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ENSURING COMPETITION ON THE INTERNET: NET 

NEUTRALITY AND ANTITRUST (PART II), FCC 

PANEL 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INTELLECTUAL PROPERTY, 

COMPETITION, AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MAY 5, 2011 

Serial No. 112–40 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

[Vacant] 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION, AND THE INTERNET

BOB GOODLATTE, Virginia, Chairman 

BEN QUAYLE, Arizona, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

SANDY ADAMS, Florida 

[Vacant] 

MELVIN L. WATT, North Carolina 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

BLAINE MERRITT, Chief Counsel 

STEPHANIE MOORE, Minority Counsel 

(III) 

C O N T E N T S 

MAY 5, 2011 

Page 

OPENING STATEMENTS 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 1 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Intellectual 

Property, Competition, and the Internet ............................................................ 3 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary, and 

Member, Subcommittee on Intellectual Property, Competition, and the 

Internet ................................................................................................................. 4 

The Honorable Darrell E. Issa, a Representative in Congress from the State 

of California, and Member, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 5 

WITNESSES 

The Honorable Julius Genachowski, Chairman, Federal Communications 

Commission 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 10 

The Honorable Robert M. McDowell, Commissioner, Federal Communications 

Commission 

Oral Testimony ..................................................................................................... 15 

Prepared Statement ............................................................................................. 17 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Julius Genachowski, Chairman, Federal 

Communications Commission ............................................................................. 69 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response of the Honorable Julius Genachowski, Chairman, Federal Communications Commission, to Post-Hearing Questions from the Honorable Howard Coble ............................................................................................................... 286 

Response of the Honorable Julius Genachowski, Chairman, Federal Communications Commission, to Post-Hearing Questions from the Honorable 

Jerrold Nadler ...................................................................................................... 287 

Response of the Honorable Robert M. McDowell, Commissioner, Federal Communications Commission, to Post-Hearing Questions from the Honorable 

Jerrold Nadler ...................................................................................................... 289 

(1) 

ENSURING COMPETITION ON THE INTERNET: 

NET NEUTRALITY AND ANTITRUST (PART 

II), FCC PANEL 

THURSDAY, MAY 5, 2011 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INTELLECTUAL PROPERTY,

COMPETITION, AND THE INTERNET, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:03 a.m., in room 

2141, Rayburn Office Building, the Honorable Bob Goodlatte 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Goodlatte, Quayle, Smith, Coble, 

Chabot, Issa, Jordan, Chaffetz, Griffin, Watt, Conyers, Berman, 

Chu, Sa ́nchez, Lofgren, Jackson Lee, Waters. 

Staff present: (Majority) Holt Lackey, Counsel; Olivia Lee, Clerk; 

and Stephanie Moore, Minority Counsel. 

Mr. GOODLATTE. Good morning. The Subcommittee on Intellectual Property, Competition and the Internet will come to order. 

I have an opening statement. Today’s hearing is the second part 

of the Subcommittee’s inquiry into ‘‘Ensuring Competition on the 

Internet: Net Neutrality and Antitrust.’’ This hearing, like the Subcommittee’s February 15, 2011 hearing, will explore the FCC’s 

Open Internet Order, whether the FCC had the authority to issue 

it and how it will affect Internet competition and innovation. Our 

previous hearing only reinforced my belief that the widely criticized 

order circumvents Congress’ lawmaking authority and will stifle innovation in a morass of bureaucratic rules. 

I conducted our previous hearing at a first—as a first step in reasserting that under our constitutional system it is the role of Congress, the people’s elected representatives, to make the laws. Congress has taken several additional steps since then. One important 

step was the passage, early last month, of House Joint Resolution 

37 which disapproves of the Open Internet Order pursuant to the 

Congressional Review Act. 

However, Congress’ effort to protect the Internet and its constitutional role in making the laws of the land, did not end with the 

passage of H.J. Res. 37. Congress will continue, through hearings 

like today’s, to reassert its rightful authority to determine the 

FCC’s jurisdiction and to make the laws that will best protect the 

Internet as an open, innovative and relatively unregulated environment. The constitution provides that all legislative power is vested 

2 

in Congress. The FCC can only exercise legislative power that Congress has delegated to it and the FCC acts unconstitutionally when 

it exceeds its limited power. 

And make no mistake, the Open Internet Order exceeds the 

FCC’s power. Congress has never given the FCC the authority to 

impose this sort of top down regulation of Internet services. That 

is why the D.C. Circuit in the Comcast case correctly held that the 

FCC’s previous effort to regulate Comcast’s network management 

practices was not tied to any statutorily mandated responsibility of 

the FCC. Instead of accepting the limits of its power the FCC responded to the Comcast decision by inventing an entirely new legal 

theory to justify its desire to regulate broadband network practices. 

According to this new theory, the FCC has to impose regulations 

on broadband in order to encourage development and expansion of 

broadband access. The FCC undoubtedly has authority to encourage broadband deployment, but the open Internet order bears no 

rational relationship to that policy goal. 

The FCC argues that by preventing broadband networks from 

unreasonably discriminating against applications, it can encourage 

the development of new applications which will in turn spur consumer demand for broadband access and then Internet service providers will react to this increased demand by deploying additional 

broadband networks. We must reject this Rube Goldberg theory of 

regulation in which the FCC may impose an otherwise unauthorized regulation in the hope that it will spur a long chain of events 

that may at some point advance an authorized policy. Allowing 

such a creative and attenuated theory would effective remove any 

limits on the agency’s power. 

As the evidence from our early hearing and many of the comments that the FCC made clear, imposing these new regulations 

are likely to discourage broadband deployment. Common sense tells 

us that the way to encourage broadband deployment is to decrease, 

not increase, broadband providers regulatory costs and burdens. 

You don’t grow an industry by regulating it. The way to encourage 

growth and innovation in broadband and the Internet economy as 

a whole is to maintain the relatively unregulated environment in 

which the Internet was conceived, grew and continues to thrive 

today. 

Rather than a heavy-handed regulatory approach crafted by the 

FCC, I believe a light-touch antitrust based approach will best protect a competitive, innovative and open Internet. Antitrust law provides a time tested and predictable system for preventing providers 

from engaging in anti-competitive blocking or discrimination. Unfortunately, by overstepping its authority and imposing its regulatory regime, the FCC has begun to take the country down a regulatory direction rather than a flexible, fair antitrust-based response 

to this threat, as this Committee has recommended in the past. 

When an agency oversteps the powers that Congress has given 

it, and takes for itself Congress’ exclusive power to make the laws 

of the United States, Congress must hold the agency to account. 

Hearings like today’s are an important tool for ensuring agency accountability. I look forward to this opportunity to take statement 

from our two distinguished FCC witnesses and to demand a public 

explanation for the commission’s overreach. 

3 

At this time it is my pleasure to recognize the Ranking Member 

of the Committee, the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman and I thank the Chair for 

convening this hearing, although I would have to say I have some 

reservations, some ambivalence about both the jurisdictional questions that we are dealing with and the timing of this. 

In any event, I do want to welcome Chairman Genachowski and 

Commissioner McDowell to the Subcommittee. They seem to, from 

everything I have read, be on the different tracks that perhaps the 

Chair and I are on, so at least we will get balanced views about 

this issue. 

The debate about net neutrality is far from new. It started over 

a decade ago as broadband network providers became increasingly 

vertically integrated. For example, cable companies began to expand from the provision of television services to start deploying 

high-speed Internet, landline telephone and even wireless cellular 

services. Questions quickly emerged by how the stratified communications legal regime would apply to new conglomerate companies 

offering services that crisscross services and a wealth of regulatory 

laws. At issue then and now is the very architecture of the Internet 

and how to ensure that it remains open to all lawful content, information, applications and equipment. Large innovative, U.S. based 

companies like Amazon, E-bay, Facebook and Google urged the 

FCC to act to establish some baseline rules that would promote 

and protect commerce, creativity and global competitiveness. Fulfilling that task has been easier said than done. 

On the other side of the issue, some Internet service providers 

or advocacy groups fear burdensome restrictions will operate to 

choke off innovation, free speech and commerce. In addition, some, 

like the Chairman, make the process claim that antitrust laws are 

adequate to ensure that the Internet remains a viable engine of 

economic growth. 

Now that the order has issued and the courts have cleared the 

pathway for publication, the intensity has grown here in Congress 

to determine one, whether the FCC had the authority to act; two, 

whether the antitrust laws provide the appropriate legal framework to ensure competitiveness on the Internet and three, whether 

the substantive rules embodied by the Open Internet Order, transparency, no blocking, no unreasonable discrimination, will provide 

the necessary safeguards to ensure—to the entire Internet community, including consumers, rights holders and service providers. 

There are no doubt a variety of opinions on this Subcommittee, 

indeed in Congress, as to the FCC’s authority to police the Internet 

and to the effectiveness of the antitrust regime. Attorney General 

Holder was just here Tuesday and was asked a number of questions about the effectiveness of his antitrust division and policies. 

While these are legitimate inquiries I dare predict the same form 

of net neutrality or open Internet rules will ultimately monitor and 

regulate functions to access the Internet, whether through voluntary agreements or Federal laws or regulations. I would like to 

see it—see to it that such rules ban illegal conduct, including child 

pornography and online theft, and strike the right balance with 

lawful commerce that stimulates creativity, preserves open social 

4 

discourse and yet has the capacity to raise the necessary capital for 

first rate network management. 

In short, I think whether the rules will protect consumers and 

promote growth in the—is the most important inquiry and the repeal efforts are an unfortunate distraction. So I am happy that we 

have the commissioners before us today who studied the submissions and have the expertise to assess the probable effect of the 

open Internet rules on its users and I look forward to their statement. 

I would just say, outside my notes, as a Member of the Financial 

Services Committee, I think I probably have a much, much different perspective on the value of the regulatory framework that 

we have in our system than from my service on the Judiciary Committee. I am one that believes that the more we dictate these 

things, as opposed to establishing the broad principles, the more we 

dictate them legislatively, the more likely we are to get them 

wrong and that we ought, quite often, defer to regulators to make 

more reasoned judgments about these things, listen to the experts, 

listen to the consumers and business advocates and try to balance 

their interests within the general framework that we have established legislatively. So I expose my bias on that. It comes from long 

service on a different Committee, but I think it applies here with 

equal force. 

And with that, Mr. Chairman, I yield back. 

Mr. GOODLATTE. I thank the gentleman. 

And the Chair is now pleased to recognize the Ranking Member 

of the full Committee, the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. What a rare opportunity this is this morning to 

have these two excellent public servants before us and I am indebted to all of you here. It is rare that—didn’t Mr. Goodlatte make 

the opening statement? And it is so unusual when I find myself 

more in agreement with him than the Ranking Member of the Subcommittee, especially—yeah, democracy is great, isn’t it? The reason is because it was Chairman Goodlatte that mentioned that 

there are antitrust remedies that this Committee has and I think 

that is very important. And I hope that Mel Watt will agree with 

both of us in that regard. 

What I was doing since I have had the chance to talk with both 

of you, is that in summary I have to dismiss the view that there 

is irreparable harm being done, that there is nothing broken and 

that the—there is ample protection to consumers that is sufficient 

as it exists now. I wish I could see things that way. I don’t. 

And then the court, in terms of Mr. McDowell’s very excellent 

presentation, in terms of whether the FCC has rulemaking authority, we better hope that it does because I don’t know what else they 

would do if this commission existed and couldn’t make rules as a 

result of the good work that you two have mostly agreed with each 

other and the FCC as a whole. 

We are in for a, I think a very exciting discussion. But this case 

is already—that question is already in the Federal judiciary now 

being resolved. And I—of course our opinions are always maybe 

worth something to them, and whether they are or not we give 

them anyway. So I think this is an excellent opportunity that rarely comes. 

5 

We have all worked together on telecommunications issues. I, as 

a long time supporter of net neutrality, was not unhappy with the 

December order of the Federal Communication Commission. As a 

matter of fact, I don’t think it went far enough to ensure consumer 

protection and a competitive marketplace. The House of Representatives have already voted twice to defund and undo the FCC’s work 

and I would like to just review some of the arguments that have 

made—that have been made to undermine this net neutrality argument, the net neutrality order of the FCC, which the congressional 

product I did not have much sympathy for. 

First, the regulations will cause irreparable harm. Well, great. 

That nothing is broken that needs fixing. That existing laws already protect consumers sufficiently. Please, give me a break somebody, I mean we are suffering out here. What we need is more effective and more precise regulation, not none or less. 

Here is some instances where the Internet service providers have 

blocked, slowed, censored content on the Internet. That is not a 

good thing. Verizon Wireless has blocked pro-choice text messages. 

Comcast has slowed traffic to competing video service providers. 

These are demonstrable, uncontrovertible harms that will only 

worsen if this commission is prevented from acting as is now being 

proposed in the House of Representatives. 

Unfortunately ISPs disclose little information to the public about 

how they manage their networks. There is little transparency. We 

have no readily available way to tell if and how they could be censoring or slowing content. 

And I conclude with this. The high-speed market is highly consolidated and anti-competitive. Most of the people in this country 

have only two choices for high speed Internet. Thirteen percent of 

the—about 90 percent of our citizens live in either a monopoly or 

duopoly. Now let’s not start this conversation off this morning with 

everything is okay. It is far from okay. 

And so with that modest opening I thank the Chairman for his 

generosity and time and I turn back the rest of it to Chairman 

Goodlatte. 

Mr. ISSA. Mr. Chairman? 

Mr. GOODLATTE. I thank the Ranking Member. The custom of the 

Committee is to recognize the Chairman and Ranking Member of 

the Subcommittee and the full Committee and ask other Members 

to submit their statements for the record. Since we have had two 

on that side, we will defer to the gentleman from California for 

an—— 

Mr. ISSA. Thank you, Mr. Chairman. And I am going to be—— 

Mr. WATT. I have no objection to that. 

Mr. ISSA. Thank you. 

And I will be brief. I know that the Ranking Member of the full 

Committee is more knowledgeable on all things of this Committee, 

however I know a monopoly when I see one and there is no place 

in America that I know of in which you could say 90 percent of any 

state or 90 percent of any region and certainly not 90 percent of 

America, live under a monopoly or a duopoly, because ultimately 

if you have satellite and you have cellular, you already have two 

before you get into any of the well known broadband. 

6 

I would like to take exception though, at the onset. In order to 

assert authority one needs to have it. I believe what we’re seeing 

here today is an assertion of authority that was not granted, a 

claim of antitrust behavior by monopolies that has not been proven. 

The FCC did not determine that they had it, nor are they continuing to study. Instead of asking for whether they are were right 

to make a decision, instead of coming to Congress for limited authority, they chose, in a quiet period, while Congress was not 

watching, to do this. Clearly, we were at home, we got the word. 

Clearly, the question was not before them, the history of harm was 

not available to them, the finding of a monopoly or duopoly certainly does not exist, had it, it would have long ago gone through 

the courts. 

More importantly, if we allow this to stand then we must make 

the presumption that we can regulate gasoline at the gas stations 

so that all grades of gas sell for the same price. We can regulate 

the railroad so that all freight and passengers are carried by the 

same rate per pound. 

Let me not belittle the fact that there were a few isolated instances that need to be looked at. Let me not limit the question to 

whether or not there should be some sort of guidance available as 

to fairness and equality. I for one believe that if you sell a product 

and you block a competitor’s product then you have no claim of 

any, any right to say you serve the public trust. So although I find 

some things which needed to be acted on, I find it completely unacceptable that an agency took it on itself to do so. 

I will disagree, just one more time, with the Ranking Member of 

the full Committee, just because something is before the courts 

doesn’t mean that it belongs before the courts if in fact the only 

thing the court can essentially say is that the FCC had—ceded authority that we as Congress know we did not give them. 

I thank the Chairman for the indulgence on this and yield back. 

Mr. GOODLATTE. I thank the gentleman for his comments and 

without objection other Members’ opening statements will be made 

a part of the record. 

And it is now my pleasure to welcome our two witnesses. As is 

the custom in this Committee, we would ask that they stand and 

be sworn. 

[Witnesses sworn.] 

Mr. GOODLATTE. Thank you, gentleman. 

Our first witness, Federal Communications Commission Chairman Julius Genachowski was nominated to that position by President Barack Obama on March 3, 2009 and was sworn into office 

on June 29, 2009. 

Prior to his nomination Chairman Genachowski had spent over 

a decade in the private sector, first as a senior executive with the 

IAC Interactive Corporation and since 2005 at firms that he founded to invest in early and mid-stage technology companies. Before 

entering the private sector, Chairman Genachowski served as chief 

counsel to the FCC from 1994 to 1997, as an advisor to then Representative Charles Schumer of New York, and at that time a 

Member of this Committee, and as a law clerk to D.C. Circuit 

Court of Appeals Chief Judge Abner Mikva and Supreme Court 

Justices William Brennan and David Souter. 

7 

Our second witness, Federal Communications Commissioner Robert McDowell was originally appointed by President George W. 

Bush and confirmed by the Senate in 2006. Commissioner 

McDowell was reappointed to the commission on June 2, 2009 by 

President Barack Obama. This made him the first Republican appointed to an independent agency by President Obama. He was 

confirmed by the Senate for a second time on June 25, 2009. 

Prior to joining the FCC Commissioner McDowell was senior vice 

president for the Competitive Telecommunications Association or 

CompTel, an association representing competitive facilities based 

telecommunication service providers and their supplier partners. 

Over his career he has worked in various public policy and private 

sector positions with a consistent focus on telecommunications policy. 

Welcome to both of you and Chairman Genachowski, we will ask 

that you begin. 

TESTIMONY OF THE HONORABLE JULIUS GENACHOWSKI, 

CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION 

Mr. GENACHOWSKI. Thank you, Chairman Goodlatte. Sorry, 

Chairman Goodlatte. I apologize. Ranking Member Watt, Ranking 

Member Conyers, Members of the Subcommittee, thank you for the 

opportunity to be here. This is my first time testifying before this 

Subcommittee since becoming chair of the FCC. 

Prior to my appointment, Chairman Goodlatte thank you for 

mentioning this, I spent more than a decade in the private sector 

as an executive and as an investor. I saw in the private sector the 

importance of high-speed Internet, of wired and wireless broadband 

to our country’s economic success and to addressing so many challenges our Nation faces from education to public safety. The importance of communications to our economy and to all Americans is 

why the Communications Act has long given the FCC authority in 

this area. 

So we are working hard at the FCC, on a bipartisan basis, and 

I thank my colleague, Commissioner McDowell for his service and 

cooperation, on a series of issues including universal service for 

broadband, on reducing barriers to private sector broadband buildout, on promoting competition, on promoting next generation 911 

and public safety networks and on unleashing spectrum so that we 

can lead the world in mobile and address the looming spectrum 

crunch. 

I also saw, in the private sector, the importance of the Internet’s 

freedom and openness to its powerful success as a platform for innovation and economic growth, as well as for free expression. I 

learned that no central authority, public or private, should have 

the power to pick which companies or which ideas win or lose on 

the Internet. And I learned that certainty and predictability are 

critical to encouraging private sector investment and innovation, as 

is flexibility for companies and sectors characterized by fast moving 

technologies and markets. 

When I arrived at the FCC the agency had, on a bipartisan basis, 

taken steps to enforce Internet freedom and openness in response 

to incidents in which Internet service providers had blocked or degraded lawful online content. This occurs in a market where more 

8 

than 70 percent of Americans live in areas with only one or two 

fixed, terrestrial broadband providers. 

Unfortunately, what some have called the ad hoc process by 

which the prior FCC sought to protect Internet openness, generated uncertainty among Internet stakeholders. That’s why, in 

2009, we launched a fair and open Administrative Procedures Act 

process with the goal of establishing a framework that would be 

good for all parts of the broadband economy, for consumers of 

Internet services, for innovators and entrepreneurs building new 

products and services on the Internet and for Internet service providers building and operating networks. That was our goal and I 

believe we achieved it. 

Our sensible, high-level framework to preserve Internet freedom 

has increased certainty and generated support from a very broad 

array of stakeholders who in the past could not find common 

ground. 

The light-touch rules of the road are built on the commissions 

prior bipartisan steps in this area and rooted in the Communications Act. The rules fit on one page and boil down to four things. 

First, transparency so that consumers and innovators can have 

basic information to make smart choices about broadband networks. Empowering them with information will reduce the need for 

government involvement. 

Second, no blocking of lawful Internet content or services so that 

consumers can be free to access such content or services and so 

startup and other Internet companies can be free to reach Internet 

consumers. 

Third, a level playing field, a fair non-discrimination principle so 

that consumers and markets, not the government, are picking winners and losers online. 

And fourth, flexibility for Internet service providers. Flexibility to 

manage broadband networks, to deal with congestion or harmful or 

unlawful traffic, to pursue innovation in business models and to 

earn a meaningful return on investment so that we can have a fast 

and robust broadband set of networks in the United States. 

Some people think the framework we adopted doesn’t go far 

enough, others thing it goes too far. I believe it gets it right. One 

of the Nation’s leading venture capitalists described our framework 

in terms used by many other investors and companies throughout 

the broadband economy, quote, this effort is a pragmatic balance 

of innovation, economic growth and crucial investment in the Internet. 

It promotes competition in the marketplace and increases certainty. It is not regulation of the Internet, it is a light-touch framework to preserve the dynamic, free and open nature of the Internet. 

Virtually all major investment analysts agreed that our framework 

was good news for the broadband economy. 

We completed the Internet freedom order in December and I believe that undoing the framework would increase uncertainty, decrease investment and hurt job creation. 

Some argue that rather than acting the FCC should have allowed 

antitrust laws to be the sole remedy for violations of Internet freedom. In my view, while vitally important, antitrust laws alone 

would not adequately preserve the freedom and openness of the 

9 

Internet or provide enough certainty and confidence to drive investment in our innovation future. 

As we heard during our FCC proceeding, antitrust enforcement 

is expensive to pursue, takes a long time and kicks in only after 

damage is done, especially for startups, in a fast-moving area like 

the Internet, that is not a practical solution. 

The Supreme Court decision in Trinko also raises uncertainty 

about relying solely on antitrust laws as a remedy in the context 

of communication services. 

To conclude, while the FCC was divided on the particular issue 

of open Internet rules, the issue has a bipartisan foundation at the 

FCC and the fact is that even at the FCC today we resolve more 

than 95 percent of our votes on a bipartisan basis. We are now focused together on promoting universal access to broadband and 

unleashing spectrum, initiatives of vital importance to our 21st 

century economy, to our global competitiveness and to expanding 

opportunity broadly. 

I look forward to working with my commission colleagues and 

with Congress and the Subcommittee to harness the opportunities 

of communications technologies for our economy and for all Americans. 

Thank you and I look forward to your questions. 

[The prepared statement of Mr. Genachowski follows:] 

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Mr. GOODLATTE. Thank you, Chairman Genachowski. Commissioner McDowell, welcome. 

TESTIMONY OF THE HONORABLE ROBERT M. McDOWELL, 

COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION 

Mr. MCDOWELL. Thank you, Mr. Chairman, Ranking Member 

Watt and Ranking Member of the full Committee, Mr. Conyers. It 

is terrific to be here today. This too is my first time testifying before your Subcommittee and it is an honor to be here. So thank you 

for having me. 

The Federal Communications Commission was created by Congress almost 77 years ago. Today its influence reaches far beyond 

the radios, telephones and telegraphs of 1934. By some estimates 

the FCC holds sway over one-sixth of the American economy, or a 

slice of the economic pie that is the same size as the healthcare 

sector. For better or for worse, our actions touch the daily lives of 

all Americans. 

During my 5 years as a commissioner my focus has been to support policies that promote consumer choice offered through abundance rather than regulation and its unintended consequences, 

whenever possible. In the absence of market failure, unnecessary 

regulations in the name of serving the public interest can have the 

perverse effect of harming consumers by inhibiting the constructive 

risk-taking that promotes investment, innovation, competition, 

lower prices and jobs. 

Competition obviates the need for government intervention. With 

that in mind I have made increased competition in the so-called 

‘‘last mile’’ of our country’s communications infrastructure a top 

priority. These facilities serve as the vital on and off ramps to the 

Internet, the greatest deregulatory success story of all time. 

Since my arrival at the commission in 2006 the FCC has taken 

several historic steps to spur the construction of broadband facilities. Our video franchising order of 2006 removed local barriers to 

entry into the video market and helped spark the largest private 

investment in fiber to the home in American history. 

In early 2007, in the wake of the Supreme Court’s Brand X decision, without dissent, the FCC finished a deregulatory project, 

started by Clinton-era chairman Bill Kennard, by classifying wireless broadband Internet access service as an information service. 

And please keep in mind that broadband Internet access services 

were never regulated as common carrier phone services. The FCC’s 

orders after the Brand X decision merely formalized its consistent 

light-touch treatment of information services. 

Our bipartisan actions provided the deregulatory certainty for 

entrepreneurs to launch the smartphone revolution which has 

made the United States the world leader in adoption of fourth generation devices and networks. 

In one of its finest moments, the commission voted unanimously, 

in 2008, to approve the unlicensed use of vacant TV channels, 

known as white spaces. Under Chairman Genachowski’s leadership 

we took that action a step further in an additional five to nothing 

vote last September. Unlicensed use of these airwaves offers the 

promise of greater consumer empowerment. I am eager for the FCC 

to finish its work in this area, as soon as possible. Combining the 

16 

spectral power of white spaces with the constructive chaos of an 

unregulated and unlicensed market will act as an antidote for potential anti-competitive conduct in the last mile thus negating the 

need for additional rules. 

Chairman Genachowski also deserves credit for bringing to a 

vote many other initiatives that may seem unimportant at first 

blush, but actually have a profound effect on promoting competition 

in the last mile. Among them are: Creating a shot clock to ensure 

faster decisions by local authorities affecting placement of wireless 

towers; ensuring resolution of pole attachment approvals with reduce rental rates for broadband providers and repurposing some 

satellite spectrum for terrestrial broadband use. 

One frequently forgotten fact about the FCC, that the Chairman 

just reminded us all about, is that roughly 95 percent of our votes 

are not only bipartisan but they are unanimous. Certainly we have 

had our differences of opinion, including over the topic of this hearing, the regulation of Internet network management. For the convenience of the Subcommittee’s Members, I have attached a copy 

of my dissent, which is rather long, sorry about that, in that proceeding and I respectfully request it be included in the record. 

In a nutshell, however, I dissented from last December’s order 

precisely because, number one, nothing is broken in the broadband 

Internet access market that needs fixing and the government is not 

the best tool to fix it if something had been broken. Number two, 

as Chairman Goodlatte said, Congress never gave the FCC the 

legal authority to act as it did. Number three, the order is likely 

to cause more harm than good. And number four, sufficient antitrust and other consumer protection laws exist to prevent and cure 

any of the contemplated harms outlined in the order. 

So thank you again for inviting me to appear before you and I 

look forward to your questions. 

[The prepared statement of Mr. McDowell follows:] 

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Mr. GOODLATTE. Thank you, Commissioner McDowell. And without objection your, I’m sure, cogently written dissenting opinion 

will be made a part of the record. 


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57 

I’m pleased to note that the Chairman of the full Committee, 

Congressman Lamar Smith of Texas is present. I don’t believe he 

has a statement to make and these buzzers are going off a second 

time indicate that we have votes on the floor. So the Committee 

will stand in recess and we will begin the questioning as soon as 

we return. 

Thank you, gentlemen. 

[Recess.] 

Mr. QUAYLE [presiding]. Welcome back to the hearing on Ensuring Competition on the Internet and Net Neutrality and Antitrust. 

I want to thank the witnesses for being patient with the votes 

and we will just start getting right into the questions. 

And I am going to recognize myself for 5 minutes. The first question is for you, Chairman Genachowski. There has been reports, 

just last month, that the newest 706 Report is going to be coming 

out and within that report you—the FCC is going to be giving 

broadband deployment a failing grade. That is according to the reports, I don’t know if that is accurate. 

But, looking at the statistics, you have 95 percent of households 

have access to at least one broadband service and about 200 million 

people have signed up in the last 10 years. Now if you have 95 percent deployment in access to broadband services and that is a failing grade, I find it a little troubling and a little confusing. But I 

am kind of new to Washington here and when you use that and 

contrast with a GAO report that came out in 2011, in February, 

not on the FCC but on another agency in Homeland Security, when 

they said that they only had 15 percent control of the southern border and 44 percent operational control and they were saying—the 

secretary was saying that, you know, this is the best it has ever 

been, and from my understanding that could be a B+ to an A. 

So I am trying to understand the sliding scale that we have here 

in Washington where 95 percent could be an F and 15 percent 

could be a B+ to an A. So if you could just tell me how does the 

deployment get an F or failing grade, if that is true, in the reports 

that are coming out. 

Mr. GENACHOWSKI. So thank you for the question. We are working on a 706 Report, it hasn’t been released yet and so let me not 

address what it might say specifically. But I can answer your question in the following way. I think that there is broad agreement 

that broadband access, high-speed Internet access is a service that 

should be universal. It is so essential to our economy, it is essential 

to education, it is essential to small businesses, it is essential to 

public safety. The numbers that—I will just talk about last year’s 

report, that stood out for me and that stand out for me in general 

on this issue is that over 20 million Americans live in areas that 

have no broadband infrastructure. And so if they want to be part 

of the online world, if they want to start a small business in their 

area, these are rural communities all over the country, but over 20 

million, I think that is a significant number. And the second significant number are the number of Americans who could have— 

who could subscribe to broadband but don’t, for various reasons. 

That number is about 33 percent. So that is about 100 million 

Americans who aren’t part of our online world, because practically 

broadband isn’t available to them. 

58 

My view is that we need for our economy to be moving to true 

universal broadband very, very quickly. Our global competitors are. 

And I think that while we are making progress as a country, in a 

variety of ways, Congress asked us to determine whether 

broadband availability is moving in a reasonable and timely manner. Last year we concluded that it was not. And I will tell you that 

based on these kinds of numbers and based on what we seeing happening around the world and their focus, I think any spur we can 

give to ourselves to get broadband to every part of rural America, 

to increase our adoption rates from 67 percent to, you know, to 90 

percent to 100 percent, it is a very important issue. 

Mr. QUAYLE. Okay. Thank you. And I would shift topics to the 

order that came out. And I was just looking at it and the order argues that broadband providers have the incentive to limit Internet 

openness. But, if the order is correct the Internet openness creates 

a virtuous cycle that drives consumer demand for broadband access. Wouldn’t broadband access providers have every incentive to 

preserve openness and increase demand for their product? 

Mr. GENACHOWSKI. Well, there is a history here, of course. And 

the FCC has enforced Internet freedom and openness going back to 

at least 2005. And it found that there were instances where Internet service providers blocked or degraded or slowed down content. 

In one case it was voice over Internet content, in another case it 

was lawful video. And the incentives to block a competitor I think 

are there. 

From a global perspective I agree with your point, we benefit 

from preserving a baseline free and open Internet because it will 

trigger the virtuous cycle that I—that you spoke about and Commissioner McDowell spoke about and that I completely agree with. 

But I don’t think there is any real doubt that in a market that isn’t 

characterized by vibrant competition that there are incentives to, 

if you are controlling a consumer’s Internet access to the home, incentives to harm a competitor. And as I said in my opening statement, in this context where many of these competitors are earlystage startups, the option of waiting to be blocked, hiring a lawyer, 

filing an antitrust lawsuit I think is not practical. Having highlevel, light-touch, baseline rules that say, look no blocking, let’s 

move on, I think benefits the entire ecosystem. 

Mr. QUAYLE. All right. Thank you, Mr. Chairman. 

The Chair now recognizes the Ranking Member of the Subcommittee, the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Mr. Chairman, with the recognition that I have to be 

here for the rest of the hearing anyway, as the Ranking Member, 

I think I am going to defer and let my other Members go in front 

of me. 

Mr. Berman, I think, would be next. 

Mr. BERMAN. I appreciate that. I thank the gentleman and I 

probably should be here for the rest of the hearing too, but I don’t 

have to be. [Laughter.] 

Chairman Genachowski, I wanted to ask you a more elaborate 

question but I am just wondering, is it possible, right at the outset 

real quickly, because of my 5 minute time limit, to establish, I hope 

the answer to this is yes, that net neutrality doesn’t mean neutrality between lawful and unlawful content. 

59 

Mr. GENACHOWSKI. Correct. Yes. 

Mr. BERMAN. Because that has been one fear of mine. And I 

think the FCC and your open Internet order addressed that question, I just wanted to make sure I understand it right. 

Mr. GENACHOWSKI. You understand correctly. Our open Internet 

framework is only about lawful contact—content. We make clear in 

our order that it doesn’t interfere with enforcement of laws 

against—relating to unlawful content, whether it is theft of intellectual property, whether it is child pornography, those are outside 

our rules. 

Mr. BERMAN. Great. And in fact I think in addition to what you 

referred to the Administration has specifically endorsed the policy 

of promoting voluntary marketplace initiatives to address cooperative efforts among ISPs and rights holders regarding online copyright infringement and then what the FCC has done. 

So I—my question I guess is this, given these statements and the 

clarifying language in the FCC open Internet order, what can the 

FCC give assurances—what assurances can the FCC give to ISPs 

that they can enter into voluntary agreements with copyright owners to try to address or mitigate copyright infringement online 

without running afoul of net neutrality principles? I have been 

hearing reports for a couple years that ISPs and copyright owners 

are trying to agree on some kind of graduated response program 

to address the peer-to-peer infringement online, but assuming that 

they reach an agreement, how are they to know that the program 

is lawful under FCC rules? 

Put another way, can we—how do we get—how can we ensure 

that voluntary practices undertaken solely for the purpose of mitigating the occurrence of copyright infringement aren’t stymied by 

the fear that people will use the net neutrality principles as a 

sword to prevent such practices from being implemented? 

The net neutrality rules aren’t completely clear on what—how or 

when an ISP can make reasonable efforts to address unlawful activity or when and how it is determined that their practices constitute reasonable network management. And I don’t think the 

FCC wants to be the arbiter of copyright infringement issues online, but you do determine whether efforts to mitigate infringement 

are reasonable. 

Is there any way to give these companies comfort that they have 

some discretion to implement those kinds of initiatives which are 

truly targeted at addressing or mitigating the occurrence of copyright infringement? 

Mr. GENACHOWSKI. An intention of the framework we adopted 

was to provide that confidence. We made it clear that only lawful 

content falls within the range of the framework. We made it clear 

that our framework doesn’t inhibit sensible, voluntary efforts to 

protect intellectual property. Certainly our doors at the FCC are 

open and we have been encouraging voluntary efforts that are sensible and that protect intellectual property. 

Mr. BERMAN. So is there a way for a person to talk about a possible way to deal with that issue and get some indication of whether they are going down the right track? 

Mr. GENACHOWSKI. I image that there is, but I would say the 

first step would be to do what I believe is already occurring, the 

60 

discussions with staff of the FCC and our doors are open for that 

and they will continue to be. 

Mr. BERMAN. Thank you very much. 

I yield. 

Mr. QUAYLE. Thank you very much. The Chair now recognizes 

the gentlelady from California, Miss Lofgren, for 5 minutes. 

Ms. LOFGREN. Thank you, Mr. Chairman and thanks to both of 

our witnesses. 

I think as I listened to the various opening statements, I couldn’t 

help remembering the 1996 proceedings on the Telecom Reform 

Act. At one point Henry Hyde, then the Chairman, said the Republicans and Democrats are adversaries but the Commerce Committee is our enemy. [Laughter.] 

And I think to some extent, if we look at our differing approaches 

to this issue, it does relate to our jurisdictional spread. And I was 

one of the, with Mr. Conyers, introduced the bill just about 3 years 

ago with an antitrust approach to this effort. But I must say I am 

completely satisfied with what the FCC has done in this regard. 

While I thought the antitrust approach had merit, clearly the 

FCC is in a position to move more nimbly and, you know, I think 

of the years that Judge Greene had the antitrust breakup here in 

D.C. So I think that the approach you have taken is a solid one. 

I would note as well, that although not every Member of this 

Committee, apparently, is enthusiastic about your efforts, the business community is enormously enthusiastic about your efforts, all 

the way from TechNet which represents about $2 trillion in market 

cap out in—primarily in—well, the technology sector, even the big 

telecoms, AT&T and Sprint and Dish were supportive of this. So 

the fight is inexplicably here in the Committee even though the 

commercial world has moved on. 

And I think there is a very good reason for it. I want to give 

credit, certainly, to the commission for bringing content—consensus 

for what had been, you know, a contentious issue. But it is enormously important that we have these rules in place. I know sometimes people will say, well isn’t this really a fight between Google 

and AT&T. I don’t worry about Goggle, they have got plenty of 

money, they can, you know, pay for whatever. But I worry about 

the startup that could be squashed, you know, killed in the cradle 

before there is an opportunity, if we don’t have a free and open 

Internet. 

So, I just wanted—I thought it was necessary to say that clearly. 

Although we had had this antitrust effort, I am not sure that there 

have been successful efforts in remedying ongoing practices in the 

telegong industry as opposed to stopping mergers or doing breakups of companies. 

Mr. Chairman, do you have any instances where we had success 

using antitrust on an ongoing basis? 

Mr. GENACHOWSKI. Well, we certainly heard, during our proceedings, from startup companies, early-stage companies, small 

businesses, investors putting risk capital to work in early-stage 

companies was that as important as they believe antitrust laws 

are, and I share that, that they didn’t see it as a practical solution 

for the, you know, entrepreneur in the great American tradition, in 

their garage or in their dorm room taking advantage of an open 

61 

Internet to put a new product, a new service, a new idea in front 

of consumers. 

So it wasn’t—no insult to antitrust law, but not something that 

early-stage investors and companies thought was a realistic solution. And in fact what we heard overwhelmingly was that in the 

absence of basic high level rules of the road, the investors in the 

early-stage companies who had to devote their capital, whether it 

was time or money, would feel much less confident, much less willing to do it, not being certain whether if they started an Internet 

business it could be blocked from reaching the broad Internet audience. 

Ms. LOFGREN. Now one of the measures of whether this serves 

entrenched interests or challengers is what does the venture capital world say about it, because they are funding the disrupters. In 

terms of angel investors in the VC world, are they supportive of 

what the commission has done? 

Mr. GENACHOWSKI. They have been very supportive. A series of 

prominent leading venture capitalists have been supportive as have 

investors who are investing in the infrastructure itself, because 

what we really need as a country is both incredible vibrancy and 

dynamism in the startup world—— 

Ms. LOFGREN. Right. 

Mr. GENACHOWSKI [continuing]. So that we continue to lead the 

world in that kind of innovation, we also need fast, robust wired 

and wireless networks. The government is not going to build those, 

we need private sector investment to build it. And over the course 

of the proceeding we were able to craft an approach that met our 

goal of increasing the incentives across the board to grow the pie. 

I agree with Mr. Quayle on the idea of all working together to 

get a virtuous cycle of investment in early-stage companies and infrastructure. And honestly, the early reports on what we did is that 

we—well there was—as I said, there were some people who 

thought we went too far and some people thought we didn’t go far 

enough, but the general view was that this was a positive for investment throughout the broadband economy. 

Ms. LOFGREN. Well, my time is up. I would just like to thank 

you, Mr. Genachowski, for your leadership on this. I think it is important for freedom in America and our economy future. 

And I yield back. 

Mr. QUAYLE. Thank you. The Chair now recognizes the gentleman from California, Mr. Issa, for 5 minutes. 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. Genachowski, I pretty much, in the opening statement gave 

you some of my ideas of you don’t have this authority, you have 

taken it, I disagree. But I will move on past that to a couple of 

questions that are on another set of subjects. 

You are an independent agency. You serve for a term. You don’t 

serve at the pleasure of the President. Is that correct? 

Mr. GENACHOWSKI. Correct. 

Mr. ISSA. Did you discuss net neutrality with the President and 

if so, when? 

Mr. GENACHOWSKI. Didn’t discuss net neutrality with the President. The FCC’s—— 

62 

Mr. ISSA. Were you aware that the President made this an issue 

in his campaign? 

Mr. GENACHOWSKI. I think many people were aware—— 

Mr. ISSA. No, were you? 

Mr. GENACHOWSKI. Yes. 

Mr. ISSA. Okay. Did you do it, in any way, shape or form, because you believe that it was a promise made by President Obama 

that was not being kept by legislative authority? Yes or no, please. 

Mr. GENACHOWSKI. No. 

Mr. ISSA. Okay. So you made this because you thought that the 

market outcome you were seeking to achieve was good for America. 

Fair characterization? 

Mr. GENACHOWSKI. Yes. 

Mr. ISSA. Well, I commend you for that. Now the question is, do 

you believe we should do the same thing, make gasoline and diesel 

the same price? Yes or not? 

Mr. GENACHOWSKI. I am not an expert on gas. 

Mr. ISSA. No, but you are an expert on what is good for the consumer. 

Mr. GENACHOWSKI. I am familiar with—— 

Mr. ISSA. Do you believe that we should regulate everything so 

it is good for the consumer? 

Mr. GENACHOWSKI. No, I don’t. 

Mr. ISSA. You don’t? So you, for example, would not suggest that 

you just give all the rest of the spectrum, as quickly as possible, 

to AT&T, Verizon and Sprint so that they can create more brand— 

broadband capacity faster, drive down the price to the goal you say 

you want? 

Mr. GENACHOWSKI. I believe we have a serious spectrum opportunity and challenge. 

Mr. ISSA. No, no that is—that—spectrum opportunity means you 

want to sell it and make a lot of money. Right? For the American 

people. 

Mr. GENACHOWSKI. We would like to bring market mechanisms 

and expand auction authority for the FCC. We—— 

Mr. ISSA. No, no. You want to make more money for the American people by selling more spectrum. Yes or no? That is not a hard 

one. I don’t need the flowery. 

You have been selling spectrum. You have sold spectrum to 

AT&T, Sprint, Verizon, you didn’t sell any to Comcast, Comcast 

bought their way into cable, for the most part you have been selling it. 

You sell it and then you say, I want tell to you how to use it. 

Is that correct, based on net neutrality? 

Mr. GENACHOWSKI. Sorry, I didn’t understand the last piece, I 

didn’t hear the last piece. 

Mr. ISSA. Well look, you are selling—you are saying you want a 

better price, it is a value, you are trying to do all this but in fact 

you start off by selling them a very expensive commodity. The most 

expensive fundamental delivery system is through the airways, the 

least expensive fundamental is through a piece of fiber, as far as 

per terabyte. Right? You can’t deliver as much through broadband 

as you can, today, through a piece of fiber or even copper. 

Mr. GENACHOWSKI. Yes. 

63 

Mr. ISSA. Okay. Mr. McDowell, you are not completely on the 

other side of this, but in your opinion, don’t we have a fundamental 

problem saying that you have to charge the same price, effectively, 

you have to show no preference, when in fact in many cases you 

have a constrained basic capability? Nothing in the FCC ruling actually gives AT&T, Verizon, Sprint or for that matter the cable 

companies inherently more bandwidth to—in which to deliver services. Is that correct? 

Mr. MCDOWELL. Correct. 

Mr. ISSA. So, in addition to the question of whether there was 

antitrust and so on, where is the benefit to a market that is already growing, I won’t say exponentially, that gets overused, but 

it is growing a pretty feverish rate when we look at where we were 

10 years ago versus where we are today? Where is the benefit inherent in this ruling? 

Mr. MCDOWELL. It is—I think it is—— 

Mr. GENACHOWSKI. Sorry. No—— 

Mr. MCDOWELL [continuing]. Yes, thanks. 

Mr. GENACHOWSKI [continuing]. Go ahead. Sorry. 

Mr. MCDOWELL. I think it is confusing. I think what this order 

has done is actually create confusion in the marketplace and actually I disagree with the premise that the business community is 

uniformly behind this and the investment community. In fact, the 

evidence in the record is—points to quite the contrary. 

We have to look at broadband services in America went from covering 15 percent of Americans in 2003, by the end of 2009, 6 years 

later, it covered 95 percent of Americans in the absence, in the absence of regulation. Also in the absence of regulation we had a free 

and open Internet, under existing law. So I think the order was unnecessary and I think it actually creates more questions than answers. 

Mr. ISSA. Well, I am going to close by having something I think 

that will unite the two of you and which I think we all, we should 

all agree. As we have this fundamental growth, as we try to figure 

out ways to keep the Internet open, isn’t the fundamental part of 

what you achieved, not everything you sought to achieve, including 

regulation, the fundamental question that you should not be able 

to block like services to those which you are already delivering in 

your package? Is that a fundamental item that the examples that 

we talked about and the worry that Congress had is the one thing 

that probably both sides of the dais agree Congress should have 

dealt with before you did? 

Mr. GENACHOWSKI. It was a fundamental piece of our framework. 

Mr. MCDOWELL. I think Congress dealt with it through Section 

2 of the Sherman Act. Congress dealt with it with Section 5 of the 

Federal Trade Commission Act and other competition and consumer protection laws. I think there is another way to address 

these hypothetical harms. 

Mr. ISSA. Oh, I didn’t say I approved of net neutrality as the 

FCC did it, but simply that we did have an obligation to ensure 

that like products were not restricted when they happened to come 

from the competitor of the carrier themselves. 

Mr. MCDOWELL. We want openness and freedom on the Internet. 

Mr. ISSA. So do I. Thank you. 

64 

I yield back. 

Mr. GOODLATTE [presiding]. Thank the gentleman. The gentlewoman from Texas, Ms. Jackson Lee is recognized for 5 minutes. 

Ms. JACKSON LEE. Thank you very much and to both the Chairman and the Ranking Member for these ongoing hearings. And I 

have expressed a continuing theme to both the Chairman and the 

commission. Let me thank both of you for the quality of work. I 

know how extensive it is for the different views that you are now 

espousing. But, my thought on this Committee of competition and 

intellectual property is how can we protect the genius of America 

and how can we create jobs. 

And certainly the business community is involved in that continuing question and theme. At the same time, for those of us who 

define the business community is that alone, a positive, small 

Internet business user, whether they be sitting in rural America or 

urban America, getting for the first time that access or opportunity, 

I think that is also part of the business community. And Mr. Chairman, we may not be able to query them, but we have a responsibility to them. 

So I want to ask both of you, what do you think is the heart of 

the net neutrality rule in order—Mr. Chairman the heart, very concisely and that for the commissioner, and I’ll go with the chairman 

first—and give me the basis of your interpretation of the FCC authority to have rended such a rule. 

Let me start with the chairman first. And I have follow up questions so if you can be very concise, I would appropriate it. 

Mr. GENACHOWSKI. Sure. The heart of the order are four basic 

propositions: No blocking of lawful content to consumers; transparency so that network management practices are available to 

consumers, reducing the need for government involvement; third, 

reasonable network management permitted and fourth, flexibility 

to deal with network congestion and to invest in networks. 

The authority comes from Title I of the Communications Act, 

provisions in Title II, Title III, Title VI and Sections 706. And I 

would be happy to discuss any of those. 

Ms. JACKSON LEE. Just give me Title I in particular. 

Mr. GENACHOWSKI. Well, Title I, for a very long time, going back 

to Chairman Powell in the early 2000’s confirmed by the Supreme 

Court in Brand X made it clear that the FCC, under Title I, has 

the ancillary authority to adopt measures, policies with respect to 

advanced services like high-speed Internet. And again, I could go 

on but I want to respect your time. 

Ms. JACKSON LEE. Thank you very much. 

Commissioner? 

Mr. MCDOWELL. Well, I let the chairman speak for himself on 

what the heart of the order was. 

Ms. JACKSON LEE. Yeah, I’m asking you. 

Mr. MCDOWELL. You asked—well—— 

Ms. JACKSON LEE. You can either answer it and as they say, 

I—— 

Mr. MCDOWELL. Sure. 

Ms. JACKSON LEE [continuing]. Asked the question, you can give 

me the answer as you so desire. 

65 

Mr. MCDOWELL. But, it is his order, I dissented against it so he 

knows the heart of it better than I do, because it is his heart. 

But in any case—— 

Ms. JACKSON LEE. But you can interpret the heart, as you saw 

it, that caused you to vote against it. 

Mr. MCDOWELL. I will stipulate to the fact the Chairman has a 

good heart and that he had the best of intentions with executing 

this order. 

But I do disagree with the legal authority. The Title I portion is 

the fundamental cornerstone that the majority tried to use to justify its actions. And in a very similar fashion, almost identical fashion in some cases, as to what it tried to do before and that was 

struck down by the D.C. Circuit last year. So that is one of the 

many reasons I have concerns about the order. 

Ms. JACKSON LEE. All right. And then let me start with you then, 

your opposition to it was based upon the fact of, I assume, the free 

market abilities. But let me just ask this question to you. In the 

alternative of what the chairman and the commissioners voted on, 

what is your answer to the unfettered access of the small, minority, 

women-owned and businesses and others who are trying to access 

this huge phenomenon? 

Mr. MCDOWELL. Excellent question. For years, long before Chairman Genachowski came to the FCC, I have been advocating a different approach all together, which is to use the non-governmental 

Internet governance model that the Internet was built upon and 

that is what made it so great. So that is to gather together, the 

FCC could find a new role for itself, gather together all the nongovernmental entities that help run the Internet, the Internet Society, the Internet Engineering Task Force, you could have consumer 

protection agencies, government, academics, engineers, bring them 

all together to spotlight allegations of anti-competitive conduct and 

use existing antitrust and consumer protection laws to cure that. 

Sometimes, as we found with the Comcast/Bit Torrent matter, 

that merely shining the sunlight makes the infection go away. 

Ms. JACKSON LEE. But—— 

Mr. MCDOWELL. And that is adequate. All of the allegations that 

were made earlier of what has gone wrong here, first of all were— 

just a tiny amount of what—of each—of the quadrillions of Internet 

communications each day but also were rectified under existing 

law. 

Ms. JACKSON LEE. My time is short and I—— 

Mr. MCDOWELL. Sorry. 

Ms. JACKSON LEE [continuing]. Appreciate that interpretation. 

Chairman, respond to that. And I will lay my premise again, I 

am concerned on the premise of net neutrality, is the unfettered access, which I believe you were going after, how do you respond 

to—— 

Mr. GENACHOWSKI. We share that concern. 

Ms. JACKSON LEE [continuing]. The commissioner’s point? 

Mr. GENACHOWSKI. I think it is fundamental to our economy, to 

the genius of America, as you said. 

A couple of points. One is, the FCC, going back to at least 2005 

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nesses, others who want to access an open Internet. And that was 

deemed necessary, number one. 

Number two, I agree with Commissioner McDowell on the importance of transparency and that is why we made it one of the hearts 

of the order. 

And the third point that I would make is while we heard, very 

loudly, from the communities that you mentioned and from others 

that baseline rules of the road were necessary to provide confidence 

for investment and for startup activities, nothing in our order, in 

fact we specifically support private third party entities developing 

around that baseline, to minimize the need for government involvement. But the core question was, should there be a baseline framework protecting freedom—Internet freedom and openness. On a bipartisan basis the FCC, since 2005 at least agreed to that, I respect 

Commissioner McDowell for dissenting consistently over that period, but there is a bipartisan foundation to it and our actions were 

consistent with that bipartisan history and the—our analysis of the 

record and what we heard from the investment community and 

from early-stage entrepreneurs. 

Ms. JACKSON LEE. And you believe it is squarely founded on antitrust premises of open competition or the non-hindrance of competition? 

Mr. GENACHOWSKI. I believe it is—I believe we had ample authority into the Communications Act. Antitrust is available as a 

remedy as well, but as I said earlier, I believe that that remedy 

would be insufficient for startups who are blocked or interfered 

with, given the realities of what it takes to start a company in 

America. 

Mr. GOODLATTE. The time of the gentlewoman has expired. 

Ms. JACKSON LEE. I thank the gentleman. 

Mr. GOODLATTE. I thank the gentlewoman. And I will ask my 

questions at this point. 

Chairman Genachowski, aren’t broadband providers in a competitive market in a better position than the FCC to figure out how 

to increase demand for their property? 

Mr. GENACHOWSKI. I think broadband providers are in a strong 

position to figure out how to increase demand for their product. 

They have also told us that they recognize that there are challenges that they have been unable to solve alone. 

Mr. GOODLATTE. And what do you mean by that? 

Mr. GENACHOWSKI. Well, our work, which was broadly based, 

found that the adoption gap that we have in this country, 67 percent versus a goal of a hundred, is related to, in some cases affordability, in some cases relevance, people lacking knowledge of the 

benefits of the Internet, in some cases digital literacy, in some 

cases trust of the Internet. And we have been working with the 

broadband industry to develop measures that would be a win-win 

and increase demand adoption from 67 percent at a faster rate. 

Mr. GOODLATTE. In a competitive broadband market wouldn’t 

market forced prevent broadband providers from adopting any 

practices that actually harm their consumers, lest those consumers 

switch to a competitor? 

Mr. GENACHOWSKI. I think that, you know, the market that we 

are looking at is one where over 70 percent of the country only has 

67 

one or two choices. I would agree that with more competitors and 

very vibrant competition in place—— 

Mr. GOODLATTE. But your order specifically says that the FCC 

didn’t conduct a market power analysis. 

Mr. GENACHOWSKI. I respectfully—the order spent a lot of time 

analyzing the markets, there is a section called cost and burdens. 

We didn’t conduct a formal antitrust analysis. 

Mr. GOODLATTE. Why not? We like that around here. 

Mr. GENACHOWSKI. It wasn’t necessary, it hasn’t traditionally 

been thought necessary in the FCC’s context. But the important 

point to emphasize is the order is filled with market analysis, the 

record is filled with market analysis, the Administrative Procedures Act imposes us on an obligation to analyze all of the costs 

and issues in the record and we did that in the order. 

Mr. GOODLATTE. You note in your statement, and just again stated, that as a justification for the order, that more than 70 percent 

of Americans live in areas with only one or two fixed broadband 

providers. Does the reasonableness standard embodied in the order 

apply in the same way, whether the alleged violation occurred in 

one of these areas or in the 30 percent of America with a more 

competitive broadband market? 

Mr. GENACHOWSKI. We haven’t had to address that question. We 

heard from the industry that they would, in general, prefer having 

the ability—— 

Mr. GOODLATTE. You haven’t had to address that question until 

today and we are asking you today. 

Mr. GENACHOWSKI. I wouldn’t want to prejudge issues that might 

come to the commission, but I would agree with you, at a higher 

level I would agree with your point that the more there is competition the less there is a need for government involvement. 

Mr. GOODLATTE. Is it true that the FCC may publish an order 

in the Federal Register, even before the order has received final approval from OMB? 

Mr. GENACHOWSKI. I am not aware of that. There are procedures 

that are in place involving Paperwork Reduction Act and OMB approval. We are in those procedures now and we will follow the 

standard procedures. 

Mr. GOODLATTE. Given the sense of urgency surrounding adoption of the order in December, why has the FCC chosen to delay 

publishing the open Internet order until the full Paperwork Reduction Act process is complete? 

Mr. GENACHOWSKI. Well, the order has been published in the 

sense that it is there, everyone knows exactly what it is. Formal 

publication in the Federal Register is a process that I don’t consider myself an expert on. As I mentioned there are Paperwork Reduction Act processes, OMB processes, the Federal Register has its 

own processes, we are doing our work as quickly as we can in connection with those processes to get to final publication in the Federal Register. But it doesn’t change the rules that we adopted and 

that have been made public already. 

Mr. GOODLATTE. The order—Commissioner McDowell, the order 

explicitly declines to conduct any market power analysis. Do you 

believe that the a market power analysis is necessary to distinVerDate Aug 31 2005 09:45 Jul 19, 2011 Jkt 000000 PO 00000 Frm 00071 Fmt 6633 Sfmt 6601 H:\WORK\IP\050511\66157.000 HJUD1 PsN: DOUGA
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guish between benign network management practices and network 

management practices that actually harm consumers? 

Mr. MCDOWELL. Absolutely and you are absolutely right. At footnote 49 of the order it says specifically we are not performing a 

market power analysis in this proceeding. I think that is very telling. 

Mr. GOODLATTE. And do you think that is because they do not 

have any evidence to substantiate a claim that there is a market 

power problem that is harming consumers? 

Mr. MCDOWELL. Each time the government has looked at the 

broadband Internet access market, it has not found a concentration 

of market power or abuse of that power, whether it is the Federal 

Trade Commission in 2007 or whether it was the Department of 

Justice just last year filing comments with the FCC. In fact, both 

of those agencies, in both of those instances warned against just 

this type of regulation because of the disincentives that it might 

provide to the buildout of broadband. 

And when we are talking about trying to build out broadband to 

that last 5 percent of Americans who might not have access to it, 

it is important to provide those incentives as much as we can. 

Mr. GOODLATTE. Chairman—— 

Mr. GENACHOWSKI. I reserve my right, at a later point to—— 

Mr. GOODLATTE. You are welcome to respond right now. 

Mr. GENACHOWSKI. Very quickly. The DOJ’s filing with the FCC 

called this market that we are discussing, concentrated. And the 

chairman of the Federal Trade Commission testified, in our process, in a way that—with respect was different from what Commissioner McDowell suggested. And I would just suggest that we make 

the FTC and the DOJ materials part of the record of the proceeding. 

Mr. GOODLATTE. Without objection they will be. 

Mr. MCDOWELL. And they speak for themselves. 

Mr. GOODLATTE. Sure. 

[The information referred to follows:] 

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Mr. GOODLATTE. In that regard, Commissioner McDowell, Chairman Genachowski has been somewhat dismissive of antitrust remedies to address these issues. I don’t see problems because, as you 

correctly point out, there are quadrillions of bits of information that 

are exchanged I think very freely over the Internet on a daily basis 


66157D-30.eps
269 

and the examples of potential abuse have been de minimis and 

have been solved under current law as opposed to this new proposed rule. 

But, let me just ask you, looking ahead and supposing that 

issues will arise, as I no doubt believe they will, do you believe that 

antitrust law provides an appropriate and adequate remedy for the 

sorts of misconduct that the open Internet order seeks to curtail? 

Mr. MCDOWELL. Yes. 

Mr. GOODLATTE. Any elaboration on that? 

Mr. MCDOWELL. Sure. So under—I didn’t know how long I had. 

Under Section 2, whether it is refusals to deal or exclusive dealings 

or raising rivals’ costs, all of the scenarios put forth by the proponents of Internet network management regulation for these rules 

can be addressed by those laws. But so can also, you know, Section 

5 of the Federal Trade Commission Act could also address it as 

well. 

And you make an excellent point which is the de minimis 

amount of allegations that have been made and all, all were resolved in favor of consumers under existing law. 

Mr. GOODLATTE. Thank you. My time is expired. 

And the Chair now recognizes the gentlewoman from California, 

Ms. Chu for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman. Let me welcome Mr. Genachowski here and Mr. McDowell here this morning 

with their statement. 

Voice. It is just Judy Chu. Sorry. Ms. Judy Chu. 

Ms. WATERS. Oh, it is Judy’s turn? I am sorry. 

Mr. GOODLATTE. I think we recognized Ms. Chu. 

Ms. WATERS. It was? Okay. 

Mr. GOODLATTE. But we will come—— [Laughter.] 

We have a lot of California—— 

Ms. CHU. It’s fine. 

Mr. GOODLATTE. I said we have a lot of California gentlewomen 

here and we respect them all, but we are going to Miss Chu first. 

Ms. CHU. Well, thank you. 

Well, Chairman Genachowski, opponents of the rules of the road 

have argued that the Internet is open and inspired innovation 

under current law and that broadband has expanded to reach a significant number of Americans. So, please explain for our knowledge 

what has changed in the marketplace, in your opinion, to make 

this rule necessary. 

Mr. GENACHOWSKI. Well, the misperception that some people 

have is that the framework that we adopted was the first time that 

the FCC adopted measures to preserve a free and open Internet. 

In fact, in 2002 the FCC issued open Internet principles; in 2005 

it enforced—it issued an enforcement action against a company 

that was blocking voice over the Internet; later, under its framework, it issued—it enforced—it took an action against a cable company that was blocking online video. What we saw—what I saw 

when I came to the FCC was that there had been a bipartisan history in favor of preserving a free and open Internet, but we inherited a process that wasn’t the traditional rulemaking process, had 

created uncertainty because there weren’t any rules that had been 

written down. And we took it upon ourselves to increase certainty 

270 

and predictability in the overall broadband economy by conducting 

an open Administrative Procedures Act rulemaking process. 

One other point, if I may, the fact that there were incidents of 

blocking, degrading during these years when the FCC made clear 

that that shouldn’t happen, means a lot because it means that even 

with the rules there were issues. In the absence of the FCC going 

back to 2002 saying this was an issue, it is fair to presume that 

there would have been many more instances of interference with 

Internet openness and freedom. What we have done now is simply 

codify a fair and reasonable, broadly supported framework that increases the level of certainty and predictability for everyone in the 

broadband economy, including America’s great entrepreneurs and 

early-stage investors. 

Ms. CHU. And in fact talking about those companies that have 

blocked services on the Internet, can you be more specific about 

them, specific examples? 

Mr. GENACHOWSKI. Sure. In 2005 a company called Madison 

River blocked voice over the Internet traffic to its consumers. In 

2008 Comcast blocked lawful video from Bit Torrent. We learned 

in, I think, 2009 that Apple and AT&T had agreed that voice over 

the Internet applications should not be allowed on the IPhone, that 

has since been changed. There have been private lawsuits raising 

instances of Internet blocking or degrading that were settled by— 

with agreements to follow practices consistent with open Internet 

and freedom. All of this was as against a backdrop of an expectation any lawyer would have told any company, look the FCC has 

something in place here, before our framework they would have 

said, but we’re not sure exactly what it is. 

Ms. CHU. And how has this rule been received by the industry 

and other players? 

Mr. GENACHOWSKI. Well, I think in this contentious area I am 

very proud of our staff for working hard to get the broadest possible consensus that anyone has seen in an issue that is difficult 

like this. And so across the spectrum from early-stage entrepreneurs and investors, to major ISPs and cable companies, there 

has been support for the predictability and certainty that the order 

provides. I mentioned in my opening statement that it has been described as a pragmatic resolution that promotes investment, economic growth and innovation. 

Ms. CHU. And in fact opponents do argue that this regulation 

would hurt our economy and stifle private sector job creation and 

undermine innovation. How does this ensure that we can continue 

to have innovation in—and that investment can flourish? 

Mr. GENACHOWSKI. Well, fundamentally this is an innovation 

framework. It makes sure that the next entrepreneur with a great 

idea in a garage or a dorm room can start that business knowing 

that if he or she puts it on the Internet it will reach an audience 

and the market will decide whether or not it is successful. And 

they don’t have to worry about it being blocked by any of the companies that control access to the Internet, that is a fundamental 

way to make sure that we preserve what has been so great about 

the Internet in promoting innovation, job creation and private investment in our company. 

271 

Ms. CHU. Thank you. I have no time—awareness of the time because of the—— 

Mr. GOODLATTE. I think that gives you a little latitude to ask another question. 

Ms. CHU. Oh. Okay. Well, but thank you, I think I will yield 

back. 

Mr. GOODLATTE. I thank the gentlewoman. 

And the Chair now recognizes the gentleman from North Carolina, Mr. Coble? 

Mr. COBLE. Mr. Chairman, I thank you for that. Mr. Chabot, the 

gentleman from Ohio has been here longer than I, Mr. Chairman. 

If you would recognize him then I will get mine later. 

Mr. GOODLATTE. With your deference we will be happy to do that 

and we will recognize the gentleman from Ohio for 5 minutes. 

Mr. CHABOT. Thank you, I—just one question and then I am 

going to yield the balance of my time to Mr. Coble and then he can 

have my time and his time. 

I understand that it has already been discussed, to some extent 

here today, in my absence, the fact that some have argued that we 

don’t need further regulation to achieve net neutrality because our 

Federal antitrust laws may be used to seek redress from anti-competitive behavior. How does that argument square with the impact 

of the Supreme Court’s ruling in Trinko that makes it considerably 

more difficult to bring an action under our antitrust laws for activities regulated by the FCC pursuant to the Telecommunications 

Act? 

And I will start with Mr. McDowell, I guess. In fact I will give 

it to Mr. McDowell, then I am going to go ahead and yield back 

so I can go with Howard. 

Mr. MCDOWELL. Thank you, Mr. Chabot. You know, I was in the 

private sector when the Trinko case was decided in 2004 and I read 

it many times and I have reread it in preparation for this hearing. 

What is—I think Trinko is first of all a case of bad facts, perhaps 

not making the best law. You have an indirect purchaser situation, 

first of all. But second of all, what the Court said there, my interpretation is that when there is a statutory regime setting up regulatory relief for a particular matter, that the courts are loathe to 

step in with antitrust remedies. And what you had in Trinko, I 

think, has to be looked at specifically to the facts and the law applied to Trinko. You had the Telecommunications Act of 1996, you 

had Title II specifically, you had the unbundling obligations of the 

regional Bell operating companies, so you had Sections 271 and 

Section 251 and Section 251(c)(3) in particular. And so that was a 

very prescriptive, statutory regime, that gave the FCC a great deal 

of authority and latitude as to how to address competition matters 

and regulatory matters that came up within the confines of the 

statute. 

Here, with broadband Internet access, broadband Internet access 

by the net neutrality order’s own admission is not common carriage. The order itself, from last December, goes out of its way to 

say it is not common carriage, even though I think the FCC is trying to foist a lot of the common carriage type regulation on there, 

on its face it is saying it is not common carriage. So therefore, Title 

272 

II would not apply, so therefore it is unregulated, so therefore the 

antitrust laws would apply even in the face of Trinko. 

But I would like to address a few other things as well. Not to 

split hairs on the legal history of the FCC’s actions regarding an 

open Internet, the FCC, in 2005 did bring action against Madison 

River and entered into a consent agreement. Madison River was a 

phone company and was violating its statutory obligations under 

Title II and that is how the FCC came after it. 

The Internet principles of 2005 were just that, they were principles. All four commissioners at that point said they were not enforceable, they did not have the effect of rules, they didn’t go 

through the notice of proposed rulemaking process, the notice and 

comment process. They weren’t codified in the Code of Federal Regulations. Yet, at least two, I think three actually, of the commissioners reversed themselves in 2008 to address the allegations 

made against Comcast in the Bit Torrent affair that arose in 2007. 

So in 2008 there was that order and the commissioners reversed 

themselves to say, oh those are enforceable rules when in fact they 

didn’t go through the process, they weren’t codified in the Code of 

Federal Regulations, they were not rules. 

So that was when the commission actually started to take a turn 

down—— 

Mr. CONYERS. Sorry. 

Mr. MCDOWELL [continuing]. A turn down the wrong road in 

terms of its authority. And I think that is important. But what is 

also important about what the chairman said is that all of those 

complaints, every single one of them were resolved under existing 

law that came prior to the net neutrality order, every single one 

of them. 

Mr. CHABOT. Okay. Thank you very much. 

I would like to yield the balance of my time to Mr. Coble. 

Mr. COBLE. Mr. Chairman, what little time I have then I will 

wait my turn, but let me start with Mr. McDowell. 

Mr. McDowell, will the order only affect large cable and telephone companies or will it affect smaller companies as well, a.). 

And b.) how will it affect local co-ops? 

Mr. MCDOWELL. It affects, from my understanding of it, all companies regardless of their size and including local, rural co-ops. 

Mr. COBLE. Let me go to the chairman and try to beat the red 

light, Mr. Chairman. Mr. Chairman, given that the recent academic studies have demonstrated that in excess of 89 percent of the 

bit traffic—Bit Torrent traffic is copyright infringing material, 

would slowing down or delaying or blocking Bit Torrent package to 

prevent copyright infringement be allowed under the rule under 

the order? 

Mr. GENACHOWSKI. The order addresses only lawful content and 

it makes it clear that measures to enforce intellectual property or 

other actions against unlawful content are permissible under the 

framework. 

Mr. COBLE. Mr. Chairman, do I have time for one more question? 

Mr. GOODLATTE. Without objection, gentleman is recognized for 

an additional minute and then we are going to give you another 

bite of the apple here. So—— 

273 

Mr. COBLE. And by the way, I apologize for my delay, I had two 

other hearings going on this morning. 

Mr. GOODLATTE. Go right ahead. 

Mr. COBLE. I thank you, Chairman. 

Either to Mr. McDowell or—Commissioner McDowell or the 

chairman. The order predicts significant and likely irreversible 

harm from threats to openness unless the FCC rules are enacted, 

I am told. Has the lack of these rules led to significant and irreversible harm at any point in the past? 

Mr. MCDOWELL. The lack of rules has not led to significant or 

irreversible harm, in fact we have an open and freedom enhancing 

Internet, I think precisely because the government has not been involved. 

Mr. COBLE. Mr. Chairman, you want to be heard? 

Mr. GENACHOWSKI. If I could just add again, since 2002 the commission has made clear that it was important to the country and 

the commission to preserve Internet openness and freedom and 

since 2005 enforced it in a series of instances. The mechanism that 

it used was later invalidated by the court and so that left the commission without—at great uncertainty in the marketplace, particularly for early-stage investors. The framework that we adopted, 

pursuant to Administrative Procedures Act process under the Communications Act restored certainty and predictability among earlystage investors and in various ways for Internet service providers 

as well. 

Mr. COBLE. Thank you. Mr. Chairman Goodlatte, thank you for 

your generosity. I yield back. 

Mr. GOODLATTE. I thank the gentleman. The Chair now recognizes the second gentlewoman from California, Ms. Sa ́nchez for 5 

minutes. 

Ms. SA ́ NCHEZ. Thank you and I will just point out for the Chairman’s general knowledge that California sends the most female 

representatives to the United States Congress, that is why you find 

yourself in the midst of so many here on Judiciary. 

Mr. GOODLATTE. And we are pleased to have them all. [Laughter.] 

Ms. SA ́ NCHEZ. Thank you so much. I want to thank both of our 

witnesses for joining us today. And as both witnesses notice in— 

or noted in their written treatment, I think the FCC does a great 

job of addressing the issues in front of them, to the best that they 

can in a bipartisan manner and that is something that is to be 

envied from somebody sitting on this side of the table, so to speak. 

I want to start my questioning with Chairman Genachowski. Did 

I pronounce that correctly? 

Mr. GENACHOWSKI. Genachowski. 

Ms. SA ́ NCHEZ. Genachowski, I’m sorry. You know, it is no secret 

that in the FCC’s national broadband plan 13 percent—just 13 percent of Americans have only one broadband access provider and 78 

percent of Americans have only two broadband options which 

means not a lot of choice out there. So I am curious in getting your 

perspective on in the absence of the open Internet order that the 

FCC has adopted, should those citizens be worried about the content that they hope to access potentially being censored? 

274 

Mr. GENACHOWSKI. Well that was one of the reasons why we 

thought it was important to adopt the order and I think the framework that we adopted gives consumers and innovators basic protections to ensure that if you are a consumer you can access whatever 

is lawful on the Internet, if you are an entrepreneur you can put 

something on the Internet and know that consumers will have access to it. 

Ms. SA ́ NCHEZ. Great. And just as a side note, I would be interested to know what you are doing to try to help expand options for 

these folks that don’t have a lot of choices when it comes to access. 

Mr. GENACHOWSKI. We each, Commissioner McDowell and I each 

mentioned several items that we are working on together to increase competition, from dealing with infrastructure issues like 

tower siteing and pole attachment to freeing up more spectrum 

both unlicensed and licensed. Those are just some of the measures 

that we pursue to promote and extend competition in the marketplace. 

Ms. SA ́ NCHEZ. Great. I am curious in knowing what you think 

the impact of the open Internet order will have minority communities in particular. 

Mr. GENACHOWSKI. I think keeping the Internet open allows anyone with an idea or a business concept to have a real chance. And 

that is true for members of minority communities. We have actually seen a number of examples of business and content entrepreneurs from minority communities take advantage of an open 

Internet to build an audience, build a business. It is one of the 

many reasons why preserving the openness and the freedom of the 

Internet has real value for the country. 

Ms. SA ́ NCHEZ. Thank you. I am interested in knowing, if you can 

give us an example of how—because it has been suggested that 

antitrust laws would help with respect to violation of Internet freedom, but can you give me an example of how using solely antitrust 

enforcement would play out regarding a violation of Internet freedom? 

Mr. GENACHOWSKI. What concerned the staff and us as we looked 

at this issue was—and what we heard from early-stage companies 

and investors, you know, imagine an early-stage company working 

out of its garage or a small office, that has a great product, that 

perhaps is competitive with a product offered by an Internet service provider and gets blocked. Well, what is that early-stage company supposed to do? If the only remedy is filing an antitrust lawsuit, you know, here is a company that has no money, that has 

very few customers, if any, having to find a lawyer, pay the lawyer 

to file a lawsuit, prove damage and hope at the end of the day— 

well this—it is just—even telling the story, it is not realistic for 

America’s early-stage entrepreneurs and small businesses, and it is 

why I think that going back many years there has been a real consensus that baseline protections for Internet freedom and openness 

were necessary and would be a healthy complement to antitrust 

laws, which themselves are very, very important. 

And so it is no—I don’t mean any disrespect to antitrust laws, 

they play a critical role in promoting our economy and competition, 

but in some areas like this, they aren’t alone enough. 

275 

Ms. SA ́ NCHEZ. There might be in fact an additional hurdle for 

people that are trying to compete? 

Mr. GENACHOWSKI. Um hmm. 

Ms. SA ́ NCHEZ. Great. And then finally, you know, there has been 

some debate over what the response has been from the commercial 

sector to the rules that you adopted in December, whether it has 

been predominantly positive or negative. You mentioned that in 

your experience you have been that it seemed to be predominantly 

positive people are looking for something that is pragmatic and 

something that has predictability. And I am just wondering if you 

can expand on that a little bit. 

Mr. GENACHOWSKI. Sure, of course. You know, the—and we 

would be happy to provide you—people said things publicly and so 

I am not, you know, reporting simply in private conversations. And 

we heard from, I think one of the Members mentioned TechNet 

which broadly represents the technology community, companies 

and associations throughout the broadband economy, large ISPs 

and cable companies, early-stage investors and entrepreneurs. We 

would be happy to provide you with some of the examples of statements that were issued after the order was adopted. 

Ms. SA ́ NCHEZ. Would you say, with the Chairman’s indulgence I 

will just—if I could have an additional 15 seconds to ask this last 

question? 

Mr. GOODLATTE. Without objection the gentlewoman is recognized for an additional minute. 

Ms. SA ́ NCHEZ. Oh, thank you. Very generous. 

Would you say that these are not always people that have the 

same interests, so it is sort of a broad swath of people who are interested in this issue have actually come to some sort of agreement 

in terms of support? 

Mr. GENACHOWSKI. Very much so. And I—at some level we became concerned that sort of the Groundhog Day ongoing battle on 

net neutrality was doing harm to the potential of high-speed Internet for all Americans. And we heard that from many entities 

throughout the economy saying, you know what, it is time to resolve this, the gap between the bid and ask isn’t that large, let’s 

work together to find a framework that moves us forward and allows us to tackle other issues that we need to tackle as country, 

unleashing spectrum, transforming the Universal Service Fund 

from telephone to broadband, a whole series of issues that we need 

to drive broadband success in the United States. 

Ms. SA ́ NCHEZ. Great. And I thank you for your time and I yield 

back. 

Thank you, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentlewoman and the Chair now 

recognizes California gentlewoman number three, Ms. Waters, for 

5 minutes. 

Voice. Number four. 

Ms. WATERS. Thank you very much, Mr. Chairman. Again, I 

would like to thank Mr. Genachowski and Mr. McDowell for both 

being here today with this statement. I have three areas that it is 

going to be hard to get to in a limited period of time, but if I kind 

of tell you in advance perhaps you can respond to questions that 

I am going to have about the Comcast/NBC merger, about net neuVerDate Aug 31 2005 09:45 Jul 19, 2011 Jkt 000000 PO 00000 Frm 00279 Fmt 6633 Sfmt 6601 H:\WORK\IP\050511\66157.000 HJUD1 PsN: DOUGA
276 

trality and of course our new bank media mogul, Mr. Jamie 

Diamon and JPMorgan. 

On the Comcast/NBC merger, the FCC and DOJ have authority 

to review media mergers under Federal antitrust laws. The FCC’s 

process allows for a more comprehensive public interest analysis. 

According to the Supreme Court and FCC president, factors considered to be in the public interest must include a deeply rooted preference for preserving and enhancing competition, promoting diversity of license holdings and generally managing the spectrum in 

the public interest. 

How does consolidation promote a diversity of license holdings 

and what types of public interest conditions tend to promote a diversity of license holdings and broadcast viewpoints? Which public 

interest conditions in the FCC’s order approving the Comcast merger were not previously agreed to or presented by the merging applicants months in advance? That is on Comcast. 

On net neutrality, many of us consider the FCC net neutrality’s 

rule very weak and all of the consumer protection and public interest organizations have basically said this. I want to know, since the 

future of the Nation’s communications infrastructure is moving to 

mobile wireless, is the FCC at all concerned about the lack of protection for wireless Internet users? 

My colleagues on the other side of the alley are also worried 

about investment. Many investment firms and venture capitalists 

are now lining up behind innovators who are developing mobile applications for cell phones and other portable services. If the FCC 

is at all concerned about the potential blocking that could occur 

over mobile wireless networks, what may that may stifle investment and mobile application? 

And finally, last year Bloomberg reported that JPMorgan Chase 

owns a 10.2 percent stake in U.S.A. Today publisher Gannett Company, making it the company’s largest shareholder. Besides U.S. 

Today, Gannett owns more than 80 other daily newspapers scattered across the country. JPMorgan Chase owns or wields considerable power over Reader’s Digest Association, Source Internet Companies and American Media. If the holdings of all these companies 

that JPMorgan Chase has inherited were rolled into a single entity 

it would be the largest magazine publisher in the United States. 

JPMorgan could also become a co-owner of the Tribune Company, publisher of the Los Angeles Times and Chicago Tribune, depending on the outcome of the proposed bankruptcy organization or 

reorganization plans in courts. I have been following the L.A. 

Times waiver for quite some times now and I suppose they have 

been holding on and they have been protected in this waiver until 

they could resolve this bankruptcy and perhaps do this kind of sale 

that is being contemplated. 

So, is the FCC at all concerned about whether JPMorgan’s mass 

media holdings violate the agency’s cross-ownership rules? Do you 

think it serves the public interest for Wall Street to own significant 

portions of the media? 

Mr. GENACHOWSKI. Thank you for the questions. Let me try to 

address each of them. 

With respect to Comcast/NBC, the statutory obligation of the 

agency is to determine that a license transfer is in the public interVerDate Aug 31 2005 09:45 Jul 19, 2011 Jkt 000000 PO 00000 Frm 00280 Fmt 6633 Sfmt 6601 H:\WORK\IP\050511\66157.000 HJUD1 PsN: DOUGA
277 

est. And so it is not surprising that companies who seek FCC approval think in advance about what types of actions might permit 

the FCC to determine that the transaction was in the public interest. And often those public interest benefits from the start are beneficial. 

Of course they don’t determine the end of our process. In that 

transaction we conducted a very thorough, extensive review and 

over the course of it approved the merger with a series of conditions that allowed the commission to determine that the transaction was in the public interest. I would be pleased to provide you 

a full list of it and both what was in the initial public interest 

showing and what—— 

Ms. WATERS. No, no, no. I know what it is in it and I will be 

watching to see if there is going to be an enforcement. I don’t like 

it. You have spoken to it. We can move on. 

Mr. GENACHOWSKI. And so the second question on wireless, a 

couple of points. There is a misperception, to a certain extent, 

about what we did on wireless and open Internet. We did have— 

we do have a provision, a no blocking provision for wireless Internet access. The transparency requirements are there. And there is 

also a provision saying no blocking of competitive applications. So 

those are there. 

We also said that we would monitor developments in the wireless 

space to see if additional action was necessary. We hope there 

won’t be, but it is part of the FCC’s role to monitor and determine 

if additional action is necessary. 

And on the third question, I am not familiar with the underlying—sorry. 

Ms. WATERS. If you may, just for a moment on the wireless, since 

the future of the Nation’s and communication’s infrastructure is 

moving to mobile wireless, is the FCC at all concerned about the 

lack of protection for wireless Internet users? I really want to understand with this dual track, this dual system that we have, how 

are you going to do that? 

Mr. GENACHOWSKI. Well, we thought it was appropriate to take 

into account legitimate differences between wired and wireless, but 

let me say, the wireless is incredibly important to the future of our 

economy. 

Ms. WATERS. That is right. 

Mr. GENACHOWSKI. Wireless Internet access is very important. 

Ensuring open Internet on wireless is very important. We took into 

account differences between wired and wireless in putting together 

our rules, but again, there is a no blocking rule in affect, no blocking of competitive applications, transparency rules in effect. I expect and believe that those will be sufficient to preserve Internet 

freedom and openness on wireless, but the FCC will monitor the 

situation and act, if necessary. 

Ms. WATERS. Now to JPMorgan. 

Mr. GENACHOWSKI. Well, you have mentioned facts that I am not 

aware and so I don’t want to tread into areas that I just haven’t 

had a chance to think about or be briefed on. 

Ms. WATERS. Oh, this is big. You have got to know about that? 

Mr. GENACHOWSKI. We will look at it. I am not aware of any 

rules that—cross-ownership rules limiting investment by financial 

278 

institutions in broadcast entities. But we would be happy to follow 

up if you—— 

Ms. WATERS. No, that’s—what I am getting to is this consolidation. You know—you are aware that JPMorgan has bought up 

these other magazines, newspapers, what have you? You are aware 

of that? 

Mr. GENACHOWSKI. I am aware now. 

Ms. WATERS. Okay. And you are aware, particularly of their purchase of the Tribune or the court actions around the Tribune. I 

guess a decision was made yesterday or today or so about their 

bankruptcy status and what that means in terms of JPMorgan’s 

purchase of the Tribune. Are you aware of that? 

Mr. GENACHOWSKI. I am not familiar with the current status of 

the bankruptcy proceeding. I am aware that a bankruptcy proceeding is going on with the Tribune. 

Ms. WATERS. But you know they want it? 

Mr. GENACHOWSKI. Excuse me? 

Ms. WATERS. You know that JPMorgan is going after Tribune? 

Mr. GENACHOWSKI. I don’t know exactly. 

Ms. WATERS. Okay. All right. 

Mr. GENACHOWSKI. But I would be happy to follow up, understand it more and—— 

Mr. GOODLATTE. The time of the gentlewoman has expired. 

Ms. WATERS. Thank you. 

Thank you very much, Mr. Chairman. 

Mr. GOODLATTE. And in the category of the last shall be first or 

the first shall be last, the Ranking Member deferred his questions 

and so we will recognize him now. 

Mr. WATT. Thank you, Mr. Chairman. And I deferred for—because I knew I was going to need to be here until the end of the 

hearing, as the Ranking Member and other Members had other 

things to do. 

I also deferred because at the outset I kind of have viewed this 

as a difference in philosophy share. A free enterprise person, antitrust laws will take care of everything and you know, stay out of 

free enterprise and then you have got another side. And you know, 

and I still, even after the whole hearing and all of the questions 

and answers, kind of come down at that same place. You have one 

philosophy about this, the Chairman has another philosophy, the 

Chairman of our Subcommittee has one philosophy about it, the 

Ranking Member has another philosophy about it. 

I said at the outset that I was closer to the chairman, Chairman 

Genachowski’s position than I was. But so I ask this to Mr. 

McDowell, he has been here most of the time, hadn’t had a chance 

to exert himself as much. But I have always kind of felt like it is 

important to understand more my—the opinion of the person who 

I disagree with, and so I ask this question for that purpose. When 

I was practicing law—the beauty of being in Congress, I have said 

a number of times in this Committee and other Committees, is 

when I was practicing law I never asked a question that I didn’t 

know the answer to, of a witness on the witness stand. Here I can 

ask any question that I want, without worrying about the—whether I know the answer to it because nine times out of ten I don’t 

279 

know the answer to it. And my purpose, I think the purpose of 

these hearings is to educate Members of Congress about it. 

So the questions I am going to ask are designed to educate me 

about your position, Mr. McDowell, because I want to understand 

it better. 

It seems to me that at least on the surface, and I am sure you 

will be able to clarify why this is not the case, you believed that 

the FCC has some role with respect to the—to broadband. You say, 

in your statement, ‘‘Since my arrival at the commission in 2006, 

the FCC has taken several historic steps to spur the construction 

of broadband facilities.’’ You list some of those. 

And then you say, on page four of your statement, that ‘‘Chairman Genachowski also deserves credit for bringing to a vote many 

other initiatives that may seem unimportant at first blush, but actually have a profound effect on promoting competition in the last 

mile.’’ So you obviously think FCC has some role in that last mile. 

And then you talk about the creation of a shot clock to ensure 

faster decisions by local authorities, ensuring timely resolution of 

pole attachment approvals with reduced rental rates for broadband 

providers, repurposing some satellite spectrum for terrestrial 

broadband use. So it is quite obviously to me that you believe that 

the FCC has some role and I am trying to figure out what your 

bright line distinction is between where you think the FCC ought 

to be acting with reference to broadband and where it ought not 

be acting, because it seems to me that in some cases when things 

have gone the way you wanted on that last mile, you were very 

happy with where—with the fact that the FCC was there doing 

something. And yet, in this case you have dissented and said, I 

don’t want you to be there. And the appearance is, is that gives you 

a results-oriented process as opposed to a substance-oriented process. But I am sure that is not the case. 

So just help me understand what you think the dividing line between—is between what the FCC did and what it shouldn’t—what 

it did in this case and what it has done in other cases, I guess. 

Mr. MCDOWELL. Excellent question. Thank you. So my guiding 

principle is whether or not we have statutory authority. So whatever the case might be before us, whether it is this or something 

else, even if I think it is a good idea but if we clearly do not have 

the statutory authority to do something then we can’t do it. 

In this case, with the net neutrality order the commission overreached, in my view. And fresh off a court opinion saying that it 

overreached using the same or substantially similar arguments 

that it did just a year earlier. So—— 

Mr. WATT. What are the statute—what is the statutory authority 

for all of the other things that—I am just, again, you know, this 

is not designed to trick anybody I am just trying to better understand where you come down. 

Mr. MCDOWELL. Sure. So when it comes to let’s say repurposing 

spectrum, we have the authority, under Title III, to do that and it 

is explicit. If it is things like pole attachments, we have the authority under Title II to do that and it is explicit. 

Sometimes Congress gives us narrow authority, sometimes it 

gives us broad authority. Sometimes a court says you don’t have 

that much authority, we are going to narrow down what our view 

280 

of that is and we have to follow that court’s order. And that is what 

has happened with net neutrality. 

Mr. WATT. So ultimately if we get the courts saying, yes the FCC 

has this authority, which is, you know, where we are headed, I 

guess, or not headed, one way or another the court will decide this, 

you are not dissatisfied with the rule you wrote, you are dissatisfied because you felt like the FCC shouldn’t have written a rule? 

Mr. MCDOWELL. That we just didn’t have the authority to do 

that. So that is right. 

Mr. WATT. Yeah. Okay. All right. Okay, that is fine. 

And that is—that helps me. And believe me, I am not trying to 

call you out here, I am just trying to understand better what the 

differences were here. 

Mr. MCDOWELL. And if I could just—you know, one common 

ground that we have is that, I think we all want an open and freedom enhancing Internet. But how do you get there? And we have 

already gotten there under existing law, in my view. 

Mr. WATT. Well you have gotten the—I am not sure you have 

gotten there for that last five—what do you call it—— 

Mr. MCDOWELL. Broadband adoption and deployment, that’s different. 

Mr. WATT [continuing]. To the last mile. 

Mr. MCDOWELL. That is a different issue for the last 5 percent 

or so. Yeah. 

Mr. WATT. Okay. All right. That is all, Mr. Chairman. I—that is 

very helpful and I appreciate your—— 

Mr. MCDOWELL. Thank you, sir. 

Mr. GOODLATTE. Well, I thank the gentleman. If the gentleman 

has additional questions he will be recognized again in a moment 

because I have a few additional questions I would like to ask the 

witnesses. It has been a very, very helpful and good discussion and 

I think we ought to take advantage of closing a few issues. 

Chairman Genachowski, to revisit the whole issue of the justification for the order that more than 70 percent of Americans live 

in areas with only one or two fixed broadband providers, the 

broadband market is rapidly evolving. Commissioner McDowell has 

pointed out some of the statistics that point in that regard. Antitrust law, which we have advocated, has the benefit of being available and ready to step in at any time but is sitting on the sidelines 

and not, on a active basis, regulating unless some event takes place 

that would justify it. 

So my question for you is will the order remain in effect if the 

broadband market evolves toward what you view as being more 

competition? 

Mr. GENACHOWSKI. Well, I am sure that if very significant competition develops in the fixed broadband space we will be asked to 

and we would take a look at what rules are necessary under those 

circumstances. It is quite a challenge to generate more competition 

in the space. The investment costs to build out the infrastructure 

are high, switching costs are high. Notwithstanding a lot of good 

work that has been done over the years, we are still at a point 

where there are only one or two providers for over 70 percent of 

the country. So I don’t think anyone thinks that we are imminently 

going to see—— 

281 

Mr. GOODLATTE. But in many instances that is not counting 

wireless providers or satellite providers. Is that not the case? 

Mr. GENACHOWSKI. And we are—one of the reasons that we work 

together on unleashing spectrum is in additional to the economic 

benefits of making sure our spectrum infrastructure is available for 

the kind of innovation that we are seeing, is that we would all be 

very pleased to see wireless broadband developed as a competitor 

in a substitutable product for fixed broadband access—— 

Mr. GOODLATTE. Oh, I think we would agree with that too and 

we would also agree that you have the jurisdictional authority to 

work in the direction of making more spectrum available for that 

purpose and I have conveyed to you my interest in being supportive 

of that as well. But that is a separate issue from whether you have 

the authority to do what you are doing here or whether you need 

to do it given the current increasing availability of broadband and 

increasing uptake and the number of companies involved. We have 

some large companies, obviously, in both hard line telephone service, cable service, wireless service. We also have hundreds, if not 

thousands of small companies that are providing these services too. 

So, let me ask you a question regarding that. The order creates 

entirely new adversarial proceedings that can be initiated by quote, 

any person. Once any person initiates a proceeding against an 

Internet service provider, that defendant must answer and the 

FCC staff must evaluate the competing filings. Because these proceedings have never existed before, how can you be confident that 

creating them will not impose significant costs on those private 

parties, and the FCC, particularly smaller companies? 

Mr. GENACHOWSKI. Well—— 

Mr. GOODLATTE. And will it not have the potential affect of slowing down the roll out of more broadband services? 

Mr. GENACHOWSKI. We are committed to running any administrative processes in the most efficient way. Because of the reasons 

I articulated, my concerns about—— 

Mr. GOODLATTE. But this is an administrative process you have 

created that doesn’t exist and wouldn’t be a burden on anybody but 

for the fact that you have created. 

Mr. GENACHOWSKI. Understood. But we needed to find, in our 

opinion, some framework to preserve Internet freedom and openness. 

Let me make a couple of points. One is the transparency piece 

of what we did is very important and it is designed to minimize the 

need for anyone to ever have to bring a complaint. 

Number two, I agree with the point that was made that it would 

be beneficial for third party organizations to develop, and I look 

forward to working with commissioner McDowell and others on 

that, to be an initial resource. Anything we can do to resolve disputes before they come to the FCC we will support. 

And the third point I would make is that putting the framework 

in place and providing clarity to both early-stage companies and 

also Internet service providers also reduces the occasion for bringing complaints, because there is greater clarity. So we see the FCC 

as a backstop that we hope is infrequently and maybe never used. 

But the existence of that backstop we think will be important in 

promoting innovation and preserving Internet freedom. 

282 

Mr. GOODLATTE. I wish I shared your optimism about greater 

litigation. But, be that as it may, let me turn to Commissioner 

McDowell and ask him his opinion about whether small companies 

or large companies are going to be better able to deal with these 

adversarial proceedings and what affect will that have on competition in the Internet? 

Mr. MCDOWELL. You know, I think the most common request we 

get at the FCC, when you boil it down to its nub, is please regulate 

my rival. And I think that is a lot of what is at the heart of what 

the push for these types of rules. Unfortunately we have seen a 

growing division between application dividers and Internet service 

providers from a policy perspective while at the same time from an 

engineer’s perspective they look a lot alike. 

So if I were to describe to you a company that has thousands of 

miles of fiber, it has soft switches and servers and it offers voice, 

video and data services and if I gave you a multiple choice test and 

it said, is that company either a.) AT&T, is it Microsoft, b.), c.) is 

it Verizon, d.) is it Google, it would be a trick question because the 

answer would be e.) it is all of the above. 

And from an engineer’s perspective the market is really demanding convergence. And we have got these old stovepipe regulations 

in the statute that actually force us to look at these—to treat them 

differently based on whether or not a bit travels over a piece of 

coax cable or a piece of copper, fiber or through the airwaves. And 

I think wireless is really going to change the entire landscape here. 

I think a lot of this is fighting the last war, except it is fighting 

the last hypothetical war, no war ever actually broke out. It is really a fight that is rooted—— 

Mr. GOODLATTE. But it almost invites perpetuation of that war 

into the future, doesn’t it? When we open the door for any person 

to bring an adversarial proceeding, these companies large and 

small will have to deal it. 

Mr. MCDOWELL. Absolutely. And it disproportionately, I think, 

affects the smaller companies who have to bear litigation costs. But 

also it becomes a classic case of ‘‘Mother, May I’’ regulation when 

the FCC, in its order, invites declaratory rulings. So before a company can come out with a product or service do they have to come 

to the FCC for a declaratory ruling or do their rivals come to the 

FCC saying, that type of company cannot offer this type of product 

or service? Then we become an adjudicator of innovation. 

Mr. GOODLATTE. Commissioner Genachowski, Mr. Chairman, the 

Department of Justice’s settlement of its challenge to the Comcast/ 

NBC merger included a commitment from Comcast to abide by the 

open Internet order for a period of time, even if the order is struck 

down in court. If the open Internet order is struck down in court, 

will the FCC play any role in enforcing this provision? And if not, 

how will the Department of Justice or anyone else enforcing 

Comcast’s obligations under the open Internet order determine 

whether Comcast’s practices are reasonable? 

Mr. GENACHOWSKI. I believe that both the DOJ and the FCC orders included conditions relating to open Internet that we both 

viewed, at the Justice Department and at the FCC, as transaction 

specific conditions that would justify the merger. So in the absence 

of the general rules, the mechanisms would still exist to enforce 

283 

those conditions with respect to Comcast, I think both at DOJ and 

FCC. 

Mr. GOODLATTE. What is the FCC’s authority for using the merger review process to extract what Commissioners McDowell and 

Baker called quote far reaching and non-merger specific policy concessions, such as Comcast’s promise to abide by the open Internet 

order? Weren’t Commissioners McDowell and Baker correct that 

the FCC’s role in merger review limited—was limited to ensuring 

that the transaction complies with all applicable statutory provisions? 

Mr. GENACHOWSKI. Well, that is not what the Communications 

Act says in its direction to us. In order to approve a merger that 

is within our jurisdiction, one that involves the transfer of licenses 

granted under the Communications Act, we have to find that the 

transaction serves the public interest. An affirmative finding is required. And so it is not surprising that companies seek to demonstrate that a transaction is in the public interest and over the 

years, under both Republican and Democratic chairman, there have 

been merger review processes that have developed at the FCC looking at areas of importance under the Communications Act to determine whether or not a transaction is in fact in the public interest. 

And so it is under that framework that we operate. 

The conditions, in my view, in that transaction were transaction 

specific. I think, for example, the open Internet condition, here you 

have the largest broadband provider in the country combining with 

a very large content player, certain it raised the potential harm of 

discriminating in favor of its content or against others. And so both 

the FCC and the DOJ concluded that in order to approve that 

transaction it needed to be clear that that kind of favoritism/discrimination would not occur. 

Mr. GOODLATTE. Commissioner McDowell, do you have any response to that? 

Mr. MCDOWELL. Certainly the public interest standard is broad 

and undefined when it comes to mergers. But when you ask one 

player to live by a set of rules that might be overturned in court 

for the rest of the industry, so that it is the only player that has 

to live by those rules, I think that is a legitimate public policy concern. 

So it has been my philosophy to look at merger conditions to see, 

as a result of the merger, is there a specific consumer harm or 

market harm that arises and what can we do, in a narrowly tailored fashion, to fix that and is there a way to sunset that rather 

than keep it going on, even if it is overturned in court more broadly 

for the rest of the industry. 

Mr. GOODLATTE. Thank you. 

Do my questions prompt any additional questions from the Ranking Member? 

Mr. WATT. No, just one observation. I keep hearing everybody 

bragging about the level of competition out there, still having trouble getting cell service that competes—— [Laughter.] 

In the mountains of North Carolina. 

Mr. GOODLATTE. And Virginia. 

Mr. WATT. And the mountains of Virginia. Maybe I should be 

asking a question here, how close are we to getting any competition 

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for—even for phone service, landlines in the mountainous parts of 

our country? 

Mr. GENACHOWSKI. Well, transforming our Universal Service 

Fund which spends literally billions of dollars a year to support 

traditional telephone, that is what it is optimized for, transforming 

that to an efficient, focused mechanism for broadband is a very 

high priority that is shared, on a bipartisan basis, at the commission, number one. And number two—— 

Mr. WATT. I have been hearing that for about three or 4 years 

now, though. 

Mr. GENACHOWSKI. Well, we’re working—— 

Mr. WATT. I keep asking this question of all of the players, the 

mobile carriers, the—I mean nobody seems to—they keep saying it 

is coming, it is coming. 

Mr. GENACHOWSKI. All I can tell you is that the fact that we 

haven’t done it yet as a country is not a good thing. We are taking 

this very seriously. In fact, about a month ago all five commissioners issued a joint blog letting all the players know that we 

were serious about action and if you had a point of view and a view 

on how we should solve some of these problems, now is the time 

to come to the table. And we are working in a very focused way 

on this, as we are on the spectrum challenge that the country faces. 

There is a growing gap between the demand on spectrum, generated by smartphones, tablets, other things, very exciting for economic growth, job creation, the gap between that and the supply. 

We proposed an idea for freeing up a substantial amount of spectrum. This is one where we have asked for congressional authority 

so that we can do this on an incentive based, market based mechanism. I think these incentive auctions would be a very positive bipartisan success for the country. 

Mr. WATT. Would you just transport into your hearing record 

over there that I think this needs to be done. 

I yield back, Mr. Chairman. 

Mr. GOODLATTE. I don’t know what authority we have to insert 

into the record at the commission. But—— [Laughter.] 

In that regard I do want to thank our witnesses for their statement today. I appreciate both of you taking all this time today and 

working with your schedules to make it possible. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses, 

which we will forward and ask the witnesses to respond to as 

promptly as they can so that their answers may be made a part 

of our record. 

And without objection all Members will have 5 legislative days 

to submit any additional materials for inclusion in the record. 

With that, I again thank the witnesses and declare the hearing 

adjourned. 

[Whereupon, at 12:44 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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Response of the Honorable Julius Genachowski, Chairman, Federal Communications Commission, to Post-Hearing Questions from the Honorable Howard Coble 

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Response of the Honorable Julius Genachowski, Chairman, Federal Communications Commission, to Post-Hearing Questions from the Honorable Jerrold Nadler 


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Response of the Honorable Robert M. McDowell, Commissioner, Federal Communications Commission, to Post-Hearing Questions from the Honorable Jerrold 

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