every 552 megahertz cable system to file and 
prosecute a waiver through the FCC? Would you support a blanket dual 
carriage waiver for 552 megahertz cable systems?
    Answer. I do not know the precise cost of filing and prosecuting 
such a waiver request with the Commission. As I stated when the must-
carry decision was made last fall, I would have preferred to grant some 
accommodation to small cable systems as a whole rather than 
establishing a waiver process and seeking further comment. I hope that 
the Commission will now act quickly on the record developed in the 
general rulemaking.

    Question 2. Section 254(a)(2) of the Communications Act requires 
that the Commission ``complete any proceeding to implement 
recommendations from any Joint Board on Universal Service within 1 year 
of receiving such recommendations.'' The Joint Board on Universal 
Service delivered its recommended decision on high-cost reform on 
November 19, 2007. Do you support putting the Joint Board 
recommendation out for public comment?
    Answer. I believe the Federal-State Joint Board for Universal 
Service's recommended decisions should always be put out for public 
comment, including the Joint Board's most recent recommendation on 
high-cost reform. While I would have preferred for the recommendation 
to be put out for public comment more quickly, I am pleased that the 
Commission issued a Notice of Proposed Rulemaking on January 29, 2008 
that seeks comment on the recommendation. Comments are due to the 
Commission on April 3, 2008, and reply comments are due on May 5, 2008.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                         Hon. Michael J. Copps
    Question 1. The FCC has commissioned 10 economic studies on media 
ownership and its effect on news and other programming. According to 
these studies, how does cross-ownership effect local content and 
political slant? Does this outcome differ by the size of the media 
market? In other words, how does the cross-ownership ban impact local 
content and political slant in the largest 20 markets compared to 
effects in smaller markets around the country? What has been the 
experience of markets which had companies grandfathered in under old 
media ownership rules?
    Answer. I believe that the Commission's research process in the 
recent media ownership proceeding was fundamentally flawed, from the 
framing of the issues, to the commissioning of the studies, to the peer 
review process, to the truncated period for public comment. These flaws 
are well documented in the record. Indeed, some public interest groups 
used the FCC's raw data to run their own analyses and reached very 
different conclusions than the studies officially commissioned by the 
FCC. With that background, I believe that several studies--e.g., 3, 4 
and 6--purport to address the questions you raise. I believe that these 
studies must be read in conjunction with the peer reviews and public 
comment questioning their usefulness.

    Question 2. The financial troubles and perceived threats to the 
viability of newspapers and broadcasts have played a significant role 
in the proposed changes of media ownership rules. Some sources contend 
that despite declining ad revenues and readership, newspapers remain 
profitable. However, others contend that these media outlets have only 
been able to remain profitable at the expense of quality and quantity 
of news they produce. What do you perceive the financial position of 
newspapers to be in today's market? How does this vary based on the 
size of the media market? To what extent will these proposed changes 
alleviate these troubles?
    Answer. I believe the reports of the imminent death of traditional 
newspapers is decidedly premature. Profit margins for the newspaper 
industry last year averaged around 17.8 percent. As the head of the 
Newspaper Association of America put it in a Letter to the Editor of 
The Washington Post last July: ``The reality is that newspaper 
companies remain solidly profitable and significant generators of free 
cash-flow.''
    I do not believe that the changes adopted will improve either 
broadcast or newspaper service to the public. To the contrary, in this 
era of consolidation, cutting jobs is often the first thing a merged 
entity does in order to increase profit margins. In the final analysis, 
the real winners of the Commission's misguided decision are businesses 
that are in many cases quite healthy, and the real losers are going to 
be all of us who depend on the news media to learn what's happening in 
our communities and to keep an eye on local government.

    Question 3. The Universal Service Fund is obviously very important 
for rural states like South Dakota. What general troubles do you see 
arising with the fund and its solvency? What would you recommend to 
help alleviate these troubles? What are your thoughts on the 
recommendations put forth by the Federal-State Joint Board in November?
    Answer. I believe that the Universal Service system needs to be 
comprehensively reformed so that the Fund is both sustainable and 
rational for the future. Unless the mission of the Universal Service 
Fund (USF) is reformed and its contribution and distribution mechanisms 
are updated, its sustainability and its ability to achieve its goals 
are likely to be jeopardized.
    There are a variety of ways to promote Universal Service and at the 
same time ensure the sustainability and integrity of the fund. I 
believe much would be accomplished if the Commission were to include 
broadband on both the distribution and contribution side of the ledger; 
eliminate the Identical Support rule; and increase its oversight and 
auditing of the high-cost fund. Additionally, Congressional 
authorization to permit the assessment of Universal Service 
contributions on intrastate as well as interstate revenue would be a 
valuable tool for ensuring that contributors are not unfairly burdened.
    That being said, the Joint Board made an assortment of 
recommendations of its own. I agreed with some of them and not with 
others. In my view, the most important part of the Recommendation is 
its inclusion of broadband as part of USF for the 21st century. I 
believe the recommendation merits further action by the Commission, and 
therefore, I supported the Recommendation and the Commission's Notice 
of Proposed Rulemaking that put the Recommendation out for public 
comment.

    Question 4. Many people are concerned that the digital TV 
transition is not going as smoothly as would be hoped and a number of 
steps still need to be taken including the issuance of rules regarding 
the processing of construction permit applications and the assignment 
of channels to broadcasters. Why have these issues not been resolved 
yet? When do you expect them to be resolved? Will this allow the 
industry enough time to transition to digital TV?
    Answer. Since the December 13, 2007 hearing, the Commission has at 
least taken further action on the two specific issues you raise. At the 
end of 2007, the Commission issued an Order in the Third DTV Periodic 
Review proceeding establishing rules for broadcasters' final build-out 
of DTV facilities. More recently, the Commission adopted an Order on 
Reconsideration regarding the final DTV Table of Channel Allotments.
    I am troubled by the tardiness of these decisions and whether they 
will result in a smooth DTV transition on February 17, 2009. Had we 
acted earlier, we could have established a more measured and orderly 
switch-over process and avoided many of the difficult trade-offs and 
compressed schedules we were ultimately compelled to adopt. Concern 
over a lack of real progress for the DTV transition is, I believe, why 
Chairman Inouye and Chairman Dingell called for the White House to 
establish a Federal Inter-Agency DTV Task Force. I continue to believe 
that a coordinated, private sector-public sector partnership is 
essential to prepare the American people for the transition, now less 
than a year away.

    Question 5. The FCC appears to be re-regulating some aspects of 
broadcasting which were deregulated under President Reagan and have 
helped the broadcast industry remain competitive over the past 25 
years. With the influx of new technologies and mediums, why has the FCC 
chosen now to begin re-regulation? Have there been any specific 
detrimental effects that have prompted this? Why has the FCC 
increasingly turned to government mandates instead of market based 
solutions to help resolve these problems?
    Answer. The Communications Act contemplates a quid pro quo between 
the public and the Nation's broadcasters. We allow broadcasters to use 
as much as half a trillion dollars of spectrum--for free. In return, we 
require that they serve the public interest: devoting at least some 
airtime for worthy programs that inform viewers, support local arts and 
culture, and educate our children--in other words, that aspire to 
something beyond just minimizing costs and maximizing revenue.
    At one time, the FCC actually enforced this bargain by requiring a 
thorough review of a licensee's performance every 3 years before 
renewing the license. But since the 1980s, that process has been 
whittled down to essentially a rubber stamp renewal every 8 years with 
virtually no substantive review.
    At bottom, I believe that the consolidation we have seen and the 
decision to treat broadcasting as just another business have not 
produced a media system that does a better job serving most Americans. 
Quite the opposite. Rather than reviving the news business, it has led 
to less localism, less diversity of opinion and ownership, less serious 
political coverage, fewer jobs for journalists, and the list goes on. 
These are the concerns I`ve heard from Americans across the country. I 
hope we can address them, not with hyper-regulatory solutions, but with 
solutions that use 21st century tools to better serve the public 
interest.

    Question 6. Earlier this year, the FCC's Office of Engineering 
(OET) released a report which shows that allowing unlicensed devices 
into the television spectrum may interfere with the television signal 
in 80-87 percent of a television station's service area. Additionally, 
a July report from the FCC demonstrated that prototypes that utilize 
``sensing'' technology did not effectively detect TV signals. Do you 
perceive this to be a threat to the DTV transition? If so, what is the 
FCC doing to ensure that the DTV transition is not jeopardized by 
unlicensed consumer digital devices?
    Answer. The DTV transition is one of my top priorities and I would 
not do anything to jeopardize that effort. FCC testing of ``white 
spaces'' devices continues and will guide my decision-making. Again, 
however, I am committed to protecting existing spectrum users from 
harmful interference. Moreover, as a practical matter, it is highly 
unlikely that any ``white spaces'' devices could be on the market by 
February 17, 2009. Even if testing were over (which it is not), the 
design and manufacturing cycle would extend well past next February.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                       Hon. Jonathan S. Adelstein
    Question 1. Last year, a provision to reform the FCC's forbearance 
authority was included in the Committee's telecom reform bill. 
Specifically, it would have eliminated the ``deemed granted'' language 
in Section 10 in order to ensure a fairer process at the FCC. I 
recently introduced legislation that will eliminate this provision, so 
we can avoid a situation where the agency erases its rules simply by 
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
    Answer. I share your concerns about the Commission's use of Section 
10 forbearance authority and believe that the public is best served 
when the Commission adopts orders addressing such petitions rather than 
letting them become ``deemed granted.'' Congress has given the 
Commission a powerful tool in our Section 10 forbearance authority, but 
the Commission must wield it responsibly.
    In many forbearance proceedings, I have worked with my colleagues 
to support regulatory relief where the record reflects the development 
of competition and includes evidence to satisfy the substantive 
standard of Section 10. I am concerned, however, about the Commission's 
approach to forbearance, including allowing a complex and controversial 
forbearance petition to grant without issuing an order. Allowing 
petitions to grant by operation of law, and without disclosing a shred 
of analysis, does not best serve the public interest. Moreover, this 
approach inappropriately ignores Congress's directive to consider the 
specific substantive standards set out in Section 10 and raises serious 
questions about the scope, effect, and validity of its actions.
    I supported the recent action by the Commission to issue a Notice 
of Proposed Rulemaking on the need for procedural rules to guide its 
consideration of forbearance petitions. I have urged the Commission to 
adopt procedural rules for forbearance petitions, such as requiring 
parties to include in their original petitions detailed information 
about the services subject to the petition and a detailed analysis of 
how such proposals satisfy the statutory test. Procedural rules can 
provide transparency and predictability to all interested participants 
and can restore confidence in Commission processes. While only Congress 
can address the continued applicability of the ``deemed grant'' 
provision of Section 10, I am pleased that the Commission has taken at 
least an initial step toward improving its processes, and I will 
continue to encourage my colleagues to complete this proceeding as 
expeditiously as possible.
    The Court of Appeals for the District of Columbia recently rejected 
a challenge to the ``deemed grant'' of a far-reaching, industry-filed 
petition, effectively foreclosing judicial review of such cases.\1\ The 
court concluded that the ``deemed grant'' is an act of Congress rather 
than of the FCC and, therefore, is not reviewable agency action. Thus, 
the current approach to forbearance has effectively permitted 
petitioners to write the terms of their relief, to amend their request 
multiple times during the course of the Commission's consideration, to 
obtain that relief without the Commission issuing an order, and to 
evade judicial review. Such an approach raises serious Constitutional 
questions and does not best serve the public interest.
---------------------------------------------------------------------------
    \1\ Sprint Nextel Corp. v. FCC, 06-1111 (Dec. 7, 2007).

    Question 2. Earlier this year, the FCC released a Notice of 
Proposed Rulemaking examining so-called ``two-way, plug-and-play 
standards'' for cable navigation devices. Do you support implementation 
of Section 629 in a way that will create a retail market for ``two-way, 
plug-and-pay'' devices and allow for greater competition and consumer 
choice? Do you believe that FCC oversight is sufficient to ensure that 
any standards and specifications are created and changed through a fair 
process that treats all affected parties equitably?
    Answer. I support the implementation of section 629 to create a 
retail market for ``two-way, plug-and-play'' devices and allow for 
greater competition, more consumer choice and higher quality products 
and services. Congress intended to create a competitive market for 
navigation devices by ensuring that consumers have the opportunity to 
buy navigation devices from sources other than their video provider. 
Thus, the goal is to create a national, competitive market for 
navigation devices which would give consumers the option of going to 
their electronics retailer to choose a set-top box with innovative 
features.
    Under section 629, Congress directed the Commission to adopt 
regulations to assure the commercial availability of navigation 
devices, such as converter boxes and interactive communications 
equipments, ``in consultation with appropriate industry standard-
setting organizations.'' The Commission has sufficient oversight 
authority to ensure that standards and specifications are created and 
changed through a fair process. However, FCC oversight alone may not be 
sufficient to achieve the goals of section 629. The honest and full 
support of the affected industries is essential to ensure that MVPD 
delivery systems support the commercial navigation device and that the 
commercial device preserves the integrity of the MVPD's suite of 
offerings. Continued Congressional oversight may be necessary to 
encourage good faith negotiations among the parties. Also, guidance 
from Congress is always helpful during our deliberation.
    The development of technological standards and specifications is 
indeed complicated. Accordingly, the two-way, plug-and-play NPRM 
specifically seeks comment on the Commission's oversight role in the 
development of standards and specifications for enhanced CableCARD, 
OCAP, and all-MVPD solutions. I look forward to reviewing the comments 
carefully, and discussing further action with my colleagues to advance 
the public interest.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                       Hon. Jonathan S. Adelstein
    Question 1. At the last FCC open meeting in November, you made some 
strong statements regarding how the FCC operates. For example, with 
respect to a certain annual report, you pointed out that the Chairman 
cherry-picked only the data that justified the outcome desired, while 
suppressing other data. You made clear your view that decisions should 
be objective and based on the facts, not outcome-driven for political 
expediency.
    This is not the first time you have raised these concerns. With 
respect to the media ownership proceeding, you state that studies were 
suppressed, and others were structured and conducted with the goal of 
facilitating consolidation.
    I am deeply troubled to learn that the Chairman of this Commission 
operates in this way, and share your view that this undermines the 
Commission's credibility. Can you elaborate on how the culture of this 
FCC impacts its policy decisions?
    Answer. You raise key concerns about the problems with process and 
transparency that have affected the Commission recently. While it is 
true that roughly 95 percent of the items that the Commission addresses 
are resolved on a unanimous and bipartisan basis, a smaller number of 
high profile proceedings have been problematic. The issues can be hard, 
but as a Commission, we all need to do a better job in working together 
to improve the FCC decision-making process.
    More specifically, we need to encourage a greater deal of 
transparency at the FCC. The GAO already has commented on the agency's 
lack of openness with regard to access to information on the timing of 
Commission votes. As a rule, greater openness by the Commission will 
inspire greater confidence and better decisionmaking. So we must take 
specific action to eliminate any unnecessary barriers to information 
and ensure it flows even-handedly to all parties, including public 
interest groups. Publication by the Chairman of the circulate list is a 
good first step. I also have called for the publication of the list of 
our so-called ``white copy'' items--those items that are identified by 
the Chairman's office for consideration 3 weeks prior to a Commission 
open meeting.
    I also believe that the agency's culture will be improved and the 
Commission will be well served by encouraging greater dialogue between 
Commissioners and career staff. Many times, the agency staff simply is 
steeped in an issue, with unparalleled and independent expertise. It 
would be invaluable to allow the staff to more freely share their 
independent perspective with the Commissioners to improve the 
decisionmaking process. I want to see our staff encouraged to provide 
feedback and critical thought on all FCC decisions and to provide 
advice to the Commissioners upon request.

    Question 2. You say the FCC must not move forward with issuing new 
media ownership rules until it creates an independent minority 
ownership task force that is empowered to perform an accurate census on 
minority and female owners and then analyze the impact of policy 
decisions on minority ownership. Tell me why this is so important. What 
has the FCC failed to do in order to promote female and minority 
ownership?
    Answer. As the gatekeeper of the public airwaves, the Commission 
has a solemn obligation to ensure that all Americans have equal access 
and opportunity to own, operate and control broadcast outlets. Indeed, 
the founding charter of the FCC requires us to protect the public 
interest. We have traditionally relied on the importance of promoting 
competition, localism and diversity. It requires us to take affirmative 
steps to prevent discrimination on the basis of race, gender, religion, 
and nationality. It also requires us to take affirmative steps to 
promote diversity of ownership because, in America, ownership is the 
key to having your voice heard. And if these statutory mandates are not 
sufficient, in section 257 of the Communications Act, Congress 
specifically encourages us to develop and promote policies that favor 
the diversity of media voices.
    Despite this clear and unequivocal mandate to facilitate ownership 
and participation by new entrants, women and people of color, the 
Commission has been hesitant to act. And even when we've acted, it has 
not been in a comprehensive and sustained manner. Piecemeal, short-term 
measures will not improve the number of women and minority 
broadcasters, especially when the Commission continues to relax our 
media ownership rules.
    Women make up over half of the U.S. population, and minorities make 
up over a third. But women and people of color own broadcast stations 
at roughly one-tenth of their level of representation in the 
population. In radio, women and people of color own approximately 6 
percent and 8 percent of stations, respectively. Media consolidation 
only takes outlets further out of the reach of women and people of 
color, and further from the local communities and their values. That's 
why we needed to first implement improvements to diversity and localism 
before we considered loosening the media ownership rules.
    As you are aware, on December 18, 2007 and over my objection, the 
Commission relaxed the newspaper/broadcast cross-ownership rule in all 
markets. This decision will take broadcast TV stations further beyond 
the reach of women and minority owners. As Free Press has shown, an 
examination of FCC data reveals that women and people of color, 
respectively, own about 6 percent and 3 percent of TV stations. Rather 
than improving the opportunities for women and people of color to 
purchase local TV stations, the FCC has substantially raised the 
barrier of entry--decreasing further the likelihood of diversifying the 
ownership class of TV stations.
    Under the revised newspaper/broadcast cross-ownership rule, in the 
top 20 markets, there is a high presumption in favor of permitting the 
dominant local newspapers to purchase a local TV station that is not 
among the top four ranked stations in the market. The main problem is 
that these are likely the only stations that a women or minority would 
have an opportunity to purchase. Instead of promoting women and 
minority ownership, the FCC has taken affirmative steps to impede it.
    Rather than limiting opportunities for women and people of color, 
the FCC--to begin--should attempt to improve the regulatory climate by: 
(1) staying any relaxation of the broadcast media structural rules; (2) 
adopting a definition of ``eligible entity'' that will truly provide 
women and minority owned broadcast businesses with targeted regulatory 
relief; (3) developing an accurate census of women- and minority-owned 
stations; (4) conducting a longitudinal study of the effects of our 
media ownership rules on women and minority ownership; and (5) creating 
an independent, bipartisan panel to review Commission rules, propose 
reform measures, and monitor the Commission's progress over time.
    These initial steps are critical because over the years, it has 
been standard operating procedure for the FCC to neglect its statutory 
obligation to promote diversity of ownership. For instance, as the 
Commission nears completion of an item addressing women and minority 
ownership, so much time has gone by that it has had to start all over 
again. Such was the case when the Commission made a good faith attempt 
to respond to the Supreme Court's decision in Adarand v. Pena. In 2000, 
the Commission developed a series of empirical studies to determine the 
impact of Commission policy on women and minority businesses. Since 
that time however, the Commission has done nothing more than to 
``refresh the record.''
    Also, as the Commission knows all too well, there is no accurate 
census of women- and minority-owned stations. A study commissioned by 
the FCC has found, ``the data currently being collected by the FCC is 
extremely crude and subject to a large enough degree of measurement 
error to render it essentially useless for any serious analysis.'' We 
do not even have enough data to determine which owners or stations will 
actually benefit or be harmed. For safe measure, we should not act in 
an area of such sensitivity until we can clearly ascertain the actual 
impact. An independent panel would provide an effective means of 
addressing this data shortfall.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                       Hon. Jonathan S. Adelstein
    Question. As you are probably aware, Florida is currently the 
largest ``net payer'' state into the Universal Service Fund. Florida 
pays in more than $300 million more to the USF than it receives in 
disbursements. Getting beyond the idea of a ``cap'' of some sort--which 
may raise competitive issues--it seems like one other way of achieving 
efficiencies is through more effective targeting of support. How do you 
feel about this approach?
    Answer. Among the highest priorities for the FCC is implementing 
and directing Universal Service as intended by Congress in Section 254 
of the Act. The FCC is actively engaged in re-examining almost every 
aspect of our Federal Universal Service policies, from the way that we 
conduct contributions and distributions, to our administration and 
oversight of the fund. Each of these proceedings has a potential impact 
on the contribution burdens of individual consumers. As reflected in 
your question, one of the central challenges is preserving and 
advancing Universal Service in the broadband age, while remaining 
mindful that it is consumers who ultimately fund Universal Service 
contributions.
    Congress and the Commission recognized early on that the economic, 
social, and public health benefits of the telecommunications network 
are increased for all subscribers by the addition of each new 
subscriber. Federal Universal Service continues to play a vital role in 
meeting our commitment to connectivity, helping to maintain high levels 
of telephone penetration, and increasing access for our Nation's 
schools and libraries. Ensuring the vitality of Universal Service will 
be particularly important as technology continues to evolve, and as our 
Nation confronts the critical broadband infrastructure challenge.
    I note that the Federal-State Joint Board on Universal Service 
(Joint Board) recently issued a Recommended Decision that seeks to 
address long-term reform issues facing the high-cost Universal Service 
support system. The Joint Board addressed the targeting of Universal 
Service support in a number of contexts, including questions about 
which services should be supported, whether the fund should support one 
or multiple providers in a given area, whether funds should be 
distributed on a more granular level, and whether to direct funds to 
unserved, underserved, or high cost areas more generally. I note that 
the Joint Board was not able to reach consensus on all of these issues, 
or even recommendations on some issues, but I appreciate the Joint 
Board's analysis and numerous recommendations. Indeed, I hope that the 
Commission will seek comment quickly on the Joint Board's considered 
input, and I look forward to carefully reviewing the record developed 
in response to this set of proposals.
    I also believe that it is important that the Commission conduct its 
stewardship of Universal Service with the highest of standards. We must 
be active in our oversight and aggressively combat any evidence of 
waste, fraud and abuse. As we move forward with these issues, I look 
forward to any guidance from Congress regarding this important program.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                       Hon. Jonathan S. Adelstein
    Question 1. A recent GAO report cited that no comprehensive plan 
exists for the digital television transition. The GAO stated ``Among 
other things, a comprehensive plan can detail milestones and key goals, 
which provide meaningful guidance for assigning and coordinating 
responsibilities and deadlines and measuring progress. Such planning 
also includes assessing, managing, and mitigating risks, which can help 
organizations identify potential problems before they occur and target 
limited resources''. This week the Commission released a written 
response to the GAO report. At this point in time, what do you consider 
to be the top five risk factors with respect to American consumers 
getting through the digital television transition with minimal 
disruption? Which of these risk factors fall under the jurisdiction of 
the FCC? How is the FCC managing and mitigating these risks?
    Answer. As I have testified at DTV transition hearings before the 
Senate Commerce Committee and the Special Committee on Aging, I believe 
the top five risk factors with respect to American consumers 
transitioning to digital television with minimal disruption include: 
(1) the lack of a comprehensive plan; (2) the lack of a coordinated 
message; (3) the lack of Federal, state, local and tribal government 
coordination; (4) the lack of an established grassroots campaign; and 
5) the lack of Federal resources.

        1. As GAO found, no one appears to be in charge of the 
        transition. And because there is no one in charge, there is no 
        strategic plan. This falls under the jurisdiction of the FCC 
        and NTIA, but I believe the FCC has the requisite expertise and 
        staff to lead this national effort.

        I continue to be concerned that there is no established 
        structure to coordinate the national DTV transition. No one is 
        ultimately responsible for vetting, prioritizing and 
        implementing ideas from both the public and private sectors 
        into a comprehensive and coherent plan. Poor long-term planning 
        and the continued lack of a national, Federal and internal FCC 
        coordination plan have left the FCC in the unfortunate position 
        of playing catch-up. Rather than being proactive--anticipating 
        problems and concerns, and developing an effective strategy--
        we've been reactive.

        2. Another risk factor is the lack of a coordinated message 
        sent by the government and companies to the public. I am 
        concerned that there is no coordinated message, and that the 
        most vulnerable, over-the-air viewers will not have the proper 
        information and technical assistance necessary. I have 
        advocated that the FCC, NTIA and other relevant Federal 
        agencies develop a Federal DTV Task Force. This multi-agency 
        task force, accountable to Congress, would clarify the message 
        and develop benchmarks and a timeline. Beyond coordinating 
        government efforts at all levels--as well as our own internal 
        efforts--the task force can convene joint meetings with the 
        private sector coalition to ensure a coherent, consistent 
        message across all channels. And it can help to coordinate the 
        many public-private assistance efforts needed for at-risk 
        communities. With a coherent message, the task force could work 
        with other Federal agencies to integrate DTV educational 
        information into many points of contact with consumers.

        3. A third risk factor is the lack of coordination between all 
        levels of government--Federal, state, local and tribal. While 
        there is not a comprehensive plan or a coordinated message, the 
        lack of coordination between all levels of government is 
        perhaps the factor that should be easiest to correct because it 
        is within our own control. The opportunity cost of the failure 
        to leverage the resources and experience of state and local 
        governments is enormous, as these entities are in the best 
        position to reach every household and to provide targeted 
        assistance, such as disseminating DTV transition information in 
        the appropriate foreign language, connecting with local service 
        delivery organizations, and offering technical assistance to 
        senior citizens and other vulnerable populations.

        4. The lack of an established grassroots campaign is another 
        risk. This campaign should target communities with the highest 
        concentration of the most vulnerable, over-the-air viewers. It 
        needs to establish timelines for training and outreach to 
        ensure people who need help can get it. This can fall under the 
        jurisdiction of the FCC as well as NTIA but, as the GAO 
        reported, the FCC is uniquely qualified to take the reins on 
        this plan. We not only need to get the word out, but we need an 
        implementation plan that helps seniors, those with disabilities 
        and others who need direct intervention in setting up their 
        boxes, antennae or other issues.

        In my own outreach, I have found the broadcasters, cable 
        operators, and consumer electronics manufacturers and retailers 
        eager to develop a meaningful partnership with the Federal 
        Government. For instance, after my criticism of the cable 
        industry's first round of PSAs, the industry sought my guidance 
        in developing future PSAs. The cable industry was receptive to 
        all of my suggestions, including a technical correction. But 
        rather than the ad hoc approach of individual Commissioners 
        reviewing scripts, it would have been preferable for an FCC DTV 
        education specialist to work with each industry as they are 
        developing PSAs based on a clear message vetted by the 
        Commission and other agencies involved. To my knowledge, the 
        Commission has not even asked to look at them. I am not 
        suggesting we dictate the message verbatim, but rather that we 
        offer suggestions to help coordinate it. Our industry partners 
        are very receptive to such a cooperative approach.

        5. The final risk factor is the lack of resources appropriated 
        to educate the public about the DTV transition. More resources 
        are needed to expand the scope and depth of our efforts, but it 
        is not solely a matter of funding to raise the awareness of 
        Americans, particularly at-risk groups such as the elderly, 
        low-income families, rural residents, and people with 
        disabilities, minority groups and non-English speakers. First, 
        it is a matter of coordination and prioritization. Then, it is 
        a matter of implementation. The United Kingdom spent much more 
        money for a much smaller population in order to educate their 
        public than we are appropriating currently.

    Question 2. Should the common carrier exemption be removed from the 
Federal Trade Commission? What, if any, would be the disadvantage to 
consumers if the exemption is removed?
    Answer. The Federal Trade Commission Act (FTCA) exempts common 
carriers subject to the Communications Act from FTCA's prohibitions on 
unfair or deceptive acts and practices and unfair methods of 
competition. Whether to end this exemption is ultimately a question for 
Congress, but I continue to believe that the FCC must do more to 
prioritize the interests of consumers and that consumers would benefit 
from additional oversight.
    Proponents of lifting the common carrier exemption have argued that 
changes in the telecommunications marketplace, industry structure, and 
the dismantling of traditional regulatory protections leave consumers 
inadequately protected. For example, traditional common carriers are 
increasingly offering bundles of services, some of which may be subject 
to the FTC's jurisdiction under the FTCA, others of which may not. On 
the other hand, opponents of removing the exemption have argued that 
such an approach could lead to duplicative regulation. This overlap has 
the potential to create confusion for providers and consumers, and may 
increase the likelihood of forum shopping. In addition, the FCC has 
developed a vital understanding of the rapidly evolving 
telecommunications market that positions it well to address consumer 
protection issues raised with respect to communications issues. As 
Congress considers this question, I would encourage it to examine 
potential areas of overlap and consider whether there are certain areas 
that would particularly benefit from structured coordination among 
agencies.
    At the FCC, I have been particularly concerned that recent 
decisions regarding broadband Internet access services have left 
consumers in legal limbo. Through the Communications Act, Congress 
codified a broad set of consumer protection obligations for 
telecommunications services that the FCC has now side-stepped with its 
current approach to broadband services. It is regrettable that, 2 years 
after exercising the blunt instrument of reclassification, the 
Commission has not significantly advanced the discussion of safeguards 
for broadband consumers, even though we have an open docket concerning 
Consumer Protection in the Broadband Age. The Commission must do more 
to assess the experiences and expectations of broadband consumers, who 
deserve our attention.
    This is not to suggest that we regulate reflexively or append 
legacy approaches where they do not belong. It is imperative, however, 
that as consumers continue to demand greater access to broadband 
technology, the FCC must keep apace of consumers' experiences and 
expectations to ensure they are afforded the appropriate protections.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Frank R. Lautenberg 
                     to Hon. Jonathan S. Adelstein
    Question 1. New Jersey is a net contributor of almost $200 million 
a year to the Universal Service Fund (USF). There are many proposals 
for reforming USF, including temporary caps and longer-term proposals. 
When can I tell my constituents that they will see some action from the 
FCC to stop the exponential growth of this Fund?
    Answer. As reflected in your question, one of the central 
challenges is preserving and advancing Universal Service in the 
broadband age, while remaining mindful that it is consumers who must 
pay Universal Service contributions. The FCC is actively engaged in re-
examining almost every aspect of our Federal Universal Service 
policies, from the way that we conduct contributions and distributions, 
to our administration and oversight of the fund. Each of these 
proceedings has a potential impact on the contribution burdens of 
individual consumers. While I cannot predict when the FCC will act on 
these proceedings, I can assure you that I will work with my colleagues 
to ensure timely decisions that implement Section 254 as Congress 
intended.
    Congress and the Commission recognized early on that the economic, 
social, and public health benefits of the telecommunications network 
are increased for all subscribers by the addition of each new 
subscriber. Federal Universal Service continues to play a vital role in 
meeting our commitment to connectivity, helping to maintain high levels 
of telephone penetration, and increasing access for our Nation's 
schools and libraries. Ensuring the vitality of Universal Service will 
be particularly important as technology continues to evolve, and as our 
Nation confronts the critical broadband infrastructure challenge.
    I note that the Federal-State Joint Board on Universal Service 
(Joint Board) recently issued a Recommended Decision that seeks to 
address long-term reform issues facing the high-cost Universal Service 
support system. I hope that the Commission will seek comment quickly on 
the Joint Board's considered input, and I look forward to carefully 
reviewing the record developed in response to this set of proposals.
    Finally, I also believe that it is important that the Commission 
conduct its stewardship of Universal Service with the highest of 
standards. We must be active in our oversight and aggressively combat 
any evidence of waste, fraud and abuse. As we move forward with these 
issues, I look forward to any guidance from Congress regarding this 
important program.

    Question 2. The ``UHF discount'' rule allows UHF stations to count 
only 50 percent of the households in a local designated market area 
(DMA) for purposes of the national television ownership cap. With the 
transition to digital television, is there any justification for 
maintaining the UHF discount? What effect does this have on media 
consolidation?
    Answer. The original justification of the UHF discount rule was to 
account for the deficiencies in over-the-air UHF reception in 
comparison to VHF reception. An analog UHF signal has a shorter range 
than an analog VHF signal, so the rule discounted the audience reach of 
UHF stations by half to compensate for the fact that fewer households 
in the market could receive a quality over-the-air UHF signal. However, 
after the DTV transition, all TV signals from full-power commercial and 
non-commercial stations will be the same--digital. Also, since 85 
percent of household subscribe to cable or satellite video service, and 
therefore do not rely on over-the-air transmission for TV service, the 
underlying justification for the UHF discount no longer exists.
    Perpetuating the UHF discount does indeed effect media 
consolidation because it distorts the audience reach of broadcast 
stations for purposes of the 39 percent national TV audience cap. Using 
the UHF discount, one company could control the news and information 
that 80 percent of U.S. households receive on a daily and hourly basis. 
As I have stated repeatedly, such concentration of power and control of 
information could harm our democracy, which relies upon the free 
exchange of ideas from multiple sources. Central to our American 
democracy is the ``uninhibited marketplace of ideas,'' where everyone 
is able to exchange and share music, news, information and 
entertainment programming over the public airwaves. As the Supreme 
Court has observed, ``it is the right of the public to receive suitable 
access to social, political, esthetic, moral and other ideas and 
experiences.'' That right is enshrined in the First Amendment to the 
U.S. Constitution.
    Broadcast television continues to have a powerful influence over 
our culture, political system, and the ideas that inform our public 
discourse. Study after study has shown that broadcasting is still the 
dominant source of not just local news and information, but also 
entertainment programming. The broadcast industry still produces, 
disseminates, and ultimately controls the news, information, and 
entertainment programs that most inform the discourse, debate, and the 
free exchange of ideas that is essential to our participatory 
democracy. Our failure to assess accurately the reach of TV broadcast 
stations would be a failure to protect the interests of the American 
people and to execute faithfully the directive of Congress.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Thomas R. Carper to 
                       Hon. Jonathan S. Adelstein
    Question. The Federal Communications Commission should be commended 
for issuing its recent Notice of Proposed Rulemaking that considers 
whether to authorize Big LEO Mobile Satellite Services operators to 
provide ancillary terrestrial services on more of their assigned 
spectrum. As you are aware, one such operator, Globalstar, and its 
partner, Open Range Communications, need this authority in order to 
pursue their plan to bring broadband services to more than 500 rural 
communities across the country. Given the Commission's stated 
commitment to promote the rapid deployment of advanced broadband 
services to unserved and underserved areas, will you assure the 
Committee that you will do all that it takes to complete this 
proceeding in the time required for Globalstar and Open Range to move 
forward with their business plan?
    Answer. S. 2332I am very pleased that we have initiated a 
proceeding to consider spectrum authorizations and technical rules for 
ancillary terrestrial services (ATC) in the Big LEO bands. I will work 
with my colleagues to complete this proceeding as quickly as possible. 
As you indicate, this item seeks comment on expanding the L-band and S-
band spectrum in which Globalstar may operate ATC. I continue to 
strongly advocate the need to promote opportunities to expand wireless 
connectivity, as well as to reach our rural communities with broadband 
access. I firmly believe that broadband is the key to economic growth 
for these underserved areas in this digital information age. The 
opportunities for rural areas that have seized the broadband initiative 
are enormous. I will continue to advocate and encourage ``spectrum 
facilitation''--whether technical, economic or regulatory--to get 
spectrum into the hands of operators seeking to provide broadband 
services to underserved areas as quickly as possible.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                        Hon. Deborah Taylor Tate
    Question 1. Last year, a provision to reform the FCC's forbearance 
authority was included in the Committee's telecom reform bill. 
Specifically, it would have eliminated the ``deemed granted'' language 
in Section 10 in order to ensure a fairer process at the FCC. I 
recently introduced legislation that will eliminate this provision, so 
we can avoid a situation where the agency erases its rules simply by 
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
    Answer. As a Commissioner, my preference is always to vote on an 
item and issue a decision. During my tenure, only one petition has been 
deemed granted by operation of law, and that occurred because there 
were only four Commissioners at the time resulting in a 2-2 vote on the 
order circulated by the Chairman.
    On November 30, 2007, the Commission issued an NPRM to consider 
procedures governing its review of petitions requesting forbearance 
from regulation including: format and content of forbearance petitions, 
notice and comment rules (such as default comment periods and time 
limits on ex parte filings) and participation of state commissions, as 
well as other parties, in forbearance proceedings. The Commission also 
sought public comment on whether forbearance is an effective means for 
the Commission to make changes to its regulations.

    Question 2. Earlier this year, the FCC released a Notice of 
Proposed Rulemaking examining so-called ``two-way, plug-and-play 
standards'' for cable navigation devices. Do you support implementation 
of Section 629 in a way that will create a retail market for ``two-way, 
plug-and-pay'' devices and allow for greater competition and consumer 
choice? Do you believe that FCC oversight is sufficient to ensure that 
any standards and specifications are created and changed through a fair 
process that treats all affected parties equitably?
    Answer. I have always believed that competition is in the best 
interest of consumers. Where competition flourishes, we see faster 
development of new and improved technologies, as well as lower prices, 
which benefit consumers. Yes, I believe FCC oversight is sufficient to 
ensure a fair and equitable resolution, if FCC action is required. 
Section 629 mandates that the FCC consult with appropriate industry 
standard-setting organizations to adopt regulations for converter 
boxes. As the Commission did when setting the standard for 
unidirectional devices, we will again consult with the appropriate 
industry standard-setting organization, the Society of Cable Television 
Engineers (``SCTE''), if faced with the decision on the standards for 
two-way devices. I hope the various industry parties will be able to 
reach consensus on an industry standard.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                        Hon. Deborah Taylor Tate
    Question 1. On December 18 the FCC held a vote on a major change to 
the nations' media ownership rules, despite substantial concern here in 
the Senate. The Commerce Committee passed S. 2332, the Media Ownership 
Act of 2007, on December 4. We have over 20 bipartisan cosponsors. We 
asked you to delay this vote to consider important issues of localism 
and minority ownership and allow a proper period of comment on the 
rules. Why was it so important to move ahead on December 18 despite 
this opposition? Why could you not delay this vote beyond December 18?
    Answer. To my knowledge, the Commission has always followed APA 
guidelines, which includes the opportunity for public notice and 
comment. The course leading up to our decision on the media ownership 
rules was the most thorough, open, and public I have been part of in my 
twenty-plus years of government service. It began in 2003 with the 
release of our 2002 Biennial Review Order, and culminated in a single, 
limited change to one aspect of our media ownership rules in December 
2007. In reaching this decision, we held hearings all across the 
country over the past 18 months. We sought and received comment from 
academics, economists, media industry representatives, artists, public 
interest groups, and individual laypersons. We commissioned ten media 
studies and put those studies out for multiple peer reviews. This 
procedure was twice as long as the prior media ownership review. In the 
end, we kept all of our rules in place, except for the newspaper/
broadcast cross-ownership ban, which we relaxed only in the top 20, 
most media-rich markets in the country. I would suggest this is a minor 
change--not a major one. Therefore, in light of the remand by the U.S. 
Court of Appeals for the Third Circuit in 2004, which directed the 
Commission to act, and the lengthy procedure we undertook, I was 
prepared to vote on the date the Chairman set our meeting.

    Question 2. Chairman Martin says the FCC provided a lengthy public 
comment period of 120 days, which was extended to 167 days. The FCC 
also held six hearings and finished the two localism hearings. But how 
could the public be expected to adequately comment on your proposed 
rules if the Commission issued the proposed rules at the end of the 
process?
    Answer. To my knowledge, in advance of any rulemaking, it has been 
the practice of the Commission to issue a broad Notice of Proposed 
Rulemaking, seeking public comment on how our policies should be 
crafted, analyze the comments received, and then draft rules. To draft 
rules first, and seek comment later, would seem to actually remove the 
public from the process. To seek comment, then draft rules, and then 
seek comment again, would seem to create a revolving door in which the 
FCC would be constantly analyzing comments without ever taking action. 
In its order, the U.S. Court of Appeals for the Third Circuit made 
clear that ``the APA's notice obligations are not supposed to result in 
a notice-and-comment `revolving door.' '' We began this process with 
the release of our Biennial Review Order on July 2, 2003, and completed 
it on December 18, 2007. During those 4 years we held hearings, sought 
comment, commissioned studies, and conducted peer reviews. Though not 
required to do so, in the spirit of openness and transparency, the 
Chairman shared his proposed rule change with the public on November 
13, 2007, 5 weeks before the December 18 vote. While I am certainly 
willing to work with Congress to amend our rulemaking procedures, I 
believe the Commission followed established protocol, in accordance 
with APA requirements.

    Question 3. The FCC held six hearings across the country at a cost 
of more than $200,000. I worry that the $200,000 was totally wasted as 
you ignored the input of the public on December 18. They testified 
against consolidation. You didn't hear people coming out and saying 
they wanted the newspaper to own the television station. You heard 
massive opposition to consolidation. Chairman Martin has said that the 
FCC didn't hear people constantly sounding off against cross-ownership, 
but why would you hear that--the Chairman never told them what rules he 
was concentrating on. How could the FCC vote on a rule to relax the 
cross-ownership ban having heard the massive opposition to 
consolidation?
    Answer. I found these hearings to be extremely valuable and I 
appreciate the thousands of citizens who participated. In response to 
the concerns expressed regarding cross-ownership, we did not relax the 
ban on radio ownership; we did not relax the ban on television 
ownership; we did not relax the ban on radio/television cross-
ownership; and we did not relax the ban on dual network ownership. With 
regard to the ban on newspaper/broadcast cross-ownership, we only 
modified the rule in the top 20 designated market areas, places like 
Los Angeles, New York, and Chicago, which have the largest number of 
media outlets in the country. Further, it is incorrect to suggest that 
every comment we heard was in opposition to cross-ownership. The record 
also includes comments from those who felt that local news would 
improve in quality and quantity as a result of the resource-sharing 
opportunities created by a newspaper and broadcaster being under common 
ownership.

    Question 4. The Media Ownership Act of 2007 requires the FCC to 
seek 90 days of comment on specific proposed changes to its broadcast 
ownership rules; complete a separate rulemaking on localism, with a 
study at the market level and 90 days of comment on localism, prior to 
rule changes being issued for comment; and convene an independent panel 
to make recommendations on increasing the ownership of broadcast media 
by women and minorities. Why should the FCC not have postponed the 
December 18 vote to take care of these tasks?
    Answer. The most recent media ownership rulemaking process began in 
July 2003, with the release of the 2002 Biennial Review Order, and over 
the last 18 months has included a series of nationwide hearings in 
which we heard from thousands of laypersons and experts, and 
commissioned ten media studies. Regarding the localism rulemaking 
specifically, we held six nationwide hearings and are continually 
adopting orders like the enhanced disclosure order, which requires 
broadcast stations to make their public files available online, and the 
localism order which seeks comment on a variety of measures to help 
ensure the availability of local news. Regarding the diversity order, 
we currently have a committee in place, the FCC Advisory Committee for 
Diversity in the Digital Age, chaired by the first Hispanic FCC 
Commissioner, Henry Rivera, and comprised of numerous members of 
diverse communities. They, along with the Minority Media and 
Telecommunications Council and the National Association of Black-Owned 
Broadcasters, developed a list of proposals, a dozen of which we have 
already adopted, to increase involvement by women and minorities in the 
media industry. Those proposals include: (1) extending construction 
permit deadlines, (2) modifying our equity/debt plus attribution rule, 
(3) strengthening our distress sale policy, (4) adopting a policy 
banning racial or gender-based discrimination in broadcast 
transactions, (5) adopting a zero tolerance policy for ownership fraud, 
(6) requiring nondiscrimination provisions in advertising sales 
contracts, (7) conducting longitudinal studies on minority and women 
ownership trends, (8) encouraging local and regional bank participation 
in SBA guaranteed loan programs, (9) offering duopoly priority for 
companies that finance or incubate an eligible entity, (10) extending 
divestiture deadlines in certain mergers, (11) holding an ``Access to 
Capital Conference'', and (12) creating a guidebook on diversity. All 
of these proposals will be implemented expeditiously, and as new 
proposals are presented we will continue to consider those as well. I 
personally have attended the National Association of Broadcasters' 
Education Foundation, which offers women and minorities the opportunity 
to develop professional business skills that will assist them in 
accessing managerial and ownership positions in the media industry. I 
have also attended the Hispanic Broadcasters Association Financing and 
Capitalization Seminar, worked with the National Association of Black-
Owned Broadcasters, and attended the Rainbow/Push Coalition's Wall 
Street Project. Improving the staggeringly low rate of female and 
minority ownership will continue to be one of my top personal and 
professional goals. The FCC has and continues to show great dedication 
to increasing local news and to diversity in media ownership. Of course 
we can always do more, but I believed it was important to act on the 
recommendations before us.

    Question 5. Should the Chairman have put out his proposed media 
ownership rules in a New York Times op-ed and then in an FCC press 
release? Do you believe they should have been issued in the Federal 
Register?
    Answer. As a former state PUC Chairman, I know the difficulties 
associated with this type of leadership position. Regarding the 
issuance of the proposed rule change, see Answer #2 above.

    Question 6. You have heard concerns that the Chairman's proposal 
opens up cross-ownership to much more than the top 20 markets. I don't 
agree with any cross-ownership at all. Not in the top 30, not in the 
top 20. I think I'm saying the same thing as the 1,000 people who came 
to the hearing in Los Angeles and the 1,100 people who turned out in 
Seattle. Why are we not being heard?
    Answer. I appreciate the thousands of citizens who attended our six 
public hearings and their comments certainly had an impact on me. In 
response to their concerns, the Commission did not relax the radio 
ownership limit; did not relax the television ownership limit; did not 
relax the radio/television cross-ownership limit; and did not relax the 
dual network ownership ban. We modified the rule regarding newspaper/
broadcast cross-ownership only in the top 20, most media-rich markets. 
This modest change reflects our understanding of, and appreciation for, 
the public comments we received. In addition, we also considered the 
media studies and the public comments that demonstrate that local news 
actually increases where resource-sharing occurs, and this supported 
our decision to adopt the minor change to our rules.

    Question 7. Recently concerns about unfair discrimination have been 
raised in relation to Verizon Wireless blocking the text messaging 
service of the pro-choice group, NARAL. Verizon Wireless quickly 
corrected the problem, but the fact that it happened raises major 
alarms. On October 16, 2007, Senator Snowe and I sent a letter to the 
FCC asking for your views on this issue. I have not received a 
response. Can you tell me your views?
    Answer. Before I arrived at the Commission, on August 5, 2005, the 
Commission adopted a policy statement that outlines four principles to 
encourage broadband deployment and preserve and promote the open and 
interconnected nature of public Internet: (1) consumers are entitled to 
access the lawful Internet content of their choice; (2) consumers are 
entitled to run applications and services of their choice, subject to 
the needs of law enforcement; (3) consumers are entitled to connect 
their choice of legal devices that do not harm the network; and (4) 
consumers are entitled to competition among network providers, 
application and service providers, and content providers. All of these 
principles are subject to reasonable network management. I support the 
Commission's four principles regarding Internet policy, and believe 
that consumers should have access to lawful content of choice that does 
not harm the network. Internet providers have the right to mange their 
networks in order to serve their customers as long as they do not 
engage in unlawful discrimination.
    On March 22, 2007, the Commission launched an inquiry into 
broadband market practices, including the relationships between 
broadband providers, content and application providers, and consumers. 
Also, several groups filed a petition with the Commission on December 
11, 2007, requesting that the Commission prohibit wireless carriers 
from blocking text messages sent by any company, nonprofit group or 
political campaign. I will closely evaluate the records in these 
proceedings.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                        Hon. Deborah Taylor Tate
    Question. As you are probably aware, Florida is currently the 
largest ``net payer'' state into the Universal Service Fund. Florida 
pays in more than $300 million more to the USF than it receives in 
disbursements. Getting beyond the idea of a ``cap'' of some sort--which 
may raise competitive issues--it seems like one other way of achieving 
efficiencies is through more effective targeting of support. How do you 
feel about this approach?
    Answer. As part of comprehensive long term reform of the Universal 
Service Fund I support more effective targeting of support to ensure 
that the funds are being deployed efficiently and effectively to high 
cost areas.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                        Hon. Deborah Taylor Tate
    Question 1. Do you believe that the newspaper industry is 
profitable today?
    Answer. I believe this is a very market-specific analysis. Some 
newspapers may be profitable, but unfortunately we have seen that many 
are not, resulting in the bankruptcy of many papers and a resulting 
loss of voices in some markets. This is why it is so important that any 
cross-ownership waivers, outside the top 20 largest media markets, are 
decided on a case-by-case basis. In 2007 alone, The Boston Globe fired 
24 of its news staffers, including two Pulitzer Prize-winning 
reporters; the Minneapolis Star Tribune fired 145 employees, including 
50 from their newsroom; The Rocky Mountain News fired 20; the Detroit 
Free Press and The Detroit News announced cuts of 110 employees; and 
the San Francisco Chronicle planned to cut 25 percent of its newsroom 
staff. Given the incredible technological convergence, newspapers are 
looking for ways in which to compete in the digital age and survive 
given the impact of the Internet and as our studies indicate, cross-
ownership actually results in more local news through efficiencies and 
resource-sharing.

    Question 2. A recent GAO report cited that no comprehensive plan 
exists for the digital television transition. The GAO stated ``Among 
other things, a comprehensive plan can detail milestones and key goals, 
which provide meaningful guidance for assigning and coordinating 
responsibilities and deadlines and measuring progress. Such planning 
also includes assessing, managing, and mitigating risks, which can help 
organizations identify potential problems before they occur and target 
limited resources''. This week the Commission released a written 
response to the GAO report. At this point in time, what do you consider 
to be the top five risk factors with respect to American consumers 
getting through the digital television transition with minimal 
disruption? Which of these risk factors fall under the jurisdiction of 
the FCC? How is the FCC managing and mitigating these risks?
    Answer. First, I would like to refer you to the ``FCC Written 
Response to the GAO Report on DTV'' (``Written Response'') (http://
hraunfoss.fcc.gov/edocs_public/attach
match/DOC-278883A2.pdf), which outlines in minute detail the steps the 
Commission is taking to prepare for the DTV transition. We have already 
executed a number of significant initiatives, such as requiring 
labeling of analog-only television sets, enforcing penalties against 
retailers who fail to notify consumers about the risk of purchasing 
analog-only sets, and completing three periodic reviews of the rules 
for broadcasters as they prepare for the DTV transition. There are 
numerous other benchmarks in the Written Response that we continue to 
work toward. I believe this Report is a thorough and comprehensive 
analysis of the issues remaining before the Commission. Thanks to the 
appropriation of funds we received 2 weeks ago, the Commission will be 
able to conduct more targeted education efforts to prepare Americans 
for the transition. Second, I personally mention the DTV transition and 
the informational website, www.dtv.gov, in every speech I give, whether 
DTV-related or not. Additionally, I have spoken at numerous meetings 
convened by the FCC's Consumer and Governmental Affairs Bureau, which 
focused on specific segments of the population, such as seniors and 
non-English speakers. I also participated in a panel discussion hosted 
by the Intergovernmental Advisory Committee, which brought together 
Governors, state and local officials, and tribal leaders from across 
the country. Additionally, I participated in the NTIA set-top box kick-
off at the Department of Commerce, where vendors were on hand to 
demonstrate the types of boxes that will be available to consumers 
through the NTIA coupon program. I have worked with Jonas Hafstrom, the 
Swedish Ambassador, and Magnus Harviden, Sweden's Counselor for Science 
and Technology, to learn about the successful DTV transition recently 
completed in their country. The FCC's International Bureau coordinated 
a live teleconference to gain further insights on Sweden's transition 
as well. Despite all of the FCC's current efforts, the process can 
always improve. In an effort to be responsive to your question, here 
are five areas which may pose some risk, but which are largely 
addressed in the aforementioned Written Response.

        1. Targeted outreach. Educational efforts are within the 
        jurisdiction of the FCC, and as I stated, we are conducting 
        forums. I am pleased that we recently received a $2.5 million 
        appropriation which will help us target those likely to be most 
        affected by the transition, such as the elderly and non-English 
        speakers.

        2. Additional collaboration with non-traditional organizations. 
        Volunteer groups, like the Boy Scouts and Girl Scouts, and 
        other non-profit organizations, may offer assistance to those 
        most affected by the transition.

        3. Increased intergovernmental and industry interaction. 
        Regular update and planning meetings between the groups 
        responsible for the transition could be facilitated by the FCC.

        4. Technical issues. We recently issued the Third Periodic 
        Review of the Rules and Policies Affecting the DTV Conversion. 
        The Commission will continue to work with broadcasters on 
        issues arising in the future, as we approach February 17, 2009.

        5. Consumer issues not within the FCC's jurisdiction. Congress 
        may want to consider how other associations could improve DTV 
        education efforts. For example, electronics manufacturers could 
        be encouraged to have a clear, conspicuous link on their 
        websites, in which consumers can input the model number of 
        their particular set, and determine whether it is analog or 
        digital. The set-top box coupon program, being administered by 
        the NTIA, is a critical component of the DTV transition.

    Question 3. Should the common carrier exemption be removed from the 
Federal Trade Commission? What, if any, would be the disadvantage to 
consumers if the exemption is removed?
    Answer. Obviously technological advances are blurring 
telecommunications, content and information space. This platform 
convergence may call for different types of oversight and regulation 
especially as economic regulation is reduced. In certain situations 
where the market pressure and competition do not provide enough 
consumer protection there may be a need for more regulation--not just 
from different Federal agencies, but also at the state and local level. 
Certainly, whether or not to remove the exemption is within the purview 
of Congress. Currently the Commission's Consumer and Governmental 
Affairs Bureau (CGB) develops and implements the Commission's consumer 
policies and is responsible for responding to consumer inquiries and 
complaints. CGB provides informal mediation and resolution of 
individual informal consumer inquiries and complaints consistent with 
controlling laws and Commission regulations, and in accordance with the 
Bureau's delegated authority. CGB receives, reviews and analyzes 
complaints and responses to informal consumer complaints; maintains 
manual and computerized files that provide for the tracking and 
maintenance of informal consumer inquiries and complaints; mediates and 
attempts to settle unresolved disputes in informal complaints as 
appropriate; and coordinates with other Bureaus and Offices to ensure 
that consumers are provided with accurate, up-to-date information.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Frank R. Lautenberg 
                      to Hon. Deborah Taylor Tate
    Question 1. New Jersey is a net contributor of almost $200 million 
a year to the Universal Service Fund (USF). There are many proposals 
for reforming USF, including temporary caps and longer-term proposals. 
When can I tell my constituents that they will see some action from the 
FCC to stop the exponential growth of this Fund?
    Answer. Thank you for underscoring the exponential growth of the 
USF and for your support of the Commission taking action. As Federal 
Chair of the Federal-State Joint Board on Universal Service I was 
pleased that within the last year the Joint Board made both short term 
and long term recommendations for reform of the Fund. Several decisions 
are currently circulating at the Commission to address USF reform and I 
hope that the Commission can act as soon as possible.

    Question 2. There has been recent activity--both at the FCC and in 
the courts--regarding the rebanding of the 800 MHz spectrum. When do 
you expect the rebanding to be completed?
    Answer. While the original 800 MHz rebanding was addressed prior to 
my arrival at the Commission, I am deeply committed to better, more 
efficient utilization of the spectrum, especially as it relates to the 
availability of spectrum for use by public safety. This process did not 
begin as promptly as envisioned. Nevertheless, the rebanding of the 800 
MHz band is progressing. To address some of the previous delays, in 
September the Commission issued rules requiring any non-border licensee 
to request a waiver in the event it will not complete rebanding by June 
26, 2008. The Commission made clear that it would consider waivers on a 
case-by-case basis and would not give blanket waivers to licensees that 
failed to reband on schedule. Currently, the Commission is considering 
additional guidelines for licensees that intend to file waiver 
requests, in order to further expedite this process.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Thomas R. Carper to 
                        Hon. Deborah Taylor Tate
    Question. The Federal Communications Commission should be commended 
for issuing its recent Notice of Proposed Rulemaking that considers 
whether to authorize Big LEO Mobile Satellite Services operators to 
provide ancillary terrestrial services on more of their assigned 
spectrum. As you are aware, one such operator, Globalstar, and its 
partner, Open Range Communications, need this authority in order to 
pursue their plan to bring broadband services to more than 500 rural 
communities across the country. Given the Commission's stated 
commitment to promote the rapid deployment of advanced broadband 
services to unserved and underserved areas, will you assure the 
Committee that you will do all that it takes to complete this 
proceeding in the time required for Globalstar and Open Range to move 
forward with their business plan?
    Answer. In 2006, the Commission authorized Globalstar to provide 
Ancillary Terestrial Component (ATC) service in 11 megahertz of the 
Mobile Satellite Services (MSS) band in which it is licensed to 
operate. In a subsequent petition, Globalstar requested authorization 
to provide ATC service in all of the MSS spectrum in which it is 
licensed to operate, either exclusively or on a shared basis. In 
response to this petition, the Commission released in November of 2007 
a Notice of Proposed Rulemaking (NPRM) seeking comment on whether 
Globalstar should be authorized to provide ATC service in additional 
spectrum. This is an important issue. The opportunity for Globalstar to 
partner with Open Range Communications to provide rural broadband 
service, which your question addresses, is precisely the type of 
benefit that may result from such authorization, in the event this may 
be granted without causing harmful interference to authorized licensees 
in adjacent bands. The Commission's prompt attention to this matter is 
consistent with its focus on advancing policies that promote broadband 
service to all Americans, including those in rural and isolated areas. 
Further, as a former state official in a state with a large rural 
population, expanding the availability of broadband service beyond the 
largest cities is a priority for me. While the comment period for the 
NPRM has not closed, I am committed to completing this proceeding 
promptly upon review of the record.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Ted Stevens to 
                        Hon. Deborah Taylor Tate
    Question 1. Does the Commission have the statutory authority to 
provide Universal Service support to non-profit corporation tribal 
consortiums, serving remote areas of Alaska, that provide education, 
welfare, wellness, law enforcement, natural resources and economic 
development services?
    Answer. To help promote telecommunications service nationwide, the 
Commission, as directed by Congress in section 254 of the 
Communications Act of 1934, as amended by the Telecommunications Act of 
1996 (47 U.S.C.  254. See also Telecommunications Act of 1996, Pub. L. 
104-104, 110 Stat. 56 (1996) (the Act)) and with the help of the 
Universal Service Administrative Company (USAC), administers the 
Federal Universal Service Fund.
    The Federal Universal Service Fund pays for four programs. They 
are:

   Lifeline/Link-Up. This program provides discounts on monthly 
        service and initial telephone installation or activation fees 
        for primary residences to income-eligible consumers. For 
        additional information see our consumer fact sheet at 
        www.fcc.gov/cgb/consumerfacts/lllu.html.

   High-Cost. This program supports companies that provide 
        telecommunications services in areas where the cost of 
        providing service is high.

   Schools and Libraries. This program helps support classrooms 
        and libraries in using the vast array of educational resources 
        available through the telecommunications network, including the 
        Internet. For additional information see our consumer fact 
        sheet at www.fcc.gov/cgb/consumerfacts/usp_Schools.html.

   Rural Health Care. This program helps link health care 
        providers located in rural areas to urban medical centers so 
        that patients living in rural America will have access to the 
        same advanced diagnostic and other medical services that are 
        enjoyed in urban communities. For additional information see 
        our consumer fact sheets at www.fcc.gov/cgb/consumerfacts/
        usp_RuralHealthcare
        .html and www.fcc.gov/cgb/consumerfacts/
        RuralHealthProgram.html.

    The Commission has statutory authority to provide Universal Service 
funds to the extent that a non-profit corporation tribal consortium 
meets the eligibility requirements for a program.

    Question 2. Kawerak is one of Alaska's tribal consortiums who 
provides several services to remote areas of Alaska, and has expressed 
concern about their ineligibility to receive Universal Service support 
because they are unable to meet the precise definitions of health care 
or educational service providers. Please address the requirements which 
these tribal consortiums must meet in order to receive support.
    Answer.
Schools and Libraries Program
    Federal and state laws determine eligibility of schools, school 
districts, and libraries. The following Internet link provides an 
overview of the Schools and Libraries Program: http://
www.universalservice.org/sl/about/overview-program.aspx.
    The Schools and Libraries Program of the Universal Service Fund, 
commonly known as ``E-Rate,'' is administered by the Universal Service 
Administrative Company (USAC) under the direction of the Commission, 
and provides discounts to assist most schools and libraries in the 
United States to obtain affordable telecommunications and Internet 
access.
    The Schools and Libraries Program supports connectivity--the 
conduit or pipeline for communications using telecommunications 
services and/or the Internet. Funding is requested under four 
categories of service: telecommunications services, Internet access, 
internal connections, and basic maintenance of internal connections. 
Discounts for support depend on the level of poverty and the urban/
rural status of the population served and range from 20 percent to 90 
percent of the costs of eligible services. Eligible schools, school 
districts and libraries may apply individually or as part of a 
consortium.
    Applicants must provide additional resources including end-user 
equipment (e.g., computers, telephones, etc.), software, professional 
development, and the other elements that are necessary to utilize the 
connectivity funded by the Schools and Libraries Program.
    In general, a school is eligible for Schools and Libraries support 
if it meets the following eligibility requirements:

   Schools must provide elementary or secondary education as 
        determined under state law.

   Schools may be public or private institutional day or 
        residential schools, or public charter schools.

   Schools must operate as non-profit businesses.

   Schools cannot have an endowment exceeding $50 million.

    In many cases, non-traditional facilities and students may be 
eligible.

   Eligibility of Pre-Kindergarten, Juvenile Justice, and Adult 
        Education student populations and facilities depends on state 
        law definitions of elementary or secondary education.

   An Educational Service Agency, which may operate owned or 
        leased instructional facilities, may be eligible for Schools 
        and Libraries support if it provides elementary or secondary 
        education as defined in state law.

    Libraries must meet the statutory definition of library or library 
consortium found in the 1996 Library Services and Technology Act (Pub. 
L. 104-208) (LSTA) to meet eligibility requirements for Schools and 
Libraries support.

   Libraries must be eligible for assistance from a state 
        library administrative agency under that Act.

   Libraries must have budgets completely separate from any 
        schools (including, but not limited to, elementary and 
        secondary schools, colleges and universities).

   Libraries cannot operate as for-profit businesses.
Rural Health Care Program
    Health care providers (HCPs) participating in the Rural Health Care 
Program must be eligible and must select eligible services and 
providers in order to receive discounts. The following Internet link 
provides an overview of the eligibility requirements: http://
www.usac.org/rhc/health-care-providers/step01/
    Before beginning the application process, it is important to 
confirm eligibility. In general, participants in the program must be 
rural and public or non-profit health care providers of the types 
listed below.

   Post-secondary educational institutions offering health care 
        instruction, teaching hospitals, or medical schools.

   Community health centers or health centers providing health 
        care to migrants.

   Local health departments or agencies including dedicated 
        emergency departments of rural for-profit hospitals.

   Community mental health centers.

   Not-for-profit hospitals.

   Rural health clinics including mobile clinics.

   Consortia of HCPs consisting of one or more of the above 
        entities.

   Part-time eligible entities located in otherwise ineligible 
        facilities.

    If an applicant is not clearly one of these entities, they can 
contact USAC's Customer Service Support Center at 1-800-229-5476 for 
assistance in determining eligibility.
    In 2004, the Commission expanded the definition of ``Rural'' for 
participants in the Rural Health Care Program. To determine if a 
location is considered rural, a potential applicant can select Rural 
Health Care Search Tools on the left side of this Internet link: http:/
/www.usac.org/rhc/health-care-providers/step01/rural-eligibility-
search.aspx.
    Health care providers are permitted to apply to receive reduced 
rates for a variety of telecommunications services under the Rural 
Health Care Program. Health care providers may seek support for 
multiple telecommunications services of any bandwidth and for monthly 
Internet service charges.
Examples of Eligible Telecommunications Services and Charges
    Examples of eligible telecommunications services and charges 
include, but are not limited to:

   Mileage-Related Charges

   T3 or DS3

   T1

   Fractional T1

   ISDN (Integrated Services Digital Network)

   Frame Relay

   ATM (Asynchronous Transfer Mode)

   Off-Premise Extension

   Satellite Service

   Centrex

   Dedicated Private Line

   Foreign Exchange Line

   Network Reconfiguration Service

   Direct Inward Dialing

   One-time (Installation) Charges

   Wireless or microwave services

   DSL (digital subscriber line)

    The Rural Health Care Program supports these services up to the 
maximum allowable distance (MAD). The applicant is responsible for the 
cost of services beyond the MAD.
Examples of Ineligible Telecommunications Equipment and Charges
    Telecommunications equipment does not qualify for support under the 
Rural Health Care Program. The following examples are not eligible:

   Computers

   Fax machines

   Video cameras

   Telephones, cellular phones, pagers, handheld devices

   Maintenance charges

   Franchises, zone charges, and surcharges

    The Rural Health Care Program does not support the cost of 
construction or infrastructure build-out for the installation of 
telecommunications services. For example, if a wall must be removed, a 
street dug up, or a cable laid, these costs would not be eligible for 
support.
Examples of Eligible Internet Services and Charges
    Eligible Internet services are limited to the following:

   Monthly Internet access charges

   E-mail

   Web hosting
Examples of Ineligible Internet Services and Charges
    Equipment and certain Internet services do not qualify for support 
under the Rural Health Care Program. The following items are not 
eligible:

   Caching

   Filtering content

   Training

   Servers

   Web casting

   Equipment and wiring

   Maintenance

    Question 3. If these tribal consortiums are unable to meet the 
Commission's current requirements, please address whether a waiver 
process is available for these entities.
    Answer. Under 47 C.F.R.  1.3 the Commission's rules may be waived 
for good cause shown.

    Question 4. Please also describe the specific steps which non-
profit corporation tribal consortiums must take to apply for, and 
receive, support from the Universal Service Fund.
    Answer.
Schools and Libraries Program
    An overview of the application process can be found at the 
following Internet links: http://www.universalservice.org/sl/about/
overview-process.aspx; http://
www.universalservice.org/_res/documents/about/pdf/brochures/sl-
overview-brochure.pdf.
    The Internet page referenced provides links to the application 
process, from Technology Plan through Invoicing and summarizes the 
process schools and libraries follow to apply for and receive support. 
Each of the steps in this process--preparing a technology plan, opening 
the competitive process, seeking discounts on eligible services, 
confirming the receipt of services, and invoicing for services--is 
covered in more detail in the steps below. For additional details 
applicants should refer to form instructions and the guidance materials 
posted on the USAC website.

        Step  1  Determine Eligibility

        Step  2  Develop a Technology Plan

        Step  3  Open a Competitive Bidding Process

        Step  4  Select a Service Provider

        Step  5  Calculate the Discount Level

        Step  6  Determine Your Eligible Services

        Step  7  Submit Your Application for Program Support

        Step  8  Undergo Application Review

        Step  9  Receive Your Funding Decision

        Step 10  Begin Receipt of Services

        Step 11  Invoice USAC
Rural Health Care Program
    Rural health care providers and service providers that participate 
in the Rural Health Care Program have certain requirements and 
responsibilities that must be met in order to receive support. Below is 
an overview of the process.
    All health care providers (HCPs) or consortia of HCPs seeking to 
participate in the Rural Health Care Program must complete the 
Description of Services Requested and Certification Form (Form 465) to 
request bids from service providers for services to be used for the 
provision of health care. A separate Form 465 must be completed for 
each physical location within the consortia that is eligible to receive 
support.
    When a Form 465 is received from a new applicant, USAC confirms 
eligibility. Once USAC reviews a Form 465 and determines it is 
complete, it is posted on the USAC website and a letter is sent to the 
health care provider to confirm the posting. The posting invites 
service providers to bid to provide services. The posting date starts 
the 28-day competitive bidding process. All health care providers 
expecting support must complete the 28-day posting requirement before 
entering into an agreement to purchase services with a service 
provider.
    A health care provider must consider all bids received and select 
the most cost-effective method to meet its requirements. The most cost-
effective method is defined by the Commission as the method of least 
cost after consideration of the features, quality of transmission, 
reliability, and other factors relevant to choosing a method of 
providing the required services.
    To be eligible to receive telecommunications support, the selected 
carrier must be a ``Common Carrier.'' Any telecommunications service 
and/or Internet access necessary for the provision of health care is 
eligible for support, but equipment charges are not eligible for 
support. All Internet service providers are eligible to participate in 
the program; however, only the monthly charge is eligible for support.
    Once the service providers and services are selected, the health 
care provider completes and submits the Funding Request & Certification 
Form (Form 466) and/or an Internet Service Funding Request & 
Certification Form (Form 466-A). These forms specify the type(s) of 
service ordered, the cost, the service provider(s), the terms of any 
service agreements, and certifies that the selections were the most 
cost-effective offers received.
    USAC reviews the Form 466 and/or 466-A packet for accuracy. Upon 
approval, USAC mails the health care provider a Funding Commitment 
Letter (FCL) and a copy of the Receipt of Service Confirmation Form 
(Form 467). A copy of the FCL is also sent to the service provider.
    After the service begins from the service provider, the health care 
provider submits Form 467 to USAC. Form 467 must be submitted in order 
to receive discounted services. USAC cannot process Form 467 unless a 
Funding Commitment Letter has been issued.
    Once Form 467 is received, reviewed, and approved, USAC will send 
the health care provider and its service provider(s) a health care 
support schedule. At this point, the service provider can begin 
crediting the bill with the monthly recurring support amount or issue a 
check for the discount. As soon as the service provider has issued a 
credit or check to the health care provider, the service provider 
invoices USAC.
    USAC will then credit or reimburse the carrier's Universal Service 
Fund (USF) account. Those that do not have such an active USF account 
and have not been issued a SPIN number by USAC must fill out an FCC 
Form 498 and then reimbursement will be issued by check or direct 
deposit.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                        Hon. Deborah Taylor Tate
    Question 1. The Commission's Regulatory Flexibility Analysis for 
the November 30 must-carry order says that ``Every effort will be made 
to minimize the impact of any adopted proposals on cable operators.'' 
How much will it cost for every 552 megahertz cable systems to file and 
prosecute a waiver through the FCC? Would you support a blanket dual 
carriage waiver for 552 megahertz cable systems?
    Answer. I am very mindful of the cost of overly burdensome 
regulation, especially on small cable operators. That is why I urged 
the Commission to seek comment on the effect of our dual carriage order 
on small cable operators. In that Order we solicited ``further 
proposals for means to minimize the impact on small cable operators, 
whether they be alternative rules, ameliorated timetables, or any other 
approaches that would conform to the requirements of the statute.'' I 
will carefully consider the comments submitted.

    Question 2. You appeared before the Senate last year and predicted 
that the Federal high-cost fund would grow by $280 million per year if 
all of the CETC petitions at the FCC were granted. Can you tell me how 
you arrived at this number?
    Answer. The numbers in my testimony were based on those of Chairman 
Martin as originally presented at the en banc hearing hosted by the 
Federal-State Joint Board on Universal Service on February 20, 2007 (a 
copy of the testimony and accompanying charts are located at http://
hraunfoss.fcc.gov/edocs_public/attach
match/DOC-271011A1.pdf and http://hraunfoss.fcc.gov/edocs_public/
attachmatch
/DOC-271011A2.pdf). Following the en banc, the Joint Board issued a 
Recommended Decision recommending an emergency interim cap on the CETC 
portion of the High Cost Fund (a copy of which is located at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07J-1A1.pdf). To the 
extent you would like more information on the methodology used, I would 
be happy to forward your request to the appropriate Commission staff.

    Question 3. Section 254(a)(2) of the Communications Act requires 
that the Commission ``complete any proceeding to implement 
recommendations from any Joint Board on Universal Service within 1 year 
of receiving such recommendations.'' The Joint Board on Universal 
Service delivered its recommended decision on high-cost reform on 
November 19, 2007. Do you support putting the Joint Board 
recommendation out for public comment?
    Answer. Yes. On January 29, 2008, the Commission issued an NPRM 
requesting comments from the public. I look forward to receiving input 
from the public on the Joint Board recommendations and working with my 
colleagues on comprehensive long-term reform.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                        Hon. Deborah Taylor Tate
    Question 1. The FCC has commissioned 10 economic studies on media 
ownership and its effect on news and other programming. According to 
these studies, how does cross-ownership effect local content and 
political slant? Does this outcome differ by the size of the media 
market? In other words, how does the cross-ownership ban impact local 
content and political slant in the largest 20 markets compared to 
effects in smaller markets around the country? What has been the 
experience of markets which had companies grandfathered in under old 
media ownership rules?
    Answer. Study #3 (``Television Station Ownership Structure and the 
Quantity and Quality of TV Programming,'' by Gregory S. Crawford) 
found:

        Our strongest findings are for Local News: television stations 
        owned by a parent that also owns a newspaper in the area offer 
        more local news programming.

    This study can be found at: http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-07-3470A4.pdf.

    Study #4 (``The Impact of Ownership Structure on Television 
Stations' News and Public Affairs Programming,'' by Daniel Shiman) 
found:

        Stations cross-owned with a newspaper provided 11 percent (18 
        minutes) more news programming per day. Each additional co-
        owned station in the same market is associated with 15 percent 
        (24 minutes) more per day of news programming.

    This study can be found at: http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-07-3470A5.pdf.

    Study #6 (``The Effects of Cross-Ownership on the Local Content and 
Political Slant of Local Television News,'' by Professor Jeffrey Milyo) 
found:

        This within-market comparison reveals that cross-owned 
        newspaper/television combinations devote more time to news, as 
        well as several categories of local news. Further, these cross-
        owned stations do not have a political slant that is any 
        different from other major network affiliated stations in the 
        same market, at least when slant is measured by candidate 
        speaking time, candidate coverage or partisan issue coverage.

    This study can be found at: http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-07-3470A7.pdf.

    Question 2. The financial troubles and perceived threats to the 
viability of newspapers and broadcasts have played a significant role 
in the proposed changes of media ownership rules. Some sources contend 
that despite declining ad revenues and readership, newspapers remain 
profitable. However, others contend that these media outlets have only 
been able to remain profitable at the expense of quality and quantity 
of news they produce. What do you perceive the financial position of 
newspapers to be in today's market? How does this vary based on the 
size of the media market? To what extent will these proposed changes 
alleviate these troubles?
    Answer. I believe this is a very market-specific analysis. Some 
newspapers may be profitable, but unfortunately we have seen that many 
are not, resulting in the bankruptcy of many papers and a resulting 
loss of voices in some markets. In light of this, and in an effort to 
respond to the heart of the Third Circuit's concerns, the Commission 
will approach all markets outside the top 20 on a case-by-case basis, 
analyzing the specifics of each particular market area. As for the 
impact of market size, one can look to the changes in newspapers in 
several markets in 2007. For example, The Boston Globe fired 24 of its 
news staffers, including two Pulitzer Prize-winning reporters; the 
Minneapolis Star Tribune fired 145 employees, including 50 from their 
newsroom; The Rocky Mountain News fired 20; the Detroit Free Press and 
The Detroit News announced cuts of 110 employees; and the San Francisco 
Chronicle planned to cut 25 percent of its newsroom staff. Given the 
incredible technological convergence, newspapers are looking for ways 
in which to compete in the digital age and survive given the impact of 
the Internet. As studies 3, 4, and 6 indicate, cross-ownership actually 
results in efficiencies and resource-sharing which allow these 
businesses to continue and to provide more local news. These studies 
can be found at http://www.fcc.gov/ownership/studies.html.

    Question 3. The Universal Service Fund is obviously very important 
for rural states like South Dakota. What general troubles do you see 
arising with the fund and its solvency? What would you recommend to 
help alleviate these troubles? What are your thoughts on the 
recommendations put forth by the Federal-State Joint Board in November?
    Answer. Being from the rural state of Tennessee, I understand 
firsthand that the Universal Service Program is an important program at 
the heart of rural America. Its purpose, to connect all Americans, has 
over the years permitted people to be connected even in rural and 
remote parts of our Nation at reasonable rates. That is why it is so 
critical that we adopt policies that will ensure the long-term 
sustainability of the Fund. As I have stated on many occasions, high-
cost support to competitive eligible telecommunications carriers 
(CETCs) has been rapidly increasing in recent years, jeopardizing the 
viability of the fund. That is why I support the Federal-State Joint 
Board on Universal Service's Recommended Decision recommending an 
emergency interim cap on the CETC portion of the High Cost Fund. As you 
are aware, on November 20, 2007 the Joint Board also issued a 
Recommended Decision to address the long-term reform issues facing the 
high-cost Universal Service support system. A copy of my Statement 
issued with the release of the Recommended Decision can be found at 
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07J-4A3.pdf. I 
look forward to reviewing the comments and look forward to working with 
my colleagues on comprehensive long term reform.

    Question 4. Many people are concerned that the digital TV 
transition is not going as smoothly as would be hoped and a number of 
steps still need to be taken including the issuance of rules regarding 
the processing of construction permit applications and the assignment 
of channels to broadcasters. Why have these issues not been resolved 
yet? When do you expect them to be resolved? Will this allow the 
industry enough time to transition to digital TV?
    Answer. On August 6, 2007, the Commission released the Seventh 
Report and Order and Eighth Further Notice of Proposed Rule Making In 
the Matter of Advanced Television Systems and their Impact Upon 
Television Broadcast Service, which specified channel assignments for 
nearly all of the 1,800 full power stations. (The Further Notice 
addressed 13 stations that filed too late to be included in the 
Report.) On December 31, 2007, the Commission released the Third 
Periodic Review of the Rules and Policies Affecting DTV Conversion. 
That Order resolves many of your concerns, including the procedures, 
rules, and forms for processing applications. Currently, the Media 
Bureau is working on the 8th Report and Order and the Order on 
Reconsideration of the 7th Report and Order. I am also committed to the 
completion of our DTV Education Order which reinforces the need for 
industry, government, and broadcasters to work together. In conjunction 
with these Orders, the FCC has also undertaken its own educational 
efforts, including: (1) hosting workshops targeting specific segments 
of the population, such as seniors, minority/non-English speakers, and 
rural and tribal consumers, (2) participating in over 90 events and 
conferences across the country disseminating over 50,000 packets of DTV 
literature, (3) holding national DTV awareness sessions, (4) attending 
NTIA set-top box kick-off program and DTV Federal Agency Partners 
events, (5) charging two FCC Committees, the Intergovernmental Advisory 
Committee and the Consumer Advisory Committee, with focusing on DTV 
issues and convening meetings of their respective members on this 
subject, (6) conducting eight meetings with representatives of 
disability advocacy groups to discuss best outreach practices and 
educational techniques, (7) establishing a website, www.dtv.gov, which 
offers Americans 24-hour-a-day information on the transition, including 
educational materials for local governments and community groups, (8) 
participating in AARP's national convention, (9) participating in the 
2007 annual meeting of La Raza, and (10) enforcing FCC rules against 
retailers who fail to properly label analog-only television sets. 
Further, with the $2.5 million recently authorized by Congress for DTV 
education, the Commission will continue to target the most at-risk 
populations. In addition to our domestic partnerships, the FCC is 
reaching out to other countries that have already completed their own 
DTV transitions. I recently met with Swedish Ambassador, Jan Eliasson, 
to discuss Sweden's DTV transition which is nearly complete. Next week 
the FCC will participate in a teleconference with representatives from 
the UK to discuss that country's plans for its DTV transition, set to 
begin fall 2008. I believe we can learn a great deal from those that 
have gone before us in this technological revolution. On a personal 
note, I have spoken to groups at the FCC focusing on educating seniors, 
minorities/non-English-speakers, and state and local government 
leaders, and I continue to include information on the DTV transition in 
every speech I give. I have done interviews with groups like Retirement 
Living TV whose audiences are most likely to be affected by the 
transition. There has also been overwhelming support for education and 
outreach through industry initiatives. The National Association of 
Broadcasters has pledged $1 billion for outreach materials and 
advertisements. The National Cable and Telecommunications Association 
has already begun a $200 million television ad campaign that includes 
public service announcements in English and Spanish. Electronics 
retailers are participating by offering in-store, point-of-sale 
educational materials to their customers, in addition to labeling all 
analog-only television sets in accordance with our FCC mandate. It is 
my firm belief that by working with our industry and government 
partners we can achieve a successful DTV transition on February 17, 
2009.

    Question 5. The FCC appears to be reregulating some aspects of 
broadcasting which were deregulated under President Reagan and have 
helped the broadcast industry remain competitive over the past 25 
years. With the influx of new technologies and mediums, why has the FCC 
chosen now to begin reregulation? Have there been any specific 
detrimental effects that have prompted this? Why has the FCC 
increasingly turned to government mandates instead of market-based 
solutions to help resolve these problems?
    Answer. As a Commissioner, my first responsibility is to enforce 
the laws that Congress passes. I support market-based solutions; 
however, I agree that regulation may be necessary where there is a 
clear market failure. It is important to maintain a balance between 
adopting policies that serve the public interest and giving 
broadcasters the flexibility to develop successful business models. For 
example, in an effort to improve localism, the Commission adopted an 
order which requires broadcasters to post their public inspection files 
online. This requires a modest amount of effort by most broadcasters, 
and results in the public having easier and broader access to the 
public files, which they are entitled to access under 47 C.F.R.  
73.3526. In an effort to reduce the burdens on broadcasters, the rule 
does not apply to those that do not maintain a website, and it allows 
those that do to simply link to the FCC's website for portions of the 
required information. Given the staggeringly low rate of female and 
minority involvement in the media industry, the Commission carefully 
weighed more than forty proposals submitted by the Minority Media and 
Telecommunications Council, the FCC's Diversity Committee, and the 
National Association of Black-Owned Broadcasters, and selected twelve 
that appear not only to hold the most potential for promoting 
diversity, but also impose a relatively small burden on the broadcast 
community. Certainly I am committed to the continued dedication of 
broadcast resources for news, entertainment, and most importantly, 
emergency alerts. I have always been a proponent of market-based 
solutions.

    Question 6. Earlier this year, the FCC's Office of Engineering 
(OET) released a report which shows that allowing unlicensed devices 
into the television spectrum may interfere with the television signal 
in 80-87 percent of a television station's service area. Additionally, 
a July report from the FCC demonstrated that prototypes that utilize 
``sensing'' technology did not effectively detect TV signals. Do you 
perceive this to be a threat to the DTV transition? If so, what is the 
FCC doing to ensure that the DTV transition is not jeopardized by 
unlicensed consumer digital devices?
    Answer. In October 2006, the Commission issued its First Report and 
Order on Unlicensed Operations in the TV Broadcast Bands. That Order 
prohibited unlicensed operations in the TV ``white spaces'' until after 
the DTV transition on February 17, 2009. Last year, the Commission 
tested early prototypes of ``white spaces'' devices, completing Phase I 
in July 2007. The first prototype devices submitted to the Commission 
did not effectively detect TV signals; however, the provider of one of 
the devices stated that the device was not functioning properly. In 
October 2007, the Commission's Office of Engineering and Technology 
(OET) announced that Phase II tests would be conducted and invited 
interested parties to submit prototype devices. In January 2008, OET 
issued another public notice announcing that it had received four TV 
white space prototype devices for testing and publishing a test plan. 
Tests began January 24 and are open to the public. The Commission is 
developing a complete record in its rulemaking proceeding, and 
conducting further tests of TV white space prototypes, so that whatever 
rules may ultimately be adopted will avoid any detrimental impact to 
the DTV and other radio services operating in this spectrum. For more 
information and the schedule of testing, see http://www.fcc.gov/oet/
projects/tvbanddevice/Welcome.html.
    No decision will be rendered until after the final testing is 
completed and a report is issued. Regardless of the outcomes of this 
testing, I remain committed to a seamless DTV transition on February 
17, 2009.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                        Hon. Robert M. McDowell
    Question 1. Last year, a provision to reform the FCC's forbearance 
authority was included in the Committee's telecom reform bill. 
Specifically, it would have eliminated the ``deemed granted'' language 
in Section 10 in order to ensure a fairer process at the FCC. I 
recently introduced legislation that will eliminate this provision, so 
we can avoid a situation where the agency erases its rules simply by 
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
    Answer. As Section 10 of the Communications Act is currently 
written, action on a forbearance petition requires a majority of 
Commissioners to act to deny the request. The Commission is bound by 
the statutory provisions governing forbearance petitions. If, in the 
opinion of Congress, the operation of this statute is causing an 
undesired result, then it could certainly modify that provision. I 
believe that requiring an up-or-down vote would fall into this 
category.
    I was recused from each of the forbearance petitions that the 
Commission has acted on since my swearing in as a Commissioner on June 
1, 2006 through May 31, 2007, due to my ethics agreement with the 
Office of Government Ethics as filed with the Senate Commerce Committee 
and by virtue of my former employer's participation in those 
forbearance proceedings. However, since my one-year recusal period has 
expired, I have acted on all of the forbearance petitions that have 
been due for a vote. I believe all forbearance petitions should have an 
up or down vote. It is preferable that they not go into effect as the 
result of a ``deemed granted'' situation.
    On November 27, 2007, the Commission took an important step to 
bring clarity to the uncertainty surrounding the forbearance petition 
process by initiating a rulemaking proceeding. Only Congress can amend 
Section 10, which is simple and clear in its mandate; but the 
Commission can take steps to improve its implementation. And that is 
what we are doing by initiating this rulemaking. It is also appropriate 
to examine the effect that forbearance petitions have on our broader 
rulemaking responsibilities. I will review the comments filed in this 
proceeding, as well as evaluate our forbearance regulations, so that we 
can implement rules that we find are necessary to improve the 
forbearance process.

    Question 2. Earlier this year, the FCC released a Notice of 
Proposed Rulemaking examining so-called ``two-way, plug-and-play 
standards'' for cable navigation devices. Do you support implementation 
of Section 629 in a way that will create a retail market for ``two-way, 
plug-and-play'' devices and allow for greater competition and consumer 
choice? Do you believe that FCC oversight is sufficient to ensure that 
any standards and specifications are created and changed through a fair 
process that treats all affected parties equitably?
    Answer. Yes, I support implementation of Section 629 in a way that 
will create a retail market for ``two-way, plug-and-play'' devices and 
allow for greater competition and consumer choice. Our mandate from 
Congress in Section 629 directs the Commission to adopt regulations to 
``assure the commercial availability'' to MVPD consumers of navigation 
devices from manufacturers, retailers, and other vendors not affiliated 
with any MVPD. The goal of the statute is to promote competition in the 
market for set-top boxes and televisions so that consumers will have 
options beyond their MVPDs for innovative products and features. For 
years the cable and consumer electronics industries also have been 
negotiating technical solutions for two-way navigation devices. I am 
examining the industry proposals advocating DCR-Plus and ``Tru2Way'' or 
the Open Cable platform while considering whether there is a solution 
that can apply to all MVPDs.
    In the meantime, I am hopeful that the private sector will reach a 
resolution to this challenge. I am confident that the technology exists 
to develop a two-way plug-and-play solution and I have urged market 
rivals to work together to forge agreements. While the Commission can 
set standards and specifications, the parties would do a better job of 
choosing the appropriate technology than the government would. In the 
one-way context, the separated security cable card solution endorsed by 
the Commission was overtaken by the possibility of downloadable 
security shortly after the Commission's 1998 order. I hoped that 
another government-mandated, soon-to-be-obsolete solution would not be 
the answer to the two-way debate. The marketplace, through consumer 
choices and privately-negotiated agreements, should be permitted do its 
job. However, should the market fail, the FCC should be ready to 
prescribe narrowly-tailored solutions.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                        Hon. Robert M. McDowell
    Question 1. On December 18, the FCC held a vote on a major change 
to the nations' media ownership rules, despite substantial concern here 
in the Senate. The Commerce Committee passed S. 2332, the Media 
Ownership Act of 2007, on December 4. We have over 20 bipartisan 
cosponsors. We asked you to delay this vote to consider important 
issues of localism and minority ownership and allow a proper period of 
comment on the rules. Why was it so important to move ahead on December 
18 despite this opposition? Why could you not delay this vote beyond 
December 18?
    Answer. I respect the Committee's concerns about process, but I 
also think it is important to note that this media ownership proceeding 
has been unprecedented in scope and thoroughness. The proceeding began 
at my very first open meeting as a Commissioner, 18 months ago. We 
gathered and reviewed over 130,000 initial and reply comments and 
extended the comment deadline once. We released a Second Further Notice 
in response to concerns that our initial notice was not specific enough 
about proposals to increase minority and female ownership of stations. 
We gathered and reviewed even more comments and replies in response to 
the Second Notice. We traveled across our great nation to hear directly 
from the American people during six field hearings on ownership in: Los 
Angeles and El Segundo, Nashville, Harrisburg, Tampa-St. Pete, Chicago, 
and Seattle. We held two additional hearings on localism, in Portland, 
Maine and here in our Nation's capital. In those hearings, we have 
heard from 115 expert panelists on the state of ownership in those 
markets and we've stayed late into the night, or early into the next 
morning, to hear from concerned citizens who signed up to speak.
    We also commissioned and released for public comment ten economic 
studies by respected economists from academia and elsewhere. These 
studies examine ownership structure and its effect on the quantity and 
quality of news and other programming on radio, TV and in newspapers; 
on minority and female ownership in media enterprises; on the effects 
of cross-ownership on local content and political slant; and on 
vertical integration and the market for broadcast programming. We 
received and reviewed scores more comments and replies in response. 
Some commenters did not like the studies and their critiques are part 
of the record.
    These issues, and public comment on them, were examined thoroughly 
and carefully prior to our adoption of the order at the December 2007 
FCC Open Meeting. All of the concepts adopted in our December 18 order 
received years of public scrutiny, debate and comment. I cannot 
remember any proceeding where the Commission has solicited as much 
comment and given the American people as much opportunity to be heard.

    Question 2. Chairman Martin says the FCC provided a lengthy public 
comment period of 120 days, which was extended to 167 days. The FCC 
also held six hearings and finished the two localism hearings. But how 
could the public be expected to adequately comment on your proposed 
rules if the Commission issued the proposed rules at the end of the 
process?
    Answer. The Commission considered all of the comments submitted 
during the course of the proceeding. Most of the comments filed toward 
the end of the process reiterated points already made earlier in the 
proceeding. The points made were considered once again. Moreover, prior 
to the start of this extensive proceeding, the Commission had 
considered these same media ownership issues in our 2001 rulemaking 
focused on the newspaper/broadcast cross-ownership ban and in the 2002, 
1998 and 1996 media ownership reviews required by Congress.

    Question 3. The FCC held six hearings across the country at a cost 
of more than $200,000. I worry that the $200,000 was totally wasted as 
you ignored the input of the public on December 18. They testified 
against consolidation. You didn't hear people coming out and saying 
they wanted the newspaper to own the television station. You heard 
massive opposition to consolidation. Chairman Martin has said that the 
FCC didn't hear people constantly sounding off against cross-ownership, 
but why would you hear that--the Chairman never told them what rules he 
was concentrating on. How could the FCC vote on a rule to relax the 
cross-ownership ban having heard the massive opposition to 
consolidation?
    Answer. A point that gets lost in the emotion surrounding the media 
ownership debate is that Congress enacted a statute that contains a 
presumption in favor of modifying or repealing the ownership rules as 
competitive circumstances change. Section 202(h) states that we must 
review the rules and ``determine whether any of such rules are 
necessary in the public interest as the result of competition. The 
Commission shall repeal or modify any regulation that it determines to 
be no longer in the public interest.'' This section appears to upend 
the traditional administrative law principle requiring an affirmative 
justification for the modification or elimination of a rule, and it is 
crucial for everyone involved in this debate to recognize this 
important presumption. It is also important to remember that Section 
202(h) is the most recent set of codified instructions we have from 
Congress and is our legal mandate unless Congress changes the law. We 
also have a duty to pursue the noble public policy goals of 
competition, diversity and localism. In adopting our media ownership 
order, we met these legal and policy requirements.
    At our field hearings on media ownership and localism, we heard 
from citizens from all walks of life, who presented their opinions as 
viewers, listeners, readers, businesspeople, and consumers regarding 
whether broadcasters and newspapers are providing their local 
communities with needed local news and information. We heard from 
citizens who oppose media consolidation, but we also heard from those 
who see the benefits of cross-ownership, those who valued the service 
broadcasters and newspapers provide, as well as those who have 
jettisoned traditional media and turned to new media and the Internet 
for content.
    The record shows a dramatic change in competitive circumstances for 
media companies in recent years. Since the newspaper/broadcast cross-
ownership ban was established in 1975, at least 300 daily newspapers 
have shut their doors. Newspaper circulation and advertising revenues 
continue to decline year after year, while online readership and 
advertising revenues have surged. As a result of economic losses, 
newspapers have cut costs and sliced into the heart of the news-
gathering operation: the newsroom and its reporters, resulting in a 
diminished capacity to cover news. We have five national broadcasting 
networks, hundreds of cable channels cranking out a multitude of video 
content produced by independent voices, two vibrant satellite TV 
companies, telephone companies offering video, cable overbuilders, 
satellite radio, the Internet and its millions of websites and 
bloggers, a plethora of wireless devices operating in a robustly 
competitive wireless market place, iPods, Wi-Fi, and much more. And 
that's not counting the myriad new technologies and services that are 
coming over the horizon such as those resulting from our Advanced 
Wireless Services auction of last year, or the upcoming 700 MHz 
auction, which starts next month. Certainly, more voices and more 
delivery platforms exist today than when the media ownership rules were 
established.
    The energy, creativity, capital and growth of the private sector 
have been focused on areas that are less regulated than traditional 
media. Companies such as Disney, Citadel, Clear Channel and Belo 
actually have been shedding broadcast radio and television properties 
to raise capital for new ventures. The Hollywood writers' strike is all 
about the concept of following the eyeballs and ad dollars to new media 
and getting fairly compensated as a result. Over one-third of Americans 
go online to get their news. YouTube alone requires more bandwidth than 
the entire Internet did in 2000. Unregulated new media's numbers are 
growing. Heavily-regulated traditional media's numbers are shrinking.
    These developments led a majority of the Commission to determine 
that a modest and narrowly-tailored deregulation of the newspaper/
broadcast cross-ownership ban is necessary in the public interest as 
the result of competition.

    Question 4. The Media Ownership Act of 2007 requires the FCC to 
seek 90 days of comment on specific proposed changes to its broadcast 
ownership rules; complete a separate rulemaking on localism, with a 
study at the market level and 90 days of comment on localism, prior to 
rule changes being issued for comment; and convene an independent panel 
to make recommendations on increasing the ownership of broadcast media 
by women and minorities. Why should the FCC not have postponed the 
December 18 vote to take care of these tasks?
    Answer. I respectfully submit that Section 202(h), with its 
presumption in favor of modifying or repealing the media ownership 
rules as competitive circumstances change, is the Commission's legal 
mandate unless Congress changes the law. We worked hard to follow that 
mandate. In addition, at the December Open Meeting, we adopted an order 
containing several proposals aimed at promoting minority and female 
ownership of broadcast properties, as well as a report and notice of 
proposed rulemaking regarding a comprehensive set of issues raised in 
the localism proceeding. I hope that these actions address many of the 
concerns raised about minority and female ownership and localism.

    Question 5. Should the Chairman have put out his proposed media 
ownership rules in a New York Times op-ed and then in an FCC press 
release? Do you believe they should have been issued in the Federal 
Register?
    Answer. After publishing the New York Times piece, the Chairman 
agreed to the requests of some Commissioners to make the proposed 
changes to the newspaper/broadcast cross-ownership rule available for 
public comment. Those comments were considered prior to the adoption of 
the media ownership order in December. It is the Chairman's prerogative 
and responsibility to conduct the proceeding procedurally as he deems 
appropriate. Again, overall, this proceeding has been the most 
comprehensive and thorough proceeding the Commission has conducted in 
recent memory. I am supportive of the results.

    Question 6. You have heard concerns that the Chairman's proposal 
opens up cross-ownership to much more than the top 20 markets. I don't 
agree with any cross-ownership at all. Not in the top 30, not in the 
top 20. I think I'm saying the same thing as the 1,000 people who came 
to the hearing in Los Angeles and the 1,100 people who turned out in 
Seattle. Why are we not being heard?
    Answer. We have heard and considered the voices of not only Members 
of Congress, but also citizens from across the country who came to our 
hearings to speak to us. We must also consider the voices of everyone 
who submitted comments either at hearings or in the written record, 
including those who disagree with the premise of this question. Despite 
a strong de-regulatory statutory presumption mandated by Congress and 
an order from the Third Circuit essentially giving a green light to 
lifting the newspaper/broadcast cross-ownership ban altogether, the 
order we adopted is quite modest. The order creates a presumption in 
favor of lifting the ban only in the top twenty media markets where 
there is tremendous competition in the traditional media sector. Even 
then we only allow a combination outside of the top four TV stations 
and only when at least eight independent major media voices remain in 
that market. Outside of the top twenty markets, our rule establishes a 
negative presumption against permitting the combination. This test is 
not pocked with loopholes as some have suggested; quite the contrary. 
In my opinion, our order balances the competing views and the evidence 
of market developments appropriately, in favor of modest deregulation.

    Question 7. Recently concerns about unfair discrimination have been 
raised in relation to Verizon Wireless blocking the text messaging 
service of the pro-choice group, NARAL. Verizon Wireless quickly 
corrected the problem, but the fact that it happened raises major 
alarms. On October 16, 2007, Senator Snowe and I sent a letter to the 
FCC asking for your views on this issue. I have not received a 
response. Can you tell me your views?
    Answer. I have reviewed your letter to Chairman Martin of October 
16, 2007. I would expect that he will provide an analysis of existing 
Constitutional, legal and regulatory issues surrounding this issue 
pursuant to your request. In the meantime, I join you in giving credit 
to Verizon Wireless for promptly admitting its mistake with regard to 
the NARAL text-messaging campaign and fixing the error within hours. I 
understand that this situation involves a business-to-business 
transaction for the purchase of short codes, which are short telephone 
numbers that are purchased through a short code administrator and are 
used for addressing messages sent to mobile phones. On the one hand, it 
is important that we ensure that consumers are able to send and receive 
text messages. On the other hand, we must be equally vigilant in 
protecting consumers from unwanted SPAM messages, which may be false, 
misleading, or offensive, and I understand that short codes are a 
meaningful tool for this purpose. Similarly, we must allow carriers to 
have the freedom to manage their networks to ensure that they are able 
to function properly in order to meet ever-increasing consumer 
expectations. I will continue to monitor developments in this area to 
ensure the public interest is being served in a fair and balanced 
manner.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                        Hon. Robert M. McDowell
    Question. As you are probably aware, Florida is currently the 
largest ``net payer'' state into the Universal Service Fund. Florida 
pays in more than $300 million more to the USF than it receives in 
disbursements. Getting beyond the idea of a ``cap'' of some sort--which 
may raise competitive issues--it seems like one other way of achieving 
efficiencies is through more effective targeting of support. How do you 
feel about this approach?
    Answer. I have consistently maintained that the Universal Service 
system is in dire need of comprehensive reform. As I approach this 
crisis, I will follow five principles when considering all reforms to 
Universal Service. We must: (1) slow the growth of the Fund; (2) 
permanently broaden the base of contributors; (3) reduce the 
contribution burden for all, if possible; (4) ensure competitive 
neutrality; and (5) eliminate waste, fraud and abuse. I am in favor of 
considering all options to reform the Universal Service High Cost Fund, 
including those disbursement mechanisms that would target support. We 
have a number of proposals before us. On January 9, 2008, the 
Commission adopted rulemaking proceedings seeking comment on the 
elimination of the identical support rule and utilization of reverse 
auctions. In addition, we have received the Federal-State Joint Board 
recommendations for permanent reform. I support seeking comment on the 
Joint Board's reform measures as soon as possible, so that we can 
consider all the options to reform the system more comprehensively. We 
have a terrific opportunity before us.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                        Hon. Robert M. McDowell
    Question 1. Do you believe that the newspaper industry is 
profitable today?
    Answer. The great weight of the data available to us shows that 
while some newspapers are profitable, the industry as a whole is in 
decline. Consumers now have more choices and more control over what 
they read, watch and listen to than ever. As a result of this multitude 
of voices competing for consumer's attention, at least 300 daily 
newspapers have shut their doors since the cross-ownership ban went 
into effect because people are looking elsewhere for their content. 
Newspaper circulation has declined year after year. Since this past 
spring, average daily circulation has declined 2.6 percent. In the six-
month period ending September 2007, circulation declined for 700 daily 
newspapers across the country. Of the top 25 papers in daily 
circulation, only four showed gains. Also, newspapers' share of 
advertising revenue has shrunk while advertising for unregulated online 
entities has surged. Advertising revenues, which currently account for 
slightly more than 80 percent of the industry's total revenues, are 
predicted by SNL Kagan to decline through at least 2011.
    As gross revenue declines year after year, publishers cut costs to 
retain margins. After a while, such cost-cutting slices into the heart 
of the news-gathering operation: the newsroom and its reporters. As a 
result, the ability to cover more news diminishes. In recent years, we 
have witnessed a sharp reduction in the number of professional 
journalists employed in the newspaper industry. In 2006, the industry 
employed approximately 3,000 fewer full-time newsroom staff people than 
it had at its peak of 56,400 in 2000. In 2007, job cuts due to economic 
losses were announced by several major newspapers, including, to name 
only a few, The Boston Globe (24 newsroom staff cut in 2007, including 
two Pulitzer Prize-winning journalists), The Minneapolis Star Tribune 
(50 newsroom staff cut in 2007), Los Angeles Times (70 newsroom staff 
cut in 2007) and The San Francisco Chronicle (25 percent newsroom staff 
reduction in 2007, equal to about 100 jobs). Other newspapers have 
substantially reduced or wholly abandoned news bureaus. These 
developments have substantial consequences for the public interest.

    Question 2. A recent GAO report cited that no comprehensive plan 
exists for the digital television transition. The GAO stated ``Among 
other things, a comprehensive plan can detail milestones and key goals, 
which provide meaningful guidance for assigning and coordinating 
responsibilities and deadlines and measuring progress. Such planning 
also includes assessing, managing, and mitigating risks, which can help 
organizations identify potential problems before they occur and target 
limited resources''. This week the Commission released a written 
response to the GAO report. At this point in time, what do you consider 
to be the top five risk factors with respect to American consumers 
getting through the digital television transition with minimal 
disruption? Which of these risk factors fall under the jurisdiction of 
the FCC? How is the FCC managing and mitigating these risks?
    Answer. The Commission currently is considering a proposal 
circulated by Chairman Martin regarding what types of consumer 
education efforts the Commission should require of broadcasters, MVPDs, 
manufacturers and retailers, including public service announcements, 
notices in billing statements, the content of such announcements and 
notices, as well as reporting of such efforts to the Commission. The 
proposal implements rules suggested by Congressmen Dingell and Markey 
in a letter to Chairman Martin dated May 24, 2007. In considering each 
of these proposals, I am keeping in mind the comprehensive voluntary 
consumer education campaigns that the broadcasting, MVPD and consumer 
electronics industries have commenced. I hope we can strike the proper 
balance to provide guidance regarding consumer education to these 
industries without micro-managing their efforts and while giving them 
the flexibility they need to communicate with their customers 
effectively. I am also analyzing whether the Commission has the 
jurisdiction to require certain elements of this proposal and how the 
First Amendment limits our authority in this regard.

    Question 3. Should the common carrier exemption be removed from the 
Federal Trade Commission? What, if any, would be the disadvantage to 
consumers if the exemption is removed?
    Answer. Congress intended for the FCC to have jurisdiction over 
common carriers, pursuant to Sections 214 and 310(d) of the 
Communications Act, as amended, rather than the FTC. Should Congress 
choose to amend this regulatory and jurisdictional structure, the 
Commission will implement Congress's directives. However, the FCC has a 
74-year history of being the expert agency with purview over common 
carriers in pursuit of the public interest.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Frank R. Lautenberg 
                       to Hon. Robert M. McDowell
    Question. New Jersey is a net contributor of almost $200 million a 
year to the Universal Service Fund (USF). There are many proposals for 
reforming USF, including temporary caps and longer-term proposals. When 
can I tell my constituents that they will see some action from the FCC 
to stop the exponential growth of this Fund?
    Answer. I have consistently maintained that the Universal Service 
High Cost Fund is in dire need of reform and that we must take steps to 
slow the uncontrolled growth of the Fund. We have a number of specific 
proposals before us. With regard to interim measures, we have a 
Federal-State Joint Board proposal to adopt an interim cap on CETCs, 
capped at 2007 levels. Already, the Commission adopted a condition in 
both the October 26, 2007, Alltel Transfer of Control Order and the 
November 15, 2007, AT&T-Dobson Order, which subjects those wireless 
carriers to an interim cap. As a result of this action, a majority of 
the CETC portion of the Fund is now capped. With regard to more 
permanent reform, soon we will release two notices of proposed 
rulemaking (NPRM) that seek comment on the elimination of the identical 
support rule and adoption of reverse auctions. Also, the Joint Board 
has provided a recommendation for long-term reform. I hope that we will 
seek comment on the Joint Board's permanent reform measures quickly and 
within the same general time-frame as the other two NPRMs, so that we 
can consider all the options to reform the system more comprehensively. 
We have a terrific opportunity before us.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Thomas R. Carper to 
                        Hon. Robert M. McDowell
    Question. The Federal Communications Commission should be commended 
for issuing its recent Notice of Proposed Rulemaking that considers 
whether to authorize Big LEO Mobile Satellite Services operators to 
provide ancillary terrestrial services on more of their assigned 
spectrum. As you are aware, one such operator, Globalstar, and its 
partner, Open Range Communications, need this authority in order to 
pursue their plan to bring broadband services to more than 500 rural 
communities across the country. Given the Commission's stated 
commitment to promote the rapid deployment of advanced broadband 
services to unserved and underserved areas, will you assure the 
Committee that you will do all that it takes to complete this 
proceeding in the time required for Globalstar and Open Range to move 
forward with their business plan?
    Answer. Yes. I have a keen interest in this proceeding and will 
review and consider Chairman Martin's draft order as soon as it is 
circulated.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Ted Stevens to 
                        Hon. Robert M. McDowell
    Question. Kawerak, Inc., a non-profit consortium in Alaska has 
requested me to submit this question to the Commission: Does the 
Commission have the statutory authority to provide Universal Service 
support to non-profit corporation tribal consortiums, serving remote 
areas of Alaska, that provide education, welfare, wellness, law 
enforcement, natural resources and economic development services?
    Kawerak is one of Alaska's tribal consortiums who provides several 
services to remote areas of Alaska, and has expressed concern about 
their ineligibility to receive Universal Service support because they 
are unable to meet the precise definitions of health care or 
educational service providers. Please address the requirements which 
these tribal consortiums must meet in order to receive support.
    If these tribal consortiums are unable to meet the Commission's 
current requirements, please address whether a waiver process is 
available for these entities. Please also describe the specific steps 
which non-profit corporation tribal consortiums must take to apply for, 
and receive, support from the Universal Service Fund.
    Answer. Eligibility for Universal Service support is prescribed in 
the Communications Act of 1934, as amended (the Act). Specifically, 
Section 214(e)(1) of the Act states that ``a common carrier designated 
as an eligible telecommunications carrier'' is eligible to receive 
Universal Service support. Section 214(e)(2) provides that state 
commissions shall designate eligible telecommunications carriers for 
service areas in the state.
    With regard to health care providers, Section 254(h)(1)(A) of the 
Act requires telecommunications carriers to provide telecommunications 
services that are necessary for the provision of health care services 
to any public or nonprofit ``health care provider'' that serves rural 
areas in a state at rates that are similar to those in urban areas of 
the state. The term ``health care provider'' is defined in Section 
254(h)(7)(B) of the Act to mean:

        (i) post-secondary educational institutions offering health 
        care instruction, teaching hospitals, and medical schools;

        (ii) community health centers or health centers providing 
        health care to migrants;

        (iii) local health departments or agencies;

        (iv) community mental health centers;

        (v) not-for-profit hospitals;

        (vi) rural health clinics; or

        (vii) consortia of health care providers consisting of one or 
        more entities described in (i) through (vi).

    With regard to educational service providers, Section 254(h)(1)(B) 
of the Act provides that telecommunications carriers are required to 
provide its Universal Services to ``elementary schools, secondary 
schools, and libraries'' for educational purposes at rates that are 
less than those charged to other parties. The term ``elementary and 
secondary schools'' is defined in Section 254(h)(7)(B) as those terms 
are defined in the Elementary and Secondary Education Act of 1965, 20 
U.S.C. 8801.
    Eligibility to receive Universal Service support as an ``eligible 
telecommunications provider,'' a ``health care provider,'' or an 
``elementary or secondary school'' is determined by statute, as set 
forth above. The Commission cannot waive those statutory definitions. 
An individual applicant, including a non-profit corporation tribal 
consortium, would have to apply for funds and demonstrate that it meets 
the statutory eligibility requirements.
    I understand that Commission records indicate that Kawerak, Inc. 
has received $106,671 in Rural Health Care Fund disbursements for 
Funding Years 1999 and 2003-2005. In addition, the Bering Straits 
School District, of which Kawerak is a part, has received $9,277,426 in 
Schools and Libraries Fund disbursements for Funding Years 1998-2006.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                        Hon. Robert M. McDowell
    Question 1. You have indicated you would like to see more data 
before moving on the special access docket. Do you need more data on 
competition for wireless special access? Or is your concern over lack 
of data specific to wireline?
    Answer. The Commission has not sought and thus does not have a 
complete record that fully captures the extent of facilities used to 
provide all special access services in all locations throughout the 
country. As a result, it is difficult, if not impossible, to determine 
the appropriate level of regulation or deregulation for special access 
services in a given specific location. This includes both wireline and 
wireless services. Obtaining this type of data from all types of 
providers (both wireline and wireless) would allow the Commission to 
more fully analyze outstanding issues and render more meaningful policy 
determinations.

    Question 2. The Commission's Regulatory Flexibility Analysis for 
the November 30 must-carry order says that ``Every effort will be made 
to minimize the impact of any adopted proposals on cable operators.'' 
How much will it cost for every 552 megahertz cable system to file and 
prosecute a waiver through the FCC?
    Answer. With respect to this order, my colleagues and I endeavored 
to ensure that analog cable subscribers do not lose their local must-
carry stations from their channel line-ups after the digital 
transition. The order requires cable systems that are not ``all-
digital'' to provide must-carry signals in analog format to their 
analog subscribers. This requirement will sunset 3 years after the 
broadcast digital transition hard date, with review by the Commission 
of the rule within the final year.
    As I expressed at the time of my vote, I am concerned about the 
effect this order may have on smaller cable operators, particularly 
those with systems that employ 552 megahertz or less. I will urge the 
Commission to consider waiver requests expeditiously and grant waivers 
for such providers, where relief is warranted. You are correct that 
filing and prosecuting such a waiver request will be expensive and 
burdensome for smaller companies. I had hoped that our order would have 
afforded a greater level of relief to smaller cable systems.

    Question 3. Would you support a blanket dual carriage waiver for 
552 megahertz cable systems?
    Answer. Yes, I would support a blanket dual carriage waiver for 552 
megahertz cable systems.

    Question 4. Section 254(a)(2) of the Communications Act requires 
that the Commission ``complete any proceeding to implement 
recommendations from any Joint Board on Universal Service within 1 year 
of receiving such recommendations.'' The Joint Board on Universal 
Service delivered its recommended decision on high-cost reform on 
November 19, 2007. Do you support putting the Joint Board 
recommendation out for public comment?
    Answer. Yes. In fact, the Commission voted on January 16, 2008, to 
adopt a notice of proposed rulemaking to seek comment on the Joint 
Board's recommendations for permanent reform of the Universal Service 
Fund. This notice, along with two others that seek comment on the 
elimination of the identical support rule and use of reverse auctions, 
was released on January 29, 2008. Comments on all three notices will be 
due 30 days after publication in the Federal Register and reply 
comments will be due 60 days after publication in the Federal Register. 
Parties will be able to file collective comments in all three 
proceedings.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                        Hon. Robert M. McDowell
    Question 1. The FCC has commissioned 10 economic studies on media 
ownership and its effect on news and other programming. According to 
these studies, how does cross-ownership affect local content and 
political slant? Does this outcome differ by the size of the media 
market? In other words, how does the cross-ownership ban impact local 
content and political slant in the largest 20 markets compared to 
effects in smaller markets around the country? What has been the 
experience of markets which had companies grandfathered in under old 
media ownership rules?
    Answer. The record provides both empirical and anecdotal evidence 
that commonly owned outlets can, and often do, exercise independent 
editorial control. The FCC-sponsored economic study authored by Jeffrey 
Milyo, ``The Effects of Cross-Ownership on Local Content and Political 
Slant of Local Television News'' focuses on the political slant of TV 
stations and concludes that ``television stations cross-owned with 
newspapers exhibit a slight and statistically insignificant Republican-
leaning slant'' in content. The study also concludes that cross-owned 
TV stations air more local news, including political news, than non-
cross-owned TV stations. The Milyo study's results are consistent with 
those in the Pritchard study conducted in the 2002-2003 round of the 
rulemaking. That study, ``Viewpoint Diversity in Cross-Owned Newspapers 
and Television Stations: A Study of News Coverage of the 2000 
Presidential Campaign'' found that ``in five of the 10 newspaper/
television combinations analyzed, the overall slant of the coverage 
broadcast by a company's television station was noticeably different 
from the overall slant of the coverage provided by the same company's 
newspaper.''
    Several comments submitted in the rulemaking provide examples of 
commonly owned outlets speaking with separate editorial voices. For 
example, the Newspaper Association of America provided several examples 
of programming and viewpoint diversity to demonstrate that newspaper/
broadcast combinations do not speak with a single, coordinated voice. 
With respect to grandfathered companies, Belo's WFAA-TV and The Dallas 
Morning News historically have not coordinated their opinions or 
viewpoints. Similarly, Media General's various news and information 
platforms, regardless of their method of disseminating content, operate 
separately in developing their content. The Freedom of Expression 
Foundation commented that newspaper/broadcast combinations are more 
likely to produce more public affairs programming, and such firms are 
unlikely to present a monolithic viewpoint on any or all issues of 
public importance. This evidence in the record demonstrates that common 
ownership does not equate to common editorial viewpoints or control, as 
sometimes alleged.

    Question 2. The financial troubles and perceived threats to the 
viability of newspapers and broadcasts have played a significant role 
in the proposed changes of media ownership rules. Some sources content 
that despite declining ad revenues and readership, newspapers remain 
profitable. However, others contend that these media outlets have only 
been able to remain profitable at the expense of the quality and 
quantity of news they produce. What do you perceive the financial 
position of newspapers to be in today's market. How does this vary 
based on the size of the media market? To what extent will these 
proposed changes alleviate these troubles?
    Answer. The great weight of the data available to us shows that 
while some newspapers are profitable, the industry as a whole is in 
decline. Consumers now have more choices and more control over what 
they read, watch and listen to than ever. As a result of this multitude 
of voices competing for consumer's attention, at least 300 daily 
newspapers have shut their doors since the cross-ownership ban went 
into effect because people are looking elsewhere for their content. 
Newspaper circulation has declined year after year. Since this past 
spring, average daily circulation has declined 2.6 percent. In the six-
month period ending September 2007, circulation declined for 700 daily 
newspapers across the country. Of the top 25 papers in daily 
circulation, only four showed gains. Also, newspapers' share of 
advertising revenue has shrunk while advertising for unregulated online 
entities has surged. Advertising revenues, which currently account for 
slightly more than 80 percent of the industry's total revenues, are 
predicted by SNL Kagan to decline through at least 2011.
    As gross revenue declines year after year, publishers cut costs to 
retain margins. After a while, such cost-cutting slices into the heart 
of the news-gathering operation: the newsroom and its reporters. As a 
result, the ability to cover more news diminishes. In recent years, we 
have witnessed a sharp reduction in the number of professional 
journalists employed in the newspaper industry. In 2006, the industry 
employed approximately 3,000 fewer full-time newsroom staff people than 
it had at its peak of 56,400 in 2000. In 2007, job cuts due to economic 
losses were announced by several major newspapers, including, to name 
only a few, The Boston Globe (24 newsroom staff cut in 2007, including 
two Pulitzer Prize-winning journalists), The Minneapolis Star-Tribune 
(50 newsroom staff cut in 2007), Los Angeles Times (70 newsroom staff 
cut in 2007) and The San Francisco Chronicle (25 percent newsroom staff 
reduction in 2007, equal to about 100 jobs). Other newspapers have 
substantially reduced or wholly abandoned news bureaus. These 
developments have substantial consequences for the public interest.
    The changes to the newspaper/broadcast cross-ownership rule that we 
adopted at the Commission's December 2007 agenda meeting will alleviate 
these concerns by creating a presumption in favor of lifting the ban 
only in the top twenty media markets where there is tremendous 
competition in the traditional media sector. Even then we only allow a 
combination outside of the top four TV stations and only when at least 
eight independent major media voices remain in the market. Outside of 
the top twenty markets, our rule establishes a negative presumption 
against permitting the combination. In only two special circumstances 
will we reverse the negative presumption: first, if a newspaper or 
broadcast outlet is failed or failing; and second, when a proposed 
combination results in a new source of a significant amount of local 
news in a market.
    Where neither of these circumstances exists, we establish a four-
prong test to determine whether the negative presumption is rebutted. 
To determine if the presumption is overcome, we will consider: (1) 
whether cross-ownership will increase the amount of local news 
disseminated through the media outlets in the combination; (2) whether 
each affected media outlet in the combination will exercise its own 
independent news judgment; (3) the level of concentration in the 
Nielsen DMA; and (4) the financial condition of the newspaper and 
broadcast station, and if the newspaper or broadcast station is in 
financial distress, the putative owner's commitment to invest 
significantly in newsroom operations.

    Question 3. The Universal Service Fund is obviously very important 
for rural states like South Dakota. What general troubles do you see 
arising with the fund and its solvency? What would you recommend to 
help alleviate these troubles? What are your thoughts on the 
recommendations put forth by the Federal-State Joint Board in November?
    Answer. I have consistently maintained that the Universal Service 
system has been instrumental in keeping Americans connected and 
improving their quality of life, particularly in rural states like 
South Dakota. I also believe that the Universal Service system is in 
dire need of comprehensive reform. As I approach this crisis, I will 
follow five principles when considering all reforms to Universal 
Service. We must: (1) slow the growth of the Fund; (2) permanently 
broaden the base of contributors; (3) reduce the contribution burden 
for all, if possible; (4) ensure competitive neutrality; and (5) 
eliminate waste, fraud and abuse.
    I am in favor of considering all options to reform the Universal 
Service High Cost Fund, including those disbursement mechanisms that 
would target support. On January 29, 2008, we released a notice of 
proposed rulemaking seeking comments on the Joint Board's 
recommendations for permanent reform of the Universal Service Fund. 
Concurrently, we released two other notices of proposed rulemaking, 
which seek comment on the elimination of the identical support rule and 
the use of reverse auctions. Comments on all three notices will be due 
30 days after publication in the Federal Register and reply comments 
will be due 60 days after publication in the Federal Register. This 
combined comment cycle will provide a full record for the Commission to 
consider all options. I am open to all proposals for comprehensive 
reform and will evaluate the entire record as soon as it is complete.

    Question 4. Many people are concerned that the digital TV 
transition is not going as smoothly as would be hoped and a number of 
steps still need to be taken including the issuance of rules regarding 
the processing of construction permit applications and the assignment 
of channels to broadcasters. Why have these issues not been resolved 
yet? When do expect them to be resolved? Will this allow the industry 
enough time to transition to digital TV?
    Answer. On December 31, 2007, the Commission issued an order 
resolving the digital TV (DTV) transition issues raised in our Third 
Periodic Review of the Commission's rules and policies affecting the 
conversion to DTV. The order issues our final rules regarding the 
processing of applications and the assignment of channels to 
broadcasters. Specifically, the order provides a progress report on the 
digital transition, establishes deadlines and procedures to ensure that 
the February 17, 2009, transition deadline is met, and offers 
regulatory flexibility to broadcasters to assist their efforts to 
construct digital facilities by the deadline. I am hopeful that the 
details set forth in the order regarding when stations may and must 
cease analog operations, when they may and must begin operating on 
their post-transition digital channel, and the associated regulatory 
flexibility they have, will help ensure that the complicated, 
coordinated switch to DTV unfolds smoothly.
    Of course, the broadcasters and the Commission still have a 
tremendous amount of work to do before February 17, 2009. The 
transition is an extremely complex undertaking that presents many 
challenges to the industry and to us as regulators. We have attempted 
to balance carefully the broadcasters' need for flexibility and 
certainty with the Commission's obligation to oversee the transition 
for the benefit of over-the-air viewers.

    Question 5. The FCC appears to be re-regulating some aspects of 
broadcasting which were deregulated under President Reagan and have 
helped the broadcast industry remain competitive over the past 25 
years. With the influx of new technologies and mediums, why has the FCC 
chosen now to begin re-regulation? Have there been any specific 
detrimental effects that have prompted this? Why has the FCC 
increasingly turned to government mandates instead of market-based 
solutions to help resolve these problems?
    Answer. I have significant concerns about two recent Commission 
actions, both issued on January 24, 2008. In the first, an order 
regarding enhanced disclosure by broadcasters, the majority adopted a 
new standardized form that requires TV stations to file with the 
Commission disclosures regarding efforts to ascertain the programming 
needs of various segments of the community. I dissented from this 
aspect of the order. The order requires a list reporting all 
programming aired in various categories such as local news, local civic 
and electoral affairs programming, religious programming, independently 
produced programming and so forth. The Commission eliminated 
ascertainment requirements for television and radio stations in 1984 
after a thorough examination of the broadcast market. While the recent 
order falls short of reinstating the ascertainment procedures discarded 
by the 1984 Commission, I am concerned that we are heading in the wrong 
direction. Today's highly competitive video market motivates 
broadcasters to respond to the interests of their local communities. I 
question the need for government to foist upon local stations its 
preferences regarding categories of programming. While we stop short of 
requiring certain content, we risk treading on the First Amendment 
rights of broadcasters. This form is government's not-so-subtle attempt 
to exert pressure on stations to air certain types of content.
    In the second action, the Commission delivered a report on 
broadcast localism and notice of proposed rulemaking. I have concerns 
about the notice of proposed rulemaking, in which the Commission 
tentatively concludes that broadcast licensees should convene permanent 
advisory boards made up of community officials and leaders to help the 
licensees ascertain the programming needs of the community. The notice 
also contains a tentative conclusion that the Commission should adopt 
processing guidelines, such as minimum percentages, to ensure that 
stations produce a certain amount of locally-oriented programming. 
Again, the Commission is heading back in time--in the wrong direction, 
toward ascertainment policies. Vigorous competition motivates 
broadcasters to serve their local communities. I do not believe that 
government needs to, or should, foist upon local stations its 
preferences regarding categories of programming. Again, we risk such 
policies being overturned by the courts.

    Question 6. Earlier this year, the FCC's Office of Engineering 
(OET) released a report which shows that allowing unlicensed devices 
into the television spectrum may interfere with the television signal 
in 80-87 percent of a television station's service area. Additionally, 
a July report from the FCC demonstrated that prototypes that utilize 
``sensing'' technology did not effectively detect TV signals. Do you 
perceive this to be a threat to the DTV transition? If so, what is the 
FCC doing to ensure that the DTV transition is not jeopardized by 
unlicensed consumer digital devices?
    Answer. As long as the Commission lets science, and science alone, 
drive our decisions, I do not believe that OET's ongoing testing of 
prototype devices to operate in the ``white spaces'' of the TV 
broadcast spectrum is a threat to the DTV transition. If the Commission 
refrains from polluting science with politics, powerful new 
technologies will emerge, and American consumers will benefit as a 
result. I am pleased that OET is taking the time necessary to analyze 
and field test numerous additional prototype devices. I have long 
advocated use of the white spaces, provided such use does not cause 
harmful interference to others. I am hopeful that a flexible, de-
regulatory, unlicensed approach will provide opportunities for American 
entrepreneurs to construct new delivery platforms that will provide an 
open home for a broad array of consumer equipment.
    At the same time, the Commission has a duty to ensure that new 
consumer equipment designed for use in this spectrum does not cause 
harmful interference to the current operators in the white spaces. I 
have enjoyed learning from various parties who are engaged in the 
healthy technical debate surrounding the best use of this spectrum. 
Assuredly, the discussions will become ever more intense as we move 
forward. But, at the end of the day, we will have a resolution. 
Inventors will continue to invent, and a workable technical solution 
will develop. As long as science alone drives our decisions, I foresee 
great benefits to American consumers in the long run.

                                  
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