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tv   Janet Yellen Testimony on U.S. Monetary Policy and the Economy  CSPAN  June 22, 2016 6:27am-8:57am EDT

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recovery is not a recovery folks working paycheck to paycheck. i do not know who is to blame but i can tie the american people want solutions more than plain. my question to you is as you look for the rest of this year, do you anticipate more for the job creation numbers that's 38000 in the same month where we celebrated 4.7% unemployment rate only because 400,000 people stop looking for work so when you take a real unemployment number based on the 2007 labor force participation rate we would be at 9%. >> so we do expect further improvement in the coming year. the unemployment rate the unemployment rate fell substantially over the last year and jobs created in 2015 was
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about 235 or a a month perhaps we won't see as were getting closer to estimates we may not see job creation but i expect continued improvement for broader measures of unemployment which you noted are much higher, some include include involuntary part-time employment. i expect further improvement in the labor market continues to strengthen. now the last jobs report and the last couple months of labor market performance was quite disappointing. my hope and expectation is that it is something that is temporary and will see that turnaround in the coming months. clearly it is something we will be watching very carefully. my expectations we will see
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improvements but will watch a very carefully. >> my last question has to do with full employment and how to reach that wonderful goal of full employment. when i i look at the numbers that are coming out of the need for skilled workers as well as stem workers, it appears that by 2020 we could have a shortfall of 3,000,000 3 million or 4 million folks in the skilled labor force and about 5 million. my solution has more to do with the german model apprenticeship program i would have to hear if you have any solutions you'll be recommending as we look for the labor participation rate, the number of skilled jobs that will be available and the need to get our workforce trained in that direction. >> so going back probably to the mid-eighties, we have seen a persistent shift in the
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performance pattern and people with middle skills but doing jobs that can be offshore, outsourced, to skilled demand for skilled labor. and the consequences that have been rising inequality, high return to education, and downward pressure on the wages of those who are less less skilled and middle income. i completely agree with you that education and training, perhaps apprenticeships are the type the type that are used in some european and other countries, these are ideas that really have to be considered if we are going to address what comes out of that which is even when you have enough jobs you have downward pressure on the wages and incomes of people in the middle and the bottom of the
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distribution. >> thank you mr. chairman i would suggest that we are going to have to have a national conversation of the quality of education in our country and the necessity of a dual track. back in my days we had shop which was an appropriate of our education apparatus and perhaps we need to have that conversation again. >> thank you mr. chairman. and thank you chair. when you were here in february talked about corporate offshore in and the devastating impact it has had in my home state of indiana in a manufacturing towns across the country. the frustration remains. the decline in manufacturing employment is one of the factors that have led to a shrinking middle class. we have two economies in this country, the the overall economy might be doing well enough and the wealthy are richer than ever. the middle middle and working-class families are not feeling the recovery. wages have been stagnant for years.
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a recent report said since 1971 each one each decade has ended with a smaller share of adults live in a middle income than at the beginning of the decade. was a state of the economy for working families? >> will i would agree with you that for decades now we were just discussing there has been downward pressure on the incomes of less skilled individuals of the kinds of jobs that once upon a time were pretty readily available saver high school educated man and manufacturing has gradually diminished. there has has been a long-term trend, part of it is due to just a technological change that is consistently raise the demands for skilled workers and reduce the demands for less skilled workers.
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and i think globalization has also played some role. more recently slow growth in foreign economies, the strength of the dollar which really is reflective of the u.s. doing better on balance than other countries. >> i understand all of these reasons but these are real people as you well know. there is an article not too long ago in the paper about, he was making about $70 per hour at the plant. he got fired because they shipped his job to mexico for $3 per hour. but the ongoing ripple of that was that his daughter who had applied to the indiana university, got accepted. she found out that her dad was in a lose his job and she said i don't think the family can afford for me to go to college like this.
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that is devastating. that is the future of america. that is what the real impact of all the stuff is. just is. just in the past few months. these are not because companies are not doing well, they're doing really well. but in the town next to my hometown, elkhart, 200 job shipped overseas. 700 jobs, huntington indiana, the biggest county in the state shipped to mexico for $3 per hour, wages. 1400 out of indianapolis. very profitable company companies. these folks folks are making 13, 14, $17 per hour. so as long as we have the mousetrap like this, how do we ever get the middle class up if even $13 and too much in these companies. >> so these are very sad situations.
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>> they are wrong situations is what they are. >> i mean the kind of thing that you are describing imposes terrible burdens on all too many american families. >> how do we make america work for them? >> part of it is trying to make jobs, we can't stop all shifts occurring across sectors of the economy. >> let me ask you this, do consider that a shift? when company is doing really well in somebody's making $13 an hour, not much much above minimum wage but lose their job because our laos allowed them to ship them to mexico for $3 per hour. is that a shift question? that's not really a shift in technology. that is just a cold-blooded decision that americans don't
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count as much as the profits. >> quote those forces have been in play for quite some time. for our part we are trying to create a job market where there are enough, they can see opportunity that people who lose jobs in one sector are able to find them in the sectors of the economy that are expanding. sometimes to make that transition is difficult and it may require retraining or other forms of help to connect with available job opportunities. sometimes we know that kind of a job loss does cause long-lasting -- >> it seems like taming the system to want to make your product somewhere else in the hope that you can sell them back to hear to the united states
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because your hoping that other people will be happy to pay the 13-dollar or $14 now or wages so you have enough customers, you are just going to gain so that you can pay the $3 and get your products back in here and it's like you get it on one end to any get it on the other. and that just seems incredibly irresponsible to me. >> thank you mr. chairman. madame chair, welcome. as i listen to your monitored policy report it strikes me that the ranking member indicated earlier that we talk about productivity growth and the need for both public and private investment, that requires the dollars come from someplace. i would like your thoughts on just in terms of on the basis of what the joint economic committee had reported this year and they indicated that nine,
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let me put it this way ten years from now 2026 by the ways the two and a 50th birthday of her country, we can look forward to, under current conditions 99% of all coming into the federal government, highway taxes, personal taxes, 99% is going to go back out 22 categories. interest on the federal debt, and mandatory payments on entitlements. that does not leave a lot for public investment and clearly does not drive private investment. you are working on short-term activity right now and you are monitoring very closely. you are on a day-to-day basis following the economy right now which as you suggested is doing very well yet i think some of us would disagree that three quarters hardly seems
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appropriate. i know you optimistic about the second being better but even if it's doubled or tripled, we are not going to grow our way out of this crisis which is coming upon us. i like it that's because right now were looking at areas in which if we want those jobs to come back and if we want it wages to rise we are going to be in a position we actually grow this economy once again. tax policy, predatory reform, actually managing our entitlements, all seem credible but we haven't talked about it at all. we don't seem to have a place where we can. can you as an impartial individual in this process who watches our economy grow or falter on a daily basis, can he talk to us about the need to do something now to where the crisis in ten years? >> why think we all know and we have known for a long time that with an aging population and with healthcare costs that have
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by and large risen more rapidly then in relation that we face a situation where we would have an unsustainable debt path and that this would require reforms, as you say medicare, medicaid social security, those three program. >> so what you're saying is the affordable care act needs to be reformed that's part one. >> why didn't say anything about the affordable care act. i'm saying the entitlement programs need to be considered how to put those on the sustainable basis. >> would be fair to say they need to be managed? >> they need to have congress look at both revenues and the structure of expenditures to ensure that those programs remain sustainable in the overall federal budget and debt
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associated with that remain on a sustainable course because as you go further with an aging population, as you said the debt ratio is rising simply unsustainable is it fair to say over the long term basis right now the interest rate that we pad the federal level goes up to 50-dollar a year increase being paid out. it looks to me like simply addressing a beginning the process of slowing down the is increasing the federal debt. recognizing that we cannot just say over a one day. a timer today. of time we have all the answers, but most certainly we are have to grow our way out of this, is that fair to say?
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>> is certainly would be desirable if the u.s. economy were growing at a faster rate. you cited a very depressed number for first-quarter growth over the last four quarters the average growth has been about two and a half, 22% in over a quarters it has been about two and half%. so smoothing through the ups and downs we have been experiencing growth of two and two and a half%. >> and were not going to grow our way out based on that number are we? >> we would certainly have to do better with that, and that is in matter productivity essentially being quite depressed, relative to the levels that we enjoyed in the second half of the 90s. so, it is not certain what is responsible for that, but many factors come into play. we have had depressed levels of
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investment. we seem to have a depressed rate of business formation, the sort of technological change as it shows up and output gains seems to have fallen relative to those better times. and through a range of policies -- >> madame chair my time is up and it looks to me like what we're given us is a wake-up call about a crisis that is not ten years from now, it's now. >> well it is a very serious matter that productivity grosses so slow. yes i want to want to highlight that. >> thank you madame chair. >> thank you. senator donnelly was reason a concern about manufacturing jobs in america and a dinner tray policy has given full access to our market to go to those manufacturers by companies and countries that do not have to buy by the same labor laws, the same wage rules, the same
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enforcement, this is a very unlevel playing field for american manufacturers to have a devastating impact on the loss is extensive. is that really fair to the american worker to have american companies having to compete against companies that are loud completely different set of standards that lower their cost or medically? >> i guess i would just say that in the view of most economists, more open trade creates net benefits, but that that does not mean benefits for everyone. there are gainers, but there are also losers and that is certainly. >> is that fair to the manufacturing workers? >> well, i think it's important to have policies that address the losses. >> since the mid- 70s, 1975 until now virtually 100% of the
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new income has gone to the top% of the leaving nine out of ten americans in our economy out in the coal. this is substantially a a reflection of the shift of manufacturing overseas. we have a series of geostrategic decisions and wanted to nurture the recovery of japan. we wanted to pull china out of the soviet bloc and now we want to pull the rest of asia away from china. is there an understanding within the fed how the cost of these decisions upon the welfare of american families and through loss of living wage jobs? >> what we have certainly looked at this question of wage inequality, income inequality. we collect data on our survey of consumer finances is one of the key data sets that gives us
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insight into what is happening. academic work on this topic while it has focused to some extent on trade more broadly, it also looks at the importance of technical change that the nature of technological change in recent decades has continually shifted the demand away from less skilled workers toward more skilled. >> technological change has occurred, the shipped overseas has been due to lower wages not to technological change. in fact they have been talking about shipping him overseas and its pain well. that's an issue trade policy. so in a situation where as you point out there is more higher skilled demands, demand for
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higher skilled jobs and education becomes very important. but as compared to other developed economies, higher education be higher skilled training or college, it is far more expensive. it is the single factor more than healthcare that is going up faster than inflation in our economy. such that not only is it daunting for students from blue-collar communities like the 1i live in or getting the message that there is not an affordable path to fill their goals in life and statistically we see are students who do pursue education burdened with debt is having a profound impact both on delaying marriage and unclean homeownership which is the major engine of wealth for the middle class. so we see this high cost of college and that seems to me like the type of structural concern in our economy that the feds should be using as economic expertise to highlight the longtime term and devastating
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. . . for the skills needed for the economy of the future. but i do not hear the fed talking about that. >> we are looking at trends in student debt and to believe we will be hosting a conference this fall and looking particularly at what it means for low and moderate income households. >> now over these last few years i've had so many questions in which the response is always been that something were looking at. it would be nice to have a representation of the big challenges to our economy because the fed has the expertise to put their hands around the and to project that around their policy debate. i will just close since my time is expiring by saying one of those issues that have raised multiple times is the feds power of the conflict of interest in the commodities, the ability of large institutions taught on pipelines and ships full of oil,
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own warehouses of aluminum and each time i hear were looking at that. we actually going to do something about that? >> we will come out with a proposal on that. but some of that reflects decision congress made an outside policy. it's true. >> madame chair thank you for joining us this morning. i i would tell you my conversation there is a very few i've had very few conversations who sees their economic future brighter, they're more disillusioned, no one feels more secure in their job. no one feels like their children have a brighter future. their parents are concerned about the children's opportunities when they graduate from school.
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the ability to pay back student loans, worried worried about saving for their own retirement. people are worried about having enough income and savings to pay for healthcare emergencies. so the sense of an economic recovery is far from being felt universally when i visited across our state. i wanted to raise two questions. one apart circumstances related to significantly lower agricultural commodity prices. significantly lower prices and oil production, natural gas production, and part of that is a consequence of, i assume the value of our dollar in comparison with other currencies in our ability to promote exports certainly with agricultural commodities although it allows for the export of oil as well. where win the dollar value of our dollar? what is the immediate expectations for us to be able
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to jumpstart the sale of wheat, cattle, corn, and other products, airplanes that are manufactured in her state, that seemingly are not able to access those markets in part because the value of our currency. >> value of the dollar has increased significantly since 2014. partly that reflects the fact that the u.s. has enjoyed a stronger ricotta recovery then other advanced nations and that has created an expectation that the u.s. interest rates will rise at a more rapid pace another parts of the world and that has floater assets that is pushed up the dollar. more broadly the the trends you have seen in commodity prices i think reflect a larger set of global forces.
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in some cases we have seen significant increases in the supply of commodities in the case of oil. the rapid growth of u.s. ability to supply oil markets has been a factor. then there is is been a slowdown in global growth. particularly in china which is been an important consumer of so many commodities. china is on a path and is understood to be in this will continue a path of slowing growth and the plummet that you see the commodity prices plummet, many commodity prices just because a basic supply and demand the dollar make some difference to that as well. >> we often talk about export trade agreements, has the fed when he expressed other countries to manipulate two
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exports? >> the responsibility for currency policy rests with the secretary of the treasury and we do not weigh in on that. >> madame chair let me ask you about something in your testimony, you indicate that business investment outside the energy sector was surprisingly weak. would you indicate to me and elaborate on the factors that lead you to that statement and when you exclude the energy sector, is that just because of definition, or something happening in the energy sector that indicates investment? >> well, drilling drilling activity has been very important and it is counted as part of investment activity. so what the huge plunge in oil prices even though there has been some recovery, we have seen the number of rigs in operation just plummet. that is part of why aggregate
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investment spending has been so weak. we understand that unexpected because it reflects the decline in oil prices. even when we go outside the energy sector or other sectors that are directly related to energy and supplying inputs to it, investment spending recently and this is just a report on the date. i don't have a story a story to offer you on why this is happened. it has been surprisingly weak over the last several months. it hasn't been very strong investment spending generally. we talked about this earlier during the recovery but it has been and we think we understand some reasons why it is generally been weak, mainly slow growth unless rapid increase in the labor force. but it has been surprisingly weak in recent months. it is something we are watching and i cannot tell you
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just what that is. >> i would not expect you to say this but in my view, in part the lack of investment or the reduction investment is related to a wide array of circumstances, one would be the debt and deficit, the uncertainty of our economy, lack of economic growth, generally the economic indicators are down trending not of trending. a sufficient number of times to instill a sense of confidence. the next regulation that may come their way as a business person. just just of decisions to make investments. people are deciding it's more risky to investment to not. >> will those things are certainly mentioned by business people. in recent quarters corporate earnings have also been under downward pressure for a variety of reasons. >> while i would conclude my remarks by indicating that one of the places we are to focus our attention is on innovation start a business, new entrepreneurs.
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the uncertainty that they face is even more of a dramatic consequence than a larger business that can better internalize and handle. mr. chairman, thank you very much. >> tank you. thank you chairman for being before us again. i want to to return to some of the earlier discussion of the so-called tran3, the referendum that will occur on the united kingdom on thursday whether great britain should remain or leave the e.u. your testimony on page four says quote one development that should shift is the upcoming referendum in the out kingdom. vote could have significant economic repercussions. could which used stressed. that sounds to me like the usual prudence and caution that you use in all of your public statements. you also stated to senator
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heller that quote, i do not not want to overflow the likely impacts. that reminds me of yoga berra's old advice that predictions are hard to specially bout the future. >> that is absolutely true, not a group that more. yet in the last few minutes, here's here's how the guardian of london reports your testimony to the committee. quote, yell and warrants on transfer three. not exactly what you said was it? >> i said we were monitoring it and it could have consequences. you would not count that as a brexit. >> it means i am not attempting to take a stand that they are going to go to the polls. they've had active debates on the issues and i am not providing advice in that sense.
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>> good. thank you. i sympathize when headlines do not except only captured the exact meaning of what one says. to be fair to the guardian, they are not the only outlet that has reported the testimony along those lines. the bbc, and others have as well. to be crystal clear, you take no position on whether the u.k. citizens should vote to remain or remain in the e.u. . .
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>> >> there is no close parallel to live with these consequences domestically and globally in the search in the environment. >> many of my elected counterparts have not treated the matter so evenhandedly. also they were responsible in recent years like the greek debt crisis and with the suspension with the flow
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of migrants infiltrating the flow with parts of their european union with european and global economies. >> absolutely. >> is there a risk some of some british politicians have promised or perhaps i should say threatened immediate tax increases or budget cuts if the uk citizens vote to leave. some lead rs threatened punitive action if uk plans to leave. any new trade agreement, do the statements have a potential to create a self-fulfilling prophecy?
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>> there's an active debate with the decision of this sort for many parties to weigh about consequences. as i said, i'm not trying to offer advice myself. >> thank you, nor am i. your counterpart has said that the ecb is, quote, ready for all con ting evensies following the referendum, can you say the same thing about the federal reserve following the vote on thursday? >> well, in the sense that we will closely monitor what the economic consequences would be and are prepared to act in light of that assessment.
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certainly be my inclination to do so. >> thank you for that. >> thank you. madame chair, i want to shift the conversation a little bit. custody banks which are very important, strait streets and new york and i'm sure others, it's been reported that custody banks are returning to sits or charging fees of to sits because of the enhanced supplementary ratio, you received public comments stating that the rule could limit the custody banks to accept deposits, is the fed currently examining how it's impacting how to accept deposits, one.
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two, could this rule increase system and risks during times of stress and three just for the audience that probably know what is a custody bank as opposed to ordinary retail bank? >> a custody bank is one that handles transaction -- >> very important, isn't it? a custody bank is important? >> yes, they are. we certainly are aware that they're concerned about supplementary ratio impacting their profitability. leverage ratios are normally intended to be a backup form of capital regulation, they're not orientated toward the risk but
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impose a minimum amount of capital and so for safe assets and banks that hold particularly safe assets it can be a burden and it's something that we will monitor, but this is the way ratios before it's been imposed of assets of the overall size of the organization. >> madame chair, thank you for the participation. committee is adjourned. are [inaudible conversations]
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[inaudible conversations] [inaudible conversations]
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[inaudible conversations] >> federal reserve janet yellen returns to capitol hill this morning at 10:00 a.m. eastern time. live coverage of her testimony before the house financial services committee on c-span3
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and c-span.org. >> on thursday voters in the united kingdom voters will decide if they should stay or leave the united -- european union. watch the live coverage on c-span2 and c-span.org. >> the company first net has been contracted for first responders, their ceo testified at a committee of commerce. this is an hour and 20 minutes.
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>> good morning, glad to convene today's hearing with my friend and colleague, thank you, members shots. we would like to focus on the progress first steps made and the challenges that lie ahead in deploying a nationwide public safety network. the first responder network authority also known as first net was established under the job creation act of 2012, it is intended to address communication failures that slow recovery efforts during major national emergencyies -- emergencies including 9/11 attacks and katrina. fema, red cross and others were hindered from providing the emergency recovery services
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needed during and after katrina. the 2012 act allocated $7 billion from spectrum option proceeds to launch first net. the aws3 spectrum option which concluded raised $7 billion and need today begin the planning and development the first. netanyahu has made progress in the first years. questions linger about the future of the network. i appreciate first net's commitment to providing rural but rural and remote coverage remains a major concern of my, the cost of maintenance in hard-to-to reach areas needs to be address and inventory is critical to ensuring that
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infrastructures capable of with standing 200-mile per hour winds like katrina. each face a set of challenges and it's critical to fulfilling congress' goal to creating first net. we should ensure that first net's plan for deployment includes the -- includes the neck nickal requirements that may be necessary. however, we recognize that nationwide deployment will not occur overnight. over the next several months first net will be reviewing bids to all contracts of all aspects of deployment. as this process move forward i urge first net with a limited user base, first net must have the so sophistication to determine who has not only the technical capacity but also the ability to monetize the network
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in order to keep it running in the future. the cost of public places are also a major concern with regard to long-term sustainability. today i look forward to hearing about first net's accomplishments in the past year. what benchmarks have been met and what work still needs to be done? i want to welcome all of our witnesses and thank them for testifying this morning. our planl this morning include a number of stakeholders over seeing the deployment process who could shed light ahead, senator shots. >> thank you, mr. chairman. and thank you to our witnesses. i specially want to offer to hawaii's general, general logan. we are here to discuss today the progress first net has made to
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creating nationwide wireless broadband for first responders. in 2012 when congress created first net we made commitment to public safety. the new federal entity we created is a public-private partnership created for first responders. at the time the legislation was passed, a nationwide public safety communication network in spite of glaring communication's problem that had been exposed following the tragedies of september 11th and hurricane katrina. until this network has built first responders, we will have to carry bulky land mobile radios for critical voice communications and carry around a commercial smartphone for their data needs. there's really no reason that a 16-year-old with a smartphone should have more technology at their fingertips than our first responders. first net will provide first responders mission critical data
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use for the first time. the network will be built and rugged eyes and competitive devices and specific public safety applications. for example, firefighters could download the blueprint of a building before they enter. a police officer arriving at the scene can run a background check or run pictures of the suspect by accessing federal law enforcement database. most importantly, emergency personnel will not be competing with commercial users for bandwidth. they will have priority on this network. staff and board should be congratulated for releasing rfp. they receive bids and will evaluating potential vendors while continuing to work with states on their participation. as they progress, first net and commercial partner will have to make sure that first responders and each state sees the value in
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the network, as general logan may touch upon today, we need to ensure that the specific needs of all states and territories are respected in order to accommodate for geographic and other differences across our great country. while congress will continue to keep a close eye on first net's work, the reality is that we are in a wait and see mode until first net choses its private sector partner. i expect that mrs. post will not be able to answer every issue today as they are in the middle of a procured process. again, i want to thank the witnesses for appearing before the committee and thank you. >> mr. jeffrey cloud, director of homeland security and
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national governor's association. senator shots has mentioned arthur j. logan, the single point of contact state of hawaii and hawaii general. and fourthly, mr. andrew, assistance inspector general for audit, u.s. department of commerce, washington, d.c. gentlemen, we appreciate all of you being with us today. we begin with the testimony of mr. poth and ask each of you if you could limit your verbal testimony to five minutes. thank you. >> thank you, for inviting me to testify today. since i began at first net a little ten months ago i've seen dedication towards successful deployment of the nationwide public safety broadband network. public safety that's who we work for every day and we have never
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taken the focus off the goal of delivering the best possible network of the men and women who keep themselves in harm's way every single day. we are the stewards for the network. i would like to take a moment to thank the personnel, senators, their presence are indication that they are keeping all of our feet to the fire as we work together in making first net a reality. we have accomplished a great deal over the past 12 months, wrapped consultation meetings with every state and territory partner who requested one, kicked off 2016 with single point of contacts, meetings and well underway in the state board's meeting and we released rfp and moving forward. it's the rfp that i would like to focus the majority of the comments today. when chairman testified before full committee she layed out road map that first net was
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moving along in order to conduct consultations with the state. first net continues to honor commitments to do what we set out to do on time and under budget. we have to ensure that not only our 16 core objectives, cybersecurity, public safety adoption and financial sustainability could be met by the vendor community, but we had to propose a business opportunity model that would ultimately be a win for public safety and a win for states and a win for first net and a win for commercial partners, a true public partnership across the board. based on what we have seen in the past, the financial incentive was not enough to do on their own and we know the taxpayer funds are simply not there to do this by ourselves. in essence we had to twop a business proposition that fulfilled the needs of both parties. in developing the rfp we met with entities and listening to their concerns while trying to
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establish best methods. we are in the marketing mode to create the demand and held numerous industry days, informational sessions, educational webinars for the vendor community and public speaking engagements on both the draft rfp documents and the final rfp. ultimately after year of intense work we were able to release rfp back in january of this year. the rfp was opened to the vendor community and was closed on this may 31st. we are confident that the rfp will lead to successful partnership that congress envisioned. we are confident of the value proposition put forward and will enable partner, the coverage goals, price points and financial sustainability that we need. we will maximize the value of the seven billion and the 20 mega hurts that congress and american taxpayer provided. targets will become a contract term.
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we have design it had rfp to incentivize our partner and achieve the goals and allowing the markets to work in public safety's advantage. we have safeguards and operational oversight controls over our partner to ensure that we have the ability to keep them accountable throughout the duration of the contract. today we are in the evaluation phase of the project due to rules accusation, i cannot comment on any organization related to the procurement. in 2016 we still continued consultation efforts with the states, conduct outreach with state, local, tribal and federal public safety agencies, we will sect the partner and begin development of the state plans. our previously accomplished partnerships with the states will be critical for this phase of the effort. while we are proud of efforts thus far, we cannot afford to rest for one moment. too much work needs to be done. public safety has long been demanding a broadband network
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and now we are in reach of achieving this goal. the men and women are counting on us to deliver the network. the needs for this network has never been higher and in order to meet preponderatation everywhere, i am as the organization to achieving the goals that congress laid out for us a few years ago. thank you again for your support and i look forward to your questions. >> thank you very much, mr. mccloud. >> my name is jeff mcleod. , i appreciate the opportunity to appear before you as a representative of our nation's governors to discuss our shared commitment to building and sustaining a nationwide broadband network dedicate today public safety.
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nga was a advocate of the provisions in the legislation that led to the creation of first net. represented governors on key implementation issues and challenges facing states. my testimony will address in reaching decision whether to join in deployment of the public safety broadband network would opt out and take the responsibility of deploying, operating and maintaining radio access network in their state. specifically i'm going to focus on three issues, one coverage, two cost and three the consultation process through which first net is required tone gauge state leaders. i would like to summarize my marks and ask full testimony be in record. this is a top concern with states with large rural areas and states with challenging geography.
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first net will be funded primarily from excess fees generated from the user based and more densely populated areas. thus likely to prioritize buildout before rural areas. however the financial needs of the network must be balanced with the needs of the public safety community. states require the network be build and commercial access in addition to concerns about coverage, questions of costs, governors want to know one whether the network can build within cost models, two what the use to connect to the network and three what are the long-term administration costs. the financial models that underpin the long-term sustainability require robust and user base. if fees are too high public safety users, the financial success could be in jeopardy. stays remain concern.
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given the unprecedented nature of building and maintaining a network of this size and complexity, states are concerned about the possibility of unforeseen costs to them. regarding first outreach to governors on the consul ace piece, some express concern of the tone of engagement. during consultation process first net has received to constituents, while this may appear to be word choice, lessons the focus on partnership. first net must view states as full partners in this endeavor. states have key information and expertise that must be brought to bear on the full-range of network activities. in closing, to many states it's a false choice. while there are a number of unknowns associated with opting in, very few states are in a position of taking the significant financial liabilities associated with building, operating and maintaining and upgrading a radio access network in their
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state ifs they choose to opt out. finally, i would like to note that election cycles continues communication and challenge for first net. on behalf of nga and members thank you for the opportunity to testify. i look forward to any questions the committee may have. >> well, thank you very much, general logan. >> chairman, wicker, ranking member shatz, all the members of the committee thank you very much for the opportunity to be here today. i'm major general logan, and governor appointed me as the state single point of contact for first net in january of 2015. and when he first called me i had to think about star trek in 1970's and i had to touch the top of my years to make sure they weren't pointed but everything was good. i'm also the director of
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management. at the time i was appointed in january 15, the team had already been engaged in hawaii prepare if for deployment of first net. much of the effort focused on education and outreach to public safety and public policy stakeholders as well as working towards establishing governor's model and strengthening hawaii's infrastructure. my first year and a half on the job involved briefings from key staff in hawaii, meeting with first net leadership and attend of stock meetings and money occasion plans. let me cover a few of the brief activities. hawaii sponsored the first forum in territories in july of 2014, so hawaii has foresight to
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anticipate the needs and concerns of states such as hawaii, alaska, guam, american samao, the commonwealth of northern islands and puerto rico and we know that we are different in the sister states in the lower 48 who are connected by borders and can share coverage. to that end 2014 hawaii sponsored states in territories meeting on the island of kwai. the meeting includedpolis makers and communication subject matter experts from hawaii and alaska and the territories from viring ib islands, puerto rico, samao. the leadership of the department of homeland security office of emergency communications while participants through the evolution of technologies used in public safety communications, from the punter standard of land mobile radios to the future of public safety broadband.
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first net heard from jurisdictions and actively participated in the dialogue. we invited the ceo tj kennedy and ed parkson who flew to hawaii to bring the new leaders up to date in the concept of first net and how it may add value to public safety in hawaii . first net brought staff to hawaii for a day and a half meetings with hawaii stakeholders. while first net updated attendees, hawaii stakeholders of over 90 county state and federal partners also had the opportunity to inform first net directly about the challenges and public safety and communications that arise in hawaii.
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it was said that it's the first meeting hayed been to in hawaii where people staid the whole time, they're not out on the beach and enjoying the fine weather. later on the environmental team came out to hawaii and proposed a problematic environmental impact statement held public meetings and shared findings to the public. lastly, data submissions, we work within our state, public county and community throughout hawaii to supply first net with a great deal of data regarding the specific communications for public safety throughout the state. the first net will use that data in putting together our state plan. in conclusion, i'm grateful to the committee for the opportunity to share and look forward to any questions, thank you. >> thank you very much,
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mr. katsaros. >> good morning, distinguished members of the committee, thank you for providing me the opportunity to talk to you about first net more than four years since the passage of the act and i appreciate to be here to discuss this important topic. i'm the principal assistant inspector for audit at the office of inspector general. our testimony will focus on three areas that we have identified as ongoing risk that is first net will face. these challenges will become apparent during effort to implementation of nationwide wireless broadband network for the public safety community, specifically these three areas of risk include, one, acquisition management, two consultation with states and other localities and three internal control. our office believes that if these three areas of short and long-term risks are not addressed between now and the launch in approximately mid
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year, 2018 the implementation may not succeed. the first of the three topics is that it must effectively manage acquisitions, the proposal has passed and plan to issue a final word as soon as november of this year. the approach to financial issuance of this award may prove difficult with everything left to accomplish and we believe that this schedule is aggressive. we also believe that successfully managing proposal including evaluating proposal and avoiding conflicts of interest is critical to development and implementation of network. we believe that first net will face challenges at a competitive cost. finally, first net to succeed multiple federal agencies will have to collaborate over the contract. the second topic i would like to discuss is that effective consultation with states and other localities is critical to
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first net's success. act requires first net to consult with a variety of stakeholders as it builds a network, included but not limited to federal, state, tribal entities, first net has made progress in discussion and outreach efforts in a variety of ways to include conducting visits, attending conferences, speaking at tribal gatherings, attending events and outreach meetings, working with law enforcement leaders and engaging in social media. for the network to succeed, we believe that first net must continue consultation and efforts to identify public safety needs while doing this first net must use input from consultations to develop individual plans for each state and territory which uniquely satisfy their needs and finally the third potential risk i would like to discuss is that first net must continue to strength internal control. in each of audit reports we have identified controlled
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weaknesses, similarly as part of first net's financial statement, independent auditing firms also identify areas where controls need strengthening, when made aware of the issues, first net management responded appropriately stating plans to address areas of concern and has in many instances begin to implement change. in conclusion, these three areas are short and long-term risks and group's effort to minimize potential impacts must be both ongoing and attentive. chairman, wicker and members of the subcommittee, thank you again for this opportunity to appear before you today. i ask that my testimony be entered into the record and i will be happy to answer your questions. >> well, thank you very, very much. let's do five-minute rounds of questioning. mr. poth, let's talk about the fact that $1 billion doesn't go as far as it used to go.
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not included to sustain the network for very long. with vastly rural populations having different emergency needs , what challenges do you have there and what are our thoughts about covering the rural areas of this nation and also with regard to that one person is deployed will charge user fees. do you think the user fees will generate enough revenue to sustain firstnet, and is this going to be a problem for rural areas in terms of a cost burden?
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>> thank you very much for the question. you're exactly right, 7 billion doesn't go as far as it used to. so what we have done with the 7 billion, but more importantly the 20 megahurtz that congress gave first net that become it is true value prop to sit with a partner to come together with their assets and our assets and we believe that the 12 megahertz is a beach front property and we will maximize the value of that for public safety. we expect that the commercial partners will come with x amount of capital on their side to start the nationwide buildout of the broadband network. part of the components that we built into the rfp also is we are not satisfied to attack densely populated areas. we are focused on rural coverage. even though it's a statutory requirement. we built into the rfp that every phase of the build-out at least
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a rural coverage will be contained in there. we expect our commercial partners who are typically incentivized by only going out as far as economically feasible will have to look add that mandate and we are expecting through the responses exactly what that coverage components can be. we've also required in the rfp with each phase of the build-out rural coverage components which by the fifth year a 100% of what they had proposed will be accomplished. we've also to address concerns about cost out in the rural areas, we are driving in through the rfp and with our partner for public safety prefer pricing and we expect the commercial partner to be very successful and we hope that they are in spectrum on the commercial side that will keep fees and revenues coming in to first net but also keep cost down for public safety users
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whether they are in rural, urban or suburban areas, we have provided a platform for success for both public safety and the partner to be successful on this contract. >> okay, well, continue to keep us posted on that. you know, in the 1:42 i don't know if i can ask you to respond to mr. katsaros's testimony but he did mention some concerns, no doubt about it, particularly about firstnet continuing to strengthen its internal control, and i think the clear message is that it's not where it needs to be. that's the way i took the testimony. so let me just -- let me ask you
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what -- your team is participating in outreach to assess needs in each state. do you believe the decision-making process as it stands today is as good as it should be? >> there's obviously room for improvement in anything that you do. on acquisition management we have a rigorous process in place to ensure that the ultimate advisory -- >> let me just -- let's go into the one i specifically mentioned which firstnet must continue to strengthen internal control and i do believe i've characterized the testimony as that it's not where it should be. >> right, i think we believe that the internal controls that have been in place and thanks to
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the work of the working collaboratively with the inspector general we've instituted even more rigor in internal controls and audits both within firstnet with compliance committee reviews, peoples and processes, we have strengthen those and with the inspector generals' audits, i think we believe that the controls in place are allowing us to be successful for the future for the partnership going forward. >> and do you think the decision-making process as it stands today is as good as it should be? >> i believe so. i have a very strong team that i'm extremely proud of and i'm buffered by a board of directors that the statute has enabled to takes expertise from both the federal government, financial communities and when you bring those two together, i think the decision-making process is solid. obviously as we are forging new territory there may be twists
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and turns but i'm confident with the team that's in place we will be able to navigate those turns. >> thank you very much, senator. >> my first question is for mr. poth. mr. mcleod talked about whether or not states and governors and single points of contacts are constituents or partners and as a former lieutenant governor, i'm kind of sensitive to that on behalf of the state governments. and i would like your assurance that you're listening to m mcleod, hearing that concern and that we have your commitment working with on a going forward basis with the state administrations and, the tag's and others and guaranty, grantor relationship. >> absolutely, the states and
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the people leading those efforts in the stayses for public safety and for first net are a critical component. they are truly the tip of the spear of what we are trying tone able. the partnership is very important to us. we spent a lot of time trying to overcommunicate to -- to the states, we don't view them as constituents, but they are critical partners just like public safety and just like federal partners. >> thank you, to general logan, and this is to the question of opting in versus opting out. what mr. mcleod said that the way statute runs, that opting out is a mirage. that's the gives of it. it's very tough to opt out. i want to focus on opting. i understand you enter a pretty good process with governor egay and your team and i would like for you to explain how you came to opting in and how much
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support you think you got from firstnet in that process. >> senator, thank you very much for the question. i would say -- way back to the earlier question when firstnet came out to brief the governor's cabinet i kind of got with the team beforehand and i sat down and gave the interesting nuances of how we in how perceive people that come to dc to our state and asked him no to wear a suit and tie, and they did that, that kind of warmed over the crowd. >> we appreciate that. [laughter] >> but also to this question, after they presented to the cabinet the governor and i and ted, state cio got together and governor working for telecommunication companies in the state, opting in was
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probably the best solution although we have not made a final decision. we we wanted to wait to see what our state plan is. part of the issue is we don't know what the rfp is. we can only guess of what we think is going to happen. without all the knowledge it creates anxiety. states are unprepared for what may happen. we are a lot better off. firstnet, they are overabundance of communication if you need something they will answer their questions. so they're very receptive to at least -- i know in my state they are, and we have a conversation with them. and so i think looking at it from the state's it perspective, what we haven't done yet and the state cio and i have discussed a couple of weeks ago is meeting with some of the local vendors
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within the state like your verizons, at&t and talk through that and see what their perspective is and maybe we could do it all by ourselves, but i don't think we are there. >> can you talk a little bit about -- i know you had meeting with other states but i think some of the concerns that come through the states affiliation also apply to rural areas in the continental united states, can you talk specifically of the technical needs and revenue distribution and maybe very quickly general, logan so i can hear from mr. poth as well. >> well, i have talked to the fellow stocks from the other states and we all have generally the same issue. it's we have -- you know, like oahu is the center of of honolulu. almost a million people live there. but the neighbor islands,
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140,000 on the big island, maybe 50 and close to 100,000 in maui. how do we guaranty coverage? if it's good for the city cop, it has to be good for the rural copy, firearmmen and emt, we can't say because you get in the city you get first priority and we are going to get these guys last. we have to make sure that public safety is covered across the board. >> we have your commitment to work on these issues. >> absolutely, and that's the basic premise of our revenue-sharing model. >> thank you. >> thank you. senator gardner. >> thank you, mr. chairman, and thank you for the witnesses for your time and testimony today. obviously the potential revolutionized, very excited that firstnet chose colorado headquarters, it's a great tech
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community in colorado, just down the road is standards and technology which is doing great work at the communications technology laboratory. so we've got a great tech and vibrant economy running in colorado and i appreciate you being there. mr. mcleod, i want to start with you first, you talked about firstnet quote, unquote, must view state partners rather than constituents in the consullation process and you mentioned that some states firstnet is interested in developing genuine partnerships. could you talk a little bit further about that point and talk about the nature of the meet that is you mentioned and the nature that has caused the concern in developing the genuine partnership, the desire to create them and talk about the obligation to take the state advice? >> thank you for the question, senator. there's a question
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that states have, they have been more than willing to answer those questions. i think my statement reflects the feeling among states that although they may be complying that at the end of the day i don't think states are viewed as full partners. maybe as a quick example during the development of the state plan, states will be seeing draft those plans but the final plan will be submit today them, they won't have an opportunity really to suggest revisions or at least that revisions will be made. i think that goes to the sense that we're in a true partnerships that states would be more engaged in the development of that plan beyond just the consultations that have been happening. >> please continue, if you have anything else. >> no. >> mr. poth, do you want to respond to that and thenly get back with you to additional question? >> sure, part of what we have to do in state plans is we are going to be under a contract
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with our partner. we have submitted into the rfp all the state data, unfiltered with each date and territory, we are expecting the vendor community not as he or she responded in how they would go about deploying the network in the state, random radio access network. we are then as mr. mcleod said, plan to give a draft to states so they have plenty of time to understand the coverage, the cost and what is being proposed. there is opportunities for feedback but we are going to have some limitations since it will already be under a contract term as to how much variations if a state felt it was important but it is our commitment as we have always done to work with the states and we want to provide that before we turn and have the state go final which starts the 90-day clock shot, because we don't want the states
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to be surprised of what the plan is with our partner. mr. mcleod may be direct there are some limitations to the draft and the final. >> some of the of the concerns in colorado is the geography and the limitation that is geography can pose to coverage and the challenge that is it can pose to that coverage. are you concerned at all that the approach that you're talking about -- you're not concerned that it would undermine the process then? >> no. >> and if firstnet is not relying -- if you end up with the time crunch that mr. mcleod talked about and you just identified and had unique geography to the states, i mean, qhow are you looking for for expertise to make sure you don't have a problem? >> in the state of florida, for example, all the data and what the state committee felt was important and public safety, what they felt important was submitted to the vendors and it's in the reading room. so they understand what the
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state's position is and what's important and the rocky mountains and those type of areas. what we are expecting back is how the vendor is proposing to facilitate all of that and what the build-out would look like. we continue to work with the states and make sure they understand the limitations of what may be possible from the contract although we are absolutely committed to maximize value for public safety in the states. there will be some limitations probably that we'll expect but we are going to continue to work with the states. and the other important thing we are envisioning, and this is a 25-year contract, we are going to reinvest back into the network to where we can advance technology, hopefully expand the rural footprint. so it may not be day one that a
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state or a public safety agency gets everything they want, but we do have a mechanism in place to continue to fund not only for our financial sustainability but to grow the network and with the technology. >> mr. chairman, can i ask one follow-up question to what he just said? thank you. with this revenue issue, just curious, the prioritization of those funds, network maintenance over network expansion, how would you make that determination? >> as the excess spectrum funds come in, we are going to be evaluating what's the latest technology, we are building in the contract that is we are expecting our partners to evolve and change as the technology without us funding that. that's just part of this contract. >> thank you, mr. chairman. >> thank you. we now -- we have dane fisher.
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senator. >> thank you, mr. chairman. this incident tends in our businesses, schools and, of course, to first responders as well. this is specially important in states like montana, colorado, where we have significant rural areas, first responders can be 50 miles or more away from an accident. so the goal here, i understand, is to provide coverage in 99% of the country. as we have seen with mobile wireless coverage the remaining 1% of the country often includes places like montana. mr. poth, tell me about the future plans, if any, to eventually cover that 1% of the country. >> we expect to hope 100% coverage is probably a very steep mountain to climb, no punt intended. with the cover required we
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expect industry to come back toward deployable satellite technologies will enable public safety, specially in remote areas to still maintain connectivity, the goal of getting to, you know, 100% coverage throughout the 56 states and territories, i think is going to be a pretty aggressive goal. >> in related to the issue of technology, and i spent a lot of years in the technology business where it moves in the speed of business versus the speed of government. as you think about the future of where it's headed, how will you keep up at firstnet as it relates to when technology changes by the time the project is completed, i'm guessing technology will be well ahead of where you end? >> right. that's one of the big focuses as an independent authority. we are going to continue to grow and we are going to continue to push technology. the mention of our labs in
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boulder we are going to push technology for years to grow and with the lab also focused on that, we believe that we are going to be able to optimize the benefits to public safety of what's available. if you can envision, we don't even know what technology is going to be like in ten years. i often think -- people say, your android, iphones, that's the cutting-edge technology, it's going to go so fast. we are going to have in the contract the ability to grow and push the technology as it goes from 3g, to 4g and 5g and grow with it and we are going to have the organization in place to remain advocates and stewards with our partner so they don't lose focus on what's important. >> we heard today that firstnet plans to use fees from densely populated areas to help out in more rural areas. we had service since the 90's and we still haven't achieved universal service.
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how is firstnet's different and how is your plan going to succeed when others haven't? >> we have a pretty focused mandate and mission, is to serve public safety regardless of jurisdiction and regardless of state. and so that's one of our driving forces. the other thing is we are going to do is we are going to remain responsible and accountable to public safety. they're not going to let us allow for anything less than that. and our independent board that overseas firstnet is also going to ensure for years to come that we don't lose focus on what the investments and what the priorities are. >> as you can imagine, the broadband and the wireless coverage that we do have in montana is often provided by our rural telecom providers, so i certainly appreciate the requirement that the prime contractor partner with the rural companies. but it's still unclear to me what accountability measures firstnet has in place to ensure that these partnerships happen with the rural teleco providers,
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maybe you can elaborate what plan firstnet has in place to ensure that the contractors follow through commitment to partner with the rural providers. >> once we have the bids submitted in and evaluated and we get to a contract where we are going to have specific milestone, those milestones become measurable that we are going to enforce and we try to incentivize through the contract the right behavior but there are disincentives to ensure that our commercial partner is achieving coverage and cost control measures that we have asked for. >> now, i understand the selling excess network capacity is key to paying for the network. how will firstnet ensure that selling to capacity does not end up competing with our existing providers? >> we believe with the infusion of the new spectrum and the
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needs for spectrum throughout the country and all different bands, we think that there's going to be sufficient demand on all the spectrums where we don't believe that that'll be necessarily a competition or a take away for those providers. >> all right. thank you, mr. poth. thank you, mr. chairman. >> you know, it occurs to me when -- when members come before this committee they're going to get a lot of questions about rural areas and it just makes me feel very good about the brilliance of the founding fathers. they created a senate that wasn't totally population-based and it's my pleasure to regular nice now the senator from another rural state, senator fischer. >> thank you, mr. chairman, and i won't let you down, i have a
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few more questions about rural areas, mr. poth, i heard concerns from stakeholders in nebraska that firstnet is going to rely heavily on what's referred to as deployable networks in rural areas, rather than deploying a fixed network. for example, instead of building a tower in the nebraska panhandle, perhaps firstnet's going to bring a communication's vehicle to provide, i guess, temporary coverage during an emergency. when we look at tornadoes and fires, all these emergencies that happen in very rural areas, how can we be assure that the deployable networks are going to be a viable tool for our first responders, and can they move quickly enough to be useful during really these very, very critical times and we have to have a quick response? >> right. what we did with the rfp, with
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it being objective-based, we asked one of our particular objectives is rural coverage and we have asked industry, you tell us what is the best way to solve that requirement. it could be deploy bles, it could -- deployables we are asking industry to do what they do best. come up with the most creative solution to solve and as previously discussed and pointed out, and hopefully industry has been listening for the last three years, rural and rural coverage is a significant component to the success of this network so we are hoping and very optimistic that there will be solution that is can address some of those concerns. >> and we've also heard concern from stakeholders about the deployment of the broadband network that could possibly result in overbuilding,
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specially of existing commercial networks. and in nebraska you and i discussed this previously that our telecommunications carriers are doing a really good job of bringing service to our rural areas and our underserved areas. do you have any specific steps that firstnet is taking to ensure that this overbuilding or what i would consider maybe an inappropriate use of limited funds might be addressed? >> we're not expecting nor anticipating an overbuilding even in the rural areas. ..
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i think that the concern for governors is making sure that existing existing resources to fill out the network. just being mindful of taxpayers dollars per i've not heard that is a big concern for them. >> and mr. katsaros come in your written testimony you list the process operating expenses for fiscal years 2012-2015 engine note that while firstnet spent less than $250,000 in 2012 come it spent 70 million in 2013,
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24 million in 2014, and 49 million in 2015. can you please clarify to all of these numbers reflect spending that would be considered administrative expenses under the act? if so does this opportunity to in funding not suggest that firstnet is going to exceed as allowable authorization for those administrative costs? what's going to happen in case it does? >> thank you for the question. an excellent question. those costs for our understand of the total cost. they are not there administered cause. there administered costs are much less. they been trending over the ten-year period at less than $10 million already. but there are no concerns on that area at the moment. >> so that should be within the 100 million that's been authorized if current trend continues, correct speak was correct.
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they are well under. >> and mr. poth, do you anticipate that that will happen? that you'll be under the? >> we will absolutely be under the 100 million. >> thank you very much. thank you, mr. chair. >> thank you, senator fischer. mr. katsaros, the 2012 act established firstnet as an independent authority within ntia. is that, in fact, working out? how is that arrangement working? and what, if any, role best ndia have? >> thank you. that's another good question. we are not aware of another independent authority that is housed within a federal department other than first appeared when it was created -- >> it doesn't compute to -- >> correct. it did not initially. so when we were confronted with
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an oversight challenge we were informed that this is an independent authority under ntia. the national telecommunications and in relation administration. it maintains some of the sort of capacity and administered capacity of the ntia. it allows it to partner with ntia. it allows us to partner with ntia, and initially it cost us to sign a memorandum of understanding to fund our oversight activity for firstnet, with which was not canceled and we are considering firstnet under our general appropriation for funny oversight but a relationship with ntia and it is part of the law, we work with both offices. >> were you referring to the m.o.u. with commerce oig? >> correct. >> okay. as i understand it, firstnet and
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commerce oag agree a predicamena memorandum of understanding because firstnet felt that all of the issues have been adequately addressed. are you satisfied that that, in fact, is the case? >> i don't believe that all of the issues would've been adequately addressed. i believe what the cancellation of the m.o.u. was contemplating was that all of the requests for services that were originally considered under the m.o.u. have been addressed. to the extent the request, firstnet sequester oig services would include and that m.o.u., though services we believe those services have been completed. there are many, many more things obviously to do from an oversight perspective of firstnet that are still to be accomplished. >> mr. poth, which you responded to with regard to this
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independent authority aspect of that question just came? >> yeah. so why we enjoy certain rights within the independent authority, we define ourselves from time to time bogged down with some clunky, well intended federal processes that do not enable us to remain as quick and nimble and agile as we need to be, you know, for the true public-private partnership. we've had a lot of success sometimes by brute force to work around within the rules a lot of times people confuse our need for independence, clouded as that we're trying to not be accountable or responsible and that's not the case. we have to move very fast, as the senator earlier mentioned. technology and technology companies are moving very fast end to be a true partnership we are going to still need of more streamlining and more of the
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constraints that sometimes placed upon an agency within another agency half. so we continue to work with commerce and with ntia to streamline those areas but it is still sometimes constraining. >> were to be fair to say that there's a difference of opinion between your shop and ntia as to what the term actually means, independent authority? >> i don't think there's necessary attempts of opinion. it's the difference now is to be appointed ntia has been a great partner but they also feel that they are responsible since it is within their organization. so that conflicting wording sometimes creates a little habit. we've been very successful working in partnership with them but it does add sometimes additional layers of oversight and checks the sometimes we don't believe necessarily is
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going to help us get to the value add. we certainly welcome and always will respond to being responsible and accountable for all actions, but we do look forward to continuing to work with them to streamline it. >> i don't want to start a fight but i think you said it was a clunkiness. >> yes. >> i think would be helpful if you can lighten to the committee about that. what would be an example? >> there are certain processes. for example, when we submit our annual report to congress, which is a requirement, interest up to 10 agencies that this gets circulated and signed off before we can hit the send button to your offices, we welcome additional recommendations an oversight on certain things and participation, but that introduction of the delay of x amount of time, while it's not fatal, it does push against reports and obligations.
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if you envision next as we work in partnership with our private sector partner as we deploy this nationwide network, and certain twists and turns come up with it any major effort like this, if we have the same sort of process to make sure that everyone is comfortable with the decision, that clunkiness may result in some certain delays where decisions need to be made in a more real-time fashion. >> i'm going to give you a chance to expand on that answer for the record, and you'll be able to choose your words. but again i'm not trying to create strife here. mr. mcleod and general logan, i think i've characterized mr. katsaros' testimony correctly as saying that there are shortcomings and that firstnet
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needs to step up its game. would either of you care to respond to the testimony from the ig as to some of the challenges that he has outlined? >> sir, i'm not sure i really understand the question. >> okay. well, let me ask you this, mr. katsaros. had i mischaracterized your testimony? it seems that your testimony is that you have some serious doubts about this all coming together as planned and required and has written on paper. is that correct? >> i think that's fairly well summarized.
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i think there is still a lot unknown, especially in this pre-award phase. and then with respect to your comment earlier on info control. in a lot of ways first it is still a startup organization and they experienced sort of the typical operational challenges that a startup organization would encounter. i do appreciate working with firstnet, that they have adjusted and made those changes that were necessary to kind of move them forward so that it's not a distraction, and i think that's the important thing that these operational challenges and acquisition challenges and procurement issues are not a challenge as they tried to do this important work. >> are you optimistic that the goals to be met this year? >> that's a great question, and it's going to be very difficult to answer. we keep talking about this pre-award phase in our office, and during this phase we are looking at a november 1
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timeline. we state that is aggressive. this is going to be, consultations in several phases are going to be ongoing over the next several months, and there are a lot of variables that need to fall in place for this to be successful. >> let us know if the committee can be helpful. now, either of you care to respond to that? if not, we will -- >> sure. i can say that others are fully committed to this being successful, they push hard to get legislation passed in 2012 and they want to see work and be successful. i think going forward a big push is just of the unknowns. this is, as i said, this is unprecedented in terms of size, complexity and scope. so to the extent that are unanswered questions about, for example, can't it be built within existing class models,
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what with the user fees be to connect to networks? audit any long-term administrative and operational costs? may be are not interested right now? i think with just keeping in mind states want to see if successful, concerns about the unknown and the to we get the state plan at the end of this year, states are going to probably hold back and wait to see if they want to opt in or opt out. >> thank you very much. i had a hand that senator blumenthal and klobuchar might be on their way. senator blumenthal. >> thank you, mr. chairman, and thank you for enabling us to participate. we learned quite a bit actually. >> so i gathered. thank you. and the reason is that we have a very distinguished panel, and thank you for having this hearing, and thank you all for being here today. i don't need anybody here that during emergencies, local
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resources are strained and communities depend on the sport of outside organizations in addition to first responders, the united way, the red cross, all kinds of organizations that play a vital role in protecting property and restoring and maintaining the health and safety of individuals. one example, when connecticut's shoreline was ravaged recently by superstorm sandy, disaster relief organizations mobilized quickly. they helped displace families. they provided them with food and shelter, at the nonprofit united way of connecticut supports the states 211, a 24/7 health and human services information and referral helpline which plays a critical role in the kinds of emergencies that we encountered in superstorm sandy, and other disasters or emergencies, whether it's snow storms or
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hurricanes. floods. clearly there's a need for such an organization to have access to a dependable, national public safety broadband network in order to operate as effectively as possible. but i understand that the states currently lack clarity as to what entities will be able to use firstnet. i'm concerned about that fact. in fact, according to the statute all quote public safety entities, end quote, chart access but it's not clear what that term means, all public safety entities. so let me ask you, mr. poth, in addition to our first responders, which is law enforcement, fire, ems, a lease, what other entities are encompassed in the definition of public safety entity?
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would include in connecticut our united way, red cross, community organizations and the like? >> thank you very much for the question. that's a great one. what we've done, and you are correct, the definition is in our statute, and we've leaned upon our public safety advisory committee led by chief chairman mccune to help us sort through some of these questions. and as that relates to what is called local control. we've asked of them, they represent 40 public safety agencies and associations come internationals, chiefs of police, international city county managers associations, volunteer firefighters, what would be, based on public safety needs, the hierarchy of control? everyone will have access to the network. where it becomes important is what is that priority? you mentioned some of the three
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traditional, police, fire, ems. they can also extend hospitals all the way down to schools and to those volunteers. they are helping us work through the as to what is important for local control and then when we work with our partner, those things will be kind of sad that. i think they have up to 19 tears of priority that they have identified to local control because you're exactly right, senator. in a time of crisis it's not just the first responders that are needed. it is a true communitywide effort that relies on both public and private partnerships, volunteers to be an integral part of that response fiber. >> and the structure or fabric of an emergence response also includes hospitals, health care providers, transit authorities and so forth. they are public safety entities in a sense as well. >> no, absolutely. they are states that already have standing agreement with bus companies that they have to move
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mass quantities of people out of their area due to flooding and those types of things. that becomes part of the response fiber that you mentioned. >> at me ask you in the short time i have remaining, at the last hearing on firstnet, i asked what can be done to make sure that firstnet is not hampered by a sluggish hiring process. i don't know whether you recall the question. and that it has the authority needed to are the best and the brightest, most efficiently. and i'd like to revisit that question. havhad their hiring processes changed or improved? >> yes, they have improved, it would like to think that we do the best and brightest, that we have brought to bear, our tactical and operational and management teams are i would say second and. we do have some of the traditional challenges in the federal system but we have
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developed working closely with the other agencies and human resources to streamline that as effectively as possible. what we are competing with the comp or shall -- commercial market for some of that talent. we've been very lucky, because of the mission and the passion our employees have for this mission, that it has become an easier sell. >> thank you very much. and again, my thanks to this panel for your contributions to this area of public policy and for your being here today. thank you very much. >> thank you, senator blumenthal. senator klobuchar. >> thanks very much, mr. chairman, and thank you to all the. i'm sorry i wasn't here earlier. we have canadians into an senator crapo an and in town and senator crapo and i head up the interparliamentary and group, an actual i have a candidate question to cap that off. but this means a lot to me, i'm a former prosecutor.
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senator burr and i head up the 911 caucus, next generation 911. we have worked hard to update some persistence to make them more interoperable. this is really called on i in my state when we had the i-35 w. bridge collapse. despite the fact that were dozens and dozens of cars in the water when the bridge collapsed in the one of the biggest rich and the country, 13 people died. it could've been so much worse, if not for our emergency responders. i think what doesn't always get a lot of attention but why did able to get people to safety and get into hospitals so immediately was that the minneapolis emergency community center, and indications of center, received and processed over 500 calls, 51 of which came directly from the scene of the disaster. 77 men and women were handling those calls and, of course, no warning whatsoever, not eating it when you would have with a
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storm. and were able to get those people out. it's an incredible story of work that had been done for years leading into it, anticipating some kind of a disaster between our area hospitals. so my first question would be about interoperability. we had a major shooting of a police officer, and it really changed the way we look at it, because when the police from many jurisdictions were chasing the deranged man who had killed a police officer, they were using 13 different systems, and many of them couldn't communicate with each other. so there really spurred us on to make some changes, and i know that we've been working on this since 2004. mr. poth, what guarantees can you give the committee that the feedback gathered from the stakeholders in state consultations, and states are developing this state plans will
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be incorporated, and how well first to respond and states continue to gather and provide updated data? >> thank you so much for the question. just those two small examples demonstrated the need and why public safety demanded that this network and that firstnet deploy this network. what we've done is in the state consultations and the outrage two both estates, to cities and counties and public safety entities, is make sure that they understand the value proposition and the interoperability that is the cornerstone of what we are trying to accomplish with this network. the interoperability even with canada will be critical because of the border states and those needs and initiatives. we are expecting that as we continued even post acquisition and award to continue the consultation and champion the cause for the states have a public safety with our partner in the technology world to keep
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pushing advancements. you mentioned that dependency and data connectivity with the dispatch centers, the public safety answering points, are key components since the first response on a lot of different incidents, and we were closely with a pco and others to make sure their efforts and what's going on with 911 is closely tied to what we're trying to accomplish with a broadband network specs that you brought up canada, thank you so i can report back to her 50 members of the canadian parliament who were in town, obviously we are concerned about the level of interoperability since we're right on the canadian border in minnesota, as are so many of our states. you've got the great lakes right there, and there's a vast expanse between our two countries. could you talk about a little, give us an update on the coordination between the two countries in the border area? >> we spent a lot of time with
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our canadian counterparts updating the him on the progress that what they are doing. we also have the luxury with a candidate in that the bandwidth spectrum is the same bandwidth also allocated for their public safety. so although i get outside my comfort level on the technical side, i believe that makes it even more seamless. but we have ongoing exchanges and updates with the canadian team as they are trying to implement this on their side to ensure a timely response for both parties. >> thank you. mr. mcleod, sheriff stanek of independent accounting serves on the first aboard representing law enforcement. are there some specific needs that firefighters hope t to see incorporated in the design of firstnet? what do you think can be done to incorporate some of those law enforcement and firefighter concerned? >> thanks for the question. i think states certainly look to
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the network as being available to a wide range of first responders that would include fire, police. i think it goes back to making sure there's a real value their data demonstrate the value two states into those first responders. >> i just had one last question, and maybe i will put one were on the record, and get back to you, mr. poth. nucor wireless in minnesota resort participate in a pilot project with firstnet in elk river. the pilot project tested a public safety lp network in urban and rural areas and intellectual look at those partnerships with rural companies. that's where a lot of our gaps are. it's everything from a major case o of the fugitive to someoe with a snowmobile broke down in the middle of come a small thing but it's not a small thing because they are completely isolated and they can't get through, even though they have a cell phone. it's my hope that firstnet one
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not only should the public safety community, sure the public safety community but can also share and spur on these additional wireless broadband and infrastructure deployment like we've seen in this pilot. could you talk about this pilot in particular in what you learned from it? >> the particulars i'm not exactly up to speed on, but i do know we use that as we done with all the early builders as lessons learned, and we incorporate every one of those events and we take copious notes to make sure as we work with our new partner, still get identified, to learn from this lesson as we begin the deployment into the nation. we also are expecting as you've already noted through the rfp process the rule partnerships to be clear articulated and the value propositions go out to the rural areas will be clearly stated in all the state plans.
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>> very good. thank you. thank all of you for your good work. sorry i didn't get to everyone but the canadians await me. thank you. >> thank you, senator klobuchar. and thank you, gentlemen. i think this is been a very knowledgeable panel and very enlightening hearing. thank you very much, and the hearing is closed. >> thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations]
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[inaudible conversations] [inaudible conversations] [inaudible conversations]
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[inaudible conversations] >> you realize this is something i've not only love to do something i think can be really different from the kinds of books that have been written about mccarthy in the past and the way in which to really rethink and evaluate who this person, what is the significance was what his virtues really were that made him the most one of the most adored and actually figures the american history but also what were his flaws and what were the things that made
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him in many ways unpleasant and even hated by millions. millions. >> sunday night on q&a, hudson institute senior fellow arthur herman takes a look at the life and career of douglas macarthur in his book douglas macarthur, american warrior. >> i think that's one of the things about macarthur that you have to see. he saw the future more clearly often then he saw the present. whether it was america's role in asia, the rise of china, the split between china and the soviet union which he foresaw, but also perhaps the fate of american domestic politics. >> sunday night at eight eastern on c-span's q&a. >> on monday fcc chair tom wheeler talked about the development of ig, the next generation of cellular communications technology. thursday the fcc will begin accepting applications from companies hoping to use new high-end spectrum. from the national press club in
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washington, d.c., this is one hour. [applause] >> tom wheeler became the chairman of the federal communications commission on november 4, 2013. for over three decades chairman wheeler has been involved in the telecommunications and cable sector as a policy expert, advocate and opt for nor. he has been a venture capitalist and lobbyist for the wireless and cable industries. he served as president and ceo of both the national cable television association and the cellular telecommunications indu industry association. but as a journalist i found more interesting that a lifetime ago the german word for syndicated columnist mark shields, a friend of mine. he managed the ohio state university speaker system their version of the press club speaker luncheon series that
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brings all of you here today. given the chairman wheeler used to be an industry lobbyist, his record is rather surprising. he introduced the commission strongest ever rules enforcing net neutrality. defined at&t $100 million for capping speed on unlimited data plans.s. the increased competition among the makers of cable boxes and work to get more internet access to rural areas. chairman wheeler put the entire fixed and mobile broadband industry under stricter regulatory regime and. he has done so me thinks that it angered his former employees,re employers at the ncta and ctia, have sued the fcc during his tenure. he explains his actions by saying i used to be an advocate for corporate interests. i hope i was a good one but today by clint is the american people and i want to be the best damn advocate for the american people that i can be.today, my e america is the leader in the
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wireless technology and spectrum innovation, occupying the top spot in worldwide 4g worldwide network utilization. new 5g networks will offer even faster wireless broadband services. stakeholders around the worlds. have begun shaping the new 5g landscape to benefit their national and commercial interest. today chairman wheeler will share the framework for what he thinks the american vision for 5g should be in a speech entitled the future of wireless, a vision for u.s. leadership in the 5g world. ladies and gentlemen, please join me in welcoming to the national press club federal communications commission chairman tom wheeler. [applause] >> thank you very much, tony. he certainly proved your journalistic credentials with some of that research that you y dug up there. it's an honor to be here at the national press club.
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and it's an honor to be with my colleagues who really are the ones who make things happen that i'm talking about.eagues w julie who is ahead of our office imaging technology, john wilkins, who is the head of our wireless bureau, and my colleague larry strickland, who we work like this together with a letter he acting cia and department of commerce on spectrum policy. there are so many familiar faces and friends in the audience, and i'm going to make the terrible decision to call out a couple. first is my good friend and former colleague ron nesson who, it's a real pleasure to see sitting here. we haven't seen each other for a long time. the other is hiding back in then back of a man who started theba spectrum revolution at the fcc,
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former chairman reed hundt. it was back in 1994 that is crazy idea of opening up more spectrum, creating more opportunity in building what we will be talking about today began, and that was under his leadership. but i am most pleased and most surprised to find karen smith in the audience today.. what i karen had to change her name from karen wheeler -- [laughter] but my sister from annapolis who is no stranger to telecom issues are self-admitted executive director of tech court which was that great operation that follow-through -- remember that day? we pulled all the fiber throughh the schools, now what do we do? care in organized volunteersrs throughout the country, and i was always proud of her and what she did. you know -- yes.
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[applause] a few months ago i find myself in a situation that i never would have imagined when i became fcc chairman. i was in dallas, texas. i was at the helm of an excavator, a big piece of heavy machinery, digging up the dirt. and for those of you who want to picture in your mind, yes, i was wearing a suit. i was also wearing a pair of virtual reality goggles, and i have not left the fcc. and while i may have been in washington physically, i can tell you i was at the excavation site in dallas 1400 miles away. i sat in the mockup of the
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excavator, and i had completerol control sensitivity to the equipment 1400 miles away. now, granted, digging up the dirt in dallas probably isn't high on the list of transformational advancements that will define the 21st century. but i want you to think of something. why don't you replace the hidden machinery with a scalpel so that a world-class surgeon can move from hospital to hospital without leaving her surgical to h suite? or how about students sitting in a classroom taking a virtuale ct tour inside the human body? now, we've all heard of amazing things, stories like that in the
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past, but making these kinds of activities possible without off cable -- a fat cable without -- could not be accomplished because of three limiting factors. one, the speed of the wireless connection. we all know the difference in performance of a direct fiberorf connection compared to a wireless connection. the next generation of wireless must be mobile fiber, 10-100 times faster than what we are used to today. second limiting issue is responsiveness. the surgeon's scalpel needs to be immediately responsive, not a blink later.r. the technical folks call this
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latency. it currently averages about 10 milliseconds, or 1/100th of a second. that may sound pretty fast to you and me but it's a snail's pace in computing. latency needs to be less than one millisecond, less than 1/1000th of a second to provide for real-time interaction. and a third limiting factor is spectrum capacity. because if you were going to have that kind of high speed latency, you have to have the ability for digital information to race down broad chunks of spectrum. multiples of what we know today.
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so to overcome these challenges and to seize the opportunity before us, we need the next generation of wireless connectivity, a fifth generation, or 5g. and if the united states is going to continue to be a world leader in wireless we need for speed, the deployment of 5g here on our shores. the virtual reality example that i gave is but one sample of the effects of high speed low latency connectivity. and why american leadership in 5g must be a national priority. that example i gave you is just one example of how the driving
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force of the 21st century will be powerful processing,cent centralized in the cloud, and wirelessly connected to thin cot clients. autonomous vehicles will be controlled in the cloud. c smart city energy grids, transportation networks and water systems will be controlled in the cloud. immerses education and entertainment will come from the cloud. but such futures won't come to pass and less the pathway to and from the cloud is low latency, ultra fast, and secure. now, if we've learned anything in the generational march through wireless connectivity,
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it's that we have always underestimated the innovation that would result from new generations of wireless networks. the first generation, wireless, 1g, was. in the early 1980s mckenzie told at&t there would be 900,000 so phone subscribers by the turn-of-the-century. it turns out there were 109 million. they were only off by a factor of 100 or so. the second generation, 2g, loud old talk and text -- allowed both talk and text but no one understood the power of text. from shifting the way an entire te group, teenagers, would communicate, to developing, can we developing world tool for banking the unbanked, innovators
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seized on a new capability of texting in unimaginable ways. the third generation, 3g, married wireless and digital networks to open the door to connecting with other new, the other new technological phone at the time, the internet, in a limited way. in today's technology, 4g, completed that digital migration, enabling higher speeds for so this could applications, including video. again, greater capability in the network lead to unanticipated innovation. without 4g it would not have been ways or over snapchat or instagram, or the list keeps going on. but i've listed some examples earlier a moment ago about what 5g makes possible.
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but if anyone tells you that they know the details of what 5g is going to become, run the other way. because it is the capacity to use this new capability that will determine what our future looks like. yes, 5g will connect the internet of everything. if something can be connected it will be connected in the 5g world. but the predictions, with the predictions of hundreds of will billions of microchips connected in products from pill bottles to plant waters, you can be sure of only one thing, the biggest internet of things, application, has yet to be imagined. yes, five jeep will connect the
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unconnected and compete with the uncompetitive.competitive. millions of americans cannot access high speed connectivity because it's too costly to run the fiber to the home. verizon ceo lola mcadams has begun speaking lately but using 5g connectivity to expand high-speed broadband service toi rural areas. and fiber fast wireless connectivity will deliver the long sought goal of competitive high speed internet access for consumers. but let's stop the imagining for a moment. here's the key. the the interconnected world that we live in today is the result ofle decisions made a decade ago. the interconnected world of the future will be the result of decisions we must make today.
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and that is why 5g is a national priority, and why this thursday i am circulating to myrity. thai colleagues proposed new rules that will identify and open up vast amounts of spectrum for 5g applications. we call it the spectrum frontiers proceeding, and we will vote on it july 14. our 5g proposal is the final piece in the spectrum trifecta of love and, midday and, in height and airwaves that will open up unprecedented amounts of spectrum, speed the rollout ofof next-generation wireless networks and redefine network connectivity for years to come. i'm confident that the actions will lead to a oracle beta of unanticipated, innovative uses that will generate tens of
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billions of dollars in economic activity. but let's revisit that spectrum strategy for a moment. rule number one, is that the techno- g. should drive the policy rather than the policy drive the technology. and technology for 5g is not one thing, it is many things. the marriage of moore's law and wireless connectivity involves smart antennas, new more efficient transmission formats, low energy systems, network virtualization, and much more. add-on the spectrum side, these technologies require you access to spectrum in multiple bands. the wireless future will not be
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a one size fits all future.l so our spectrum trifecta begins with low band spectrum that is optimal for wide area coverage applications. at this very moment we're in the midst of the world's first and then the auction to make greenfield low band spectrum available. the broadcasters have stepped up to bring spectrum to the market. shortly the wireless industry will have the opportunity to fulfill their repeated requests for more spectrum with this beachfront spectrum. mid band spectrum is kind of the jan brady of the spectrum world. [laughter] you know, the overlooked middle child. but its characteristics enable an order of magnitude increase
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in spectrum efficiency. the commission's recent aws a three and new citizens broadband radio service and 3.5 at gigahertz were landmarks in using new sharing tools to open up new mid band spectrum, and we need to continue looking for other mid band opportunities. and it is high-paying spectrum that will be the focus of our actions next month. these bands, the high bands, offer huge swaths of spectrum for superfast data rates with low latency, and are now becoming unlocked because of technological advances in computing and antennas. if the commission approves my proposal next month, the united states will be the first country in the world to open up high
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band spectrum for 5g networks and applications. and that's damn important, because it means that u.s. companies will be the first out of the gate. we will be repeating the formula that made the united states the world leader in 4g. it's a simple formula. lead the world in spectrum availability, encourage and protect innovation drivingtion g competition, and stay out of the way of technological development. unlike some countries, we do not believe that we should spend the next couple of years studying what 5g should be or how it should operate and how to allocate spectrum based on those assumptions. like the examples i gave
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earlier, the future has a way of inventing itself, turning innovators lose is far preferable to expecting committees and regulators to define the future.far we won't wait for the standards to be the first, to be first developed in the sometimes arduous standard setting process foreign government led activity. instead we will make ample spectrum available into a lot on a private sector led process for producing technical standards best suited for thoseent let frequencies in use cases. leadership and networks leads to leadership in uses, which quickly moves across borders. so i we sold of this national leadership is the creation of a home-field advantage similar to what we knew in 4g.
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but the main value of 5g will not be found in work share or intellectual property. the main value of 5g by orders of magnitude will be in consumption rather than production. it will be a material gains and improvements in the quality of life and economic opportunity. and i would also emphasize that the development of 5g is not anything like an international zero-sum game. rather, it's a contest in which everyone can when.an win. our success, and that of others, redounds to the benefit let early of everyone in the world. we are already seeing industry year in up to seize this opportunity. a s i have seen 5g hardware and
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firmware. the technology is here. it is also important, however, to recognize that 5g technology will be a constant evolution. it would be a mistake to think that 5g can be frozen in aistakh snapshot. it's more like a video with many new scenes all building on each other. assistance and standards for 5g with a continually improving and evolving. and on the network side, verizon and at&t tell us they would begin deploying 5g trials in 2017. and these efforts will of course help inform the standards process by putting stakes in the ground, and the first commercial deployments are expected in 2020. this timeline requires that we
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act to pave the path today.path with the new rules that i'm proposing and our spectrum frontiers order, we take our most significant step yet, down the path to our 5g future. the big game changer is that 5g will use much higher frequency bands than previously thought viable for mobile broadband and other obligations. such millimeter wave signals i have physical properties thatou are both a limitation and aa strength.ph they tend to travel best in narrow and straight lines, and they do not go through physical objects as well. this means that very narrow signals in an urban environment tend to bounce around buildings and other obstacles making it difficult to connect to a moving point. but brilliant engineers have developed new antennas that can
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anyone and amplified -- and ands amplify signals coupled with sophisticated processing that allows the moving device to pick up all of the signals that are bouncing around and create one coherent connection. now, to make this work, the 5g buildout is going to be very infrastructure intensive, requiring massive deployment of small cells. but it also opens up unprecedented opportunities for frequency reuse condenser, more localized networks. the ability to use this high frequency spectrum opens much bigger chunks of spectrum. current blocks of licensed low band spectrum are usually five to 10 megahertz in with.
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with 5g, however, we are talking about lots of spectrum that are at least 200 megahertz in widthw this will allow the networks to carry much more traffic per user. gigabits of throughput, in place of megabits of throughput. and the key point here is that by opening up these higher frequency bands, we are making available more licensed spectrui for mobile than in theectrum cumulative history, dating back to reed hundt, that the fcc has heretofore made available. >> at this point there were some audio issues with the microphones at the national press club so we lost a moment or two of tom wheeler's comments. >> advantageous for the satellite and mobile industries

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