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27–000PDF 2005

HOW INTERNET PROTOCOL-ENABLED

SERVICES ARE CHANGING THE FACE

OF COMMUNICATIONS: A VIEW FROM

GOVERNMENT OFFICIALS

HEARING

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS AND 

THE INTERNET

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

APRIL 27, 2005

Serial No. 109–69

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman 

RALPH M. HALL, Texas 

MICHAEL BILIRAKIS, Florida 

Vice Chairman 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

PAUL E. GILLMOR, Ohio 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

CHARLIE NORWOOD, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi, Vice Chairman 

VITO FOSSELLA, New York 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

CHARLES F. BASS, New Hampshire 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

C.L. ‘‘BUTCH’’ OTTER, Idaho 

SUE MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

JOHN D. DINGELL, Michigan 

Ranking Member 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, Jr., New Jersey 

SHERROD BROWN, Ohio 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

TED STRICKLAND, Ohio 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

TOM ALLEN, Maine 

JIM DAVIS, Florida 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

BUD ALBRIGHT, Staff Director 

DAVID CAVICKE, Deputy Staff Director and General Counsel 

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

FRED UPTON, Michigan, Chairman 

MICHAEL BILIRAKIS, Florida 

CLIFF STEARNS, Florida 

PAUL E. GILLMOR, Ohio 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

GEORGE RADANOVICH, California 

CHARLES F. BASS, New Hampshire 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

JOE BARTON, Texas, 

(Ex Officio) 

EDWARD J. MARKEY, Massachusetts 

Ranking Member 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

MIKE DOYLE, Pennsylvania 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, Jr., New Jersey 

SHERROD BROWN, Ohio 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

JOHN D. DINGELL, Michigan, 

(Ex Officio) 

(II) 

C O N T E N T S 

Page

Testimony of: 

Billings, Hon. Lewis K., Mayor, Provo City, Utah ......................................... 7

Davidson, Charles M., Commissioner, Florida Public Service Commission 58

Fellman, Hon. Kenneth, Esq., Mayor, Arvada, Colorado, on behalf of 

National Association of Telecommunications Officers and Advisors 

Board of Directors ......................................................................................... 27

Munns, Diane, Commissioner, Iowa State Utilities Board, on behalf of 

National Association of Regulatory Utility Commissioners ...................... 49

Perkins, John, Iowa Consumer Advocate, President, National Association 

of State Utility Consumer Advocates .......................................................... 80

Quam, David C., Director, Federal Relations, National Governors Association ................................................................................................................. 91

Strauss, Karen Peltz, KPS Consulting, on behalf of Alliance for Public 

Technology ..................................................................................................... 100

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hon. Joe Barton, prepared statement .................................................................... 138

Hon. Barbara Cubin, prepared statement ............................................................. 141

Hon. Edward J. Markey, prepared statement ....................................................... 143

Hon. Cliff Stearns, prepared statement ................................................................. 146

Billings, Hon. Lewis K.: 

Written response to questions from Hon. Cliff Stearns ................................ 148

Davidson, Charles M.: 

Written response to questions from Hon. Marsha Blackburn ...................... 154

Written response to questions from Hon. Cliff Stearns ................................ 156

Fellman, Hon. Kenneth, Esq.: 

Written response to questions from Hon. Cliff Stearns ................................ 163

Munns, Diane: 

Written response to questions from Hon. Marsha Blackburn ...................... 166

Perkins, John: 

Written response to questions from Hon. Cliff Stearns ................................ 168

Quam, David C.: 

Written response to questions from Hon. Cliff Stearns ................................ 171

Strauss, Karen Peltz: 

Written response to questions from Hon. Cliff Stearns ................................ 173

High Tech Broadband Coalition, prepared statement .......................................... 175

Intel Corporation, prepared statement .................................................................. 178

National Association of Regulatory Utility Commissioners, prepared statement ...................................................................................................................... 181

United Telecom Council, prepared statement, prepared statement .................... 183

(III) 

(1)

HOW INTERNET PROTOCOL-ENABLED 

SERVICES ARE CHANGING THE FACE 

OF COMMUNICATIONS: A VIEW FROM 

GOVERNMENT OFFICIALS 

WEDNESDAY, APRIL 27, 2005

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON ENERGY AND COMMERCE

SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

Washington, D.C. 

The committee met, pursuant to call, at 2:22 p.m., in Room 2322 

of the Rayburn House Office Building, Hon. Fred Upton (chairman) 

presiding. 

Members present: Representatives Upton, Stearns, Gillmor, 

Whitfield, Shimkus, Pickering, Bass, Terry, Blackburn, Markey, 

Engel, Wynn, Gonzalez, Inslee, Boucher, Gordon, Rush, and Stupak. 

Staff present: Howard Waltzman, Chief Counsel; Neil Fried, 

Counsel; Will Nordwind, Policy Coordinator; Jaylyn Jensen, Senior 

Legislative Analyst; Johanna Shelton, Telecommunications Counsel; Peter Filon, Counsel, Alec Gerlach, Staff Assistant; and Anh 

Nguyen, Legislative Clerk. 

Mr. UPTON. Sorry about the delays. I think most of you know, 

we had a series of votes that started right about the time that we 

were supposed to be here, so I appreciate you all waiting patiently. 

Today’s hearing is entitled ‘‘How Internet Protocol-Enabled Services are Changing the Face of Communications: A View from Government Officials.’’ This hearing is a finale of sorts in a series of 

hearings that this subcommittee has held in regard to IP-enabled 

services. Previous hearings have explored how, without a doubt, IPenabled services are dramatically changing the face of communications. 

Many of these hearings have underscored the need for Congress 

to modernize our communications laws in order to account for this 

new technology and to ensure its speediest deployment as widely 

as possible, and bring true intermodable facilities based competition to the American consumer. 

At the close of this hearing, it is my intention to get to the business of legislating along those very lines, which brings us to why 

we are here today. The FCC has held that Internet services are inherently interstate in nature, and that even if there is also an 

intrastate component, it is not technologically feasible to separate 

it for purposes of State versus Federal jurisdiction. So Federal juVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
2

risdiction and the unified Federal broadband policy trumps State 

jurisdiction. 

I have to say that I agree with that approach to creating a Federal policy for IP-enabled voice, video, and data services, and that 

that will serve as my guiding principle for legislating in this arena. 

What that means for how we approach the traditional role of State 

public utility commissions and local franchise authorities in an IPenabled world is what we will be exploring today. 

I want to thank today’s distinguished panel of witnesses for 

being with us this afternoon to help us explore that very important 

subject, and I will yield to Mr. Gordon for an opening statement. 

[The prepared statement of Hon. Fred Upton follows:]

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Mr. GORDON. Thank you, Mr. Chairman, and thanks again for 

these continuing very informational hearings you are having. 

First, let me take just a moment. I would like to recognize a 

friend from Tennessee, Ms. Debbie Tate. She is the chairman of our 

Tennessee Regulatory Commission. More importantly, a native of 

Murfreesboro, Tennessee, often thought of as a dead hole in the 

universe by many folks. 

As we consider legislation to create a Federal framework for regulating IP-enabling services, it is critically important for us to consider what role State and local governments have to play in this 

new scheme. State and local governments have traditionally implemented and enforced issues such as consumer protection, CLEA, 

and the 911. While the technology may have changed, consumers 

and providers will continue to expect full government—local governments to fulfill these functions. I am particularly interested in 

hearing from the panel on the 911 issue. I am working with my colleague, Chip Pickering, on 911 legislation for IP-based services. 

I look forward to hearing from the panel, how they think the 

States can partner with the Federal government to make sure that 

all IP-enabled telephony providers can provide full 911 services as 

quickly as possible. 

I yield back my time. Thank you. 

Mr. UPTON. Mr. Stupak for an opening statement. 

Mr. STUPAK. Thank you, Mr. Chairman. Thanks for holding this 

hearing in the series that you have held on—in-depth hearings on 

the IP-enabled services. I think the committee now has a better understanding of where both the opportunities and challenges lie as 

we look at the Telecommunications Act. 

There are opportunities to update the Act to recognize and promote the promise of IP-enabled services, but we must do so with 

an eye on rural America, and with an understanding that these 

services can only go where broadband takes it. 

We heard last week that the U.S. has fallen further behind in 

the industrialized world with regard to the deployment of 

broadband. Yes, new technologies will stimulate demand for and 

deployment of broadband in the U.S., and yes, regulatory certainty 

will help with the deployment of broadband as well. But will the 

market alone get broadband to rural America? I think this is a central question this committee needs to address. We need to graft our 

telecom laws in a way that embraces these new technologies, while 

helping all communities become connected to the future. 

Broadband is coming to my district by cable, DSL, wireless, and 

satellites. It is being provided by national companies, locally owned 

companies, local governments, and public utilities. For instance, 

the City of Gladstone in my district, with a population of 5,000, offers wireless broadband. The citizens of Gladstone benefit; so do 

those who live outside the city in very rural areas. They receive 

their broadband through a privately-owned wireless system that 

connects to the Gladstone system. Other municipal utilities in my 

district may soon be offering DSL quality satellite broadband. 

Some have suggested that local government should not have the 

ability to offer broadband, and several states have implemented 

laws prohibiting it. I look forward to hearing from the witnesses 

6

today about what role they think local government should play in 

broadband deployment. 

I am also very interested in hearing from local governments 

about local franchise agreements for cable providers. We heard at 

last week’s hearing that cable franchise must meet a series of local 

obligations, and I look forward to hearing from you why these obligations are necessary, especially the build-out requirements. 

I look forward to hearing from today’s distinguished panel. As 

this distinguished panel knows, you work very hard, often thankless work, including answering consumer complaints, arbitrating 

disputes, and maintaining critical infrastructure. There is reason 

why the Act gives State and local governments the responsibility 

they have today, and the committee needs to tread carefully when 

looking at moving some of the responsibilities to the Federal level. 

With that, I will yield back, Mr. Chairman. Thank you. 

Mr. UPTON. Thank you. 

Mr. Inslee. 

Mr. INSLEE. I just want to thank you for being so great at serving the local government. We are Congressmen and we don’t have 

that kind of pull. 

Mr. UPTON. Mr. Gonzalez. 

Mr. GONZALEZ. Waive opening. Thank you. 

Mr. UPTON. Thank you. There are a number of subcommittees 

that are meeting today. I have talked to a number of members that 

I know that are going to be coming for this hearing. Again, I apologize it is starting on a delayed basis. But at this point, we are prepared to listen to our witnesses. 

We are joined by a distinguished panel, as all of us have indicated. We will start with the Honorable Lewis Billings, the Mayor 

of Provo City, Utah. Honorable Ken Fellman, Mayor of Arvada, 

Colorado, on behalf of the National Association of Telecommunications Officers and Advisors Board of Directors. We will hear from 

Ms. Diane Munns, Commissioner of the Iowa State Utilities Board. 

Mr. Charles Davidson, Commissioner of the Florida Public Service 

Commission. Mr. John Perkins, Iowa Consumer Advocate, President of the National Association of State Utility Consumer Advocates. Mr. David Quam, Director of Federal Relations, the National 

Governors Association; and Ms. Karen Peltz Strauss, KPS Consulting, on behalf of the Alliance for Public Technology. 

I want to start off by saying we appreciate you submitting your 

testimony in full so we could take it home last night. Your statements are made as part of the record in their entirety, and we 

would like to limit your remarks now to no more than five minutes. 

And I believe—I think there is a clock. Do you all have—is there 

a clock that you all see in front of you? No. Well, I have one, so 

when you hear this, that means your five minutes is done, and 

there is a clock in these lights above that clock that will tick down 

as well. So we apologize you don’t have a clock to see, but I will 

try to signal you in there. If you can wrap up at that point, that 

would be terrific. 

We will start with you, Mr. Billings. Welcome. 

7

STATEMENTS OF HON. LEWIS K. BILLINGS, MAYOR, PROVO 

CITY, UTAH; HON. KENNETH FELLMAN, ESQ., MAYOR, ARVADA, COLORADO, ON BEHALF OF NATIONAL ASSOCIATION 

OF TELECOMMUNICATIONS OFFICERS AND ADVISORS 

BOARD OF DIRECTORS; DIANE MUNNS, COMMISSIONER, 

IOWA STATE UTILITIES BOARD, ON BEHALF OF NATIONAL 

ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS; 

CHARLES M. DAVIDSON, COMMISSIONER, FLORIDA PUBLIC 

SERVICE COMMISSION; JOHN PERKINS, IOWA CONSUMER 

ADVOCATE, PRESIDENT, NATIONAL ASSOCIATION OF STATE 

UTILITY CONSUMER ADVOCATES; DAVID C. QUAM, DIRECTOR, FEDERAL RELATIONS, NATIONAL GOVERNORS ASSOCIATION; AND KAREN PELTZ STRAUSS, KPS CONSULTING, 

ON BEHALF OF ALLIANCE FOR PUBLIC TECHNOLOGY 

STATEMENT OF LEWIS K. BILLINGS 

Mr. BILLINGS. Thank you, Chairman Upton, members— 

Mr. UPTON. Use that mic for everyone, sir. 

Mr. BILLINGS. Is that better? 

Mr. UPTON. That is much better. Thank you. 

Mr. BILLINGS. Thank you, Chairman Upton, members of the subcommittee. As has been said, I am Lewis Billings. I am the Mayor 

of Provo, Utah. Thank you for the opportunity to appear before you 

today on behalf of the American Public Power Association, APPA, 

to discuss the important role public power systems are playing in 

the deployment of affordable broadband services. 

APPA is the national service organization representing the interest of the Nation’s more than 2,000 State and community-owned 

electric utilities that serve over 43 million Americans. The vast majority of these utilities serve communities with populations of 

10,000 people or less. Provo is one of APPA’s larger members with 

approximately 33,000 metered customers, and a population of 

113,000. 

Many of these public power systems were established largely due 

to the failure of private utilities to provide electricity to smaller 

communities, which were viewed as unprofitable. In these cases, 

communities formed public power systems to do for themselves 

what they viewed to be of vital importance to their quality of life 

and economic prosperity. Today, many public power systems are 

meeting the new demands of their communities by providing 

broadband services where such service is unavailable, inadequate, 

or too expensive. Over 600 public power systems now provide some 

kind of advanced communication service, whether for internal or 

external purposes. This is a 10-fold increase since Congress enacted 

the Telecommunications Act of 1996, and the number of public 

power systems providing or planning to provide services continues 

to increase. Using technologies such as fiber to the subscriber, hybrid fiber coaxial broadband over power lines, and wireless, community-owned electric utilities provide a wide variety of services to 

their residents, either directly or in partnership with private sector 

providers. 

The types of services APPA members provide fall into two categories. The first is internal service, which is usually a municipal 

data network that connects municipal governmental entities to 

8

each other. As of the end of 2004, 247 public power systems offered 

municipal data networking. 

The second category is external service that is offered to individuals or entities outside of the utility and municipal government. 

External services include fiber lacing, high speed Internet access, 

broadband resell, cable television, local and long distance telephoning, and VoIP. As of the end of 2004, 102 systems were providing cable television service, 167 were lacing fiber, 128 were 

Internet service providers, 42 provided long distance telephone, and 

52 provided local phone service. A handful of systems are either 

providing or testing voice-over Internet protocol service. In addition, public power has been a leader in BPL, with Manassas, Virginia, being the first city in the nation to provide broadband over 

the power line service. Based on the success of Manassas’ project, 

other APPA members are now testing that technology, including 

Hagerstown, Maryland; Princeton, Illinois; and Rochester, Minnesota. 

Many communities have decided to provide residents and businesses with critical broadband infrastructure because they recognize the growing importance of broadband for commerce, 

healthcare, education, and improved quality of life. Looking to 

early pioneers of municipal broadband that have been models to 

other communities, they have seen the many benefits of providing 

access to an essential 21st century service. Some of the key benefits 

of municipally provided broadband service include lower prices, increased competitiveness in the communications marketplace, responsiveness to local needs, economic development, and universal 

access. 

Local governments are not the only entities that recognize the 

benefits of municipal broadband systems. A large number of organizations representing private industry, educational interests, and 

consumers support the availability of municipalities to provide 

broadband services. Included with my testimony are the statements of support from such organizations as the High Tech 

Broadband Coalition, Consumer Federation of America, the Free 

Press, Educause, and New America Foundation, as well as Intel. 

The United Tele Council and Fiber to the Home Council also plan 

to express their support by sending a letter to the subcommittee for 

inclusion in the record. 

The story of Provo’s entry into the communications marketplace 

is similar to those of other municipalities across the country, which 

my written testimony discusses in more depth. Eight years ago, we 

undertook a careful study to determine how we could use technology to benefit our residents. After our thorough analysis, we decided we need to reconstruct our traffic control signal systems, 

make major upgrades to our utility monitoring and control systems, 

and bring about broadband interconnectivity between all city 

owned and operated facilities. As it turned out, all of these initiatives would be dependent upon our ability to obtain high speed 

data interconnectivity at various locations throughout our city. As 

we launched this—is my time up? 

Thank you. I will be happy to respond to questions. 

[The prepared statement of Lewis K. Billings follows:]

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Mr. UPTON. Man, if everyone was that responsive, that would be 

terrific. Thank you. You went a little bit long, but it was good. 

Thank you. Again, your full statement is part of the record. 

Mr. Fellman. 

STATEMENT OF KENNETH FELLMAN 

Mr. FELLMAN. Thank you, Chairman Upton, Ranking Member 

Markey, members of the subcommittee. Thank you for the opportunity to testify this afternoon. 

I am the mayor of Arvada, Colorado, a city of 104,000 people located just outside of Denver, and I appear today as a representative of the nation’s local elected leaders and their advisors. Because 

many local elected officials serve with little or no compensation, I 

have another job as well. In my professional capacity, I am an attorney and I work with local governments on a wide variety of communications and other issues. 

I am also here today, like you, as an elected official who looks 

at new technology with a great deal of excitement, and one whose 

constituents and businesses want more choices at lower prices. And 

like all of you, I am seeking the best balance for our citizens, our 

economy, and our local communities. 

Today, on behalf of local governments, I ask this committee for 

three things. 

First, recognize the inherent police powers of local government, 

and its right to manage and charge for the use of public rights of 

way. 

Second, please take a deliberative approach as you consider the 

appropriate scheme for addressing IP services, and ensure that any 

new regulatory regime recognizes the core social obligations of our 

service providers. 

And third, appreciate the unique neighborhood-by-neighborhood 

expertise that local government has to oversee these social obligations, which include public safety, broadband deployment, and preventing economic red-lining. 

Additionally, because I know this committee has heard some negative characterizations of the franchising process, I draw the committee’s attention to the detailed written testimony which we believe demonstrates a more accurate representation. 

We support a technology neutral approach that promotes 

broadband deployment and competitive service offerings. But Internet innovations are meaningless if the networks used to deliver 

them are not widely available to our citizens. As technology improves, most of the infrastructure for these new services resides in 

the public rights of way. Local officials must ensure that the infrastructure does not interfere with other infrastructure, is safe, and 

we must preserve fair opportunities for all competitors who use the 

rights of way. As fiduciaries, we must make sure that the public 

is compensated when private actors use public land. 

To exercise our core police powers, local government must manage the right of way, and we thank Chairman Barton for his historic work in support of the existing Section 253, which preserves 

local authority and control over the public rights of way. 

We believe that federalization of all IP services would not serve 

the public interest, and would violate the principle of technology 

28

neutrality. It would create disparate treatment of entities, solely on 

the nature of the services provided. Functionally equivalent services that compete with one another in the eyes of consumers should 

face the same government obligations. Local governments want to 

ensure that we can continue to require that social obligations of 

providers be met, and that consumers be protected. 

There are several important obligations of today’s video providers 

that are enforced at the local level. These include access channels, 

institutional networks, and prohibitions on economic redlining. 

Many members of Congress are frequent guests or hosts on cable 

access channels. Congressman Markey is, Congresswoman Myrick 

is, my own Congressman, Bob Oprey, has his show appearing on 

access channels in Colorado’s seventh district. Access programming 

serves a vital role in our communities. Institutional networks provide redundancy in terms of emergencies. For example, in New 

York City’s network remained operational during the events of September 11, 2001. And as this committee has noted, prohibitions on 

economic redlining are critical to ensure all citizens will benefit 

from competition. 

Finally, I would like to briefly explain the current franchising 

process, which unfortunately, is misunderstood by many. Cable 

franchising is essentially a light touch national regulatory framework with local implementation. The Cable Act authorizes local 

governments to negotiate for a relatively limited range of obligations imposed upon cable operators, and virtually none of those obligations are mandatory. The framework for economic regulation of 

video providers utilizes that light touch economic regulation that 

the telephone companies seek. And while the current economic regulation is limited, it still plays an important consumer protection 

role. Recently, it disclosed a $5 million overcharge by one cable operator. 

My written testimony covers franchising in more detail. 

In conclusion, we believe that any new national communications 

policy should preserve local government’s authority to ensure public health, safety, and welfare, allow us to support important policy 

goals, enable us to address our communities’ communications 

needs. What this means is that we are asking you to preserve our 

local control and management of the public rights of way, and the 

ability to impose and collect taxes and fees necessary to fund essential services. Please take a deliberate approach, even as you seek 

to update economic rules, and do not eliminate the core social obligations of video programmers, regardless of the technologies they 

use. We urge you to appreciate and preserve the neighborhood-byneighborhood expertise that local government brings to overseeing 

these social obligations, like public safety, broadband deployment, 

and the prohibition of economic redlining. 

And I thank you, and look forward to answering your questions. 

[The prepared statement of Kenneth Fellman follows:]

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Mr. UPTON. Thank you very much. 

Ms. Munns. 

STATEMENT OF DIANE MUNNS 

Ms. MUNNS. Thank you. Mr. Chairman— 

Mr. UPTON. I think you have got to hit that button. 

Ms. MUNNS. Technology. Mr. Chairman, Ranking Member Markey, and members of the subcommittee, thank you for the opportunity to testify today. My name is Diane Munns and I am the 

President of the National Association of Regulatory Utility Commissioners. NARUC represents State public utility commissions in 

all 50 States and U.S. territories, with oversight over telecommunications, electricity, gas, water, and other utilities. 

Since the Telecommunications Act of ’96, the Federal and State 

governments have been involved in a cooperative effort to bring 

local competition to markets. There have been dramatic technological changes that have strained in the interstate distinctions on 

which regulations have been based. The State commission tasks 

have also changed from primarily economic regulators to facilitating wholesale markets and local competition. 

With the changes in technology, we are being asked ‘‘What is the 

function and relevancy of State commissions in today’s telecommunications market? Is there any role or need for State regulation? And won’t 50 different regulatory bodies with authority over 

new services impede rather than enhance the delivery of services?’’ 

These are fair questions as we must continually ask whether government oversight or regulation is necessary, and secondly, what 

level of government stands in the best position to deliver value? 

We believe the States have core competencies that are necessary 

in this new world. State commissions excel at delivering responsive 

consumer protection, assessing market power, setting just and reasonable rates with markup power, and providing fact-based arbitration and adjudication. States are also laboratories of democracy for 

encouraging the availability of new services and fashioning workable remedies for abuses and market failures. 

State experiments are often the basis for Federal policy. While 

competitive new technology, such as Voice-over Internet Protocol, 

are hesitant to be classified as telecommunications service providers because of regulatory requirements, in order to do business 

and compete against incumbent services, many seek the rights that 

that classification confers: guarantees of non-discrimination, interconnection rights to the public switch network, rights to interconnect for e911 delivery, local number portability, access to pole 

attachments, receipts of universal service funds. While the rights 

are granted under a national framework, enforcement of the rights 

requires a fact-intensive adjudicatory capability, and State commissions offer a timely, cost effective forum for resolution of these disputes. The State of Maryland handled 40 interconnection and intercarrier disputes last year alone. 

Consumer issues is another area where State capabilities are relevant. No one disputes that State commissions or that level of government stands in the best position to answer complaints or inquiries about service. Our citizens call us, not Washington, for information. If services do not meet expectations, or when a new abuse 

50

arises, we know first. The debate goes to the discretion that States 

should have to fashion consumer protections outside a Federal 

framework or outside laws of general applicability. Companies 

rightfully argue that different requirements cause transaction costs 

that impede competition. For example, different bill formats raise 

prices and do not bring additional value to customers. They argue 

for national standards with no discretion at the State level. 

I would like to raise the other side of the issue and use the example of slamming and cramming. After passage of the ’96 Act, the 

new, unprecedented practice of slamming and cramming began. 

States were first aware as their customer hotlines became loaded 

with complaints. States began to experiment with remedies for 

these abuses, which eventually resulted in a national approach. 

This practice is under control today, but the answer to consumers 

had been, we must seek a rule at the Federal level before we can 

act, or act through general consumer protection rules, many more 

people would have been harmed individually and it would have 

taken much longer to control this abuse. Confidence in competitive 

processes would also have been harmed. Just last week, my commission successfully addressed a novel cable modem hijacking complaint. 

In addition, sometimes raising issues through State processes 

spurs voluntary industry solutions where if hands were tied while 

a lengthy Federal process ensued, incentives to find solutions 

would be significantly reduced. Finally, some issues are local and 

do not need national attention. 

We need to have discussions on processes that can be used so 

States can effectively protect consumers, while not creating a 

patchwork of requirements that slow down competitive offerings 

and offer no value to consumers. 

We look forward to continuing this dialogue, and are hopeful that 

the benefits of these new technologies will bring our States and believe practical pragmatic regulation must be employed at each level 

of government to achieve that end. 

Thank you. 

[The prepared statement of Diane Munns follows:]

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Mr. UPTON. Thank you. Mr. Davidson. 

STATEMENT OF CHARLES M. DAVIDSON 

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

representatives. It is an honor to be here today, and I appreciate 

the opportunity. 

During these discussions, you often hear that the 1996 Act was 

a failure and it needs to be reformed. I don’t think it should be 

viewed as such. Congress should be proud of the 1996 Act and 

stand behind what it did. Competition is here. It may be outside 

the context of the ILEC versus CLEC competition anticipated, but 

it is here. 

But for the ’96 Act, we might not have seen DSL come off the 

Bell’s shelves as quickly as it did. We might not have seen the tremendous investment in the cable infrastructure that we have seen. 

We might not be the beneficiaries of probably the most robust, dynamic, competitive wireless network in the world. 

The 1996 Act had a purpose and many positive effects, but the 

world in 2005 is very different from the world even in 2000. Just 

since 2000, the telecom sector, as you know, has lost some $2 trillion in market capitalization, and hundreds of thousands of jobs. 

Other platforms are aggressively competing with wire line for market share. Estimates are that by 2006, cable captures 7 percent of 

wire line customers, and 20 percent over the next decade. On the 

flip side, traditional telecoms have a very real potential to compete 

with cable and the delivery of video. All of this is great news for 

consumers and all of this might not have occurred but for the Act. 

Getting the model right going forward is critically important to 

the economic and social advancement of the Nation. One, it is important to both—it is important to help the telecom sector recover, 

and it is also important to encourage these new entrants to come 

into the market and deliver their services and invest in these new 

technologies for consumers. Regulatory reform means jobs. The 

wireless industry generates more than $9 million a year in payrolls. We need to patent that formula, somehow. Getting the model 

right means billions of dollars in new capital spending and new 

choices for customers. Getting the policy right means a stronger 

America. 

In deregulating VoIP in Florida and in providing that broadband 

shall not be subject to a patchwork of local government regulations, 

Florida is hoping that Brighthouse Cable will compete with Verizon 

in the voice segment, and that Verizon will compete with 

Brighthouse in the video segment. This competition that we hope 

for in this building out of networks is extremely capital intensive. 

Cable has invested some $95 billion in the past decade to build out 

its networks. Verizon is currently spending over $60 million in one 

year alone to build out fiber networks to bring video to customers 

in Florida. Wireless has invested some $175 billion in its 

networked, and reinvests, as CTI estimates, about $20 billion a 

year for upgrades. 

We need a new regulatory paradigm. The current model is focused on the wire line market, on the ILEC versus CLEC debate. 

The rules distinguish between telecom and everything else. Existing rules that served a very valid purpose when the market was 

59

just telecom and the providers were just the phone companies 

doesn’t work in this new market. 

In crafting sort of a new regime, the first question that often 

arises is ‘‘What are the respective roles of State and Federal government?’’ I respectfully submit that this is not the first question 

to ask. Far more often than I hear the question of ‘‘How do we 

maximize consumer welfare? How do we bring these new technologies to customers?’’ I hear the question ‘‘How do we make sure 

States continue to have a role in regulating these issues?’’ States 

will have a role. They should have a role. But our first concern 

ought to be bringing these new technologies to customers. 

Chairman Upton, despite Michigan beating Florida in the 

broadband survey, and despite Michigan actually kicking the 

Gators’ tail a few weeks ago in lacrosse, you represent— 

Mr. UPTON. We won a big ballgame against Florida. 

Mr. DAVIDSON. I am leaving that out. 

But you represent me as a citizen of the United States. Representative Stearns represents me. Representative Markey, you 

represent me. We are not just a loose coalition of States; we are 

a Nation with sort of a shared interest in economic and social advancement. And just like with the airlines industry or the shipping 

industry or the railroad industry, we truly need a national policy. 

Some of the core ingredients that ought to be included in that 

national policy, a clear and simple quid pro quo, an articulation of 

what a social contract is to provide certainty to market participants, and a clear benchmark for regulators. A straightforward social pact might be, if you use North American numbering resources, 

for example, you are going to be subject to certain obligations. It 

doesn’t matter whether you are pure VoIP, cable telephony, wire 

line, wireless. If you use a North American number, you are going 

to have to meet certain social obligations. That keeps the model 

platform agnostic, and everyone clearly knows, okay, if we go get 

a number, we are going to have this universal service commit, we 

are going to have an inter-carrier comp issue, we are going to have 

to provide 911. There are certain things we do. 

We also need a truly national set of rules to govern terms and 

conditions of service. A patchwork of potentially 50 different State 

rules in this emerging IP market will deter some entrants from entering the market, and it will also cost a lot of money for folks already in the market to comply with those rules. States have a lot 

of good ideas. Let us nationalize those ideas and bring them forward at a Federal level. 

And finally, one final point, if I may, tax reform. The sectors that 

are driving the economy are being taxed at double-digit rates. Let 

us put some of this money back in the hands of consumers. Let us 

do something to create jobs and encourage investment and innovation. 

Thank you, Chairman. 

[The prepared statement of Charles M. Davidson follows:]

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Mr. UPTON. Mr. Perkins. 

STATEMENT OF JOHN PERKINS 

Mr. PERKINS. Thank you, Chairman Upton, Ranking Member 

Markey. My name is John Perkins. I am the consumer advocate 

from the State of Iowa. I am also currently the President of the National Association of State Utility Consumer Advocates. 

The NASUCA is an organization comprised of 42 States whose 

consumer advocates are generally—and the District of Columbia—

whose consumer advocates are generally charged with representing 

their individual residents in their States before their public utilities commissions. As such, we also usually have the authority to 

appear in State and Federal courts, to appear before Federal agencies, such as the FCC and FERC, and also to appear before legislative bodies, such as Congress and our State legislatures. 

As you look at this new legislation involving new technologies, I 

think there are a couple of issues—a couple of points I would like 

to make for you to keep in mind. And maybe they don’t need to be 

said, but as a consumer advocate, I guess we feel we need to keep 

making those points as often as possible. The first is that the overarching—the overriding principle behind all telecom legislation historically and into the future is that the public interest has to be 

the overarching principle that we reach for. We have to make sure 

that telecommunications are made as widely as accessible, as accessible as possible at the most reasonable cost that we can. That 

should govern any legislation, whether it is Federal legislation or 

State legislation, and it is as applicable to the old POTS network 

as it is to our new Internet telecommunications that we are looking 

at. 

I think the other issue that I would like the subcommittees—and 

this is not just this subcommittee, but the subcommittees that are 

also looking at the competition issues, the merger issues, universal 

service funding, those issues, should keep in mind that IP doesn’t 

necessarily mean it is on the Internet. Just because it is called 

Internet Protocol doesn’t mean that it is—somehow should become 

an information service, and deregulated or unregulated. A lot of the 

new switching that the LECs are using, so-called IP switching, the 

so-called soft switching, those are Internet protocols, but they still 

use the public switch telephone network. My telephone call using 

my wire line Quest telephone may go through an IP-enabled 

switch, but it doesn’t make it an Internet-based telephone. So as 

this committee looks at definitions of IP, I hope it keeps in mind 

that just because IP is attached to a phrase, that it is not defined 

so broadly that the LECs are going to be able to come in later and 

say ‘‘We have IP switching. We are an information service. You 

can’t regulate us.’’ I think that is an important issue. 

I think another point that should be made is if we follow the 

media and advertisements, it would appear that every American 

has a computer, and probably most of us have a broadband connection to that computer, and that is just not true. The latest figures 

that I have seen show that 30 million Americans have a broadband 

connection, but 170 million Americans have wire line access. That 

is not a very big percentage of people that have a broadband connection. And when the LECs start saying well, broadband bypasses 

81

70 to 80 percent of the American homes. That is a fine statistic, 

but it is really meaningless, because the simple fact of the matter 

is, broadband connections are still expensive, and many Americans 

can not afford a broadband connection. So to say that a cable runs 

right outside their home doesn’t mean a thing. They are still not 

going to buy a computer. They are still not going to get a 

broadband access because it is too expensive. 

I think that the last thing was one that was touched on by Chairman Munns, and that is the issue of preempting States’ rights. I 

think the States have a very legitimate interest in consumer protection issues and safety issues, and the Internet is really no different than an interstate highway. We have—States have the ability to regulate the speed and size of traffic on its interstate highways. They need that same ability. These new technologies are 

going to be a trap for the unwary by the unscrupulous, and State 

consumer protection statutes are uniquely designed to protect their 

citizens from any type of action in that regard. 

We have attached a VoIP resolution that our association did a 

year and a half ago, and I think that the points in that resolution 

are still applicable today. 

Thank you, Chairman. 

[The prepared statement of John Perkins follows:]

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Mr. UPTON. For not looking at the clock, you did exactly perfect, 

so— 

Mr. PERKINS. I have got my watch right here. 

Mr. UPTON. Oh, is it? All right. Mr. Quam. 

STATEMENT OF DAVID C. QUAM 

Mr. QUAM. Mr. Chairman, members of the committee, thank you 

very much for the opportunity to testify. 

This is a topic of great interest to governors, both IP-enabled 

services and really the future of communications. But as we look 

at it, sometimes it helps to step back. And one way I can view communications and where we stand is to actually look at what has 

happened to coffee. Back in 1984, coffee was just that. It was coffee. Today’s consumers must pick size, tall, grande, bente, roast, 

light or dark, caffeine or no caffeine, drip, latte, espresso, 

Americano, frappachino, milk or soy, fat or no fat, foam or no foam. 

Communications service today is much the same. Before 1984, a 

phone was a phone. Today, it is analog or digital, landline, wireless, or VoIP, text messaging, paging, e-mail, world wide web, call 

waiting, caller ID, dial-up or broadband, cable, DSL, or Y-fi, IP 

video, satellite, cable, or broadcast. And who knows what is to 

come. That is the challenge that is before governors. It is before 

Congress. It is before local elected officials. How are we going to 

set up a regulatory scheme that fits that world of consumer choice? 

The bottom line for NGA: full and robust competition requires a 

light touch approach that ensures nondiscriminatory access to essential facilities, to acknowledging neutral policies, and consumer 

protection safeguards to serve the public interest. This can only be 

effectively accomplished by having the Federal government partner 

with and grant State and local governments the authority to promote competition and innovation, encourage economic development, 

protect the public safety, and ensure consumer protections. 

As Congress works to reform the Nation’s communications laws, 

governors encourage this committee to work with State and local 

governments to create a regulatory framework that does several 

things. 

First, one that would employ a balanced federalism approach 

that grants States, territories, and localities the authority to protect the interest of their constituencies. 

Second, would create a level playing field for all industry participants in any given service area, regardless of the nature of the 

technology used to provide that service. 

Third, it would be sufficiently flexible and technology neutral to 

respond to any new developments in the industry. It would also 

continue to emphasize reliability standards on all communications 

systems, ensure that States, territories, and localities retain the 

authority to manage public rights of way consistent with State 

laws and policies, support States’ abilities to provide for all their 

citizens with access to communications services, and it would not 

preempt the sovereignty to determine their own tax policies. 

As I have stated before and it has been stated repeatedly by this 

distinguished panel, any rewrite of the communications laws 

should recognize and retain an active role for State and local governments in communications policy. In particular, Congress should 

92

preserve State and local authority in the following key areas: public safety would be the first. State and local law enforcement and 

public safety agencies rely heavily on communications services and 

operators to protect the public interest. States must continue to 

have the authority to collect these, and run a ubiquitous e911 system within their borders. In addition, national communications 

policies should not hinder law enforcement efforts by creating technological safe havens to communicate or plot criminal activity. Consequently, governors support Congressional efforts to extend necessary components of COLEA to all advanced communications. 

Second, consumer protection. Consumers require a practical way 

to resolve common complaints, service outages, and deceptive behavior. States have a long track record of serving that role. States 

should retain the regulatory flexibility in enforcement authority to 

effectively and creatively respond to consumer concerns. 

With regard to access, the value of the network—and that is 

what we are talking about, a communications network—is directly 

related to the number of people who use it. Twenty-four States 

have instituted their own State universal service funds to help ensure that all their citizens can access communications services. 

Governors feel that any changes to Nation’s communications laws 

should not hamper a State’s ability to continue its state universal 

service fund or prevent States from developing new programs to 

supplement any corresponding Federal plan. 

And finally, with regards to competition. Governors welcome and 

support competition. Communications networks are the next great 

economic driver for States and for the Nation, but when a competitive market does not exist, States should still retain the authority 

to manage communications infrastructure and competition in local 

markets. 

The 1996 Act ushered in a new era of cooperative federalism in 

communications. This framework took into account the responsibilities of each level, based on their core competencies. Federal government used its authority to develop national communications 

goals. States were given regulatory flexibility and enforcement 

powers to promote competition, manage public safety networks, 

protect consumers, and help ensure access to communications services. Governors look forward to working with the Congress to build 

upon our Federal/State partnership and use our collective strengths 

as a basis for any new regulatory structure. 

Thank you, Mr. Chairman. 

[The prepared statement of David C. Quam follows:]

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Mr. UPTON. Thank you. Ms. Strauss. 

STATEMENT OF KAREN PELTZ STRAUSS 

Ms. PELTZ STRAUSS. Thank you. Good afternoon, Mr. Chairman, 

Ranking Member Markey, and members of the subcommittee. My 

name is Karen Peltz Strauss, and I am pleased to appear today before you to talk about disability issues on behalf of Communication 

Services for the Deaf and the Alliance for Public Technology, on 

whose board I serve. In addition, I am privileged to have this testimony endorsed by a number of disability organizations that represent millions of Americans of a vital interest in making sure that 

the new regulatory structure adopted for Internet-enabled technologies will meet their communication needs. We thank you for 

this opportunity to present our views. 

The last time that this disability community came before your 

committee was when you were considering the Telecommunications 

Act of 1996. That Act put into place various requirements for access to telecommunications and television, culminating nearly 30 

years worth of efforts to secure equal access. Through this and 

other laws that your committee was instrumental in passing over 

the past few decades, people with disabilities now have greater access than ever before to communication. These laws and new mainstream technology, such as paging and text messaging, have made 

a dramatic difference in the lives of people with disabilities by 

opening up new opportunities to employment, education, and commerce, and making it easier for these individuals to become productive members of our society. 

As IP technology has changed the way our Nation communicates, 

people with disabilities are again presented with remarkable opportunities to enhance their independence and productivity, but consumers will only be able to reap these benefits if these technologies 

are made accessible through universal design. People with disabilities don’t want to be relegated to obsolete technologies or depend 

on specialized devices that are hard to find. They want an equal 

opportunity to benefit from the full range of functions and features 

of mainstream products that the rest of our community enjoy. 

I just refer to people with disabilities as ‘‘they’’, but really, I 

should be saying ‘‘we’’. We, as a Nation, are living longer, and as 

we do, building products and services to be accessible are taking 

on an even greater significance. According to the U.S. census, 42 

percent of people aged 65 to 74 report having some type of disability. This number jumps to 64 percent for people over 75. Many 

of us are already finding out that advanced years brings reduced 

vision and hearing. Unfortunately, history tells us that without 

clear directives from Congress to provide access, the companies developing IP services are unlikely to make their products accessible. 

This is because competitive market forces have not been responsive 

to the needs of people with disabilities. Your response to these market failures has been a string of legislative acts, the Telecommunications for the Disabled Act, the Hearing and Compatibility Act, 

the ADA, the Decoder Circuitry Act. You have seen the need to impose these disability safeguards, even where you have otherwise 

sought to apply a light regulatory touch in order to foster competition and innovation. 

101

Now, to highlight a few areas where specific legislative action is 

needed. First, we ask that you extend the access provisions of the 

1996 Act to IP technologies now, when it easy to do so, rather than 

later, when retrofitting is expensive and burdensome. An accessibility mandate is needed to ensure that IP communications services 

are inter-offerable, so that people using text and video have the 

same ability to talk to each other as voice telephone users do. The 

deaf community has already faced problems with instant messaging and video relay services not being inter-offerable. Video 

relay allows people who are deaf to talk directly to hearing people 

with interpreters over the Internet. In addition, companies that are 

making IP technologies need to ensure that the interfaces used 

with these products are accessible. Last week, this committee 

watched demonstrations of innovative IP TV systems that would 

allow viewers to scroll through various channels, use Internet services, and make the TV experience truly interactive. But think for 

a minute how a blind person can know which channel is on, or how 

to choose among menu options if onscreen menus are used. I will 

tell you, they can’t, at least not now. But if a speech-enabled chip 

and an output device are used to connect the TV to a PC, the blind 

person could use a handheld device to control the menus with the 

assistance of a screen reader. If a device requires one sense, such 

as hearing, sight, or voice to control its operation, it should offer 

the option of using other senses. 

Second, universal service programs need to be reformed to address the needs of people with disabilities in the IP-enabled environment. Right now, only common carriers are required to fund 

relay services. Contributions from IP service providers are also 

needed to sustain the viability of these services. Conversely, as people with disabilities migrate from using the public switch network 

to IP telecommunications, they should be able to use USF subsidies 

that go directly to end users, for example through Lifeline and 

Link-up programs, to help defray the costs of broadband or high 

priced specialized devices. 

Third, Congress needs to take measures to expand access to television programming, first by extending closed captioning obligations to IP TV providers, and second, by restoring the FCC’s rules 

on video description. And we wish thank Congressman Markey for 

introducing a bill to achieve just this. 

Finally, we urge that State governments be permitted to retain 

some authority over telecommunications relay programs, even 

where these programs use IP services. Several local programs have 

been directly responsive to the needs of their communities in ways 

that can’t be matched by a Federal agency located across the country. 

In conclusion, mandates are critically needed to preserve the extraordinary gains achieved by more than two decades of Congressional efforts to promote full telecom access as our Nation now migrates from legacy technologies to more versatile and innovative IP 

technologies. All of the prior mandates were created with the understanding that the costs to society of not providing access in 

terms of unemployment, dependence, and isolation would far exceed the cost of providing such access. 

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We look forward to working with your committee to carry the 

legislative progress made in the past into the IP-enabled world of 

the future. 

Thank you. 

[The prepared statement of Karen Peltz Strauss follows:]

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Mr. UPTON. Thank you all. Thank you all for your testimony. 

Any idea—at this point, we will do questions from members of 

the subcommittee, under the five-minute rule as well. 

Any idea how many different franchises there might be out there, 

Mr. Fellman? I have a guess, but I don’t know if anybody really 

knows. 

Mr. FELLMAN. Are you talking about cable franchises, Mr. Chairman? You know, I— 

Mr. UPTON. Franchise authorities. 

Mr. FELLMAN. Oh, franchising authorities. You know, I know 

that there are 36,000 units of local government in this country, approximately. I know a number of States, I think about 10, franchise 

through the State, many of which still give local authorities some 

role in the process. But I couldn’t tell you how many actually do 

the franchising itself. 

Mr. UPTON. My guess is there is probably about—my guess is 

probably about 10,000. Might be a little bit more, might be a little 

bit less. 

What does the average franchise agreement cover? What type of 

different arrangements do they have? 

Mr. FELLMAN. Average cable franchise, again, you know, I will 

tell you some things that I think most cable franchises cover, but 

in some ways, they are as different as the community needs that 

the address. 

Many cable franchises cover right of way access kinds of requirements. Oftentimes, in my experience, those are regulations that 

one finds in a local ordinance addressing rights of way, as well as 

in the cable franchise. Many will contain access requirements for 

public education or government access channels. Some will have requirements for institutional networks that I mentioned briefly in 

my testimony. There will be internal uses of that institutional network for various local government-related issues, public safety, 

communications internally and otherwise. There are public safety 

related concerns in a franchise requirement for emergency alert 

systems on the local level. General categories of programming, the 

Cable Act, as you know, precludes the requirement of individual 

channels, but does allow a local franchising authority to address 

community needs by requiring categories of programming. Franchise fees for the use of the public property are covered. Bonding 

requirements so that damages costs to public property can be replaced without cost to local taxpayers. Most good franchises will 

have some enforcement mechanisms in there. In the last 10 years, 

I am very happy to say that many franchises have provisions for 

addressing transfers and mergers, so that the local community 

knows the company that they are dealing with, because many of 

these have turned over a few times. 

So a lot of different things, but those are just a few of the major 

ones. 

Mr. UPTON. Mr. Billings would you expand on that at all, based 

on your mayorship in Provo? 

Mr. BILLINGS. I would agree that the things he has touched on. 

I guess for us, as a community, we look at what are the goals? 

What is it we are trying to bring about in our community, and certainly as we have negotiated those kinds of agreements, we have 

118

sought to have universal access. We want everyone in our community to be able to be serviced. We have talked about what is important in public safety kinds of settings, and what needs to be done 

to serve those needs. And then we have talked about other things 

we want to accomplish, and have tried to factor those in. And I 

think that our focus of legislation, perhaps even at the Federal 

level a lot of focus on those broader goals in trying to do things 

that allow those goals to be fulfilled as we do whatever it is we do. 

I just think we have to remember that it is going to be a little 

bit different in every community. Those subsets of undergoals will 

be a little bit different in every community, and we need to accommodate that. 

Mr. UPTON. It is different. I have—I am aware of one community, 

not in my district, by the way, or even in my State, that is currently negotiating an agreement, and they are trying to look at a 

number of different channels. I think they are actually looking at 

two or three of the public education governmental channels. They 

are looking for equipment that they can, themselves, use to broadcast. They actually are also trying to get a calling center located 

within the jurisdiction of the community, and it is just difficult 

for—help me through this argument. If you have got a wireless provider that is going to compete with that same cable company that 

is not going to use the same right of way. They are not going to 

need poles or dig up streets, yet they want to compete, offering the 

same services. What are your thoughts as to whether they will 

have to comport with the same types of arrangements that that 

cable company will be for that particular village, in terms of the 

services that Brecken-Morter Building personnel, a whole host of 

things that otherwise they, frankly, wouldn’t need as they look to 

expand their services and actually compete to bring down some of 

the costs of the services that they would otherwise provide? 

And I am out of time, so I will let you answer before I pass to 

Mr. Markey. 

Mr. BILLINGS. I am sure that—there is a long answer and a short 

answer, and my attempt to the short answer would be that it is 

true that they are different. But even those wireless providers still 

have to have access to our rights of way to connect up that equipment that provides that wireless connectivity. 

And so while there are differences, there are some very similar 

components to that as well. 

Mr. UPTON. Mr. Fellman. 

Mr. FELLMAN. Mr. Chairman, if I could add to that. 

I think the particular specific rights of way obligations, obviously, you couldn’t apply to a company that doesn’t use the rights 

of way, at least on the same level. But the social obligations of providing government, public, and educational access, there already 

are set-aside requirements for the satellite companies. I think Congress ought to extend the public, educational, government access 

requirement to satellite, so like you say, they are all playing by the 

same set of rules, and the community can get the benefit of that 

local programming, regardless of whether they are a satellite subscriber or a cable subscriber. 

Mr. UPTON. Mr. Markey. 

Mr. MARKEY. Thank you. 

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Ms. Strauss, in closed captioning, back in the early ’90s, the industry opposed closed captioning. They said it would be too much 

of a burden on them. We said well, we need it to help out those 

10 or 20 million people who are hard of hearing in America who 

use the TV as to—so we mandated it out of this committee, and 

the television industry did its best. Who would have thought the 

greatest use for it is people in bar rooms just watching basketball 

or football games? 

But unintended consequences of sometimes Congress acting, and 

in fact, it turns out that most immigrant families turn on the TV 

with closed captioning so that their children can see the language, 

because the parents can’t speak it. So there are tens of millions of 

others that use it in different ways. So it is a real burden. We had 

to mandate that. And then there is others where we created a readily achievable standard for the industry to meet in different areas. 

What would you recommend for the IP services? Which approach 

should we take? 

Ms. PELTZ STRAUSS. Well, I would recommend the approach of an 

undue burden standard, which is the standard that is used with 

closed captioning. And the reason for this is that we are now at the 

outset. We are at the beginning of a new technology, and with the 

new technology, it is much easier to incorporate access, rather than 

retrofitting it later on. 

The readily achievable standard was originally created in the 

Americans With Disabilities Act to make it easier for mom and pop 

in small stores not to have to retrofit with their—to put in elevators, to put in stairs. Not to have to incur great expenditures in 

retrofitting small establishments. 

The undue burden standard, which basically says that an accessibility feature has to be incorporated, unless it is undue burden, 

is easier to meet when you are at the outset of a technology. And 

here, we have software-based technologies that are very easy to incorporate access. 

Mr. MARKEY. Thank you. With the municipalities, back in 1992 

when this subcommittee—we actually had to pass a law because 

cable companies were coming to communities and saying, you have 

got to give us an exclusive contract. If you want us to come to your 

community, the promise is you will never have another cable company in town but us. And so 95 percent of all municipalities had 

guaranteed a monopoly in perpetuity to the cable companies. So 

our subcommittee had to void all of those monopolies so that we 

could have some competition. 

Now, we come to 2005, and a lot of people are now saying, well, 

maybe we should pass a law prohibiting the local communities 

from actually providing telecommunications services to their own 

community, in competition with the cable company, the telephone 

company, or whomever. 

Can you give us your views on the appropriateness of Congress 

telling you that you can not have your own system to compete with 

a cable company or telecommunications company, as long as you 

provide equal access to everyone that would want to use it? 

Mr. BILLINGS. I am a private sector player, came out of the private sector. Believe government shouldn’t go where the private sector will go, and as I have in my testimony said, eight years ago we 

120

set out to do a number of things. I said we wanted to bring about 

the benefits of technology to bless our residents’ lives. And we fully 

expected and fully intended to use private sector provided 

connectivity. We had five franchise agreements in place with fiber 

providers. When it came time to hook up our traffic lights and our 

scada and our buildings, none would do it. 

Mr. UPTON. No. 

Mr. BILLINGS. None would do it. None would step up. And so we 

did. And I hope— 

Mr. UPTON. You did it? The city did it? 

Mr. BILLINGS. I would hope that you wouldn’t preclude cities, especially small cities, especially rural cities, from being able to do 

what they need to do when others are unwilling or unable to do 

it. 

Mr. MARKEY. I agree with you. Mr. Mayor—Mr. Fellman. 

Mr. FELLMAN. Congressman, thank you for asking that question. 

Let me talk about a legal issue that piggybacks. I agree with everything that Mayor Billings said. In the existing Telecom Act in ’96, 

you have got language in Section 253 that says ‘‘States and localities shall not pass any laws prohibiting any entity from providing 

telecommunications services.’’ And a number of States have passed 

laws, and in my opinion, in violation of the Act, by prohibiting their 

units of local government from providing telecommunication services. The FCC ruled that while municipalities are creatures of the 

States, they can do to them what they want, that case, as you 

know, got to the U.S. Supreme Court and the United States Supreme Court said that Congress was not clear on what it meant by 

any entity. So we thought that it was clear that ‘‘any’’ meant ‘‘any’’, 

but the U.S. Supreme Court did not agree, and— 

Mr. MARKEY. I drafted, the provision, so you can tell them I 

meant ‘‘any’’— 

Mr. FELLMAN. Okay. 

Mr. MARKEY. —in its usual use of the term. 

Mr. FELLMAN. Had we known that, we would have brought you 

to the oral argument, but there is an opportunity this year to fix 

that problem, because the court would have ruled the other way if 

there was clearer language in the statute and clearer legislative 

record that ‘‘any’’ meant ‘‘any’’. So I would encourage Congress to 

fix that problem in the next iteration. 

Mr. MARKEY. We will pay tribute to all of the municipal light 

companies across the country. We will pay tribute to the 

Bonneauville Power Company, to the Tennessee Valley Authority. 

There is a lot of times when they want to do it, the government 

can do it well. But if you don’t do it well, they can vote you out 

of office, too. Okay? So you try to do this and it doesn’t work, you 

have an accountable, you know, job that the voters can exercise 

their right. But I don’t think it should be this Congress that tells 

you, our running municipalities that you shouldn’t try to undertake 

these endeavors. 

I thank you, Mr. Chairman. 

Mr. UPTON. Ms.Blackburn. 

Ms. BLACKBURN. Thank you, Mr. Chairman, and I want to say 

thank you to each of you for taking the time to come and— 

Mr. UPTON. Could you just put the mic a little closer? Great. 

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Ms. BLACKBURN. These chairs are bigger than I am, Mr. Chairman. 

Mr. UPTON. You are correct. A lot bigger. 

Ms. BLACKBURN. Yes. 

And while I do have the microphone, since I was in a meeting 

downstairs, I do want to recognize Debbie Tate, who is out of Tennessee. I think she was recognized a little earlier by my colleague 

from across the way, but she does a great job and I am proud to 

have her here. 

I have got a series of questions. I am going to try to clip through 

these as quickly as I possibly can. 

I think, Mr. Perkins, I am going to start with you. Or let me ask 

all of you this by Mr. Perkins’ testimony. And I am on page four 

of his testimony. This is what he says. ‘‘Most people now agree the 

Internet is truly an interstate phenomenon, and individual States 

should not be in the business of regulating the rates charged for 

Internet services.’’ 

Do any of you disagree with that statement, and if so, why? Go 

ahead. 

Mr. FELLMAN. I will jump in. 

Ms. BLACKBURN. Thank you. 

Mr. FELLMAN. Congresswoman, I think that when you say Internet services, I am not clear on exactly what that means. Cable 

services today are regulated in a very limited way for basic cable. 

If video programming is provided over Internet protocol, I would 

take the position that it is a cable service, and therefore, would be 

subject to regulations. 

Ms. BLACKBURN. All right. I am reading from his testimony, and 

that is why I wanted to see where you all stand on this, you know. 

Internet service is anything that is going to come over the Internet, 

and as we look at the Telecom Act, one of the things I look in terms 

of is we talk voice-over IP. We also know that everything is going 

to come over IP, and I just wanted to see if you all were in agreement or disagreement. It sounds like looking at your faces in the 

response—and knowing we are short on time now, that you probably would rather respond to that later. Am I reading that right 

from you all? And that maybe you would like to give me a written 

response? Am I reading that right from you all? 

Mr. DAVIDSON. I will jump in, Charles Davidson with the Florida 

Commission. 

I agree with the statement that States should not be in the business of regulating the rates charged for Internet service— 

Ms. BLACKBURN. Okay. 

Mr. DAVIDSON. —so I would agree wholeheartedly with that 

statement. 

Ms. BLACKBURN. Okay. Thank you. Mr. Perkins also—in the 

same paragraph a little bit further down, you—to allow the rates— 

Mr. PERKINS. Clearly, offers made about the technology of why 

a person should switch to VoIP and get rid of their wire line, you 

hare going to have VoIP providers coming in with the new technology advertising and saying you should chuck your old wire line. 

You should have voice-over Internet. It is the new wave of the future. There will be advertisements for that. People who are unfaVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00125 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
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miliar with the technology, you may end up with the tragedy that 

you had in Houston, Texas. 

Ms. BLACKBURN. Okay. 

Mr. PERKINS. They simply didn’t realize the limitations. Consumer protection laws are needed—are in place and can cover this 

new technology to make sure that those ads are not promising 

more or less than they should. 

Ms. BLACKBURN. Okay, excellent. 

And Mr. Chairman, with that, I will yield back since we are in 

the middle of a vote. 

Mr. STEARNS. [Presiding] Gentlelady yields back. 

Mr. Stupak. 

Mr. STUPAK. Thanks. 

Mr. STEARNS. I think what we are going to do, my colleagues are 

just going to continue here, and if Chairman Upton comes back, he 

will take it. So if you want to come vote and come right back, we 

would like to seamlessly go through. 

Mr. STUPAK. Very good. 

The two mayors there, you talked about local governments providing broadband services you have, and we do it in my district 

quite a bit, because we are the only ones who will do it. 

But do you have any opinions on a private public partnership for 

broadband deployment, and where a local unit government would 

give rights of way to private companies to offer broadband? Have 

you been approached with anything like that or any opinions on 

that? Mr. Fellman. 

Mr. FELLMAN. Congressman, I think that happens all the time, 

and again, that is one of those areas that there is as many different 

variations of that as the creativity of cities and the private sector 

can come up with. 

I have a client in Colorado, a municipality, who is negotiating 

presently with a wireless provider to put wireless broadband 

throughout a very large city, many square miles. The city council 

is fairly conservative. They believe the city should not be in the 

business of providing service, but the city clearly wants to find a 

partner in the private sector to come in and get the city wired for 

wireless broadband. They are doing it in such a way where it is not 

exclusive. Anybody else can come in. They have looked at competing companies to see who they could get the best deal with. 

They have regular rights of way regulations so the next company 

that comes in will still have access to the poles. So it is not, by any 

stretch of the imagination, putting a stop to future competition, but 

it is a city that is saying we don’t want to be in the business, but 

we want to find an industry partner who can come in and provide 

these additional broadband services to our community. 

Mr. STUPAK. Anything you want to add, Mr. Billings? 

Mr. BILLINGS. I was just going to say, in Utah, our State legislature has not caused it to be so that municipalities can not be in 

the business of deploying broadband, but we are not allowed to deploy the retail service ourselves. We provide the pipe, and then we 

enter into retail provider partner contracts. And so while it is a little different— 

Mr. STUPAK. Right. 

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Mr. BILLINGS. —I think we are specifically touching on—that is 

how it is currently being done in Utah. 

Mr. STUPAK. Okay. 

Ms. Munns, what do you think would be the role of the States 

in a universal service reform? Can you speak to that a little bit 

about what role USF funds and a need for Congress to take those 

funds into account? 

Ms. MUNNS. Yes, I think that there are things, again, that we 

have particular capabilities. We know the networks in our States, 

we are pretty good at knowing who needs what. We are good at accountability and doing auditing and that kind of thing. We recognize the issues with the universal service funds and we want to be 

a part of giving them out where they need to be. 

Mr. STUPAK. Do you think VoIP and broadband should be part 

of the USF? 

Ms. MUNNS. I think, you know, that is something you are going 

to have to struggle with as you look at the size of the fund. 

Mr. STUPAK. Just thought I would ask. 

Can anyone give me a real world example of why it may be necessary for there to be State consumer protection laws until there 

is a Federal law? I am talking about, you know, the States have 

over VoIP or anything else to deploy that. Do you think States 

should be getting involved in this until there is a Federal law to 

sort of smooth this thing all out or mark it up even more? 

Ms. MUNNS. I will take that. 

You are talking with respect to— 

Mr. STUPAK. Yes. 

Ms. MUNNS. —consumer protection— 

Mr. STUPAK. Yes. 

Ms. MUNNS. —issues, and that gets back to what I was talking 

about before, which is when consumers are harmed when their expectations are not met, we find out about that first. They come to 

us for relief. To have to say we need to forward that to Washington 

so they can look at it, to the FCC or whoever to fashion a remedy 

for this. A lot of the experimentation, a lot of dealing with it, trying 

to find something that works is done first at the State level, and 

then the Federal government acts. I don’t think you want to take 

away the capability to address those things and find a solution that 

works. It may be something that you want to federalize, but to say 

that you can’t do that and that it has to start at the Federal government, I think is backwards. 

Mr. STUPAK. Okay. 

Mr. FELLMAN. Congressman, there is a great example of that 

today that is pending that consumers are hanging out there, and 

that is do customer service standards and privacy protections apply 

to a cable modem service? And when the FCC decided a few years 

ago that cable modem service was not a cable service, but was an 

information service, one of the questions was ‘‘What about our customer service standards?’’ And at first, the FCC said well, we said 

it was an information service, so send your complaints to us. They 

quickly realized they didn’t have the staff to deal with consumer 

complaints at the FCC, so they said no, continue sending them to 

your local governments, but it was not clear. 

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They have had a pending proceeding at the Commission for, I believe, it is over two years to determine whether customer service 

standards, either of the Federal standards that the FCC adopts, or 

local customer service standards, apply to consumer protection and 

privacy rights on cable modem service. It has been open for two 

years. Now, some communities have taken the issue into their own 

hands. Montgomery County, Maryland, is working on it, the City 

of Seattle has very robust standards that protect the privacy of 

their consumers on cable modems. But the industry, the cable industry, is fighting it, and they are saying you have got to wait for 

Washington to come up with an answer. We don’t think you have 

legal authority. So consumers are hanging out there on privacy protection related to cable modem. 

Ms. PELTZ STRAUSS. If I can add for disability issues, States have 

been very responsive to the needs of their specific communities, especially on relay services and designing services specifically for 

people with speech disabilities and people who are deaf who use 

sign language interpreters. 

And that is not to say that the Federal government shouldn’t 

have a role in setting some standards. Right now, we have a dual 

system where States are allowed to set standards that exceed Federal minimums, and that would be the best result. 

Mr. STEARNS. I thank the gentleman. I think we have about six 

minutes left. I will take the liberty to ask a few questions here. If 

the chairman doesn’t come back, then we will adjourn temporarily 

the subcommittee. 

Mr. Davidson, we appreciate you being here. You have been kind 

enough to work with myself and my staff, and of course, from Florida, we appreciate your input. You have some very good ideas. 

I noticed in your statement, you said ‘‘Efforts to pigeonhole new 

technologies into regulatory constructs will service primarily to 

delay the development and deployment of these technologies for the 

consumer.’’ I think that is something I wouldn’t mind you elaborating on. You know, I think it has been reported the United States 

has dropped from 13th to 16th in broadband penetration, and one 

of the main reasons was lack of competition, vibrant competition. 

But the term ‘‘pigeonhole technology’’ might just elaborate, if you 

could. 

Mr. DAVIDSON. Well, I will. That new statistic is troubling. I 

sometimes think, though, as a country we are not as bad as sometimes it is portrayed. We have an absolute sort of high level of penetration in terms of people, and when you compare the U.S. to 

China, they have got a lot more people, so the percentages are 

going to be off. 

When I said ‘‘pigeonhole’’, the regime that exists was designed 

around telecommunications, and it distinguished between telecom 

and just everything else. And everything else includes, according to 

some, cable modem service. Some will argue that as a telecommunications component, it would include the VoIP service that 

I use at home. I don’t have a telephone; haven’t for a year. And 

when you tell sort of these new entrants, whether it be Vonage or 

someone else, that you are going to have to comply with the telecommunications obligations, the regime that exists now, I think 

they are not going to be able to raise the capital. They are not 

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going to offer the service. It won’t come to market. There may be 

some providers, really large, established providers, who may vary 

an offer and say you know what? We can comply with the telecommunications regulations and we will do that. But we want sort 

of the dynamism that we see with a lot of folks out there competing 

with their services and offerings in the market. And we need to 

somehow encourage that and we need to empower the consumers 

to be able to make the choices they want for their new technologies. 

I, as a consumer, made a choice. I do not want a telephone, so 

I made a choice to go with VoIP service. I might not have had that 

option. I might have had such a really low bill for my voice service 

at home had the company been pigeonholed into the telecom box. 

Mr. STEARNS. I think I am going to have to go vote, so I think 

I will temporarily suspend the committee, and the chairman should 

be here and we will resume. So I appreciate your patience here. 

[Recess.] 

Mr. UPTON. When we left, there were going to be two votes, and 

they changed it to one. So if it is two, we are going to be running 

pretty fast, so I told the other members that, but in order to keep 

going, we will go a little bit out of turn, I guess, and go to Mr. Bass 

for questions. 

Mr. BASS. Thank you, Mr. Chairman, and I want to first apologize for—I assume obviously everybody has given their testimony. 

I am not familiar with everything that you have said, but I understand the gist of the subject matter here today. And I just want to 

ask one question. 

I think that there were some that talked about the issue of core 

social obligations. Maybe it was you, Mr. Fellman. And I guess the 

question is core social obligation or economic redlining, I think you 

mentioned—I don’t know whether you mentioned it or not, but 911 

consumer advocacy, and so on. Local PUC’s and local communities 

have traditionally had the responsibility of monitoring these functions. Is there any problem with having that responsibility handled 

on the Federal level? Universal service might be another issue, I 

think, because 911 in community A is no different from 911 in community B or in State A versus State B and so forth. Is that a—

do you understand that question? 

Mr. FELLMAN. I understand the question and I think for each of 

the core social values, you have to look at them differently. Some 

may make more sense to be dealt with on the State level, and I 

am not an expert in telling you whether 911 would be negatively 

impacted if it was all Federal versus all State. I would tell you, 

particularly with respect to the access channels, which is a core social obligation, in my opinion, there is no way that the needs of Detroit are the same as the needs of Kalamazoo or the needs of some 

small community in the upper peninsula of Michigan. And to have 

a Federal rule that says here is what the local needs are and here 

is what the obligation of a video provider is going to be, there is 

just no way to have that work on the Federal level. 

Customer service standards, which I mentioned briefly while you 

were out of the hearing room, again are something that some communities are active in the way they enforce them. Others have a 

much lighter touch. In large part, they are a function of the history 

of the service providers in the community and what kinds of probVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00129 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
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lems they have had, which is why I think the system we have 

today with cable and customer service works. We have Federal 

standards that communities can adopt and in fact, most do. They 

just adopt the Federal standards. But they also have the ability, 

if there are particular problems in particular communities, to adopt 

different, and in some cases, more stringent local standards that 

can be enforced at the local level. 

Mr. BASS. Make it quick, because I want to ask one more question before—go ahead. 

Ms. MUNNS. Well, I think, you know, who should be subject to 

e911 is certainly a Federal decision, because you don’t want that 

to differ from State to State. But it is something that should be 

clarified is of these services, who has to provide e911, so that we 

all know. 

With respect to complaints, we did a quick survey of 20 States 

who processed over 200,000 complaints in 2004. That was 20 

States, not including California. This is something that I don’t 

think the Federal government really has the capability to do. 

Mr. BASS. Different question. 

What is your—what are your observations concerning government action, if any, when the day comes that non-cable providers 

start providing cable services in communities without paying franchises, if that happens? Franchise fees. 

Mr. FELLMAN. Well, I guess that can’t happen unless Congress 

changes the law, because the way video programming is defined in 

Title VI of the Communications Act right now, when non-cable providers begin providing video programming over facilities that are 

located in the rights of way by statutory definition, that becomes 

a cable system and they are prohibited from providing those services unless they have a cable franchise. So clearly, Congress could, 

if it chooses, change that system and eliminate cable franchising. 

I think that would be a terrible mistake, again, for the reasons that 

I went into in great detail in my written testimony, because there 

are so many elements of cable which are purely local, and community needs on a local level will not be met if cable franchising is 

taken away or general national rules are imposed at the Federal 

level. 

Mr. BASS. Okay. Chairman, I don’t have any other questions. 

Thank you. 

Mr. UPTON. Mr. Boucher. 

Mr. BOUCHER. Thank you very much, Mr. Chairman. I want to 

extend thanks to our witnesses for their illuminating testimony 

today. 

I was particularly pleased to hear the comments of Mr. Fellman 

and Mr. Billings concerning the appropriateness of community networks, just as electric utility service was provided by municipal 

utilities beginning in the 1880’s, because the commercial providers 

bypassed a lot of communities. 

We have a parallel situation today with regard to broadband. We 

saw a disturbing report this week that says that the United States 

has now dropped two more positions from 13th to 15th in ranking 

internationally among nations that have broadband penetration, 

measured as a percent of the population using broadband. We 

stand at 11 point something percent of our population currently 

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using broadband, and we are now 15th in the world. And I think 

local governments have a role to play, particularly as you suggested, Mr. Fellman, in rural areas and in some cities which have 

small populations in offering a service that the commercial sector 

either has not provided, or only provides at such a high price that 

it is effectively unavailable for residents and much of the business 

community. 

I have two municipalities that I represent that have deployed 

fiber optic networks, and these are very popular services with my 

constituents. One of those only provides broadband high speed 

Internet access. The other one provides comprehensive telecommunications services. And both are treasured in the communities where they are located. And the penetration rates for 

broadband there are higher than the national average. So I think 

there is a role to play. I was glad to hear your testimony. 

I want to follow up on the inquiry that I believe Mr. Bass was 

opening. I didn’t hear all of what he said, but we need to have a 

delicate and serious conversation about franchising. And let me 

sort of state a couple of principles. 

First of all, there are a lot more franchising authorities than I 

think we are acknowledging. In the Verizon service territory alone, 

I am told there are 10,000. 

And so the real number nationally is some multiple of that. And 

Mr. Fellman, I think you suggested 36,000 local franchising authorities across the country. That is probably a more accurate figure. Let us say 40,000 for sake of conversation. If a company like 

Verizon, that has to get 10,000 franchises in order to offer video, 

whether it is IP-based or whether it is just digital cable, is able to 

average one franchise a day, it would take about 40 years in order 

to get them all. This is every business day of the week getting one. 

Now maybe they could do a little better than that, but I kind of 

doubt it, given the necessity of devoting a lot of manpower to the 

effort, and whatever the cost of that might be. 

And I think, you know, to the extent we have delays, consumers 

in these communities are denied the benefits of competition, more 

varied services, the pricing competition that inevitably comes when 

you bring new providers into the market. And that is an undeniable benefit for residents across the Nation. 

In addition to that, the local governments are denied that second 

or third or fourth franchise fee, which would multiply by orders of 

magnitude the amount of revenue that you get from your franchise. 

And I am just wondering if we can’t embark on a conversation. I 

don’t have a fully formed view of this. If I did, I would announce 

it and tell you what it is. But I am persuaded that we need to do 

something different than what we are doing. The opportunity for 

telephone companies to get into the market, for fixed wireless providers to get into the market, I think really argues for a new construct. 

So let me just try out on you a set of principles. And I would like 

your response to this potential. 

Let us suppose that we had a national franchise, and it contained certain elements to be discussed and agreed upon. But 

among those elements would be that you get paid. That whenever 

a multi-channel video provider offers a service in your community, 

128

you get an amount of money tantamount to the existing franchise 

fee. So we take money off the table, you get paid. And you get paid 

every time another provider comes in. 

Let us also assume that one of the elements of this national franchise is public access channels. So public educational, governmental access would be afforded by the new entrants just as it is 

by existing cable. 

Now if we do this, I mean, first of all, you get a lot more money 

real fast. The companies are able to role out their services very 

fast. Your consumers get a lot of advantages very quickly, in terms 

of competition, new kinds of video being offered, better pricing. 

What would you think about that, just for starters. What is your 

response? 

Mr. Fellman. 

Mr. FELLMAN. Thank you, Congressman. 

You had said that you don’t have a fully formed opinion. I have 

a partially formed opinion. 

Mr. BOUCHER. Okay. That is better than fully formed. Partially 

formed on both sides is good. 

Mr. FELLMAN. You know, I think it is a conversation worth having. I am not in a position today to say this is a great idea, or this 

is a lousy idea. I think the conversation would have to try to define 

what are those elements that are purely local. What are the local 

police powers? But I think if there is a way to streamline the process, it is absolutely appropriate to be talking about it. 

There is an analogy that is taking place right now, which is an 

initiative started by the National Governors Association. It talks 

about telecommunications taxation where the governors and the 

State legislators and local mayors and the telecommunications industry are talking about telecom tax reform. I think that has been 

a good process yet, and I hope it will be successful at some point. 

On the issue of franchising, however, I think there is a lot of people that need to be at the table and discussing it. And I want to 

make one clarification when I said 36,000. It is units of local government. Not all of those are franchising authorities, so I am not 

sure that I would agree with you that we have got 40,000 franchising— 

Mr. BOUCHER. I don’t know either. I am just taking a number I 

know to be reasonably accurate in the Verizon territory and extrapolating from that. 

Mr. FELLMAN. You have mentioned two key issues, the compensation for the public rights of way and the peg channels, and 

if those were guaranteed to address local issues or local needs in 

some way, you know, that is a great start. I think there is—the 

only problem with public access issue that you mentioned that 

jumps right out at me, that when you say it would be guaranteed 

at the Federal level. Again, what is necessary in a small municipality that you represent may not be the same thing that is needed 

in a larger municipality. So somehow, there has got to be that local 

negotiation for what community needs are. Otherwise, in order to 

protect local franchising authorities, you have to error on the high 

side. And that is something that is not fair to the industry. 

Mr. BOUCHER. Well, this is open for discussion. I mean, obviously 

we would have to learn a lot more than we know today before we 

129

go forward. But I am encouraged by your response. I mean, it 

sounds like this is a conversation we might be able to have, and 

I look forward to working with you. 

Mr. Chairman, with your indulgence, let me just ask Mr. Billings, and then I see Mr. Davidson wants to respond, too. 

Mr. BILLINGS. Thank you very much. I believe it is a conversation that if you do have it, we want to be a part of it. I guess I 

am sitting here in my mind wondering if there isn’t sufficient manpower commitment to come into my community and negotiate a 

franchise agreement with me, is there going to be sufficient HR 

commitment to put in a system and service that system once it is 

franchised and be responsive to my customers. 

So I see your point and I know what you are driving at, but I 

think it is one we would thoughtfully want to reflect upon and be 

a part of the conversation as well. 

Mr. BOUCHER. Let me just add one more element to this. This 

could go on until dark, and I am not going to carry it on until dark, 

but it wouldn’t upset me at all if you came back with a proposition 

that said we love being paid, we love the idea of peg channels, but 

clarify our authority to offer community networks at the same 

time, and now we might have a deal. 

And so if you came back with that kind of response, you wouldn’t 

upset me in the slightest. 

Mr. Davidson. 

Mr. DAVIDSON. Thank you, Congressman. 

Conversation is a great idea that has to occur. I also think that 

national rules would provide certainty to a whole host of new entrants who are wondering what is going to happen in various 

States. The government getting paid is a good thing. State and 

local governments need money. 

My concern is if right now in a region, hypothetically, a franchise fee revenue is $1 million. If new entrants come in to offer services, 

any sort of extension in franchising fee payment obligations, in my 

view, ought not reflect the new tax. The revenue ought not go up 

to $2 million; rather, it ought to be some allocation of that $1 million across a pool of similarly situated participants, unless the actual cost of local government goes up. 

Another sort of challenging area is you have got traditional cable, 

video-over IP, which has a capacity to compete with cable, and you 

have video-over fiber to the home or fiber to the node, which cable 

will say is closer to cable. What do we do, for example, when turn 

key programming—and it is out there, sort of full programming 

comes just over the IP network and it is not based upon any sort 

of location of facilities in an area, and there is just a company that 

is providing programming over the Internet. 

Mr. BOUCHER. I think we impose the same rules. I mean, that 

is my initial response to you. 

And by the way, let me add, I believe that whatever we do for 

telephone companies, we also have to do for cable. We have to be 

even handed about this. 

So there are real challenges in this subject matter. This may 

prove to be one of the most interesting and challenging aspects of 

our reform effort, but it is one I am sure we are up to, particularly 

with your participation. 

130

Mr. Chairman, my time expired a long time ago. 

Mr. UPTON. Yes. 

Mr. BOUCHER. Thank you very much. 

Mr. UPTON. And for a little while you were safe, because the 

other members hadn’t returned, but they now have. And I would 

recognize Mr. Inslee for five minutes. 

Mr. INSLEE. Thank you. 

Mr. Fellman, I just came in the last part of your answer to Mr. 

Boucher’s question. I just wonder if you can flesh out a little bit 

for me, if we were going to go to, let us say, you knew today there 

was going to be a statewide or national kind of franchise standard. 

What are the parameters of where you would put in how many access channels, how many hours, how many, you know, build-outs, 

how many miles—I mean, what parameters would you have to 

have to meet sort of the menu item of where you are right now? 

Mr. FELLMAN. Congressman Inslee, your question, I think, discloses why this would be so hard to accomplish. Because the answer is different in every different community, so I don’t know. 

Congressman Boucher asked if we can start that discussion, and 

I think I am always willing to talk about anything, you know. ‘‘No’’ 

is always an appropriate answer in any kind of debate or discussion, but I think it is inherently difficult, extremely difficult to 

come up with a national rule on how to meet the local needs of 

every municipality and county in this Nation. 

Mr. INSLEE. So I am trying to get a flavor of how far the spread 

is, like in your State, what is the smallest number of—let us start 

with number of access channels in a franchise— 

Mr. FELLMAN. That is easy, zero. 

Mr. INSLEE. Zero. 

Mr. FELLMAN. Right. 

Mr. INSLEE. Okay. So zero in your State? There is no access 

channels in— 

Mr. FELLMAN. Well, no, the smallest number. 

Mr. INSLEE. Smallest number. 

Mr. FELLMAN. There are communities in my State that have no 

access channels. 

Mr. INSLEE. And what is the highest number? 

Mr. FELLMAN. Well, I think Denver has eight or nine. Some of 

them are used internally for internal communications. It is somewhere in that range, maybe a few more or maybe a few less. 

Mr. INSLEE. If you went around the country—I am just brainstorming here. I haven’t thought through this. It doesn’t mean I 

have bought any of this Kool-Aid at all, but I mean, if you were 

to go through and say well, if you looked at communities based on 

population size, when you get over a million you have—I wonder 

if you would find sort of fairly consistent patterns between population bases and number of access channels. Do you think you 

would, or not? 

Mr. FELLMAN. I don’t think you would, and here is why: because 

it is not simply a function of population. And the example that I 

can give you from my State is the City of Durango in southwestern 

Colorado. A stand alone city, about 40,000 people. They are out 

there by themselves. They are the big metropolitan area in southwestern Colorado. They have an incredibly robust government acVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00134 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
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cess and public access broadcast operation. They get private donations as well as city money and cable money that promotes this 

kind of programming, and it is widely watched in that community. 

The City of Lewisville, Colorado, same population, about, in metropolitan Denver. A very different community; part of a much, 

much larger metro area of two to three million people and growing, 

and the needs in that community are different. So the number of 

channels, the amount of money that you would want for equipment, the type of programming that you would want to be producing, you know, you can say that all councils are going to want 

to broadcast their city council meetings and their planning commission meetings, but beyond that, it changes dramatically from community to community, regardless of the population. 

Mr. INSLEE. In the States, I am told that some States have statewide franchising protocols now. How would you characterize the 

differences there than other States that have really local decision 

making? Is there any way to generalize there or not? 

Mr. FELLMAN. A little bit. But now, we are getting a little bit out 

of my area of expertise. I know some States have more control in 

their local franchising. Others, like New York and New Jersey, the 

State will approve the franchise but the local government is allowed to and does, indeed, do the community needs assessment and 

negotiate based upon their local needs and ultimately, it just is 

given to the State to be adopted in accordance with State rules. So 

there are some heavy State control operations, and there are some 

partnerships where the local governments have a lot more control. 

So it just varies from State to State. 

Mr. INSLEE. Does anyone else want to add to that at all? 

Ms. MUNNS. I will just add. I have a list of the States that do 

that. I know that they have varying models, and we would happy, 

if it would help the subcommittee, to try to provide that information. 

Mr. INSLEE. That would be interesting. Thank you. 

Mr. UPTON. Mr. Gonzalez is recognized for eight minutes. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. 

Let us see if I can try to make sense of it all. Well, that is kind 

of impossible in Congress, but technology moves forward. Old technology is replaced or augmented or whatever by the new technology, and that is what we are really facing here. 

In the old days, what was a telephone company, what was a Bell, 

what was a cable company, and they call this—they had all these 

fancy names about convergences and such. But we have to find 

some answers working with the States and localities that have very 

legitimate interests. 

My concern is it really a monetary interest, the fees in any kind 

of form, or is it really what you all have referred to, public requirements, social needs, social regulations. And some of it can be very 

reasonable and legitimate, and others can really be quite burdensome and really interfere with what we have to do in this country 

in order to utilize that technology to its fullest and its greatest advantages. 

So I guess my question—and Mr. Fellman and Mr. Davidson in 

particular, because I was reading your testimony. I think you all 

touched on it more than anyone else. Is it—when you say local 

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needs, social needs, social requirements, is that really the main 

consideration, or is it really one of fees? In other words, revenue 

sources. Because it is—I don’t know how we reconcile some things, 

to be real honest with you. So that is the first question. 

And the second one, because what happens is time gets all used 

up, except I did get eight minutes here. Second question would be 

to Mr. Fellman. You said something that was really interesting, 

and I believe before we broke for votes, something to the effect 

that, I guess, if it is video coming in on IP, then it is cable. In other 

words, what is the final product that is being delivered or whatever 

it is, determines its nature, not the means or the method or whatever. 

And so when you all get through the first question about not the 

competing, but what weight do you put on fees, revenue sources, 

than these other needs, social needs and requirements? 

Mr. FELLMAN. Congressman Gonzalez, thank you. 

You know, I could be flippant and say the answer to your first 

question is yes, because they are both important. Clearly, if my city 

were to lose the franchise fees that we generate from cable, basically the rent that we charge private entities who use public property in order to generate a profit, it would be a huge hit on our 

general fund. It translates into police officers, it translates into library hours and rec centers and it would be a real hit on the local 

essential services that we provide. And frankly, I think it would be 

analogous, too, if the Congress said, you know, if it is all just about 

money, maybe we shouldn’t option spectrum anymore. We want 

these services, maybe we should just give it away to the companies. 

It is the same thing. We are talking about our local public property; you are talking about Federal public property that the Congress has responsibility for. So the money is very, very important. 

But the social obligations are, as well, and I am intrigued by 

your comment that there are some that are very, very burdensome, 

and I think if we are going to have a discussion, a conversation 

going forward, I would be interested in if you have more specific 

questions of what those are and how they work, we would be happy 

to follow up with you and get you and the subcommittee more additional information. 

I think cable has been very successful. There is more broadband 

through cable systems than any other method, and they are the 

ones that have been following and abiding by these social obligations for many years, and yet, they have more penetration than 

any other source of broadband, as far as I am aware, in this country. So I don’t think that they are too burdensome in order to allow 

our consumers to utilize these technologies. 

You have got to remember, cities and counties are some of the 

more larger and sophisticated users of these technologies as well. 

We don’t want to slow down the process. We want the competition 

and the new technologies in as quickly as we can get them, but we 

think it is also important to maintain these social obligations. And 

I think they are all equally important, but would be happy to get 

more details to you if you have questions about specific ones. 

Mr. GONZALEZ. Mr. Davidson. 

Mr. DAVIDSON. Thank you. 

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On the social requirements, my answer too would be yes to the 

question. But on the social requirements, I think what Congress 

has to ask itself is okay, what is the social pact that we are engaging into? Certainly, a 911 obligation or certain consumer protection 

regime wouldn’t necessarily apply to a sky technology that you and 

I might just download on our computers to chat. But society has 

determined aside from the fact that telecommunications was provided by monopolies, that 911 service is important. It is an important component of our society, so going forward, for those providers 

that may engage in a social contract may use North American 

numbers or do something else that is utilizing a public resource, it 

is fair to say, you know what, you probably need to come with a 

way to comply with a 911 standard. 

I think the money issue is very important, and I look at that 

from two angles. One angle, in Florida, State and local governments—local governments are scared to death that as these new 

technologies emerge and as customers move to these new technologies, they are going to lose revenue. They want—many want to 

be able to tax VoIP that is a substitute for plain old telephone service, because they are afraid they are going to lose the revenue from 

that. Cable franchising authorities are really concerned about losing the franchising-free revenue as video over IP rolls out. If I disconnected my cable, and lots of folks in my area disconnected their 

cable because they could get the programming they want, whether 

it is all sports, all entertainment, whatever, over their IP network, 

that scares folks because cable is going to have a hard time competing. And if these new providers aren’t paying the funds, government loses. 

But I look at the money issue from another angle as well. That, 

to me, is one compelling reason why we need a national policy on 

these issues. 

California just went through what, in my view, is a failed experiment with their California Bill of Rights. With all the best intentions, they came up with this regime that went all the way down 

to the detail of saying you must put your contract in 12 point 

Times Roman font. If every State engages in that type of regulation, well intentioned, you are going to have millions, if not billions, 

of additional costs that in a competitive market will get passed on 

to the consumer. It is going to come out of our pockets. I don’t want 

my bills to go up because States have lots of good ideas. If we have 

good ideas, let us nationalize those. Let us have the conversation, 

talk about what the good ideas are, move forward with those, and 

perhaps have a safety valve so that when unanticipated situations 

come up, States do have the flexibility to address those issues. 

Mr. GONZALEZ. Thank you. It is only one minute, and I can talk 

to Mr. Fellman later about the cable and voice and such, but I 

think I have other witnesses that wish to respond. 

Ms. MUNNS. I would just like to respond to what Commissioner 

Davidson just said about the failed experiment in California with 

the Bill of Rights. 

California began looking at a Bill of Rights for wireless because 

of the significant increase in complaints that they had. Their customer expectation was not being met, and they started looking at 

a Bill of Rights in order address this. As a result of that, the indusVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00137 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
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try came forward and said let us take a crack at getting this solved 

voluntarily, and made significant strides to addressing some of the 

issues that had been raised. That Bill of Rights, that idea I don’t 

think is going forward in California. And to that extent, I think 

that, you know, you can call it a failed experiment, but it did have 

a good result, and we didn’t have to go to national standards to get 

some voluntary compliance on behalf of the industry. 

Mr. GONZALEZ. Thank you all very much. 

Mr. UPTON. Mr. Engel. 

Mr. ENGEL. Thank you, Mr. Chairman. Before I ask my question, 

I would like to acknowledge that Tom Dunlevey of the New York 

State Public Service Commission is in the room. I would like to 

welcome him. 

Obviously, we are soon moving to draft legislation to update our 

telecommunications laws, and as new technologies have made older 

ones obsolete, the rules and regulations that govern this industry 

need to be updated as well. 

The introduction of VoIP has really made a profound change in 

the industry and it is introducing rapidly a new level of competition to the voice market. Now soon, we will have a new level of 

competition in the video services market as well, and I am committed to personally getting this new competition swiftly into the 

market. But I believe that we need to ensure that there is a level 

playing field, a fair and level regulatory playing field, such as must 

carry public access channels and franchise fees and rates. I believe 

very strongly that consumers will benefit when there are multiple 

entrants into the market for communications services, whether it 

is voice or video. Cable is the dominant provider of video, and telephone companies are the dominant power of voice. 

So in line with that, I have a question I would like as many people who would like to answer it as possible to answer. 

So any of you see where we can streamline the process for getting more competitors into the voice and video markets, and specifically, what steps are your States or organizations taking, and what 

should we and the FCC—we meaning Congress and the FCC 

should be doing? If anybody would care to answer that, I would be 

grateful. 

Mr. DAVIDSON. I will jump in just briefly on Florida’s approach. 

Florida has taken the approach that if we remove some of these 

regulatory hurdles that market conditions will be created and folks 

will be encouraged to enter. So Florida has deregulated VoIP as 

provided that broadband, regardless of the provider platform is not 

subject to local government control. Recent legislation that is sort 

of making its way through both chambers makes clear that both of 

those platforms, however, remain subject to the State’s generally 

applicable deceptive trade practices, consumer business protection, 

statutes, fraud statutes, so that customers sort of are protected and 

have a remedy. 

But what we have seen with that now is that the State is a target market for Verizon to come in and build out fiber to the home 

to deliver video. It is one of the largest markets for Vonage. We 

have numerous cable companies offering telephony, so we are trying to just sort of as a market principle, remove some of those hurdles to competition, and we are seeing in Florida that that competiVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00138 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
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tion is, in fact, occurring. And I know everyone would like to have 

it all here immediately, but there are clearly progressive steps that 

are occurring in Florida, and the competition is coming. 

Mr. ENGEL. Thank you. 

Mr. PERKINS. Congressman. I am sorry. 

Mr. ENGEL. Go ahead. 

Mr. PERKINS. I think as we pursue that area, we need to keep 

in mind that there are large rural areas in this country, including 

Iowa, where it is not economically feasible for cable providers or 

telephone providers to come in and put in DSL. In Iowa, we recently—our legislature passed legislation that deregulated over 

time the rates that Quest could charge for its residential phone 

rates, but as a quid pro quo, Quest was told you have to get DSL 

into a lot of different exchanges where you don’t have it. Quest 

wouldn’t go in there. It wasn’t economically feasible. 

So while it is great to say in some of these areas, large metropolitan areas where everybody wants in, there are a number of areas 

where nobody wants in. The cable provider doesn’t want to extend 

its cable out for four customers out in the countryside. DSL has 

limitations on how far it can go. I live in the City of Des Moines 

and I can’t get DSL because I am more than three miles from a 

switch, but I am not certainly out in rural Iowa. 

So I think as the committee looks—the subcommittee looks at 

legislation, it is important to keep in mind that there are economies that these providers look at that dictate how much they want 

to do, and there needs to be incentives, I think, such as the Iowa 

legislature just provided to Quest, if you want this extra money, 

you better get your DSL in all of the exchanges in Iowa, rather 

than just the ones that you think you can make a lot of money at. 

Mr. ENGEL. Thank you. 

Mr. Fellman. 

Mr. FELLMAN. Congressman, I would like to give you an anecdotal example of what doesn’t work, and then give you—reiterate 

something that I said earlier that I think will. 

In Colorado in 1996, the same year that the Telecom Act was 

passed, our general assembly passed legislation that prohibited 

local governments in Colorado from being in the franchise business, 

if you will, with respect to any communications service other than 

cable television. No franchises on any kind of communications service other than cable, no charges for permit fees, other than the actual cost of administering the permit process. No requirements. 

Companies had the right to be basically on public property for free. 

Do we have more broadband in Colorado today than you have in 

New York or that you have in Iowa? Of course not, we don’t. The 

market is going to dictate where these services are deployed, and 

rural Colorado ain’t the market where they are being deployed 

first. Even outside of the highly concentrated metro area, that is 

not where they are. So to simply say we have got to make franchising go away is not going to solve the problem, because the companies are going to go where they can make a profit. 

And that brings me back to what Mayor Billings talked about, 

what I mentioned earlier. One way to encourage more deployment 

and more competition is for Congress to make absolutely clear in 

the next piece of legislation that comes out of this city that no legVerDate 0ct 09 2002 10:59 Jun 02, 2006 Jkt 000000 PO 00000 Frm 00139 Fmt 6633 Sfmt 6633 F:\DOCS\27000.TXT HCOM1 PsN: JOEP
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islation shall be passed that prohibits States or their political subdivisions from participating in a provision of telecommunications 

infrastructure and services. And when smaller rural communities 

start getting into the business and showing that it can be done and 

it can be done profitably, then the industry will follow. 

Mr. ENGEL. Thank you. 

Unless there is anybody else who cares to do— 

Mr. UPTON. If you have another question, go ahead. 

Mr. ENGEL. Well, let me ask Mr. Quam. 

In your testimony, you mentioned the 911 systems and the need 

for new services to work with them. We all agree. I don’t think 

there is anyone on this subcommittee or committee who wouldn’t 

agree. 

But I want to ask you about the allowing the States to impose 

a fee on these services to support the 911 services. We had a situation in New York, you know, Congress has passed legislation to 

clean up the abusive 911 funds, but States can opt out if they forego Federal funding. 

So I would like to know, what are the States doing to ensure that 

taxes collected on these existing technologies are actually going to 

upgrade the 911 networks? Has the National Governors Association 

undertaken any kind of creating a transparent audit process for 

States to use? There was an instance in New York, actually, where 

I am from in the Bronx where there were four young boys who 

drowned off City Island. They called 911 on their cell phones, but 

they got through to 911 but the center couldn’t locate them because 

the 911 funds weren’t used for their intended purpose. And so that 

is why I am asking this question. Have there been any studies or 

anything you can care to shed some light on this? 

Mr. QUAM. The 911 services are absolutely critical to governors 

and States and having systems that work so when a consumer 

calls, they actually find an emergency provider that can find them. 

I think it is a priority issue for all governors. 

The National Governors Association, although we haven’t taken 

on anything like auditing authority or that type of oversight, because these really are State programs, we have partnered with the 

FCC to try to help build some best practices and have e911 operators and implementers really talking to each other and see if we 

can’t get these programs going. 

With regard to some of the issues regarding the fees that are collected, because they are State issues, really those decisions for the 

levels and the fees need to be made by the State. I do know that 

several States have made attempts to streamline that process or 

simplify those systems to make sure the money that they are collecting is the money that is needed to implement those systems. 

But from a national governor’s perspective, the most important 

thing is actually getting systems up and running that work. And 

that is where most of the focus is. 

I think last year’s legislation sent an important message from 

Congress regarding the use of those 911 fees. I think governors are 

on board with that being a real priority to have a system that is 

up and running, and that works. 

Mr. ENGEL. Thank you. Thank you, Mr. Chairman. 

Mr. UPTON. Mr. Bass, you don’t have further questions? 

137

Mr. BASS. Can I ask one more? 

Mr. UPTON. Yes, you can. 

Mr. BASS. This may be pretty fundamental. 

Why do we need franchising for new cable services when we don’t 

seem to need it for anything else that we provide, for example, 

wireless voice data? Anybody have some observation? What is the 

difference? 

Mr. FELLMAN. Congressman, the primary difference in at least 

some of the examples you just—comparison examples you mentioned are the use of public rights of way. We need to remember 

that the facilities that most of the cable systems are located on 

public property whose primary purpose is to safely and efficiently 

move traffic of all kinds. And when streets are dug up and not repaired properly, there is a whole host of problems from the surface 

problems with traffic safety issues to the problems caused by cuts 

in electric lines and gas and water pipes. So there is a whole lot 

of regulatory oversight inherent in the use of public rights of way 

for a private company to operate its business, when that clearly is 

not the primary use that that property was intended for. 

The other issues—and we have talked about them, so I don’t 

want to be redundant— 

Mr. BASS. Yes. 

Mr. FELLMAN. —but the five percent franchise fee is not the only 

compensation for the use of that rights of way. I think Congress 

has, for a long time, recognized whether it be broadcasting where 

there were public interest obligations in return for use of the public 

airwaves, or the public set asides for satellites now, or the social 

obligations I have talked about and some of the other witnesses 

have talked about. With cable, a part of this is compensation and 

a recognition and a policy in this Nation that these media are essential tools for the use of our democracy by our citizenry. And I 

think that is an important concept to remember and to ensure that 

it continues with the new technologies we are going to be utilizing 

in the future. 

Mr. BASS. Okay. 

Mr. UPTON. Well thank you. Thank you all for your testimony. 

We have had a number of hearings on this issue, as you and those 

in certainly the press know, but others that have watched. I think 

we have had four lengthy hearings over the last two months. I 

think that the record is a good one. Our goal is to have a bipartisan 

effort for sure, and continues that we will try to get this legislation 

to the House Floor by our August break. I am committed to seeing 

that we do that in a timely manner. And we appreciate your 

thoughts and interests, and the participation of all the members of 

this subcommittee. 

And with that, we stand adjourned. 

[Whereupon, at 4:19 p.m., the subcommittee was adjourned.] 

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