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49–802 PDF 2008

H.R. lll, A DISCUSSION DRAFT ON WIRELESS CONSUMER PROTECTION AND COMMUNITY BROADBAND EMPOWERMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS AND 

THE INTERNET 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

February 27, 2008 

Serial No. 110–95 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

JOHN D. DINGELL, Michigan,Chairman 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

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 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

J. DENNIS HASTERT, Illinois 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS,Chief of Staff 

GREGG A. ROTHSCHILD,Chief Counsel 

SHARON E. DAVIS,Chief Clerk 

DAVID L. CAVICKE,Minority Staff Director 

(II)

(III) 

SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

EDWARD J. MARKEY, Massachusetts,Chairman 

MIKE DOYLE, Pennsylvania 

Vice Chairman 

JANE HARMAN, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

BARON P. HILL, Indiana 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

HILDA L. SOLIS, California 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

J. DENNIS HASTERT, Illinois 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSELLA, New York 

GEORGE RADANOVICH, California 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

JOE BARTON, Texas (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 1 

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

opening statement ................................................................................................ 40 

Hon. Mike Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania .................................................................................................... 44 

Hon. Jane Harman, a Representative in Congress from the State of California, opening statement .................................................................................... 45 

Hon. Hilda Solis, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 46 

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

opening statement ................................................................................................ 46 

Hon. Jay Inslee, a Representative in Congress from the State of Washington, 

opening statement ................................................................................................ 48 

Hon. George Radanovich, a Representative in Congress from the State of 

California, opening statement ............................................................................. 48 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 117 

Hon. Eliot L. Engel, a Representative in Congress from the State of New 

York, prepared statement .................................................................................... 118 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, prepared statement .................................................................................. 119 

Hon. Lois Capps, a Representative in Congress from the State of California, 

prepared statement .............................................................................................. 119 

WITNESSES

Joey Durel, Jr., city-parish president, City of Lafayette, Louisiana ................... 49 

Prepared statement .......................................................................................... 51 

Steve Largent, president and CEO, CTIA, Washington, DC ............................... 53 

Prepared statement .......................................................................................... 56 

Answers to submitted questions ...................................................................... 120 

Larry F. Darby, Ph.D., the American Consumer Institute, Washington, DC ..... 74 

Prepared statement .......................................................................................... 76 

Chris Murray, senior counsel, Consumers Union, Washington, DC ................... 79 

Prepared statement .......................................................................................... 82 

SUBMITTED MATERIAL

Letter of February 27, 2008, from the National Association of Regulatory 

Utility Commissioners, to Messrs. Markey and Stearns .................................. 2 

H.R. lll, discussion draft .................................................................................. 13 

Letter of February 26, 2008, from the United States Telecom Association, 

to Mr. Markey ...................................................................................................... 41 

(1) 

H.R. lll, A DISCUSSION DRAFT ON WIRELESS CONSUMER PROTECTION AND COMMUNITY BROADBAND EMPOWERMENT 

WEDNESDAY, FEBRUARY 27, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TELECOMMUNICATIONS

AND THE INTERNET, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

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

2322 of the Rayburn House Office Building, Hon. Edward J. Markey (chairman) presiding. 

Members present: Representatives Markey, Doyle, Harman, Gonzalez, Inslee, Boucher, Stupak, Green, Solis, Stearns, Upton, Shimkus, Pickering, Fossella, Radanovich, Mack, Walden, Ferguson, 

Barton (ex officio), and Buyer. 

Staff present: Amy Levine, Tim Powderly, Colin Crowell, David 

Vogel, Neil Fried, Courtney Reinhard, and Garrett Golding. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. Good morning. Today the subcommittee is holding 

a legislative hearing on draft legislation addressing wireless issues 

and community broadband services. This legislation is currently in 

discussion draft form in order to facilitate input from consumers, 

from industry, and other interested parties for improvements and 

clarifications. At this point, I would like to enter into the record letters from the National Association of Regulatory Utility Commissioners, as well as a coalition of telephone trade associations. 

[The information follows:] 

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Mr. MARKEY. The draft bill contains three sections. The first section seeks to create a policy framework for wireless services by providing for essential consumer protection rules at the national level, 

as well as by establishing an effective role for states in 

supplementing Federal Communications Commission enforcement 

efforts. 

The first section addresses wireless early termination penalties, 

wireless plan and contract disclosures, so-called truth-in-billing 

rules, and service quality reporting. It tasks the FCC with promulgating these rules to reflect a nationwide wireless marketplace, 

consistent consumer protection rules, and the bill preempts the 

states except in limited circumstances from creating their own differing rules for such issues. The draft bill also specifically authorizes states to enforce the national rules, which I believe is indispensable for purposes of ensuring meaningful consumer protection. 

The second bill, the second section of the bill clarifies that municipalities have the freedom to provide telecommunications services to their citizens. It reflects legislation introduced in this Congress by our colleagues Mr. Boucher and Mr. Upton and I commend 

them for their efforts. If a particular community is unhappy with 

the wireless broadband cable or phone services offered in its area, 

it should possess the clear freedom under the law to take action on 

its own to deploy and offer such services. The idea of municipal empowerment for broadband and other services is built upon provisions that are to make more with respect to municipal cable systems as part of the 1992 Cable Act. 

I believe that we should establish a national policy for wireless 

consumer protection and state enforcement in this draft. It is simultaneously important to establish that municipalities can take 

action to offer wireless service on their own or any other communications service for that matter. The final section of the bill seeks 

to make the government more efficient in its spectrum use and requires the National Telecommunications and Information Administration in the Department of Commerce to conduct a full assessment of government use of the spectrum. As part of this assessment, the NTIA is instructed to not only identify frequencies that 

may be made available to reallocate from the government to the 

FCC for subsequent use, but also to identify frequencies and government bands that could be made available for sharing with nongovernmental users. 

I look forward to working with the subcommittee ranking member, Mr. Stearns, and with Mr. Barton and of course Mr. Dingell, 

Mr. Boucher, Mr. Upton, and other colleagues who are interested 

in this legislation, and I also want to thank our expert panel for 

being here today. My time has expired. I am going to turn now and 

recognize the gentleman from Florida, the ranking member of the 

committee, Mr. Stearns. 

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OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, and thank you, Mr. Chairman, for 

recognizing with your draft legislation the need to ensure a national regulatory framework for wireless. The industry’s tremendous success is a direct result of the decision of Congress in 1993 

to preempt state and local regulation of wireless rates and entry. 

Towards that end, Mr. Chairman, I ask unanimous consent to submit for the record the following letter from the U.S. Telecom Association and other telecom associations who wrote to me expressing 

their specific concerns with Title II of the draft legislation. 

Mr. MARKEY. Without objection, it will be included in the record. 

[The information follows:] 

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Mr. STEARNS. Thank you, Mr. Chairman. In 1993 the number of 

wireless subscribers was 11 million. Now it is 250 million. In 1993 

the average local monthly bill was $96.58. Adjusted for inflation 

now it is below $50. In 1993 the cost per minute was 44 cents. Now 

it is 4 cents. And the average minutes of use has grown from 121 

to 746, the most of any country. Today 98 percent of Americans live 

in counties with 3 or more wireless providers. Ninety-four percent 

live in areas with 4 or more, and 59 percent live in areas with 5 

or more. There are more than 150 wireless providers in the United 

States, ranging from nationwide to regional and local providers. 

Americans have a choice of over 600 handsets. They also have a 

growing array of options when it comes to plans, including single 

line, family, and prepaid hybrid plans. States can still regulate 

terms and conditions. However, despite all this competition a number had begun imposing a requirement governing what type of plan 

carriers can offer, the fees that they can charge, what type of service maps must be available, and the size of the font that must appear on each bill. Wireless carriers are quickly facing a patchwork 

of disparate regulations that will raise costs for consumers, hinder 

investments, and ultimately slow innovation. 

This state regulation is not only unnecessary, but also harmful 

given the level of competition that exists today in the market. 

While I think that the chairman’s draft legislation has the right 

idea by creating nationwide consumer protection standards, and 

clearing the way for the wireless industry to continue on its current, vibrant trajectory, I am concerned that it replaces cumbersome state regulation with overly prescriptive regulation on the 

Federal level. The current draft also does not have workable preemption and enforcement provisions that would end once and for 

all a 50-state patchwork of different regulations. 

Our best approach would be to create moderate Federal guidelines that ensure carriers can cater their service to differing consumer needs while ensuring that consumers are well informed of 

all their options so they can find the best package that suits them 

and that they like. I look forward to working together with the 

chairman to chart such a course. I am also pleased that the chairman included in the draft a requirement that the NTIA develop a 

plan to make government users of spectrum more efficient and to 

identify the availability of spectrum that can be shared or reallocated for commercial use. 

This is an important first step to secure the additional spectrum 

that will be needed to fuel the next generation of advanced services. I am concerned with the inclusion of the ‘‘Community 

Broadband Empowerment Act’’ which is in the draft. As local governments have learned the hard way through problems in Philadelphia; San Francisco; Chicago; Houston; Tempe, Arizona; Toledo; 

Marietta, Georgia; and Portland, Oregon, municipalities are poorly 

equipped to run ongoing viable broadband businesses. The ability 

of them to fund their program with tax revenues also makes them 

less vigilant in managing the costs, and as unfair, frankly, the private businesses are trying to do this and trying to compete with 

them. 

I would hope that we would at least limit these networks to 

areas where there are no current providers of service and where 

44 

private industry is given the first right of refusal to serve that area 

to bring in competition, the free market, and ultimately choice to 

the consumer. With that, Mr. Chairman, I yield back. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Pittsburgh, Mr. Doyle. 

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman. Mr. Chairman, I tried to 

call you last night after the debate, but I couldn’t get a hold of you, 

but I did get to speak to this really nice lady who told me if I wanted to page this person press 2 or that I could leave a message after 

the tone and after I finished that, I could hang up or I could press 

5 for more options. Eddie, I got to tell you in the 50 years I have 

been using telephones, I really appreciate getting instructions on 

how to use a voice mail. And besides, I have got so many minutes 

on my phone, I don’t mind using 3 of them to leave you a message, 

but I digress. 

I just want to say I really appreciate everyone being here today. 

Let me say I support the goal of today’s draft bill. The reality is 

wireless is a national product. I get to carry one device. I get one 

phone number almost anywhere I go in the world. I grew up in a 

world where that stuff was right out of the Jetsons or Star Trek. 

To have it be real and to have it be an integral part of our life, 

I think is incredible. And those facts lead me to support the carriers’ call for state preemption, but if we are going to replace state 

control, then I believe we have to create a national framework for 

consumer protection. 

I am sure some will wonder why we just don’t preempt states 

rights and completely let the market and the carriers and the consumers do their things. I believe markets depend on information, 

accurate information, like the bill calls for carriers to provide consumers. I want to make sure consumers have the information they 

need to make an informed decision, that they know their options 

and that they know who to go to if they need help. One consumer 

posted a video where he called a carrier and spoke to 56 different 

representatives with questions about a data plan. From those 56 

people, he received 22 incorrect answers. Only one sales agent got 

the answer right, and 93 percent of them quoted the guy inaccurate 

information. 

I would hate to sign up for a 2-year contract thinking I was liable 

for 2 cents a megabyte, the quoted price, when I was really liable 

for $2.00 a megabyte while surfing the web on my phone. Some 

carriers have rolled out contracts with early termination fees that 

decrease over time getting ahead of the mandates in this draft bill. 

I applaud that smart pro-consumer move. Even better, other carriers have announced intentions to follow suit, but several of those 

who announced months ago that they were going to roll out prorated early termination fees still haven’t. Interestingly enough, one 

of those carrier’s sales agents provided mystery shoppers with inaccurate information 2⁄3 of the time during a dozen inquiries according to Corey Boles at Dow Jones. Now even if those are fixed, and 

the bill goes a long way to doing that, there are always going to 

45 

be consumers who complain that their service doesn’t work well in 

a new home or a new neighborhood, and they can’t switch because 

they are locked in for 2 years. 

I don’t think that the carriers are actively trying to take advantage of their consumers, but there does need to be a way to effectively handle disputes and complaints. I say all this today because 

if they are going to preempt bills on these issues that are pending 

in states across the country, including bills that are pending in the 

Pennsylvania State Senate, then I believe we are going to have to 

come up with an alternative. So, Mr. Chairman, thank you and 

thank everyone for coming to the table. I hope we can hammer out 

a deal soon. I think that what you put down is a great first step 

towards creating a true win-win for consumers and for carriers, 

and I yield back. 

Mr. MARKEY. I thank the gentleman. The chair recognizes the 

gentleman from Illinois, Mr. Shimkus. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I think I will reserve 

my time for questions. 

Mr. MARKEY. The chair recognizes the gentlelady from California, Ms. Harman. 

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. HARMAN. Thank you, Mr. Chairman, and good morning to 

our witnesses. When he arrived this morning, Mr. Doyle preempted 

my seat, but now that I have heard his remarks, I support his preemption. My point is content matters. The content of the concept 

of preemption, as he said, is fine, but as a Californian whose state 

leads the nation at all times in regulation of light bulbs and the 

environment and consumer protection, preemption must offer 

something better than the regulations of my state. Last summer 

only hours after attending a telecom subcommittee hearing on the 

future of the wireless market, my brand new Blackberry abruptly 

stopped transmitting. 

After 2 weeks of tech support phone calls, two non-functional 

Blackberry replacements, and a lot of frustration, my wireless carrier finally resolved the problem. Many wireless consumers are not 

so lucky. They do not have the support of the House telecom staff, 

and more importantly, they do not have my talent for striking fear 

into the hearts of customer service reps everywhere. Just ask my 

children. I am encouraged that many wireless carriers are already 

implementing some of the consumer protection measures in this 

draft bill, but millions of phone toting Americans still anguish at 

the prospect of resolving disputes with carriers and even understanding the terms and conditions of their wireless service. 

A national regulatory framework can work in consumers’ favor 

provided it balances state preemption with strong consumer rights 

and protections. Measures that States like California now have on 

the books, such as the 30-day buyer’s remorse period, should be a 

floor and not a ceiling for national regulation. States also are now 

playing a critical role in enforcement, and in 2006 California added 

20 full-time staff to its Public Utility Commission’s complaint bureau and established a 9-person telecom fraud unit. Effective enforcement must not be a casualty of national regulation. I look forVerDate Nov 24 2008 14:27 Jun 11, 2009 Jkt 037690 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-95 SCOM1 PsN: JIMC
46 

ward to working with Chairman Markey and Chairman Dingell to 

achieve bipartisan consensus on this bill. Some tough issues remain, as has been said, but it behooves us in the great tradition 

of this committee to work together to resolve them. I yield back. 

Mr. MARKEY. The gentlelady’s time has expired. The chair recognizes the gentleman from Texas, Mr. Gonzalez. 

Mr. GONZALEZ. Waive opening. 

Mr. MARKEY. The chair recognizes the gentlelady from California, Ms. Solis. 

OPENING STATEMENT OF HON. HILDA SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. SOLIS. Thank you, Mr. Chairman, and good morning. I would 

like to thank you and Ranking Member Upton for having this hearing today. And I would also think that this is a very important step 

toward consumer protection for wireless customers and in districts 

like mine where access is a very important word and something 

that sometimes we may forget here in the Capitol, but there are 

a lot of folks out there that rely very heavily especially in a community like mine where wireless service is very important to the 

Latino community. In fact, according to a recent poll report by the 

PEW Hispanic Center, a survey that they issued, 59 percent of all 

Latino adults in the U.S. considered the cell phone a necessity. 

They tend to have more cell phones than they do regular land lines 

in their homes. 

So it is rather a necessity than a luxury for many of those people 

that we represent. And while there is significant competition in the 

wireless marketplace, we must continue to monitor the need for increased consumer protection. Consumers are still sometimes confused about the billing practices, and I can say that in all honesty 

because I know we have dealt with that in my own household, 

reading the fine print and understanding what these contracts 

mean and in many cases having to pay additional costs for trying 

to change your server. 

I am interested in the title of the bill that we will be discussing 

that would allow municipal broadband networks around the country to be also involved. There is room for improvement there, and 

in California a prohibition on municipal broadband services was included in our statewide video franchising law that was enacted in 

2006. I am interested to learn more about the municipal broadband 

options the draft bill would provide, since municipal broadband 

could provide a backstop to ensure that all our consumers have access. And I am also encouraged by the recent news that many of 

the major wireless carriers are prorating their early termination 

fees, which I think is a good step in the right direction, but we 

need to see more there. So I am looking forward to hearing from 

our witnesses and look forward to hearing from all of you. Thank 

you. I yield back. 

Mr. MARKEY. The gentlelady’s time has expired. The chair recognizes the gentleman from Michigan. 

47 

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

Mr. UPTON. I thank the Chairman. I would have been on time 

as well, but I saw you on a different channel in my office, and I 

saw Mr. Stearns as well. I appreciate you having this hearing 

today on the Wireless Consumer Protection and Community 

Broadband Empowerment Act of ’08. It should be noted that you 

have included in the draft legislation that I helped co-sponsor with 

Mr. Boucher on municipal broadband services. The U.S. wireless 

industry is the embodiment of competition. We have four national 

competitors, several large regional providers and nearly 150 terrestrial mobile providers in all. 

More than 95 percent of the U.S. population lives in areas with 

at least 3 mobile providers and more than half of the population 

lives in an area with at least 5 competing providers. These choices 

provide tremendous opportunities for consumers, and according to 

the FCC, U.S. consumers continue to reap significant benefits, including low prices, new technologies, improved service quality, and 

choice among providers from competition in the commercial mobile 

radio services marketplace. The FCC has recognized that service 

quality in particular has significantly improved. The average 

monthly bill has dropped dramatically from 1997, when it was almost $100; the average bill for AT&T now is less than $40 a 

month. 

To me, these declining rates, growing numbers of customers in 

a competitive marketplace resulting in new products and new services, suggest that there is no market failure requiring any new significant regulatory requirements. In this context of competition and 

innovation, including broadband services at low prices and with increasing better service quality, this subcommittee needs to ask 

whether the draft legislation before us is appropriate. I think there 

is plenty of room for improvement. I would certainly support preempting state regulation of wireless services. These services are increasingly interstate in nature, and consumers would not benefit 

from a patchwork of state regulations. 

However, the draft does not preempt state regulation, and any 

such regulation that is consistent with Federal regulations promulgated pursuant to this bill would be permitted. In addition, the bill 

goes too far, I think, in terms of requiring the FCC to micromanage 

the relationships between wireless carriers and their consumers. 

Competition has spurred wireless carriers to address the issues 

that would be the subject of FCC regulation under the bill. CTIA’s 

consumer code covers most, if not all, of these issues, and the major 

carriers and many smaller ones are signatories of that very same 

code. We should let competition continue to increase innovation, 

lower prices, and enhance service quality. 

Finally, I would simply like to take particular note of the draft 

bill’s second congressional finding that wireless service has become 

a replacement for traditional telephone service for millions of consumers in the U.S. This finding captures a significant change of 

circumstances that demonstrates how profoundly things have 

changed. With 250 million subscribers and a congressional finding 

that wireless has become a replacement for this service, I would 

48 

say that the transition has long been complete. Let us tread very 

carefully as we look to the future. Thank you, Mr. Chairman. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Washington State, Mr. Inslee. 

OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON 

Mr. INSLEE. Thank you. I look forward to working on this. Mr. 

Boucher and I and Ms. Blackburn a couple years ago were working—took a stab at this and couldn’t get the thing through due to 

germaneness, so I am glad we are back here to work on it. I think 

that a national standard is probably—you can’t think of a more appropriate place than a totally interstate commerce industry like 

this one, and I hope that we can come up with the national standard with strong consumer rules and strong enforcement. And I 

think this legislative package is a good place to start and look forward to working with you. Thank you, Mr. Chairman. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from California, Mr. Radanovich. 

OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. RADANOVICH. Thank you, Mr. Chairman. I appreciate this 

hearing, and I do have a statement to read. If it takes too long, I 

will submit the rest for the record. But I did want to state the appreciation for the hearing but also mention that competition in the 

marketplace is what we should be constantly striving for to 

achieve, be it in telecommunications or in any other industry, because it is always far superior at meeting consumer needs than 

government regulation. Choice created through competition drives 

innovation. It lowers prices, increases quality of services, and 

makes things better for consumers. Competition helps consumers 

gain control of the marketplace and tailor products and services to 

their individual wants and needs. 

Nowhere are these benefits of competition more apparent than in 

the area of wireless communications. Cell phones and wireless emails and text have become a nearly ubiquitous component of our 

everyday lives. The wireless communication can do much more 

than that. As the representative for a fairly rural district, we have 

our share of communications difficulties. The digital divide is something that many of my areas have struggled to deal with while access to quick, reliable Internet service is almost a necessity to be 

successful in today’s world. I believe that wireless broadband can 

be a real solution for areas like much of my district that are less 

populated to provide services if we continue to allow the industry 

to develop free of unnecessary and burdensome regulation. 

I want to see providers investing in delivery of broadband to 

rural areas, not dedicating resources to complying with potentially 

50 different sets of rules. When Congress preempted the states on 

rates and entry it was a good start. We could all see how the industry has flourished with that national standard, but now it is time 

to finish the job and establish one national standard framework for 

regulation that recognizes the undeniably interstate nature of the 

49 

industry. The current threat of state-by-state regulation is harmful 

to consumers. It prevents them from fully benefiting from the cost 

savings that should be realized from the efficiencies of national 

frameworks and marketing, customer care operations, and other 

back office support for one of those services. 

I believe we need one set of uniform rules that apply equally to 

all American consumers in at least the wireless industry from the 

disparate regulatory burdens, then we will really see how much our 

constituents can benefit from a competitive industry and a free 

marketplace. I commend the chairman for putting out this draft 

bill. It is a true acknowledgement of the need for a national framework. However, I am concerned that the national framework created by this draft does not go far enough to achieve that goal. I believe we need a simple standard that clearly establishes Federal 

authority in the area of wireless consumer protection, terms and 

conditions, and in order to be successful this framework must serve 

both as a floor and a ceiling, because to only create a baseline but 

allow the imposition of 50 different levels of onerous regulation 

even if they are technically consistent with the statutes will defeat 

the very purpose behind establishing a national standard. 

I think we have a good start before us, but there is still work 

to be done. I look forward to working with my colleagues on both 

sides of the aisle to achieve the result that is best for the wireless 

consumers. Thank you, sir, for the hearing. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Michigan, Mr. Stupak. 

Mr. STUPAK. Mr. Chairman, I will waive and ask for extra time 

at questions. 

Mr. MARKEY. The chair recognizes the gentleman from Virginia, 

Mr. Boucher, whose legislation along with Mr. Upton’s is included 

in our draft legislation, and I mentioned that in my opening statement. I now recognize the gentleman from Virginia, Mr. Boucher. 

Mr. BOUCHER. Thank you very much, Mr. Chairman. I would like 

to reserve my time. 

Mr. MARKEY. The gentleman’s time is reserved. The chair recognizes the gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. I will ask that my full 

statement be placed in the record, but I want to thank you for the 

hearing today, and I appreciate your effort on this bill, and the legislation is a work in progress. I am looking forward to seeing how 

we can even improve it even better, but I am glad you started, you 

laid down this mark for us, and with that I will yield back my 

time. 

Mr. MARKEY. The gentleman’s time will be reserved, and we now 

turn to our opening panel, and that is a very, very distinguished 

panel indeed, and we thank each of you for being here. The first 

witness is Mr. Joey Durel, Jr. He is the President of the Lafayette, 

Louisiana City Parish, and he is testifying on behalf of the American Public Power Association. Under his leadership, Lafayette has 

successfully deployed municipal broadband facilities. We welcome 

you sir. Whenever you are ready, you have 5 minutes to make an 

opening statement. 

50 

STATEMENT OF JOEY DUREL, JR., CITY-PARISH PRESIDENT, 

CITY OF LAFAYETTE, LOUISIANA 

Mr. DUREL. Thank you. Good morning, Chairman Markey, Ranking Member Stearns, and members of the Telecommunications Subcommittee. My name is Joey Durel, and I am the City-Parish President of Lafayette, Louisiana. I am testifying today on behalf of the 

American Public Power Association, of which Lafayette is a member, and I am also the current Vice-Chairman of APPA’s Policy 

Council. The American Public Power Association is a nationwide 

service organization representing the interests of the nation’s more 

than 2,000 state and community-owned electric utilities that collectively serve over 44 million Americans. 

And I am going to tell you a little bit about Lafayette’s story and 

what we did. I ran for office for the first time in 2003 and was 

elected at the end of 2003, and took office in 2004, January. And 

when people ask me why, as I am sure many of you heard at some 

time in your political career, why in the world would you do this, 

why would you do this to your family, the first answer that came 

out of my mouth was I want my kids to stay home. We have migration in Louisiana of our greatest export, which of course is our kids. 

We educate them well for many of you, send them to your states. 

And one of the things that I said was we have to get out of the 

box. 

I hear politicians talk, that was one of my frustrations, I have 

heard politicians talk in Louisiana for a long time about getting 

things done, and they never did anything to correct this issue that 

I saw. And what I learned as we went through our little journey 

is that the reason people stay in the box is because getting out of 

the box can make many people very uncomfortable. One of the 

things that we were able to do in our—and, by the way, let me 

stress real quick. I know I heard a lot about wireless. What we are 

doing is fiber optics. We are deploying fiber optics throughout our 

community to our 120, 125 residents and businesses. And one of 

the first things I was able to do, because I don’t see this as a partisan issue, is we were able to get the Democratic party in Lafayette and the Republican party in Lafayette to stand hand in hand 

for something that they saw as being important to the citizens, and 

so that was—and, by the way, my going on there—I was the Republican mayor of Lafayette, so naturally the Democratic party 

would have been against it normally, and the Republicans would 

have been against it because of various mantra that we hear all 

the time. 

And Lafayette is also the ninth most conservative city in America 

according to a study at Berkeley. All the past presidents of our 

Chamber of Commerce—— 

Mr. MARKEY. For Berkeley to pick you out, that is quite an 

honor. 

Mr. DUREL. That is why I stressed that. All the past presidents 

of the Lafayette Chamber of Commerce of which I was a member, 

a past president, endorsed the project. Every single business organization in Lafayette endorsed the project, and ultimately we took 

it to a vote of the people, and we got a 62 to 38 percent vote of 

that very conservative community in favor of it. One of the things 

that we did a little bit to sell the project was that we were going 

51 

to provide much better service for 20 percent or so cheaper than 

what they could get. But that wasn’t the motive for me. It was economic development. It was getting out of the box to try to keep our 

young people home. 

We are going to have something, and I think this is a strong 

statement, but we are going to have—you are not going to have in 

Washington 20, 25 years from now, in fact, probably 90 percent of 

America won’t have 20 or 25 years, and I think that is a sin for 

America. And the reason—and when I say that what I am stressing 

is not just the fiber optics, but we are going to have something initially that I hope some others will have in the not too distant future, but we hear a lot about megabits per second, and one of the 

things you hear is 1 megabits per second. When we start ours up 

at the end of this year, and we are in the wholesale business right 

now so we have been doing this for a few years, but we are getting 

the retail television, telephone and Internet business, we are going 

to be able to provide our citizens peer-to-peer, customer-to-customer, 100 megabits per second for free. 

We are currently sending a gigabyte, 1,000 megabits per second, 

to our school board, and 100 megabits to every school in Lafayette 

Parish. Since we started talking about it, we have a company from 

Canada called Newcom that is coming to Lafayette and providing 

100 jobs. It is a technology kind of company, and I asked the 

owner, I said we don’t even have it yet, why are you here? He said 

just the fact that you all are making technology such a priority is 

what drove us here from among 200 cities that we were competing 

with around the world. The digital divide, I heard somebody mention the digital divide. We think we will be the first community in 

America to solve that issue. People that are on our system will be 

able to surf the Internet from their televisions with a wireless keypad and a wireless mouse. 

I am going to say this anyway even though I debated, and this 

is very tongue in cheek, but I hope 49 states outlaw doing what we 

are doing, and I say that in a way to make a point, because what 

I would tell those states is please send your technology companies 

to Lafayette, Louisiana, where we will welcome them with open 

arms and a gumbo. But the point is I think we have an opportunity 

in America just like we did in the 1890s with electricity. We were 

told in 1896 or so that the private companies couldn’t justify bringing the electricity to our little town, and so our message to our citizens over the last 3 or 4 years was a really good message and a 

really easy message, because we told them if we don’t do it, we are 

not going to get it. 

And I want you to know I begged, I begged the private companies 

to do it so we wouldn’t have to. I begged them in my office. I 

begged them publicly. I begged them to do it, because why would 

we want to do something like this? It turns out what we have is 

an opportunity to do something where a town in south Louisiana 

is leading America in something that we hope the rest of America 

will follow one day. So hopefully what you will do with this bill as 

it relates to what we are doing is remove any impediments from 

municipalities, even what I have heard talked about today is competition, because that is what has made America great. Thank you 

very much. 

52 

[The prepared statement of Mr. Durel follows:] 

STATEMENT OF JOEY DUREL, JR. 

Good morning Chairman Markey, Ranking Member Stearns and members of the 

Telecommunications Subcommittee. My name is Joey Durel and I am the City-Parish President of Lafayette, Louisiana. I am testifying today on behalf of the American Public Power Association, of which Lafayette is a member. I am also the current Vice-Chairman of APPA’s Policy Makers Council. 

The American Public Power Association (APPA) is the national service organization representing the interests of the nation’s more than 2,000 state and community-owned electric utilities that collectively serve over 44 million Americans. These 

utilities include state public power agencies, municipal electric utilities, and special 

utility districts that provide electricity and other services to some of the nation’s 

largest cities such as Los Angeles, Seattle, San Antonio, and Jacksonville, as well 

as some of its smallest towns. The vast majority of these public power systems serve 

small and medium-sized communities, in 49 states, all but Hawaii. In fact, 75 percent of publicly-owned electric utilities are located in communities with populations 

of 10,000 people or less. 

Many of these public power systems were established largely due to the failure 

of private utilities to provide electricity to smaller communities, which were then 

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. 

This same development is occurring today in the area of advanced communications services just as it did in electricity over 100 years ago. Public power systems 

in some areas are meeting the new demands of their communities by providing 

broadband services where such services are unavailable, inadequate, or too expensive. These services, provided with high quality and at affordable prices, are crucial 

to the economic success of communities across the nation. 

Thus, Mr. Chairman, my testimony today will focus exclusively on Title II of the 

discussion draft regarding community broadband empowerment. APPA has not 

adopted policy positions on the subjects addressed in Titles I and III of the draft. 

Specifically, I am here today, to explain how Lafayette, Louisiana undertook its 

own efforts to provide reliable and affordable broadband services to its citizens. 

You’ve heard similar testimony before. Last October, Wes Rosenbalm of Bristol, Virginia, another APPA member, testified at your hearing on the Future of Telecommunications Competition regarding Bristol’s successful deployment of a system 

that is benefiting their community. Bristol is a good example of what a successfully 

deployed system can bring to its region. Lafayette is another example of the hard 

fought road many communities have to take to be allowed to provide that service. 

Lafayette, Louisiana’s story began in 1999 when our utility system, Lafayette 

Utilities System (LUS) needed to upgrade the communications to its electrical substations. After some research and with the urging of our Chamber of Commerce, it 

was decided that Fiber Optics would be the choice that gave Lafayette the best infrastructure for the future. Once in place, we had a 65 mile fiber loop installed 

around our city. This gave LUS the opportunity to provide wholesale broadband 

services to larger businesses in our area. So, when I took office in January of 2004, 

LUS was already successful in providing these wholesale services. 

But, we knew we could do more. One of my first acts in office was to authorize 

a feasibility study on taking the concept to the next level of public discussion. Having come from the private sector, my first thought was why we would want to compete with something the private sector was doing. However, as I educated myself, 

my thought was ‘‘shame on us if we don’t at least look into this.’’ I told my staff 

that we would move forward until we ran into a hurdle we couldn’t jump over. The 

feasibility study was made public around March of that year, the public discussions 

began and the hurdles began sprouting up; but none that stopped us. I was visited 

by our cable and phone companies. I asked, in fact begged them to do it so we 

wouldn’t have to. But we received the same answer Lafayette received in 1896 when 

the private utility companies chose not to install that new infrastructure called electricity. ‘‘It makes no sense in an area the size of Lafayette.’’ We started informing 

our community and council. And they started misinforming. Ultimately, the message to our community was that if we didn’t do it, we were not going to get it, just 

like in 1896. 

With America falling so quickly behind the rest of the world, we could either lead 

or we could wait for others to tell us when it was convenient for them. Lafayette 

chose to lead with a 62% to 38% vote of our citizens. We were dragged through court 

53 

and ultimately ended up winning a unanimous decision at the Louisiana Supreme 

Court. This delayed us two years, and don’t forget our citizens had voted overwhelmingly for it! 

When people ask me how we did it, my simple answer is that we told the truth. 

You see, what I learned was that we in local government are held to a different 

standard than the telecom giants. We have to tell the truth. Fortunately for Lafayette our citizens saw through good old boy tactics that don’t work like they used 

to. Our citizens were much smarter than they were given credit for, and today, we 

are installing our fiber to the premise infrastructure and will begin serving our community by January of 2009. And, while we’re at it, we are putting up wireless antennas for our emergency services, and we will eventually open it up to our citizens. 

Because they are all connected to our fiber, the consultants tell us we will have the 

most robust wireless system in America. 

And we will have things that no one else in America has, and in fact I would say 

that 80% to 90% of America won’t have some of what we will have 25 years from 

now. That is unless we can remove these barriers to entry to prevent what we are 

doing. Our customers, when communicating with each other, will get not 1 or 2 

mbps, but we will open up the pipe to them, and they will have 100 mbps at their 

disposal. Actually, I often say with tongue firmly planted in cheek that I hope that 

the other 49 states do outlaw what we are doing. Then I will ask them to send their 

technology companies to Lafayette, where we will welcome them with open arms 

and a big pot of gumbo. 

The language included in Title II of the discussion draft provides all communities 

the ability to provide these services, as we have in Lafayette, if they so desire. This 

language is virtually identical to H.R. 3281, the Community Broadband Act, introduced by Representatives Rick Boucher (D-VA) and Fred Upton (R-MI). It provides 

safeguards from potential conflicts, it requires public input on top of an already very 

open process of municipal government. This same language was vetted through both 

chambers back in the 109th Congress and was included in part of the large telecommunications package that passed the full House of Representatives and passed 

out of Senate Commerce Committee. Already this year, identical standalone language, S. 1853 sponsored by Senators Frank Lautenberg (D-NJ) and Gordon Smith 

(R-OR), was passed by voice vote out of the Senate Commerce Committee. 

On behalf of APPA and my community of Lafayette, we urge the subcommittee 

to mark up and approve the provisions of Title II of the discussion draft as soon 

as possible. 

Thank you for allowing me to be here today. I look forward to your questions. 

Mr. MARKEY. Thank you, Mr. Durel. And I can tell you honestly 

that it was greatly upsetting to us when the rankings came out and 

we in Boston were number 2 to Berkeley on the list of most liberal 

communities. But on this question of competition, I am in violent 

agreement with Lafayette in terms of the need to put aside ideology to work on the issue of ensuring that we have the maximum 

broadband deployment. Let us now turn to one of our most distinguished, one of our greatest alumni from this committee, Steve 

Largent, who is the President and Chief Executive of CTIA, The 

Wireless Association. He is a former member of this committee and 

a frequent visitor. We welcome you back, Steve. 

STATEMENT OF STEVE LARGENT, PRESIDENT AND CEO, CTIA, 

WASHINGTON, D.C. 

Mr. LARGENT. Thank you, Chairman Markey. It is a pleasure to 

be here. I can’t tell you how thrilled I am to be testifying before 

this subcommittee today. We have been working for a long time to 

get legislation introduced like you have here before us today. That 

doesn’t mean to say that we think it is perfect. We think we can 

make some improvements on along the process, but we are thrilled 

that you have introduced this legislation and thrilled to be here 

today and want to thank you and your staff for the hard work that 

they have done to get this before this subcommittee. 

54 

I want to say that the wireless industry continues to be one of 

the great consumer and economic success stories of the 21st Century. It is happening in large part because in 1993 this subcommittee gave the industry a green light in the form of the current national framework for entry and rate regulation. As a result, 

we have both regional and national competitors offering service 

with national regulation on rates and entry designed to ensure that 

a company’s fortunes rise and fall based on one thing, whether it 

satisfies customers. But this success is now threatened because 

some states are exploiting the other terms and conditions clause of 

the Act to override national rules with rules of their own. 

If they are successful the result will be a patchwork of conflicting 

state-by-state regulations, and consumers are going to be left holding the bag. You simply can’t regulate wireless in one state and 

have the effect of those regulations suddenly stop at the border of 

the next state. I can’t emphasize this enough, inconsistent regulation by even a few states threatens the pro-consumer benefits that 

emerge once wireless stopped being local and started being national. The efforts of a few should not threaten a system that works 

so well for the many. Unless the subcommittee acts to protect the 

regime you set up in 1993, wireless companies will soon have to 

spend less time serving consumers and more time keeping up with 

the latest changes to multiple sets of rules, and we fail to see how 

that really helps consumers. 

Congress can put a stop to this by closing the other terms and 

conditions loophole and finishing what you started by extending 

the current national framework to consumer protection standards. 

In a relatively short time, wireless has gone from novelty to necessity. Americans pay less for service than consumers in other countries do, and as prices have fallen they talk more. CTIA member 

companies have come to serve more than 250 million customers, 

carry more than 1 trillion minutes of traffic a year, and support 

more than 600 different kinds of wireless devices doing things that 

were to previous generations science fiction. 

The economic impact of all this is just as amazing. Since 1993, 

wireless companies have invested more than a quarter of a trillion 

dollars in infrastructure and spectrum and created more than 4 

million U.S. jobs, with an additional 2 million to 3 million jobs and 

$450 billion in gross domestic product forecasted for the next decade, and we have achieved all of this despite the fact that the U.S. 

allocates far less spectrum per wireless user than our main economic competitors, even after the completion of the 700 megahertz 

auction. 

CTIA applauds the provisions in the staff draft that would move 

us towards additional allocations of spectrum for commercial usage. 

Consumers have done so well because Federal regulation promoted 

this kind of vigorous national competition. If one of CTIA’s members doesn’t satisfy the customers, their competitors will, so our 

members work very hard to give their customers what they want. 

In 2003, we introduced a 10-point, CTIA consumer code for wireless 

service to ensure fair marketing and transparent billing. We protect our customers’ privacy by prosecuting pretexters and identity 

thieves. We secured injunctions against text message spammers. 

We have gone after telemarketers who mask their identities using 

55 

spoofing. We created a national recycling program that keeps old 

phones and technology out of landfills and gives them to charity 

groups for distribution. 

We have launched a nationwide wireless Amber Alert program to 

help keep America’s children safe. But we haven’t stopped there. 

For example, many of CTIA’s member companies have adopted extended trial periods upon hearing from consumers that this is important to them. Several carriers have also decided to prorate early 

termination fees, again in response to learning that consumers 

value this. And just last week multiple carriers announced flat rate 

all-you-can-talk plans. When consumers make a demand, wireless 

companies have no choice but to say OK. 

Wireless carriers live in a ‘‘what have you done for me lately’’ 

sort of world, and the companies that thrive understand that. 

Americans have come to rely on wireless phones first as safety devices, then for convenience, and now as an integral part of daily 

life. The system you created makes that possible, and it works very 

well. On behalf of wireless carriers serving all American consumers, we ask you to keep it working by closing the other terms 

and conditions loophole and to extend the national framework to 

consumer protection standards. I thank you, Mr. Chairman, and 

look forward to your questions. 

[The prepared statement of Mr. Largent follows:] 

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Mr. MARKEY. Thank you, Steve, very much. Our members will 

have to go over and cast a vote on the House floor. There is 6 minutes left to go on that roll call, so we will recess for about 15 minutes, and when we come back, Dr. Darby, we will recognize you. 

[Recess.] 

Mr. MARKEY. We thank you all for your patience. The hearing is 

ready to recommence, and we will just wait another 10 seconds so 

that people can regain their seats. And at this point I will introduce our third witness, Dr. Larry Darby, who is a board member 

and Fellow of the American Consumer Institute of Consumer Research. He is also the former chief of the FCC’s Common Carrier 

Bureau. Welcome, Dr. Darby. Whenever you are ready, please 

begin. 

STATEMENT OF LARRY F. DARBY, PH.D., THE AMERICAN 

CONSUMER INSTITUTE, WASHINGTON, D.C. 

Mr. DARBY. Good morning, Chairman Markey and Ranking 

Member Stearns. I really appreciate the opportunity to come and 

share my views on this important bill. I should say just a little bit 

about the institute. We are a new 501(c)(3) non-profit, nonpartisan 

group. We were started in 2005, and our basic goal is to promote 

careful consumer welfare analysis applied to legislative and regulatory proposals, of which this qualifies. The staff discussion draft 

has enormous implications for consumers as users, as taxpayers, 

and as citizen stakeholders in the information economy. I don’t 

have much time. I am going to go fast. I will have to address selectively. I am going to talk about 5 points. 

First, we urge that all proposed regulations, this included, be 

subjected to a rigorous consumer welfare analysis of the costs and 

benefits. Our experience is that such tests are simple in principal 

but they are very demanding to apply and too often ignored. Good 

intentions are important, but they do not substitute for benefits actually delivered and costs avoided. Accurate cost benefit analysis of 

markets and government action are absolutely critical in this instance, since the draft opens the door to government action to address presumed market imperfection. As others have pointed out, 

the facts of wireless market performance suggest that the current 

mix of regulation and markets is working pretty well. FCC and 

OECD data indicate U.S. consumers compared to those in the rest 

of the world enjoy more choices, more competition, high usage 

rates, low cost. Costs per minute are declining, average use is increasing, penetration is high and rising. 

J.D. Powers, the FCC, the Better Business Bureau data indicate 

steadily improving service quality, and importantly J.D. Powers reports that consumer satisfaction in the sector is at an all-time high. 

International comparisons are not always reliable, but by any reasonable assessment the U.S. wireless sector and its regulators have 

a remarkable success story to tell. For certain, and I concede this, 

performance is not perfect, and a lot of consumers register complaints, but the current government industry partnership is certainly not broken. 

Second, consumer welfare is served by full disclosure of terms 

and conditions associated with commitments by both parties and 

service contracts. We regard this as the central premise of the bill, 

75 

and we support it strongly. Rational consumer choice and welfare 

depend on complete, accurate information about their options. Inadequate, imperfect, misleading, poor, bad information is a sign of 

market failure and a widely accepted basis for targeted government 

intervention. The CTIA consumer code appears to us to be quite responsive to consumer needs and in some ways appears to exceed 

the requirements in the draft. 

The Committee, I think, might usefully compare the staff requirements with those in the CTIA code. I point out that rivalry 

in wireless markets will continue to be marked by increasing quality of service improvements and service differentiation. Customer 

dissatisfaction that many of you have cited is a source of churn and 

the loss of market share. Service rivalry in the sector is very likely 

to accelerate in the future and add some substantial consumer 

value. 

Third, we commend the draft’s intention to, 1, clarify consumer 

protection requirements, and 2, to nationalize fully and clearly 

their definition and enforcement. The national framework put in 

place in 1993 homogenized economic regulation of the sector across 

the country. It has worked well and should be credited for the substantial performance gains we enjoyed. That jurisdictional framework in our view should be replicated as needed to assure adequate 

consumer protection in this environment. Now, we recognize legitimate state interest in protecting consumers, but we also note that 

state regulation poses risk. First, well-meaning consumer protection rules we are concerned may morph in the direction of full scale 

rate and service regulation of the kind we have avoided for the last 

15 years. 

Second, consumers ultimately pay all the added cost of regulation. We should recognize that, and there are many. Third, since 

users are mobile and carriers are interstate in nature, we are concerned that the cost of individual state regulation will almost certainly leak and burden users nationwide and in other parts of the 

country. We emphasize again that economic cost benefit studies 

that we have seen of state and Federal consumer protection provide 

no consumer welfare basis for permitting to emerge a mosaic dappling of consumer protection issues or schemes. 

Fourth, we are very concerned that regulators, and this is a personal note for me as a former regulator, we are very concerned that 

regulators might find support in Federal legislation for rate service 

or consumer protection regulation based on cost of service. The recent history of service regulation in the wireline sector and my experience as chief of the Common Carrier Bureau is filled with a 

number of serious danger signs and very, very few successes. We 

have seen no credible evidence that cost-based consumer protection 

rules in the wireless sector would create consumer value. 

Finally, we are uneasy about the local government network competition with investor-owned operators. I certainly see the point of 

view. We as U.S. advisors have for many years lectured other governments on the need to privatize and the dangers of private capital formation for tax funded competition. I have more, but I thank 

you again for the opportunity, and I look forward to your questions. 

[The prepared statement of Mr. Darby follows:] 

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Mr. MARKEY. Your time has expired. And now we are going to 

recognize Chris Murray. Mr. Murray is a Senior Counsel at the 

Consumers Union, and he testifies today on behalf of Consumers 

Union, the Consumer Federation of America, Free Press and Public 

Knowledge. Welcome back, Mr. Murray. 

STATEMENT OF CHRIS MURRAY, SENIOR COUNSEL, 

CONSUMERS UNION, WASHINGTON, D.C. 

Mr. MURRAY. Good morning, Mr. Chairman. Good morning, 

Ranking Member Stearns and members of the Committee. I appreciate you having me back again. First, I would like to thank staff 

for the hard work on a really excellent draft bill. Producing serious 

legislation in these times is often difficult, and I would like to commend staff for doing a good job here. We think the bill is a good 

bill. We don’t think it is a perfect bill. But I will tell you a little 

bit this morning about what we see in the marketplace, what we 

like about the bill, and what we might like to see in the bill that 

is missing. As I mentioned to the committee before, wireless consumers are not as satisfied with wireless services they should be. 

Our magazine, Consumer Reports, does a survey of consumers 

every year, and we found that wireless is 18 out of the 20 industries that we survey, just above computer makers’ tech support and 

cable television service, digital cable television service. And we 

would like to see those marks improve. We see that U.S. consumers 

are spending more on wireless than consumers in other countries, 

an average of about $506 per year, versus Sweden where they are 

spending $246 on average per year and Germany where they are 

spending $371. There is a lot of happy talk from the industry about 

permanent pricing, but permanent pricing doesn’t have much relevance to consumers if you are not getting permanent prices. You 

can’t get a plan from the wireless companies that has no flat fees 

in those 7 to 8 cents per minute fees that they are talking about, 

so it doesn’t seem to me that it is a terrifically relevant measure 

of cost here. 

It is what consumers pay on average in the end that matters. We 

see that this is a high fixed cost industry with the unlimited plans 

that a lot of the carriers are unveiling, so again we don’t know that 

permanent pricing is really a good metric here. We see some of the 

services that carriers are offering are extraordinarily expensive. 

Skydeck’s CEO was before this committee and noted that ring 

tones from the carriers note per note are the most expensive form 

of music in history at $2 per 15 second jingle. We see that text 

messages, if you were to put a floppy disk worth of text messages 

across the network on a permanent basis, it would cost you more 

than $2,000 to send that, and it is a very small amount of data. 

Of course, there is a $20 plan that they would like to get you into 

and so again it is these high fixed costs that we see. Price aside, 

we are concerned with some of the competitive tactics that we see 

from the carriers, such as high early termination penalties even 

when consumers are getting those subsidies. We understand that 

there may be a justification for some of these early termination 

penalties if the subsidies are there, but it really is a head scratcher 

to me when a consumer buys a phone such as the iPhone. It has 

got no subsidy attached to it, yet they still get locked into that 

80 

$175, 2-year contract. We see handset locking and application 

blocking, where innovation isn’t reaching consumers where entrepreneurs aren’t able to break into the market because they can’t 

sign a deal with the big carriers. 

Blackberry, for instance, had an application that they want to 

offer consumers for free, a mapping program, but AT&T had one 

for $10 they wanted to offer consumers, so Blackberry’s free application never saw the light of day. We see that U.S. consumers have 

fewer choices than European and Asian consumers in handset markets, because most of them are being sold through the carriers. So 

again we see some concerns in this marketplace, and we are glad 

to see a bill that is taking on the serious task of addressing those 

concerns. What we like about the bill is that it aims at clearer disclosure of the terms of cell phone service. It gives you better information on coverage maps, on call quality, and importantly, we 

think, aims for more transparency about these early termination 

penalty subsidies. 

If the subsidies are there and consumers are benefiting from 

them, great, let us just see some more information about what 

those subsidies really are. Our fear, as I said, is that the carriers 

are padding those early termination penalties not to reflect actual 

costs or damages but that it is a little bit of overage. We like that 

the bill aims to eliminate junk fees. There is no more padding bottom lines with these mystery regulatory charges that aren’t authorized by any state, Federal or local authority. And we like that the 

bill preserves municipal authority to provide broadband service in 

a competitively neutral way. The bill also aims at more efficient 

spectrum usage. That would pave the way for innovative new technologies like smart radio. We think that is extraordinarily important to begin that conversation for consumers. 

What the bill needs, we think, perhaps most importantly is a 

strong provision against application blocking and handset locking. 

It is my hope that some forward-thinking member of this committee will make a stand for innovation and for independent entrepreneurs and do something to add a provision to the bill on 

handset locking and application blocking. We would also like to see 

it eliminate the FCC’s common carrier exemption. One of our concerns if you are going to federalize wireless treatment, there may 

be Federal regulatory authorities that don’t have full purview over 

this industry because all common carriers have an exemption from 

Federal Trade Commission oversight. So we think that it is important if we got the most important Federal body overseeing advertising practices that their hands not be tied if we federalize this. 

So the central question of the bill is what is the price of preemption? Will consumers have strong protections and good remedies 

available when harms emerge, or will they find that with the states 

out of the game there is nobody to answer their calls at the Federal 

government or that the wireless industry, as I mentioned, getting 

special protection so that some of the agencies they would otherwise be able to turn to have their hands tied? Wireless services will 

increasingly become the way that citizens connect to the Internet 

and connect to the economy of the 21st Century. We think that free 

markets and competition help solve a lot of these problems, but 

only when consumers are armed with good information, reliable inVerDate Nov 24 2008 14:27 Jun 11, 2009 Jkt 037690 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-95 SCOM1 PsN: JIMC
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formation, and then they are unconstrained to vote with their feet 

and vote with their pocketbooks. Thank you for having me. 

[The prepared statement of Mr. Murray follows:] 

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Mr. MARKEY. Thank you, Mr. Murray, very much. The chair will 

now recognize himself for a round of questions, and let me begin 

by asking you, Mr. Largent, the wireless industry stipulates that 

the early termination fee reflects in part the cost of a subsidized 

phone. Two questions. One, do you support telling consumers the 

amount of the subsidy they are getting? 

Mr. LARGENT. Yes. 

Mr. MARKEY. And, 2, if a consumer brings their own phone and 

thus it is not subsidized with the service, should their early termination fee be the same as for a consumer whose phone is subsidized? 

Mr. LARGENT. No, and I would like to explain why. Because the 

subsidization goes far beyond just the phone that you purchase. 

The subsidy, you talk about the cost for acquiring customers, the 

cost to service a customer, that all is part of the subsidy. It is not 

just the subsidy for the phone. 

Mr. MARKEY. Mr. Murray, your comments. 

Mr. MURRAY. There is the cost of doing business for every other 

business in America. You know, on your cereal box there are certainly other costs besides just producing the cereal. There are regulatory fees associated with that. But they bundle it all in, and they 

give you an all-in price at the end. 

Mr. MARKEY. So should they deduct the amount of the subsidized 

phone? 

Mr. MURRAY. I am not sure I understand the question. 

Mr. MARKEY. In terms of the charge to a consumer who is 

not—— 

Mr. MURRAY. At minimum I think they should deduct the charge 

of the subsidized phone, but it also seems to me that if you are not 

getting the main bulk of the subsidy, maybe there are other subsidies in there, but I think most carriers would concede that the 

claim at least is that the phone is the bulk of the subsidy so removing the bulk of that subsidy what is left, and shouldn’t consumers 

actually get a lower price on not just eliminating the early termination fee but on their monthly price of service, because if the recovery of the subsidy cost is built into the cost of the service and 

you are not recovering a subsidy, it seems to me there should be 

some consumer benefit pass through there. 

Mr. MARKEY. OK, great. Now again, Mr. Largent, what the draft 

bill seeks to do is to establish national consumer protection rules, 

yet while the bill seeks to preempt states from establishing differing standards, it authorizes states to enforce the national standards in addition to the Federal Communications Commission. Now 

many wireless carriers seem to oppose state enforcement. If we establish a single set of rules, what is wrong with a state cop on the 

beat to ensure effective enforcement? 

Mr. LARGENT. Well, the fear is that the rules change. When you 

have somebody enforcing a rule that maybe the way they interpret 

the rule changes in every state, and that is the fear. 

Mr. MARKEY. But you don’t want all complaints going to the Federal Communications Commission, do you? It is an understaffed 

agency to begin with. 

Mr. LARGENT. I think there is a role for the states to play. It is 

just defining what that is I think is the real nut that we have to 

93 

crack here, but I think that the interpretation of the rules is the 

thing that we hear the most is that every state begins to—— 

Mr. MARKEY. So in theory you are not opposed to state enforcement? 

Mr. LARGENT. No. 

Mr. MARKEY. OK. Mr. Murray, can you comment on state enforcement? 

Mr. MURRAY. Well, I think you raise a good point, which is that 

we don’t want to be putting more work on an already overworked 

and under-performing Federal Communications Commission. I 

think that the states have an important role in enforcing these 

standards. 

Mr. MARKEY. Mr. Durel, a group of associations representing the 

local exchange carriers recently sent the subcommittee a letter saying that municipal broadband legislation would chill investment by 

private providers and that any municipal broadband network 

should be confined to areas where there are no private providers. 

Do you have a response to those arguments? 

Mr. DUREL. Well, I would think that our number 1 goal is not 

to chill the investment but to service the consumers, and if they 

are not servicing the consumers then I think it is pretty logical for 

the municipalities to step up. 

Mr. MARKEY. So you are saying if they are there they are not 

providing the level of service. 

Mr. DUREL. Again, we had the great story of 1896. We have— 

I think the APAA, I think initially there was about 3,500 or so 

communities that decided to bring electricity themselves because 

the private sector wouldn’t do it. And in our town it took about 25 

or 30 years for the private sector to show up with electricity. We 

can’t wait for it to be convenient to them. 

Mr. MARKEY. So you are saying the companies might be there to 

provide you kind of dirt road service in terms of capacity, and you 

want to be able to bring in a super highway, because that is the 

only way you are able to remain competitive with the job creation. 

Mr. DUREL. That is exactly right. We have what you have here 

in Washington already. We are not saying that we don’t have 

broadband service, but we don’t see where we are getting that 

super highway to prepare ourselves for the future, and this new 

technology, and it is not that new, but it is more proven, but we 

see this as the infrastructure of the 21st Century. And once again 

if we don’t do it, we are not going to get it. 

Mr. MARKEY. Thank you. My time has expired. The chair recognizes the gentleman from Florida. 

Mr. STEARNS. Thank you, Mr. Chairman. Mr. Durel, you had 

mentioned in your opening statement about how you are providing 

fiber optics to the home at 100 megabits. That is pretty impressive. 

But I think you said in your statement that you provide it for free 

to the consumers? 

Mr. DUREL. I was trying to get a lot into 5 minutes, but that is 

not quite right. 

Mr. STEARNS. I think the question I have is what are you charging the consumers, and moreover, you are subsidizing this effort of 

laying down the fiber optics and doing it through your electric company or how are you paying for this? 

94 

Mr. DUREL. Ratepayers. This is not taxpayer dollars. It is no risk 

to the community. It is like a private business, and we went to 

Wall Street, borrowed money based on the model that we had, 

bought insurance to cover any risk at all, and it is strictly paid by 

the ratepayers. And what we are going to charge our community 

for the 3 services is probably going to be—we have guaranteed 20 

percent less than whatever they are getting already for more quality, so for $85 they will get telephone, television, and Internet as 

compared to about $110 in Lafayette right now. 

Mr. STEARNS. So you put that out in consumer information saying we will undercut any private company by 20 percent? 

Mr. DUREL. We say we can provide it for 20 percent less, and we 

hope it will come down. 

Mr. STEARNS. But there was no one out there to really challenge 

you, right? 

Mr. DUREL. Sure. There are private companies out there that can 

challenge us. 

Mr. STEARNS. OK. 

Mr. DUREL. And they did. 

Mr. STEARNS. So now are you the sole provider? 

Mr. DUREL. No, no. We have AT&T and Cox Communications. 

Mr. STEARNS. Now you understand that when you go to Wall 

Street you are getting a better deal than if I went to Wall Street 

or the average company goes to Wall Street because you are getting 

municipal bonds discounted. 

Mr. DUREL. And they get tax benefits we will never get. They get 

tremendous tax benefits that we don’t get. 

Mr. STEARNS. So you think the tax benefits to the private sector 

offsets the advantage, since you don’t have to pay any taxes? 

Mr. DUREL. Well, we do pay taxes. It is just called in lieu of 

taxes, and we pay a lot more in Lafayette than they pay in Lafayette. 

Mr. STEARNS. And what is in lieu of taxes, who does that go to? 

Mr. DUREL. Because we are a publicly-owned utility, officially we 

can’t pay taxes, so it something called in lieu of taxes, and we also 

in the negotiations that we did with our legislature is we have to 

price ourselves as if we are paying the same taxes that we are paying, which we offer to do because they pay so little in our state. 

Mr. STEARNS. Mr. Darby, do you have any comments relative to 

what Mr. Durel said? 

Mr. DARBY. The Committee faces a dilemma here, and our view 

is that we want consumers to have service. We want them then to 

have good service, and we want them to have a choice of service. 

And I will put on my former Wall Street hat for a minute and express the concern that as a practical matter any state or local government involvement in this sector signals to the private sector a 

competitive advantage in the form of lower cost to capital. Now I 

don’t know the particular circumstances here. We would support if 

circumstances show that nobody else is going to be willing to offer 

the service that it doesn’t make any sense to deny consumers that 

service. 

That said, we think the playing field ought to be level. We think 

that any government-affiliated or -owned provider should provide 

those services on a competitive basis and pay the same kinds of 

95 

cost, the same kinds of taxes that the private folks would. The real 

problem here is that once you put in place a government-operated 

system, it is going to be difficult to justify to Wall Street why you 

should put in another one. 

Mr. STEARNS. Mr. Largent, assuming this bill goes forward and 

in effect if the state attorney general or Public Utility Commission 

could adopt additional enforcement protections or punitive remedies in addition to what the FCC Communications Act provided, 

how do you feel about that? 

Mr. LARGENT. Well, as I mentioned to Mr. Markey, he talked 

about a role that the states can play, and we think that there is 

a role that the states can play to. We think the role that they play 

is best played through the state attorney general, who has a consumer protection responsibility, and so when I said that, that is 

what I was referring to. We would prefer not to see the PUCs and 

the state legislatures involved in trying to legislate or regulate the 

industry, and that is why we are here today to have a national 

framework for the other terms and conditions that don’t operate 

under a national framework today. 

Mr. STEARNS. My last question is that I think all of us have sons 

or daughters who complain about they have lost their cell phone 

or they want to cancel and get the newest and greatest, and then 

they get all these early termination fees, so they all come to us and 

complain and want us to pay for them. But I guess the question 

for you is has the industry responded to these consumers’ complaints by full information to them at the front get-go so that they 

know, because I always say to my son, well, did you read the fine 

print? Do you think that your industry could perhaps be a little bit 

more transparent and explain this more carefully to them so it is 

not a feeling that they have been taken advantage of? 

Mr. LARGENT. Well, I am not going to make any excuses for any 

person working in the shopping mall that doesn’t do a good job of 

explaining early termination fees to a customer. We certainly have 

those cases involved in our industry, and we try not to do that. 

That is not a standard practice or standard operating procedure. 

But in our consumer code we talk about being very forthright with 

the terms and conditions and early termination fees and the like 

when we sell customers a cell phone. But the fact is that our companies actually are moving to address early termination fees as we 

speak. 

Even as I was speaking at a NARUC meeting right here in D.C. 

2 weeks ago in the process of—from the time I started my speech 

to the time I ended my speech another company actually addressed 

early termination fees and their reduction of early termination fees 

over the course of a contract. And so we are seeing movement already in response to consumer demand as our industry always 

does. 

Mr. STEARNS. Thank you, Mr. Chairman. 

Mr. DOYLE [presiding]. I thank the gentleman. So I am taking a 

look at this 700 megahertz result, and in particular the C block has 

met its reserve, and it looks like it is going to sell for around $5 

billion. The likely winner, Verizon Wireless, has announced plans 

to hold a developer’s conference that allows third parties to create 

devices and applications. And AT&T says that they are already 

96 

open. They are going to let you take your own device and use whatever application they want. Mr. Largent, are you as excited as I am 

about that? 

Mr. LARGENT. I really am. I think that some of the remarks that 

Mr. Murray made are going to be addressed through this open access piece that is being auctioned today. Of course we have to be 

careful what we say about an auction that is ongoing today, but 

having open access and having it applied to the wireless industry, 

I think is going to be a tremendous innovation for our industry, 

and it is going to continue to grow and continue to get better and 

better. And so I am very positive about the open access piece, and 

I think you are going to see a lot of players. As you mentioned, 

there are a number of companies, national companies in the wireless industry, that are already moving in that direction. 

Mr. DOYLE. What do you think about that applying to all carriers, not just Verizon and AT&T? 

Mr. LARGENT. That would move to open access? 

Mr. DOYLE. Yeah. 

Mr. LARGENT. Well, not all the carriers are going to have access 

to 700 megahertz, and that particular piece of spectrum is particularly appropriate for accessing the Internet. But I think we are a 

competitive industry. You are going to have a number of companies 

move into this open access world, particularly the major wireless 

carriers, so I think the competitive forces are going to work to see 

that you will have more of our members a part of the open access 

alliance than not a part of that open access alliance. 

Mr. DOYLE. Mr. Murray, are you excited about that, too? 

Mr. MURRAY. Sir, I am excited about the possibility that consumers will see some more openness. I am a little worried that perhaps the promises aren’t quite going to match up with the reality. 

I know that initially Verizon was suing over the open access conditions. They withdrew that. CTIA is now the plaintiff in that suit, 

so again it seems like this is going to be challenged in some regard. 

You know, I would like to see these companies move towards openness, and we are going to work in earnest with them to try to make 

it so for consumers. But we have seen promises made that haven’t 

been promises kept. We saw carriers saying we are going to reduce 

early termination penalties, and they haven’t quite gotten those reductions in place yet. 

They announced it a day before a Senate hearing, and what we 

found is that they were actually telling consumers that they were 

reducing early termination penalties when in fact they were not, 

and this is not people in a mall, this is customer service representatives on a company’s main call lines. So, you know, again we want 

to make sure promises comport with reality. 

Mr. DOYLE. And I am curious about that, Mr. Largent. If two of 

your largest members, Verizon and AT&T, are moving towards 

open access, why is CTIA still suing the FCC to block that? 

Mr. LARGENT. Well, we are suing because of a statement that 

was put in the record about open access that claimed that there 

was a limited supply of handsets available to customers in the 

United States. That was something that was said as a part of the 

700 megahertz auction, and we wanted to say—our protest didn’t 

have anything to do with the open access piece. It has to do with 

97 

the statement that was made in this filing by the FCC that said 

that customers in the United States did not have access to many 

handsets, and the facts are that customers in this country have access to over 600 different handsets. We think that is a lot, and so 

we felt like we needed to file this suit just simply to correct the 

statement that was made by the FCC. 

Mr. DOYLE. I see. Mr. Murray, do you have any final comments 

about that? 

Mr. MURRAY. It seems like a bit of a big hammer to go after a 

misstatement in the record, but in any case I believe that we are 

going to see companies move towards openness over time because 

the market will eventually demand it, but in the meantime we still 

see carriers out there who I can’t bring my own phone to Verizon, 

I can’t take AT&T’s iPhone to another network without breaking 

my agreement with the company, so we are concerned about the 

practices that we see. 

Mr. DOYLE. OK. Thank you very much. The chair is going to now 

recognize my good friend Mr. Shimkus for 8 minutes. 

Mr. SHIMKUS. Mr. Chairman, I would like to because Mr. Upton 

has to leave, I would like to allow him to jump ahead of me if that 

is OK. 

Mr. DOYLE. OK, no problem. The chair recognizes Mr. Upton for 

only 5 minutes. 

Mr. UPTON. I appreciate my friend, Mr. Shimkus, letting me go 

next. I do have a couple questions. I appreciate your testimony, and 

I guess I want to go back to something that Mr. Murray said and 

just clarify it with you, Steve, and welcome back to the subcommittee. Is your sense with the new auction block that is there 

that in fact will get directly to the argument that Mr. Murray 

raised that we will have more services and less cost, the example 

that Mr. Murray used that Sweden is twice as expensive as ours 

in offers, and we offer fewer services will be resolved? 

Mr. LARGENT. Well, actually I think it is resolved today, because 

the fact of the matter is we have more services at less cost than 

any other country, particularly in Europe. If we do this price per 

minute, the U.S. is about 5 cents per minute, 4 or 5 cents per 

minute. Sweden is 12 cents per minute. Spain is 16 cents per 

minute. Germany is 30 cents per minute. So clearly, and you look 

at the number of handset choices that customers in the U.S. have 

versus, for example, just take for example Great Britain. Customers in Great Britain have about 160 choices of handsets. In the 

U.S. we have 600 to 700 choices, so clearly the market is working 

in the U.S. better than anywhere else in the world in my opinion. 

Mr. UPTON. Let me follow up with you as well as it relates to 

the consumer code that is there. Now most carriers—certainly I 

think the companies involved in CTIA—— 

Mr. LARGENT. If you are a member of CTIA you have to adhere 

to the consumer code, which represents about over 95 percent of 

the customers in the U.S. today. 

Mr. UPTON. And I too, as you indicated in your opening statement, you are delighted that this bill has been introduced. We need 

to move forward. There needs to be some corrections. Does the consumer code allow for many of the changes that part of this bill has 

introduced? 

98 

Mr. LARGENT. This is actually a copy of our consumer code I 

brought with me, and it has 10 provisions in it. One is a disclosure 

of rates and terms of service to consumers, make available maps 

showing where service is generally available, provide contract 

terms to customers, and confirm changes in service, allow a trial 

period for new service, provide specific disclosures in advertising, 

separately identify carrier charges from taxes on billing statements, provide customers the right to terminate service on changes 

to contract terms, provide ready access to customer service, 

promptly respond to consumer inquiries and complaints received 

from government agencies, abide by policies for protection of customer privacy. 

These are all things that we think go beyond what the bill requires. These are things that are adhered to by our carriers today. 

Mr. UPTON. Mr. Durel, as I indicated, I am a supporter of allowing municipalities to participate. To me it allows more choice and 

competition. Obviously, you subscribe, I think, to many of the same 

consumer codes that Mr. Largent just indicated, is that right? Do 

you have a consumer code that is fairly recognizable by the consumers there in Louisiana? 

Mr. DUREL. I really can’t—— 

Mr. UPTON. Do they know their rights? 

Mr. DUREL. Sure. We talked about, I heard level playing field a 

couple of times, and I always got a kick out of that, because it will 

never be a level playing field. Both sides have advantages. In our 

case we debated and discussed our project with our competition sitting out in the audience. Nobody in the private sector would ever 

do anything that dumb. But we did because we believe in transparency, and it has to be transparent, and so I think the consumers, they can call the CEO of this company, which is me, and 

they can call the board of directors, which is the council, and they 

can come see them every Tuesday night, so we have plenty. 

Mr. UPTON. Now my sense is that you probably for the competition that is there, you said AT&T, and there was one other 

cable—— 

Mr. DUREL. Cox. 

Mr. UPTON. Cox. Do they offer these bundled services, 

broadband, telephone, and video? What type of franchise fee do 

they pay to the City of Lafayette? What is your agreement with 

them in terms of—do they pay per subscriber? 

Mr. DUREL. We get a little bit from them. And, by the way, since 

you said Lafayette, I said a while ago we had 125 people. We have 

125,000 people in the city, and Newcom brought 1,000 jobs, not 100 

jobs. But, yeah, we get a little bit. They help support our channel, 

the government channel, and they pay some attachment fees. Cox 

does. BellSouth doesn’t pay anything, or AT&T. 

Mr. UPTON. Thank you. Thank you, Mr. Chairman. Thank you, 

Mr. Shimkus, as well. 

Mr. DOYLE. Thank the gentleman. The chair now recognizes my 

good friend from California, Ms. Harman. 

Ms. HARMAN. Thank you, Mr. Chairman. In my opening remarks, 

I talked about enforcement, and my impression that the states, at 

least my state, are doing very well in the enforcement area. It also 

occurs to me that whatever we do about preemption, we don’t want 

99 

to lose the ability for tough enforcement. So let me start with Mr. 

Murray and ask you about the role that state PUCs or other regulatory bodies and states’ attorneys general are playing in the enforcement area, and whether you think this is a role that we would 

want to continue, and then ask others to comment. 

Mr. MURRAY. You have put your finger on a really important 

point, which is that most of the marketplace changes that we have 

seen to date have been driven by either lawsuits or states’ attorneys general in states pursuing the wireless carriers, whether it 

was for inaccurate coverage maps, inaccurate disclosure on billing, 

and so it would be an unfortunate, unintended consequence if what 

happened here was in the process of trying to set federalized consumer protection standards for consumers, we end up preempting 

a bunch of suits that are either on the eve of trial or states who 

are ready to get in the game on simply just enforcing the standards 

that we have got out there already. I don’t think the regulatory 

creep fear is a legitimate one if we got strong Federal standards. 

Ms. HARMAN. Let me ask others to comment. Anybody? 

Mr. LARGENT. Well, I would just say that the states’ attorneys 

general, they already have responsibility for consumer protection, 

and we don’t have a problem with them being included in this bill 

in that fashion. We get more concerned when it goes to other agencies or other departments in a state, and we want to have a long 

talk about that. 

Ms. HARMAN. Well, I appreciate that answer. I think we should 

have a long talk, but I don’t think we want to cut states out of the 

consumer protection business, and I think that is what you just 

said, Steve, am I right? 

Mr. LARGENT. That is right, and as long as we are operating 

through—I mean we feel like the safest way to do that is through 

a state’s attorney general. 

Ms. HARMAN. Well, let us talk then, as long as we are talking 

about consumer protection, about the future, and let me direct this 

question to you. What if new problems emerge, things we haven’t 

thought of in this brilliant piece of legislation that we will eventually reach consensus on, new problems in the wireless market. For 

example, in the future cell phones become vehicles for identity 

theft, and they are already vehicles, but they become bigger vehicles, better vehicles, and there is text message spamming, which 

degrades service quality. Would you feel that the states would be 

free to act on new issues that aren’t covered by our legislation? Let 

me ask all of you, how would you feel about that? 

Mr. LARGENT. Well, I would say that the companies themselves 

are doing a great job of addressing many of these issues that you 

have already raised, and I mentioned that in my opening statement 

that we are addressing those. So my feeling is this is a competitive 

marketplace, and there are going to be problems that we are going 

to face in the future. And I would tell you that there are problems 

that we faced in the past, and the way that we have dealt with 

them is the most expeditious way to do it, and that is why the company is taking steps to ensure that their customers are receiving 

the type of services that they expect. 

Ms. HARMAN. Well, I applaud the fact that the companies are 

taking steps, but we are all here today to see whether or not that 

100 

is adequate, and some of the examples we all gave show that there 

is a lot of consumer frustration out there. So let me ask Mr. Murray, what if new issues arise in this general area, do you think we 

should preempt the states from regulating regardless of whether 

the companies are doing more, which of course we would expect? 

Mr. MURRAY. Well, surely the answer to what should we do in 

a forward looking way to protect consumers about novel issues that 

arise cannot be that the wireless industry association has a voluntary code of conduct that we should wave a hand and sort of say 

that consumers will be fine. Remember that code of conduct was 

created in response to California coming up with a telecommunications user’s bill of rights, and I may be reading motive here 

which is not entirely fair, but in response to that the industry association came up with this voluntary code. I think it is a very good 

thing that they did this. We support that effort. We would like to 

work with them to tighten it up. 

But what is the enforcement? Are they going to kick a member 

out who is a dues paying member who is one of their largest dues 

paying members? That is a hard thing to imagine. 

Mr. DARBY. I might just quickly address both those questions, 

Ms. Harman. We support Federal standards. We support enforcement of Federal standards, and if the industry code of ethics, code 

of conduct doesn’t work, we support having in some measure that 

enforced at the state level. Our concern is for what I call regulatory 

creep or mission creep. As a part of the FCC I have seen it. I have 

seen it happen. It happens at the Federal level. It is a natural sort 

of tendency to expand one’s regulatory domain. It doesn’t make 

these bad people. They are quite capable, and we will support targeted enforcement constrained, not to be expanded into unintended 

areas by clear cut national guidelines. 

Ms. HARMAN. Thank you, Mr. Chairman. 

Mr. MARKEY. The gentlelady’s time has expired. The chair recognizes the gentleman from Illinois, Mr. Shimkus. 

Mr. SHIMKUS. Thank you, Mr. Chairman. A couple points. It is 

good to have the panel here, and I represent 30 counties in southern Illinois, approximately from Springfield, which is about 100,000 

folks, all the way down to Paducah, Kentucky, and the Indiana border and the Missouri border, so it is a wide rural area. I have 

worked on the cell issues for a long time, not just basic communications so the consumer can have a great gadget, but on the emergency services side. So this is an interesting debate from the perspective of competition and choices for rural consumers and cost, 

because we are going to talk about universal service funds some 

day and moving to cell tower buildout, being able to do intersection 

abilities to be able to do identification location on it, and emergency 

issues. 

And I always like just to highlight—I hate it when we compare 

the United States to my friends in Western Europe, because there 

is really no comparison on size. I took about 30 members of different NATO countries out to McCord Air Force Base, a 5-hour 

flight, looking down at the frost covered plains, and I talked to one 

of my colleagues, and I said this really gives you an idea how big 

a country this is. He goes you guys don’t live in a country, you live 

in a continent. So it is easy to provide cell coverage to my friends 

101 

in Denmark. It is very difficult to do that in Creal Springs, Illinois, 

so in this whole debate about moving from Federal regulatory—I 

mean to a state regulatory framework to a national. And you can 

answer this if you want, but Steve, if you would start, and then we 

will just go on to Mr. Darby and Mr. Murray, do you think this will 

give us a greater ability to be able to have my consumers in parts 

of 30 counties of rural America more choices? 

Mr. LARGENT. Absolutely. And this industry is moving as quickly 

as they can to make that happen. I would cite the fact that we 

have built 100,000 towers in the last 10 years in this country, and 

we continue to build as quickly as possible. We are spending as an 

industry $20 billion a year for infrastructure buildout in this country, and it is a big country, as you mentioned. And, you know, I 

flinch when I talk to a member that is from a rural district like 

yours is, John, because our coverage is not as great as it could be 

and it will be. And it is not from a lack of effort, because we are 

making the effort, and it is just a matter of time. And I think 

things like the 700 megahertz auction are going to go a long way 

to help us to improve our service in rural districts like yours. 

Mr. SHIMKUS. Mr. Darby. 

Mr. DARBY. I would really like to address that with just a quick 

story about how national networks get built, and the evidence is 

very clear from wireline networks, and the wireless sector is following it precisely. You start out by building the densest areas and 

the broadest pipes between the largest concentrations. The companies generate cash flow. They have people, very expert people, who 

ask themselves as capital budgeters the following question: where 

do I do better? Do I do better by extending into rural areas? Do 

I do better by building more cell towers, so I have fewer dropped 

calls in rural areas, or do I migrate from this generation to the 

next generation? And as a practical matter these businesses make 

those decisions. And over time, and it is clear it is happening in 

the wireless sector, over time these areas will be built out. 

Now you ask me how fast they are going to be built out. I don’t 

know, because the companies are feeling pressure if you lose that 

cash in a variety of ways because there is not enough cash to do 

them all. That said, if you look at the lesson of the wireline sector, 

it took, what, it took us something like 60 years to get up to 95 

percent penetration. OK. Look at how fast we have gotten penetration in the wireless sector, and I suggest to you that competition 

is going to develop sort of much along those same accelerated lines 

to serve areas like yours and my hometown in Indiana. 

Mr. SHIMKUS. Thank you. Mr. Murray. 

Mr. MURRAY. I think that is exactly why a blend of solutions is 

important, and that is why the municipal broadband solution is important. We see a lot of rural members who are fed up with waiting 

for private enterprise to see that area and become profitable 

enough. It may be profitable, but they can’t get quite the return 

that they would like, so we see municipalities that are taking 

charge and saying, look, we are fed up with waiting. We are going 

to provide this service to our citizens because it is not a luxury 

good. We are talking about basic communications, and that is why 

I think the provisions of the bill—— 

102 

Mr. SHIMKUS. And I agree, and I am supportive. My concern is 

just the market, because once government takes control then do 

you lose the next generation of excitement? But I think that is 

something we are going to be able to work out and be supportive 

of. The terminology used in some of the draft language that states 

can adopt requirements consistent with Federal regulations, do we 

see that as a problem? Does that revolcanize the process, Steve? 

Mr. LARGENT. I think it does, Congressman. It creates an unknown that I think will be resolved in courts as opposed to being 

resolved in Congress. I think Congress always wants to put their 

imprint on legislation and not allow it to go to the courts as the 

’96 Act eventually happened with it. So I think the more specific 

we can be about the roles that states will play and the more specific we can be about the roles that the Federal government is 

going to play the better. 

Mr. SHIMKUS. Anyone disagree? 

Mr. DARBY. No, I agree with that, and I have lots of friends who 

are lawyers who would regard that as a substantial contribution to 

their retirement to be able to debate in Federal court what is 

meant by consistent with the Federal guidelines. 

Mr. MURRAY. It can necessarily be the case that Congress’s judgment is far seeing enough to see all the problems that might come 

down the pike. What happens when we have got, let us say, a 

small group of rural consumers who are affected in a particular 

way? Maybe there is not quite enough impetus for a big national 

kind of action, but the state is able to focus on that problem, and 

again I think consistent with gets out a solution to the problem of 

50 different models. 

Mr. SHIMKUS. And I think we as legislators understand why 

some things aren’t transparent and other things are. It is amazing 

what we want to make transparent and what we want to keep from 

being transparent. So let me just talk about the transparency issue 

on what occurs at the multiple levels of government, and if we are 

going to be transparent on fees and charges, wouldn’t transparency 

on taxes and the like be just as important for the consumer? 

Mr. LARGENT. I think it absolutely is important for the consumer 

to know exactly how much of his bill is going to taxes and fees 

versus how much is going for his actual service that he is paying 

for, and that is part of our consumer code that we ask our carriers—we demand that our carriers put that on their bill so that 

their customers can know how much they are paying. 

Mr. SHIMKUS. Anybody else? An indication, Mr. Murray, you 

would concur? 

Mr. MURRAY. I would concur with that. I think transparency is 

important. We have seen this in two sides. We have seen the different rates of taxation, which I think transparency there is good, 

and we have also seen it with these regulatory fees that sometimes 

you see these junk fees added to the bill where they call it a regulatory charge, but it is not quite a regulatory charge. It is more like 

bill padding. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Texas, Mr. Gonzalez. 

103 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. And I am 

going to focus my attention on Title II, which is municipal 

broadband buildout so most of my questions will to go the mayor, 

and welcome, Mayor, and thank you for everything that you do in 

public service. You probably have the hardest job of any elected official. I know that Mr. Boucher and Mr. Upton have introduced a 

bill that will allow municipalities to do exactly what you did without any interference from the state that might prohibit those entities such as a municipal government. The question, though, is it 

applicable across the board? I mean what works in Lafayette 

doesn’t necessarily work in San Antonio, where we probably have 

1.3 million people now, and of course AT&T is headquartered there. 

That is part of the mix. But the question is, you have Cox that provides, I guess, coaxial television, right? Then you have—now who 

else, AT&T is obviously telephone service, copper, and then you 

have a Cadillac of all delivery systems, which obviously is fiber 

optic. They looked at it, and they said, and I think Dr. Darby has 

alluded to, they look at it as an investment. But wouldn’t it be the 

fact that you were able to do it because it is not a level playing 

field? 

And I am not saying that Mr. Boucher and Mr. Upton’s bill is 

not a good one. I haven’t seen it. They are going to explain it to 

me. I am sure in certain circumstances it makes a lot of sense. It 

does not make sense obviously that then government would be 

competing with the private sector, because I think government always has an advantage. Now why did it make sense for Lafayette 

and didn’t make sense to the private sector? 

Mr. DUREL. Well, you know, of course the words we use at home 

is we answer to Main Street, they answer to Wall Street. Once 

again, we asked them to do it. Why didn’t it make sense to them 

is because obviously they don’t feel that they can make enough 

profit fast enough to justify their investment to Wall Street. We do 

have that advantage that we can bond things out for 20, 25 years, 

and we don’t have to make a 40 percent profit to justify it. Our 

profit is how we service our community, and that is how we measure it. 

Mr. GONZALEZ. And I understand, and I am not being critical of 

your effort, I commend it. However, I just don’t think that the Lafayette experience necessarily has to be replicated in those areas 

that are not subject to the same conditions, and as you got copper, 

you got coaxial, and you want something a lot better, which then 

leads me to what services do you provide with your fiber optic system? 

Mr. DUREL. What we are going to provide—right now we are in 

the wholesale end of it. We allow some of the larger businesses in 

Lafayette to get it through our wholesale companies. We are getting into the retail, television, telephone, and Internet. 

Mr. GONZALEZ. That is exactly, I guess, my point. You will be 

getting everything that is available over what we refer to as Internet protocol, and that is voice, that is video, that is data, that is 

everything. So you are going to be in direct competition then with 

the telephone company and the cable company. Is there anything 

about that that is any concern to you as far as a governmental entity in direct competition with these other providers way beyond 

104 

what initially was we want more capacity, we want broadband, and 

I think that probably it was advanced on the notion of data, but 

now you are in direct competition with voice, right, and television. 

Anything wrong with that? 

Mr. DUREL. Our community didn’t think so. Our citizens voted, 

62 percent to 38 percent said it is OK. And as I pointed out earlier, 

it is a very conservative community. And once again had we not 

gone to the private sector and asked them to do it it may rub a 

little bit different. 

Mr. GONZALEZ. And I understand that. 

Mr. DUREL. I don’t know what else to say. I mean they had the 

opportunity to do it. They choose not to. They chose not to bring 

electricity in the 1890s to a lot of communities in America. Had we 

not done it, we would not have gotten electricity for 25 or 30 years. 

Mr. GONZALEZ. I am from Texas. You don’t have to tell me about 

that, and I understand about co-ops and so on. 

Mr. DUREL. I think what we are trying to do in Lafayette that 

I worry about not happening is I see us raising the bar. I think it 

is time for America to raise the bar and not try to—— 

Mr. GONZALEZ. Let me ask you some—there are many moving 

parts to what you have there. Who built your system? I mean you 

didn’t. You didn’t have your engineers—— 

Mr. DUREL. We had private contractors do it. 

Mr. GONZALEZ. All right. And then who do you contract with to 

maintain it, run it? 

Mr. DUREL. A lot of what we would be doing would be kind of 

a public-private partnership in that you may have somebody like 

Google running our—— 

Mr. GONZALEZ. That is going to be my point. You are going to 

have special contractual relationships with either content people, 

right? 

Mr. DUREL. Right. 

Mr. GONZALEZ. Applicators, all of that. 

Mr. DUREL. Right. 

Mr. GONZALEZ. So you have a governmental entity that establishes the network and then enters into special relationships with 

other private entities that may be in competition with networks? 

Mr. DUREL. Right. That was a good answer. Thank you. 

Mr. GONZALEZ. When I answer my own question it is always the 

best answer. Let me ask you this, because you are a municipality, 

and because you have these special relationships, and because 

maybe there may be some advantage that you enjoy as a governmental entity. I don’t mind that in certain circumstances. However, 

as we expand this—now you are not going to be able to provide any 

service outside of Lafayette. You are restricted to your geographical 

area, are you not? 

Mr. DUREL. In fact, right now we are. It is a city-owned utility, 

and we provide services only in the city, so yes. 

Mr. GONZALEZ. Do you foresee expanding beyond, and would you 

be able to? Is that your intention? 

Mr. DUREL. It is not our intention, but I can tell you this. If our 

state came to us and said, because quite frankly we do have the 

license to provide it to anybody in the state that wants it, and they 

can afford to do it. 

105 

Mr. GONZALEZ. OK. Well, let me go from there then. Let me ask 

you. Would you feel then obligated to follow the following principles: consumers are entitled to access the lawful Internet content 

of their choice; consumers are entitled to run applications and use 

services of their choice; consumers are entitled to connect their 

choice of legal devices that do not harm the network; and consumers are entitled to competition among network providers, application, service providers, and content providers? You are willing 

to—I think the conflict comes where competition among network 

providers when you have a governmental entity that has a leg up 

on the private sector. That is a very serious concern. I am going 

to talk to Mr. Boucher. I am going to talk to Mr. Upton. In limited 

circumstances. But I also believe that that which you establish 

within your geographical boundaries should be limited to that area, 

because the whole premise was that you were underserved. At this 

point, once you are no longer underserved and you expand beyond 

that, the advantage is tremendous. 

And I do believe that it is not a fair advantage. I understand the 

necessity of it. So I am concerned. Much of what we are talking 

about here actually is contrary to what we were trying to achieve 

with a Federal franchise regime, which obviously we did not succeed, but we knew we had problems with what the municipalities 

were doing with their franchises. That is states like the State of 

Texas were then coming and preempting. So I am not sure we don’t 

have a cousin of that particular problem. I mean I do commend 

what you did, because you are your city’s leader, and you saw a 

need and you are fulfilling it. I just don’t like the idea of you going 

beyond the original plan and need. I yield back. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from California, Mr. Radanovich. 

Mr. RADANOVICH. Thank you, Mr. Chairman, and again thanks 

for holding this hearing. Mr. Largent, welcome back to Congress. 

I wish you were here and about 60 others of our friends that are 

not here anymore. But I do have a question that is relevant to my 

rural area of the district in California, my neighboring Sierras and 

Yosemite National Park, and they are pretty rural areas. My question is how would creating a uniform Federal standard or national 

framework for wireless consumer protection benefit my rural constituents in those areas who use their cell phones on a daily basis? 

Was it covered? I am sorry. I just came in late. 

Mr. SHIMKUS. I am just harassing you. 

Mr. LARGENT. Thank you for the question. I think the principal 

way that it benefits all customers is in keeping the prices so low. 

As I mentioned, wireless customers in this country are experiencing some of the lowest rates—they are experiencing the lowest 

rates in the first world, and I would say the lowest rates in the 

world. And it is because of this uniform set of rules that we have 

on the industry. And what we are trying to do is extend that uniform set of rules to cover all of our consumer issues that we are 

talking about here. So I would say that having the rules that we 

have been under since 1993 has been positive. It has created the 

competition that we experience today. Competition has worked in 

a positive way for customers, and we are just trying to extend that 

to this one other terms and conditions of the ’96 Act. 

106 

Mr. RADANOVICH. Mr. Largent, on the issue too of siting towers, 

a lot of—I think there is quite a bit of public lands, BLM, national 

forest land where siting towers is important. You need more of 

them in rural areas. And environmental laws I think are laws that 

get in the way for us to be able to site some of those towers in rural 

parts of the United States. Do you find that—does it affect the carriers’ ability to site towers as part of a consumer protection element in this thing, easier access into those areas and the ability 

to site those would benefit as well? 

Mr. LARGENT. Absolutely. I appreciate the question because it is 

something that has been a particular thorn in the side for the industry is the ability to site towers in specific areas. And I would 

tell you as one example the CEO of Verizon Wireless lives in a particular part of New Jersey where he has been trying for 12 years 

to get a tower sited in his community. It is not a rural community. 

So we have some issues like that that are very perplexing to us as 

an industry, and bringing some uniformity to how we can site towers and having a shot clock, for example, on how long we have to 

wait to site towers would be very helpful for this industry. 

It is not just rural districts like you represent, George. It is the 

entire country. New Jersey is—most of New Jersey is not rural, 

and it is certainly not rural where this gentleman lives, but we 

have issues with local municipalities on issues like that all the 

time. 

Mr. RADANOVICH. All right. I appreciate that, Mr. Largent. And 

I thank my ranking member, Mr. Shimkus, and the chairman. 

Thank you. 

Mr. MARKEY. Thank you. Often times you wind up with a paradox at the most beautiful bucolic communities who have the worst 

service, but they also then object to having a cell phone tower 

placed in those communities. It creates a paradox that has always 

been interesting to observers. 

Mr. RADANOVICH. If the gentleman would yield. I would encourage the industry to—they are making great strides in making them 

look like trees and maybe half dome and things like that, some of 

these towers. 

Mr. MARKEY. He is the CEO. Maybe they could put one in his 

backyard. It would be so beautiful. It would be a beautiful thing 

to have right there. So let me turn to recognize the gentleman from 

Michigan, Mr. Stupak. 

Mr. STUPAK. Thank you, Mr. Markey. Why can’t he put a tower 

up? I mean what is the—is it local—— 

Mr. LARGENT. Right, it is getting the approval from the local municipalities. He can’t build a tower. And he probably would put one 

in his back yard if he could. 

Mr. STUPAK. Mr. Durel, let me ask you a question or two. I have 

a very, very rural district, probably one of the most rural in the 

United States, one of them. Michigan actually passed a law saying 

you cannot—municipalities cannot get into it unless no one will bid 

for services. Before you implemented your system, did you have 

representations by carriers that they would come in and build a 

system for you, or would they just ignore your area altogether? 

Mr. DUREL. Oh, no, and like I pointed out earlier we have what 

everybody else has. We just wanted to have something, instead of 

107 

a Cadillac, we wanted something supersonic. And we did ask the 

private sector to do it several times. We had meetings with them. 

I would be speaking at a Rotary Club, and they would be out in 

the audience, and I would say do it, we won’t do it, so we gave 

them the opportunity for sure. 

Mr. STUPAK. Just never presented the opportunity or they never 

came forth with a proposal or anything? 

Mr. DUREL. They came forth with smoke and mirrors, you know, 

but they never presented us with anything that was significant. 

Mr. STUPAK. That is one of the frustrations we have in Michigan 

with this law. They are making proposals, and they promise to do 

it, but it never happens, and the municipality can’t get into it. You 

stated that by 2009, you will begin service of up to 100 megabits 

per second. How much will Lafayette be charging for this fiber to 

the home service? What would be your cost for the home customer? 

Mr. DUREL. I am glad you asked that because I made a mistake 

a while ago again. We are going—our starting service will probably 

be somewhere in the neighborhood of 8 or 10 megabitss per second 

going both ways. 

Mr. STUPAK. OK. 

Mr. DUREL. But we are going to give 100 megabits per second 

peer-to-peer, customer-to-customer for free, so an engineering firm 

working with one of our geologists can send lots of data very cheap 

and very fast. And so the 100 megabits per second peer-to-peer is 

free. 

Mr. STUPAK. OK. 

Mr. DUREL. But they have to be paying for some level of service 

first. 

Mr. STUPAK. Right. Mr. Gonzalez asked you about all these other 

services you provide to homeowners. What is the anticipated cost 

of that per month? 

Mr. DUREL. Oh, the basic service, what we would call expanded 

cable, telephone, and television would be about $85. And it is like 

I told my community, you will still have available to you less quality for more money. 

Mr. STUPAK. OK. 

Mr. DUREL. They will still have it. 

Mr. STUPAK. And 62 to 38 they passed that? 

Mr. DUREL. Yes. 

Mr. STUPAK. OK. Why have some, in your opinion, municipal 

broadband proposals, failed to deliver what Lafayette is delivering? 

Mr. DUREL. Well, that is another good question, because I want 

to make sure we are real clear that when we talk about municipal 

broadband that covers a whole range of things, wireless and fiber 

optics. And we heard a lot of that. That was some of the smoke and 

mirrors that was presented to our community, and we checked on 

every one that they held up as a failure and never could find one. 

I guess they would hold them to different standards and that sort 

of thing that they wouldn’t hold the private sector to on a cash flow 

basis instead of—just kind of using accounting jargon. But from a 

fiber optics standpoint, we have never been able to find a community providing retail fiber optic services that has failed. 

Mr. STUPAK. Did your community—and I am asking all these because based on a lot of these issues in my district—did they see it 

108 

as wanting to take hold of this new technology, or was it driven 

by the business sector that if we didn’t have this technology we 

would be left behind? 

Mr. DUREL. I think it is a pretty progressive little town in Louisiana. In fact, we think we have the most progressive city in Louisiana. 

Mr. STUPAK. How big is—— 

Mr. DUREL. The city is about 125,000 people. The parish is about 

225,000. 

Mr. STUPAK. My biggest city is 30,000. 

Mr. DUREL. And so, yeah, it was a business community. I don’t 

know if you were here earlier. We had—— 

Mr. STUPAK. I have been in and out. 

Mr. DUREL. We had every living former chairman of the board 

of the Chamber of Commerce stand up at our council meetings supporting it. Every single business organization, realtors, home builders, every single business organization in Lafayette stood up in 

favor of this. We had the Democratic party, the Republican party 

standing up in favor of this. And it was all about getting Lafayette 

something to set it apart. It was all about us having something 

that we couldn’t get otherwise, and we had enough people who recognized that what we were going to have was something that could 

bring us to a whole new level and that could lead America and that 

would give companies, as I pointed out earlier, this company called 

Newcom from Canada that located in Lafayette after looking at 200 

cities. And when I talked to the president of the company, he 

said—I asked him, I said we don’t even have it yet, why do you 

talk about it, and why are you here, and he said just because of 

the fact that Lafayette is holding technology as is an important 

issue. It tells us it is a place we want to be. So without even having 

it available on a retail basis, now he was able to get it on a wholesale basis, but anyway we have had many companies that have 

looked at us, and we have worldwide recognition about our battle, 

the legal fees that we paid to fight the battles that we had to fight. 

By the way, we went all the way to the state Supreme Court to 

finally get the ability after a 2-year fight, but those are probably 

the best marketing dollars we could have ever spent. It was great 

publicity for us. 

Mr. STUPAK. In my district: 5 percent that has never been wired. 

There are parts of my district that don’t have phone service. The 

upper peninsula of Michigan, which is part of my district, the 

upper peninsula of Michigan economic development and how it improved, they said things, transportation and faster broadband of 

100 megabits per second, as you are saying. So it is very interesting what you did there. Thanks. A little bit of time left here. 

Mr. MARKEY. There are only 31⁄2 minutes left to go on the House 

floor, just so you know. 

Mr. STUPAK. OK. Mr. Murray, in your testimony you say Consumer Reports’ annual customer satisfaction survey ranked cell 

phone service in 18th place out of 20. How was that data collected? 

Was Congress in there because they were 21? 

Mr. MURRAY. Consumer Reports is actually quite a robust statistical department. We have a full survey team, and the survey research that we are doing is accredited by some universities as valid 

109 

social science, so nationally these are not—to be clear, these are 

Consumer Reports surveys that were done by the magazine side as 

opposed to—— 

Mr. STUPAK. You used surveys they did then? 

Mr. MURRAY. Right, as opposed to the D.C. office, if that is the 

question you are asking, sir. 

Mr. STUPAK. It is the question I was asking. OK. Do you believe 

comparing FCC reports to the total number of subscribers gives an 

accurate description of complaints? 

Mr. MURRAY. Do FCC numbers giving—— 

Mr. STUPAK. Let me ask Mr. Largent this. Steve, in your testimony you indicate that 26 million Americans complain about wireless service, 1.3 million complain about the contracts, but it looked 

like you compared the numbers or the number of complaints, 26 

million, and then 1.3 by FCC, complaints using FCC numbers, not 

your peers. 

Mr. LARGENT. I would just say very quickly that we are not resting on any laurels. We know that we have complaints. We are trying to address them. The more important statistic to me is the fact 

that 92 percent of the complaints that are lodged are resolved by 

the carriers themselves. We are fixing our own problem. 

Mr. MARKEY. The gentleman from Michigan’s time has expired. 

We have less than 2 minutes to go over to the House floor to make 

these roll calls. We are fast. We are going to make—I am still recovering from my Achilles rupture, and I don’t want to miss the 

role call. We will reassemble and immediately thereafter but since 

the Red Sox are on the White House lawn at 3:00, we will adjourn 

before that time so everyone knows that. We are in a brief recess. 

[Recess.] 

Mr. MARKEY. The gentleman from Mississippi is recognized for a 

round of questions. 

Mr. PICKERING. Thank you, Mr. Chairman. I commend you for 

this legislation as one further step to bringing about the Federal 

framework in communications policy that we have all worked toward over the last 10, 12 years. I guess about 10 years ago we 

passed legislation to bring uniformity to cellular taxation in all 

local and state jurisdictions. This would do the same thing, and I 

think it is very wise and good legislation. Although I do have some 

concerns and want to see that we do give the clarity and the certainty to the industry and the consistency and the predictability for 

consumers of knowing what they will face, and I think it can be 

a win-win both for investment innovation and the companies that 

are trying to do national businesses, as well as for the consumer 

knowing that on early termination fees, on transparency, and on 

calling plans and modifications that we can get the right balance. 

So I look forward to working on those types of things. 

Mr. Durel, I had a question before we broke on the last break. 

I started thinking about it as we give municipalities the opportunities to do broadband. Let us say somebody comes in after the fact 

and wants to do a broadband wireless or wireline service but a municipality does not want to give them the siting. Couldn’t that be 

like a barrier to entry or an anti-competitive practice, and would 

it be wise for us in a balance if we want to promote municipalities 

having that option if no one shows up, no one will come in, also 

110 

making sure that there is a shot clock or certainty of a fair process 

on siting, because we have very aggressive mandates of buildout in 

700, which I think will be great for rural areas and underserved 

markets and cities like Lafayette, but if municipalities hold up 

siting we are not going to get those services in many places. Would 

you mind that type of balance where if we in this bill give that 

choice and at the same time have a siting process that would be 

fair and reasonable both to cities and localities, as well as to companies, so that we make sure that we don’t have anti-competitive 

or barriers to entry? 

Mr. DUREL. And I want to point out that municipalities already 

have the ability to do this. It is a question of having legislation 

that would prevent it from happening, and some states have already done that. But, yeah, I think that there should be something 

in there to prevent municipalities from saying now that we have 

done what we have done, that we don’t want anybody else to come 

in here. 

Mr. PICKERING. Mr. Murray, you have raised questions about the 

language in the legislation possibly not being able to predict future 

consumer needs or what the market is going to be or the protections. In the ’96 Act we had the triennial review. If we put something in this legislation that would have say a 5-year review for the 

FCC to look at what consumer protections may be needed 5 years 

from now, would that address your concern, and would that be a 

wise and reasonable way to address that, that we just have that 

type of review process built into what we do? 

Mr. MURRAY. Well, I don’t think that that would be as responsive 

as having people who are closer to the ground, closer to the potential of fraud and abuse be able to address it in an immediately responsive way if the problem arises, and then we have a 5-year cycle 

before we can say, well, is the FCC doing enough here. You know, 

the FCC is a great agency, but boy, they have a lot on their plate 

already, and there are 250 million cell phone subscribers out there. 

And I am not entirely sure that that is the right place for this to 

live in its entirety. 

Mr. PICKERING. But if we built in some type of review process, 

would that be helpful? 

Mr. MURRAY. I think that if it was a shorter duration certainly 

then 5 years, maybe a bi-annual review, that would alleviate some 

of the concerns, but I don’t think it addresses it completely. 

Mr. PICKERING. Mr. Largent, as you look at the legislation what 

are the areas that cause—if you had to make 3 proposed changes 

to give the industry the certainty that it needs to make this investment that we can tighten up the language while maintaining the 

protections on a federal basis as far as our standards, what would 

you recommend? 

Mr. LARGENT. Well, that is a great question. I think that there 

are a couple of changes that we would recommend. One is on the 

enforcement piece, we think that the attorneys general today have 

the ability to enforce laws of general applicability as it applies to 

the wireless industry, and we would reinforce that to see that they 

could enforce those laws that generally apply to all consumers but 

particularly to consumers in the wireless industry. That would be 

one piece. Another piece is on Title III where it actually—— 

111 

Mr. PICKERING. In the legislation do they give that enforcement 

to the state public service commissions? 

Mr. LARGENT. They allow the states to determine how they are 

going to do that is my understanding. 

Mr. PICKERING. And it is done by the attorney general. 

Mr. LARGENT. That is right. 

Mr. PICKERING. Which would lead to more of a court-legal process than a regulatory process. 

Mr. LARGENT. That is right, and I think that that is conducive 

to actually resolving the problem in the quickest way possible. 

Mr. PICKERING. Mr. Chairman, again I would like to follow up 

and get some language, and if I could just have a few seconds to 

say later this afternoon I have to go down to the White House with 

Mr. Markey to celebrate the Red Sox and their great victory. Now 

you ask why would a Mississippi boy go to a Red Sox celebration? 

It is because it is a Mississippi pitcher, Papelbon, who is their closer, and if they had a Mississippi quarterback like the New York Giants, they would have won the World Series. Thank you, Mr. 

Chairman. With that, I yield back. 

Mr. MARKEY. Thank you. To be more specific, he is talking about 

Jonathan Papelbon and Eli Manning, both sons of Mississippi. So 

we are—I want to tell you, Mr. Durel, that your staff has notified 

us that you are on a 2:00 flight. It is now 1:00, and you are going 

to Washington National, so I think you can make it even if we do 

so after we recognize Mr. Boucher for his round of questions. So at 

the conclusion of that, you will be free to leave. 

Mr. DUREL. As of now, I may not have a 2:00 flight. We are 

working on it. 

Mr. MARKEY. You will make it. 

Mr. BOUCHER. Well, thank you very much, Mr. Chairman, and 

Mr. Durel and other distinguished witnesses, welcome. Thank you 

for sharing your testimony with us today. I am going to try to be 

very brief. I just have a couple of points that I would like to make. 

First of all, I want to acknowledge, as others have, the presence in 

the draft legislation of the title that would empower municipalities 

across the country to offer broadband services, and I want to thank 

Chairman Markey for making that provision which I introduced in 

partnership with Mr. Upton a part of the draft legislation. 

Mr. Durel, I was very impressed with your testimony. I want to 

thank you for the way in which you prepared it and the power with 

which you delivered it. I can’t resist taking this opportunity to respond briefly to the comments made by my friend and colleague 

from Texas, Mr. Gonzalez. He expressed concern about making 

sure that when municipal systems are in fact deployed that there 

is no discrimination by the municipality in favor of the municipal 

system to the disadvantage of a private sector competitor, and I 

would point to Section 202 of our draft that basically provides the 

following, that says that a public provider shall not grant any regulatory preference to itself or to any provider of advanced communications capability or service that it owns or with which it is affiliated. 

The second provision says that it shall not apply its ordinances, 

rules, and policies in a way that discriminates in favor of any provider of the service, itself included. I have the same concern that 

112 

Mr. Gonzalez had at the time we drafted this provision, and so we 

put this section in in order to make sure that the playing ground 

in fact would be level. And I would assume, Mr. Durel, that your 

municipality has no problem in complying with these kinds of safeguards? 

Mr. DUREL. Absolutely not. 

Mr. BOUCHER. That is very good. You can go get on your plane 

as far as I am concerned. Thank you very much for being with us 

today. Mr. Chairman, maybe with your permission, we could excuse him. 

Mr. MARKEY. You are excused, but let me note this if I may. Congressman, there is no such thing as a congressional expert. We are 

only experts compared to other congressmen on subjects, not compared to real experts on subjects. There is only one subject that we 

are really experts on, and that is getting re-elected. And I might 

say this to you as a very conservative Republican, I think all of us 

are of the opinion that you are going to have no problems at getting re-elected in Lafayette, Louisiana. Thank you so much for your 

willingness to appear before us today. 

Mr. BOUCHER. Mr. Chairman, let me just comment briefly on 

that section of the legislation that relates to the regulation of wireless services. And I very much support the direction in which that 

title of the draft moves us. In fact, several years ago I joined with 

Mr. Inslee and also Ms. Blackburn in offering an amendment that 

had very similar content to the then pending legislation, which was 

a telecom bill addressing a different subject. And the ruling was 

that our amendment, whatever its merits, was not germane to the 

then pending bill, so we withdrew that with statements that we 

hoped the day would come in the near future when we could return 

to that subject and address it in a more complete way. And I am 

delighted that that day has now arrived, because I think it is hard 

to imagine a market that is better suited to complete Federal regulation and total preemption of state regulation than the inherently 

mobile wireless market, where you could have a person resident in 

one state with a telephone number that is in a zip code for another 

state traveling all across the country, and who is to say what state 

regulation would better suit that individual person. 

I can’t imagine a situation better tailored to total Federal regulation and complete preemption of state regulations than this. So I 

am very pleased that the time has arrived where we can have a 

discussion about how to do that. I will just offer my view. I think 

the right formula is to say rigorous Federal standards so that they 

are meaningful and so that they offer the kinds of consumer protection and service quality standards that really are necessary. And 

it is hard for me to imagine a Federal standard too rigorous for me 

to say is appropriate, and so I think it needs to be very rigorous. 

But in return for that fully rigorous Federal standard, we need 

to have complete state preemption, and if I have a fault of this 

draft, it is that it leaves the door open for continued state regulation even when a rigorous Federal standard is put in place, and so 

I think as drafted it doesn’t fully meet the purpose for which I 

would certainly like to see it applied. Now I also think that in return for rigorous Federal standards and complete state preemption 

there ought to be rigorous enforcement, and so I am not offended 

113 

at all by the provision in the bill that says that state attorneys general, that state public service authorities ought to have the opportunity coincident with Federal enforcement to also enforce these 

Federal standards. 

And we have that as an aspect of federalism across a whole 

range of statutes, both regulatory and criminal. And so I don’t have 

any problem with that dual level of state and Federal enforcement. 

So, Mr. Largent, let me just put my single question of the afternoon to you, and that is this. If we can achieve that balance where 

we have complete state preemption but we have a rigorous Federal 

standard and I know you would have some discussion about what 

ought to be in that Federal standard, but let us assume for purposes of this question that you are satisfied with what that federal 

standard is, and that remains to be discussed. In return for that 

and the complete state preemption that your industry would receive, would you be willing to accept the dual level of enforcement 

with the states being able to enforce through AGs and PUCs coincident with the Federal enforcement at the same time? 

Mr. LARGENT. I would say, Mr. Boucher, I was applauding you 

all the way up until the very end, but I would say this, that we 

would applaud your entire statement as long as the enforcement 

was uniform. We don’t care who is enforcing it as long as what they 

are enforcing is uniform. The problem is when you start getting different layers of enforcement, so if we can say that we got one 

standard that we are adhering to, and if you don’t meet that standard it is going to be enforced, and we don’t care who enforces it, 

whether it is the FCC or PUC in a state, but we want the enforcement to be uniform. 

Mr. BOUCHER. I don’t object to that qualification, but let me just 

make this point. The reason I think it is important that the states 

have some enforcement authority is that there are limited Federal 

resources that can be devoted to enforcement, whether that is at 

the Federal Trade Commission or at the FCC or at DOJ or somewhere else, and it is possible to imagine a broad range of consumer 

problems that could arise under a rigorous Federal standard, and 

when a complaint is filed at the FCC it takes 3 years to adjudicate 

it. That is not an avenue for relief for that particular consumer. So 

my view is there really is a role for state enforcement. Now I agree 

with you. It ought to be uniform to the extent that the state and 

the Federal authorities are enforcing the same standard. That 

would be a well enunciated Federal standard that is clearly defined, and everyone understands that it is, but as long as that is 

met, it just seems to me that the state role is important in this 

equation. 

Mr. LARGENT. I agree with you. 

Mr. BOUCHER. OK. Excellent. Thank you, Mr. Largent. Thank 

you, Mr. Chairman. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Oregon, Mr. Walden. 

Mr. WALDEN. You know, Mr. Chairman, if I could for the moment, I know Mr. Buyer needs to go over to the Senate side to 

speak to a group of veterans, and so I would like to pass at this 

point and yield—not yield to him but pass and then come back. 

114 

Mr. MARKEY. We can do that. We will recognize the gentleman 

from Indiana. 

Mr. BUYER. I ask unanimous consent to participate in the questioning of the witnesses. 

Mr. MARKEY. Without objection, the gentleman is recognized. 

Mr. BUYER. I thank the gentleman. One, Mr. Largent, if you 

know, what percentage of wireless consumers actually ever pay 

early termination fees? 

Mr. LARGENT. I don’t know the exact statistic, but it would be a 

fraction, 1 or 2 or 3 percent total. 

Mr. BUYER. All right. I am not officially back on the subcommittee but will be in the very near future, so I look forward to 

working with Mr. Markey. One thing that does concern me, I read 

your statement and embraced what you wrote on page 11 of your 

statement when you talked about only 26 wireless consumers per 

million have complaints about their wireless service, and this is the 

most recent data that was released to the FCC. Now when I look 

at questions like this, I have to put it—if I am going to make judgments and it is based on principle-oriented decision making, I have 

to put it into a matrix that says, all right, if we are going to do 

some form of consumer protection, what will be its impact upon liberty, will we continue to be able to promote economic opportunity, 

are we going to be enhancing high standards while at the same 

time we have with regard to these devices, we have speech, we 

have—we have freedom of speech, freedom of expression, freedom 

of association? 

Yes, the courts have allowed legislatures and congresses to act 

on consumer protections, but in this case, I look and say how are 

industries doing policing themselves? And I look at this—now if 

you say here you have got 26 per million, I will go to my congressional district. If I have got now, the growth of my congressional 

district—— 

Mr. MARKEY. How about this room? 

Mr. BUYER. If I have 750,000 in my congressional district, if I 

use the same ratio that means I have only got about 19 people 

would be complaining about me. Boy, that is pretty sweet. That is 

a great correlation, but is it unrealistic? But as I look at that, I go, 

wow, that is an industry that is doing pretty well if you got 26 per 

million and your trend line is going down as your prices are going 

down and the cost per minutes are going down. And if the competition is there and increases, all it does is place more pressure on 

you to do your job well, otherwise, people are going to go somewhere else. And so I look at this and say I embrace Mr. Markey’s 

sincerity. I have never judged it. 

But if there is ever a moment where we need to be cautious, it 

may be now and be very careful in what we do. Now in Indiana 

I advocated and worked with the governor, and we wiped out a lot 

of these regulations in Indiana, and we have done that so of all the 

states out there Indiana, my gosh, you can freelance. It is the wild 

west out there with regard to the technological renaissance. And if 

I am worried about the impact upon liberty, then I am deeply concerned about increased regulation at a time when the industry 

seems to be doing really well. And take, for example, we allow the 

115 

press. Right? The press pleases itself. We don’t get into the censorship. 

We say you have got your codes of ethics, and we can debate 

whether they actually enforce their codes of ethics or not. I would 

submit they don’t do it very well, but if you have got your code and 

you place demands upon your members and your results are pretty 

strong, then one of my colleagues talked about all these complaints. 

Well, all these complaints, does that mean the 26 of all these complaints? So is there a boogey man in the closet? Are they under the 

bed? I don’t know. My concern is that we better be walking cautiously here. That is just my impression. Mr. Largent, do you have 

any comment? 

Mr. LARGENT. And I share your concerns, but our problem is it 

is not the Federal regulation that we are feeling nipping at our 

heels today. It is the state regulation, and that is what this particular bill addresses is where there are 20 states right now that 

introduced over 400 bills to regulate the wireless industry on terms 

and conditions, and under just that nomenclature, the terms and 

conditions, the contract terms and conditions, we have 1.3 complaints per million subscribers. 

Mr. BUYER. I concur with all of that. When I say walk cautiously, 

we can say we are going to do Federal preemption, yet we are 

going to allow all these state AGs to go out and set their own 

standards and losses. 

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentleman from Oregon, Mr. Walden. 

Mr. WALDEN. Thank you very much, Mr. Chairman. I appreciated this hearing. Mr. Largent, I want to go through as I was 

reading through this section-by-section on this legislation just some 

of the issues that come up as they are described, and perhaps you 

can help me better understand what is being proposed here. I know 

in Section 101 it talks about disclosure of roaming charges, and I 

understand roaming charges. My question is, as mobile as people 

are, if I go into a cell provider how easy is it for them to disclose 

all the different roaming charges? Is that an issue that we need to 

have any concern about? 

Mr. LARGENT. No, it is not an issue. It is part of our consumer 

code already. 

Mr. WALDEN. Then in Section 103 it talks about the maps must 

factor in topographic and other variables and impact service availability and identify limitations in the reliability of the maps. Now 

I had several of my colleagues here talking about the size and 

scope of their districts. Mine is 70,000 square miles, which 

stretches from the Maryland shores to Ohio. I was just out traveling 1,124 miles in 8 counties over 5 days. A lot of that area has 

no coverage. Some of it has coverage, but it depends upon the contours. Do you have any concerns that the maps that you are going 

to be required to produce here can accurately be done, or do they 

do a Longley-Rice standard? What standard will be used to look at 

shadowing and everything else? 

Mr. LARGENT. Well, the problem is that the maps are changing 

on a regular basis. 

Mr. WALDEN. Right. 

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Mr. LARGENT. And the biggest problem that that presents is to 

our smaller carriers, to our mid-size and small carriers who don’t 

have maps that are on the Internet, that have physical maps that 

they are having to replicate or redo on a regular basis as they build 

new towers. Our larger carriers all have their maps on the Internet. They are pretty adjustable for that. 

Mr. WALDEN. Right, but when this is put in statute and you are 

required to have them, does that open up for some sort of penalty 

phase? Is there a private right of action in here if I have a cell 

phone and determine while I am driving out in the mountainous 

country I don’t get service and your map shows I would, but because I drop down into one valley and out, how specific do these 

maps have to be? 

Mr. LARGENT. Well, that would be subject to the legislation, and 

I am not sure what the specificity would be, but we have a code 

that we follow, the CTIA consumer code for wireless services that 

requires mapping. And my concern on this particular provision is 

requiring our carriers to put their maps on the Internet, and all of 

our companies are not big enough to have maps on the Internet because they are so small, and that would be one thing that I think 

would be an exception to this particular bill. 

Mr. WALDEN. OK. Let me go to Section 104, which deals with the 

charges that can or cannot be disclosed. And I have been reading 

through the summary of the section, and I am trying to figure out 

what we are really getting at here. Does that preclude you from 

listing specific charges? 

Mr. LARGENT. Yes, it would. 

Mr. WALDEN. And which charges would those be? 

Mr. LARGENT. It would be the charges are billed under regulatory 

fees, and that would be charges that carriers incur for having to 

deduct from their customer’s bills for various regulations, so that 

state, local, as well as Federal regulations on E-911, CALEA, universal service—— 

Mr. WALDEN. So I as a consumer wouldn’t know what those 

charges are because you would be precluded from detailing those 

specifically on my bill? 

Mr. LARGENT. What I am talking about specifically is the charge 

that is incurred to the carrier to actually deal with all those fees. 

Mr. WALDEN. Right. 

Mr. LARGENT. So, in other words, I don’t think there is anything 

in the bill that precludes a carrier from putting on the actual 

charge that you have to pay for universal service or E-911. You can 

put that on the bill. But what we are saying is there is actually 

a cost to the carrier to have to deal, juggle all those balls before 

he puts out a bill, and that is the charge that is often put on, 70 

cents per month or whatever that is on a customer’s billing. That 

would not be allowed. 

Mr. WALDEN. You couldn’t charge that or you couldn’t disclose 

that? 

Mr. LARGENT. You couldn’t disclose that. 

Mr. WALDEN. I would still be paying it. I just wouldn’t know 

why. 

Mr. LARGENT. That is exactly right. 

117 

Mr. MURRAY. But the difference is you would have that number 

up front when you buy service rather than it being a charge that 

pads the bill. Let us be clear. E-911, cost of compliance for that, 

that can be explicitly on the bill. 

Mr. WALDEN. I have been in and out of different cell carriers, 

and I know this bill does some good things to say we are going to 

make this a lot clearer for consumers to understand, but once you 

have signed up you have long forgotten what was in that small 

print, but when I get that bill every month it is kind of nice to 

know the specifics. I am just trying to figure out why we would put 

in the law that they can’t put something like that on their bill. 

What is the justification? 

Mr. MURRAY. So the idea is, number 1, any charge that is authorized by a government so E-911, that is on the bill, no problem. 

What we don’t want to see on the bill is the administrative overhead for that, the bottom line padding, but what it allows—— 

Mr. WALDEN. Why not? Why wouldn’t you want to disclose that? 

Mr. MURRAY. Well, because what the carriers are doing is they 

advertise, for instance, you can get a product for $50 a month. 

Mr. WALDEN. All right. 

Mr. MURRAY. And then so you say, oh, I got $50 a month. At the 

end of the month the bill comes back and it looks more like $75, 

$80 because there are all these mystery fees that pop up. 

Mr. WALDEN. I see what you are saying. 

Mr. MURRAY. All I am saying is if there is going to be an all-in 

price that is going to include some overhead, some administrative 

overhead, let us just tell consumers up front, that is all. 

Mr. MARKEY. The gentleman’s time has expired. 

Mr. WALDEN. Thank you, Mr. Chairman. 

Mr. MARKEY. All time for this hearing has expired. I apologize 

to all of you. I wanted to give you each time for a concluding statement, but this constant series of roll calls on the House floor will 

make that impossible. We are obviously interested in working with 

each of you and all other parties interested in this legislation. We 

thank you for your participation today. This hearing is adjourned. 

[Whereupon, at 1:26 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

STATEMENT OF HON. JOHN D. DINGELL

Today the Subcommittee will receive testimony on a draft version of the Wireless 

Consumer Protection and Consumer Broadband Empowerment Act of 2008. I look 

forward to working with Chairman Markey, who developed this draft, and my colleagues on both sides of the aisle to seek consensus on its overarching goals. 

This draft legislation addresses three important topics. The first concerns consumer protection and the regulatory structure of the wireless industry. I am mindful 

that much has changed since 1993, when Congress established the current regulatory regime for wireless services. Since that time, and with increased competition, 

consumers have enthusiastically adopted wireless devices. According to the Washington Post, cell phones have spread across the globe faster than any technology in 

history. There are now 3 billion phones in use globally and about 243 million wireless devices in the United States. 

This impressive growth, however, has been accompanied by an increasing number 

of consumer complaints about confusing or unfair contract terms, an inability to 

change providers because of early termination fees, poor service coverage, and other 

failings. These complaints, in turn, have prompted some States to pass or seek to 

pass legislation to remedy these problems. The wireless industry is then faced with 

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regulatory requirements that vary by State. Sometimes these State requirements 

even conflict with each other. 

The draft bill’s solution is to establish a strong set of Federal consumer protections and to preempt State efforts to regulate the wireless industry. I am mindful 

that for Federal preemption in this instance to be meaningful, it must represent not 

only a floor, but also true preemption of inconsistent State regulation. Thus, a national framework must provide not only meaningful and enforceable consumer protections, but also preemption that is structured to give wireless carriers more certainty in their business. 

Striking the right balance between protecting consumers and providing the industry with a more manageable regulatory structure will not be easy. This Committee 

carefully established the current regulatory framework for the wireless industry, 

and precluding a State from protecting its citizens is never a simple matter. However, many wireless carriers operate national businesses, and it is possible that consumers could stand to gain from a more Federalized regime. This bill represents the 

starting point of this process. My focus as we move forward will be to ensure that 

consumers remain protected under any regime that we may develop. 

Second, the draft legislation addresses the abilities of towns and cities to build 

their own broadband networks. This piece of the draft legislation is a bill introduced 

by Mr. Boucher and Mr. Upton, and I commend Chairman Markey for including it 

here. Some States have passed legislation that prohibits a town or city from building networks, even when the residents of those towns or cities are not served by 

a single private broadband provider. The draft bill would preempt those State laws, 

thereby promoting broadband deployment. As I have said before, I believe that if 

cities or towns are not adequately served by private sector networks, they should 

not be hindered in their ability to build their own advanced networks. It makes little sense to me that we should keep broadband from those who need it most. So 

long as all broadband providers are treated fairly, I would hope to quickly reach 

consensus on this issue. 

Finally, the draft legislation seeks to make the Federal Government’s use of spectrum more efficient by requiring the use of the latest technologies. This is a laudable objective that, if achieved, could provide Government users with the best available technologies and potentially make more spectrum available for commercial use. 

I look forward to hearing more about this aspect of the legislation. 

Tackling these difficult issues this year will require cooperation and consensus not 

only across the aisle, but also among wireless carriers, States, consumer groups, and 

others. I appreciate Chairman Markey’s initiating discussion by circulating the staff 

discussion draft. Much work remains to be done, but I look forward to working with 

all interested parties to craft a solution that will enhance the protection of consumers while lending certainty to the wireless industry. 

STATEMENT OF HON. ELIOT ENGEL

Chairman Markey, Ranking Member Stearns— 

I would like to thank you for holding this hearing today. In my 19 years in Congress, I have been one of the biggest supporters of consumer rights, and I am glad 

to see this legislation come up today. Clarifying consumer rights in the wireless industry is something that consumers and providers can all support. And I thank 

CTIA as well as consumer groups for coming here today. 

The wireless industry is a remarkable success story. When I came to Congress in 

1989, the idea that cell phones would be so ubiquitous was laughable. But now, I 

and just about everybody else in this building carries a cell phone and a blackberry 

everywhere we go. 

This success can not only be traced to the demand in the market. The Congress 

helped this process by not over-regulating the wireless industry. And this committee 

should get a lot of credit for that. A tremendous job was done by both parties of 

balancing the rights of consumers with the good of the marketplace. And while this 

is a good piece of legislation that we are discussing today, I want to ensure that 

we continue to walk that balance. 

Currently, the FCC can regulate pricing of wireless plans, while states can regulate the terms and conditions of the plans. And this means that one state can regulate what can be on a wireless bill, another can mandate the size and type of the 

font, and another can regulate the early termination fee. Unfortunately, this has the 

potential to quickly turn into a patchwork of 50 different sets of regulations. Mr. 

Chairman, I applaud you for bringing up this legislation. This legislation would 

work to end this patchwork and create one strong national standard that consumers 

and providers can appreciate. 

119 

We should be careful, however. I think everybody here is interested in passing a 

consensus bill that all sides support. But if we allow a great deal of leeway in the 

legislation to allow states to continue to create many new rules and regulations, we 

risk losing the consensus that this bill has the potential to create. 

I also strongly support the municipal broadband provisions of this legislation. A 

number of municipalities have begun to roll out broadband internet access, only to 

be stymied by state legislation preventing the rollout. 

Universal broadband is an excellent target that this nation should shoot towards. 

Broadband can bring additional commerce to an area, it can bring better health care 

at lower cost, and it can bring multimedia presentations and new learning opportunities to students that currently lack them. We should not stand in the way of cities 

that want to provide broadband to their citizens. So I strongly support the provisions in this legislation to allow cities to propagate broadband access. 

Finally, I appreciate the goal of this legislation to streamline the spectrum to 

make room for new technologies and services. As we all know, the spectrum is simply running out of room. But with new smart radio technologies, we can more efficiently use the spectrum that is currently being utilized. By freeing up space on the 

spectrum, we can allocate more space for public safety or put it up for auction as 

we are currently doing with the 700 megahertz portion of the spectrum. 

Mr. Chairman, I again want to say that I appreciate this legislation, and I look 

forward to working with you to make it even stronger for all sides. I yield back the 

balance of my time. 

STATEMENT OF HON. ANNA G. ESHOO

Thank you Mr. Chairman, for holding today’s hearing. 

While I believe that comprehensive consumer protections are necessary for wireless services, I’m concerned that comprehensive preemption could undermine current California law. California has led the nation in seeking to address the problems 

that plague many wireless customers, and our laws in this area continue to evolve. 

I think it would be a mistake for Congress to step in with a heavy hand and pull 

the plug on this process. 

The bill preempts state laws that are inconsistent with the bill and correctly 

places the burden on wireless carriers to demonstrate to the FCC that state laws 

are inconsistent with this bill. I’m concerned about the effect of this provision on 

current California law and the uncertainty it could create on how to determine 

which laws are consistent and which laws are not, which could lead to protracted 

litigation in Federal courts. 

It is clear that this Subcommittee should be reviewing wireless consumer protection legislation, considering that wireless service ranks near the bottom of Consumer Reports’ annual consumer satisfaction survey. Consumers are concerned 

about rising prices for service, early termination fees, and poor service coverage. I 

will continue to review this legislation and look forward to working with the Subcommittee on it. 

Thank you Mr. Chairman for holding this hearing and drafting this legislation. 

STATEMENT OF HON. LOIS CAPPS

Mr. Chairman, thank you for holding this hearing. I have certainly heard from 

my constituents regarding their experiences as consumers of wireless products and 

look forward to the testimony here today. 

I would like to first say that I am encouraged by the collaboration on these issues 

between Congress, the wireless industry, and consumer groups. 

As technology continues to evolve at incredible speeds, we must rely on each other 

to further maximize consumer benefit of the public spectrum. 

The large shift in consumer reliance on wireless services has resulted in the need 

to reconsider what constitutes an adequate regulatory regime but also what constitutes adequate consumer protections. 

Moving forward, we must consider that consumer mobility performs an important 

function in promoting free market competition and that full and appropriate consumer disclosure is paramount to ensuring that that competition is fair. 

Like the Chairman, I believe that, working together, there are effective ways to 

address these concerns. 

I look forward to the testimony and to further discussion of this draft legislation. 

Thank you again to Chairman Markey and to our witnesses here today. 

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