tv Politics Public Policy Today CSPAN January 23, 2015 1:00pm-3:01pm EST
we continue to cover the u.s. conference of mayors winter meeting underare way way in washington. president obama addresses the group this afternoon. that's coming up 4:45 p.m. eastern on our companion network, c-span. all this month we're covering state of the state speeches and governors inaugurations, which you can see at c-span.org. tonight, we'll bring you some of the speeches beginning at 8:00 eastern on c-span2. including republican governor nathan deal, in georgia. larry hogan, the governor of maryland. tom wolf of pennsylvania. and new mexico governor suzanna mar tee he's in martinez. that's 8:00 p.m. eastern on c-span.org 2. andrew keen, author of "internet is not the onser eranswer" on how the public is being used for
profit. >> people went to work for factories. they were paid for their labor, they worked 9:00 to 5:00 and went home and did what they want with that money. today, we're all working in these factories, like google like facebook, like twitter. but we're unpaid labor. we're working 24 hours a day. we're not rewarded. it is not even acknowledged we're creating the value for them. and worse than that, we are the ones who are being packaged up as the product. because, of course what these companies are doing is learning more and more about us, from our behavior, from what we public, from our photographs, from our ideas, from what we buy, from what we say from what we don't say, that they're learning about us creating this penaptacomrepackaging us as the product. not only are we working for
free, but we're being sold. it is the perfect exam, thescam. the perfect hitchcock movie. >> sunday 8:00 p.m. eastern on q & a. >> the freedom summit from des moines begins at 10:00 a.m. eastern. speakers include 2016 presidential candidates governor rick perry, scott walker and chris christie former governor mike huckabee businessman donald trump and ben carson and 2008 vice presidential nominee sarah palin. the iowa freedom summit this saturday on c-span, c-span radio, and c-span.org. the fcc is weighing whether to reclassify broadband internet access as a common carrier under title two of the communications act. proponents say this change would ensure what is called net neutrality, because it would give equal access to the internet. former fcc chair michael powell and former fcc commissioner
meredith at well baker testify about the pros and cons of making the change before a house subcommittee. this is three hours, ten minutes. >> i'll call to order the subcommittee on communications and technology. good morning and welcome to our subcommittee's first hearing of the 114th congress. i can think of no issue within our jurisdiction that is more important to consider at this time than the future of the internet, and our responsibility as legislators to set internet policy for the country. that's why we put forward draft legislation, provide consumers the protects they deserve while not choking off investment and innovation. we have shared this draft with my colleagues on both sides of the aisle. we have made it available publicly and we have invited our witnesses today to give us their views on this draft proposal and i thank all of our witnesses for
their participation. we have a very important choice to make. between letting three very smart and capable but unelected people at the fcc majority of the commission, use a statute, written for another era, to cobble together a regulatory scheme and undoubtedly will end up in court for years in litigation. providing no protections, but much uncertainty. or we can do our job and draft a new law for this century, through the open and transparent legislative process that we are beginning today. we have come together before in this subcommittee and full committee to draft communications legislation. frankly it is now pretty good law and we must do it again. it is the home only way to bring clarity and certain toy internet governance. now a little less than four years ago the fcc was in court defending its first attempt to regulate the network management practices of an isp. since then, the commission has gone to court twice in defense of net neutrality and twice the
courts have rejected the fcc's rules. while the court seems to have given fcc lawyers a third times the charm road map for how to craft rules under the current act, the commission is preparing to invoke net neutrality's nuclear option, reclassification under the set of aging and inept rules developed for 19th century railroads and then adapted for the age of the monopoly telephone. we don't have to settle for that. we have a duty to those who use the internet those who manage the internet and those who build the internet to provide legal certainty, consumer protection, and clarity for investment. what we're offering today is a solution that will bring to end the loop of litigation and legal gymnastics that flowed from fcc attempts to shoehorn the policy it wants to fit the authority it has. our discussion draft is largely based on the 2010 open internet order, adopted by former fcc
chairman julius jankowski and draws from the legislative proposal put forward by henry waxman. now, some pundits raised concerns that the draft bill curtails the new found authority that the courts have read into section 706 of the telecommunicationsant. 706 was added in 1996. and it instructs the fcc to promote the deployment of broadband networks. until recently it was understood that section 706 meant the fcc should use existing authority to promote broadband deployment. and it works. however, last year the courts for first time interpreted section 706 to permit the fcc to take nearly any, and i underscore any action to promote broadband so long as it is not inconsistent with the rest of the act. did you catch that? it gives them nearly any authority at the fcc. this is a broad expansion of what was intended under 706.
now, while some take comfort that a slim majority of the fcc will do what they want, i pose the question, what happens when an fcc not to their liking grabs the regulatory throttle. let me put a finer point on this. that means amazon etsy and every other company should be prepared to meet its new regulator. if you would like an idea of what you're in for, look no further than your fellow witnesses, mr. powell and ms. baker who represent the regulated. it is time to update this law. time for a fresh approach from we who are elected to write the law and to set the nation's communications policy. my priority is to protect consumers and the internet we all rely upon. my priority is to encourage its expansion to the hills and valleys of our vast nation that lack connectivity and to various segments of our population underserved and too often ignored. together we have taken on complicated communications
challenges and produced good legislative solutions. we stood up to powerful special interests and stood with the american people, and we must do so again. the draft legislative proposal represents our good faith effort to end the net neutrality debate before going to court again. our committee will not ignore our responsibility. as some of my colleagues know, we have been working on the principles and last legislation for month. we have listened to supporters, opponents and neutral parties too. we'll take the advice and council from our witnesses today into full consideration. and then we won't let the old washington gridlock stand in the way of us doing our job for the voters demanded and they deserve it. with that, i recognize the gentle lady from california, the ranking member of the subcommittee, miss eshoo. >> thank you, mr. chairman. today's hearing renews a critical discussion in the new congress about the internet. should it be truly open and equal. should consumers competition and chase drive our
deliberations? should privacy and the disabled be protected? should every region, city, town and reservation be they rural or urban have equal access to broadband speeds capable of leveraging innovative online content and services. i reviewed the majority's proposal very carefully and i commend you for finally acknowledging that we do in fact have problems with online blocking throttling and paid prioritization. we agree that bright line rules should apply to both fixed and mobile broadband services. what is abundantly clear in the majority's proposal is to purposefully tie the hands of the fcc by prohibiting them from reclassifying broadband under title two. the proposal creates a huge loophole called specialized services. on the one hand, the proposal says it will prohibit fast lanes. under specialized services, a
loosely defined term, broadband providers can give themselves prioritized service and the fcc will have no power to define this. if our goal is to have a system that guarantees equal access of an open internet to everyone and it should who is going to carry out and oversee this? this proposal carries an enormous bias against enforcement, which in turn, doesn't give consumers a leg to stand on. the proposal does harm to the efforts made to bring broadband to rural areas, it could unintentionally harm the 911 system, limit the fcc's authority to promote access by the disabled to communications services, and it could restrict access by competitors to utility poles. the proposal also attempts to address specific forms of discrimination, but who today knows with any certainty what
tomorrow's forms of discrimination will be. the proposal takes away the authority of the fcc to address them. i don't think your constituents or mine are clamoring for a bill of rights for various companies. they want the guarantee of an open accessible internet. 4 million people spoke out to the fcc and i think our goals should match theirs. we should protect ordinary consumers, promote innovation, create real competition and advance startups. when we do our constituents should be 100% confident that these things are going to be carried out. that there is going to be a cop on the beat. an open internet is not only critical to america's future it is essential for every american to learn, to educate, to conduct commerce, to build businesses and create jobs, to innovate, to
expand our economy and promote democracy. it will strengthen the middle class and it will bring more into it. what path we take will determine much of our future. in an attempt to eliminate bad practices, we should not be tempted to establish rules that will create new bad practices. i think this would be a march to folly. >> the gentle lady yields back the balance of her time. >> the balance of my time i yield to mr. doyle. >> mr. doyle is recognized. >> thank you, chair for holding this meeting. this represents a step forward by my colleagues. that being said, the bill still falls short. it permanently revokes and severely weakens the commission's ability to address serious issues in promoting broadband competition, encouraging broadband deployment, and protecting consumers and their privacies. mr. chairman, technology policy
needs to be flexible, not prescriptive. it needs to be adaptive and able to change to meet our future needs. the principles included in the draft bill are very similar to what the f cc proposed in the 2010 rules. but since then we have seen battles between netflix and isps, over intersection. a continuing need for strong consumer protection. the last five years have been a lifetime in the technology world. and we need rules that can adapt to the pace of innovation and the new challenges that it brings. i yield back. >> the gentleman yields back the balance of the time and now to the chairman of the full committee, the gentleman from michigan, mr. upton. >> thank you mr. chairman. this committee is known for working together to tackle the tough issues. tradition of getting ingting the job done, where each side gives a little bit to make things better
for the american public. one issue that divided us for too long is how best to ensure an open internet, rooted in bedrock principles of freedom and access for consumers and inouenovateors alike. i believe free markets address these issues, the fcc believes regulatory action is necessary and one of the only tools at its disposal is to apply rules to shape the internet for the 21st century. given the chase between enacting prudent legislation or tackling it while being unfit for the task, we chose to take action. we put forward draft legislation to codify. legislation for consumers and innovators assuring america remains the preeminent global leader the internet era. it prohibits service providers
from blocking content, selectively changing the quality of traffic based on where it came from or what it is or prioritizing certain traffic based on payment. it requires providers to be open and transparent with consumers, allowing them to make the most informed choice about their service. we also included safeguards that -- to close potential loopholes and prevent mischief. this should all sound very familiar to my democratic colleagues because they are the rules many of you and the president have been calling for some time. the fcc spent years trying to craft rules that achieve those goals. in fact, much of this bill's language is taken from past fcc attempts. but limits resulted in year, many years of litigation and certainly uncertainty. consumers and industry deserve better. consumers deserve certainty to know they're protected by clear
rules. providers need certainty so they can move forward with their business models because without that certainty, innovation and investment suffer and consumers lose. our thoughtful solution provides a path forward that doesn't involve the endless threat of litigation or the baggage of laws created for monopoly era telephone service. only congress can give the commission the tools that it needs to protect consumers and innovation in the internet era and beyond. this draft legislation provides a sustainable, responsible path to appropriately and effectively address the concerns from the left and the right. it puts to bed one of the most contentious issues we face and it allows us to move forward in our goal of modernizing the nation's communication laws. our update process can bring bipartisan change through communication laws but have to come together and resolve this
near decade long debate over the future of the internet. i yield the balance of my time to mr. bart. >> i thank the chairman. i was heartened by some of the comments mr. doyle made in his remarks. last night after the president's state of the union, i came back to my office and did a little video we put on my facebook page page. we put on youtube. also i believe we put it on twit er twitter twitter. i have a 9-year-old son that has an ipad ipod, xbox, playstation 4, on the cell phone, knows how to use the internet better than i do. he's spoil eded. well, that's his mother. that's his mother. she bought him all these things, actually. no, that's not true but anyway my point is to paraphrase
president reagan in his first campaign in 1980 he asked the american people are you better off today than you were four years ago? when you look at the internet, i think you could ask the consumers are you better off today than you were four years ago and the answer would be yes they are. i see advertisements every day, there is one on -- playing down in texas right now, give me your bill, we'll cut it in half. i'm not going to name who is offering that, but you all would know it if i said it the internet is not a monopoly like the telephone companies were or utilities were in the 1930s. it is one of the most vibrant markets in the world. the chairman's draft is an attempt to keep it that vibrant marketplace. some of the people at this table helped develop the policies to make that possible. we should support the chairman work with the ma minority and
try to keep it a bill that keeps it a viable market. i'm supposed to yield to mr. lanta. i would ask unanimous consent if mr. lanta has a minute. >> is there any objection? if not, we'll welcome him out of courtesy. >> thank you. i appreciate that. thank you to our witnesses for being here today. the fcc indicated it intends to move forward with an order to reclaf services under title two of the communications act. i believe this course of action will bring legal uncertainty, slow innovation and investment and negatively affect american consumers. even those who support recollaboration and recognize its challenges, but would attempt to circumvent the limits by forebearing sections of law a plan that would team so magnify and further postpone innovation. it is evident that ending the long-standing precedence of the framework that governs the
internet would add uncertainty and necessary regulation on broadband providers and would restrict their ability to continue investing in faster networks that consumers demand. i support the direction by the chairman. with that, mr. chairman i appreciate the unanimous consent. >> the gentleman returns the balance of his time. where i proceed to mr. pallone i believe this is your firsthearing, we welcome you for that. we will add an extra minute to your side of the aisle and i've been told too during the opening statements, the mikes on this side could hear it streaming on the internet apparently not on your side. i think we have that corrected now. it was an attempt to throttle mr. doyle.
not supposed to catch anna along the way. but, anyway, i think we have that -- >> i think this has something to do with the deflated footballs. >> that ohio state that -- no, i'm not going there. painful enough. i appreciate the green room. with that we get serious again and i recognize the gentleman from new jersey for six minutes. >> thank you mr. chairman. let me start by stressing the importance of network neutrality, it is the surprisingly simple concept that consumers should control, what they access when they go online. it represent the idea that small businesses should be able to compete on a level playing field. internet access has become a critical part of all our lives. it is how we apply for our job grow our businesses and that is why 4 million americans reached out to the fcc demanding strong net neutrality protections and those four million people expect
here in washington we'll pay attention. i'm heartnd my republican colleagues all benefit from clear rules from the road and i welcome their interest in bipartisan selection so long as it is truly bipartisan from the start. mr. chairman i don't want to undermine the fcc's authority as i think was -- you suggested. i don't think that will serve to protect consumers. the fcc must continue to serve an important role in the broad ban age. standing ready to act, or to promote broadband deployment to rural areas. just as important, it must maintain the flexibility to keep up with new technology. why we continue our work, i expect the fcc to continue its work. these are complicated issues with complicated answers. it has train six months it
create new rules that expands to the american public and congress cannot be expected to work it all out in 13 days. i urge the fcc to continue to move forward as we begin this legislative effort. it is over a year since the court ruled out the net neutrality rules. that is too long. the time for the fcc to act is now. i look forward to working with my colleagues and with the commission to ensure the internet remains an open platform for commerce, innovation and self-expression for generations to come. now, i'd like to yield. i have an extra minute i'd like to yield two minutes to miss matsui and the rest of the time to mr. rush. >> thank you. i thank the ranking member for yielding me time. the chair for holding this hearing and the witnesses for being here today. the american people have spoken on how important the internet is to their daily lives and
economy. i have personally heard from hundreds of my constituents who write, call or come up to me to share their thoughts. i heard the message loud and clear when i hosted a field hearing in sacramento last september on net neutrality. i must say it is remarkable how the debate has shifted on net neutrality. i am really glad that my republican colleagues now agree that there are real threats to internet openness. but i am concerned about the unintended consequences of the current draft bill in particular, it could undermine the fcc's efforts to transition usf to broadband, putting at risk deployment and adoption advances in urban and real areas. that said, i do believe that there is a role for congress. that's why i introduced a bill to instruct the fcc to write rules that ban privatization or so-called internet fast lanes. the bill has two components.
bans paid private agreements and does not take away from the commission's authority. the republican bill attempts to ban pay privatization agreements. i'm concerned the overly broad definition could serve as a loophole for skeemzchemes and create a two-tiered internet system. the internet is dynamic. the fcc needs flexibility to tailor rules, to adapt to changes in the marketplace. as congress considers legislation, it is important that the fcc does not slow down or delay its vote. i look forward to continuing to work with my colleagues in a truly bipartisan fashion to reinstate strong net neutrality rules. and i yield to congressman rush. >> i want to thank the gentle lady for yielding. i want to thank the rnkanking member and also for two decades
now, the battle over how best to ensure a free and open internet has been persistent without a clear victor or a clear verdict. all of this uncertainty -- chronically and disproportionately disconnected sentiments of our society and our local and state and federal governments and even our nation's economy. certainly, it also affects broadband network and edge providers as well, but make no mistake about it it is the consumers who stand to be the biggest losers of all. many consumer ss weigh in with
congress for the strongest pro consumer rules possible. these broadband consumers and users say they love and depend greatly on their broadband service. and then they want for their services to be provided on a competitive level competitive rates, and competitive terms. but they also said to washington, to us here in washington, with passion and with fervor that they do not trust the broadband providers will honor those terms due to selfish and anti-competitive motives. this, mr. chairman, should serve as a powerful reminder to us that the issues arising out of
this koefrs why icontroversy are propelled and amenable to my person resolution and compromise. these issues greatly concern all broadband consumers and citizens in our society regardless of political affiliation. we have all seen and heard, however, that this matter is too important for this committee and for congress to stand by or for it to consider and mark up only a majority republican draft. accordingly, mr. chairman, it is my intention to introduce open internet legislation in the not too distant future. i hope to work with my colleagues on both sides of the aisle with the aspiration that whatever legislation is hammered out, there will be clearly
surely nothing but my partisan. i yield back. >> the gentleman yields back the balance of the time. and that takes care of our colleagues for opening statements. we now go to our distinguished panel of witnesses. and we're going to start out with michael powell, president and ceo of national table and communications association. and mr. powell, we're delighted to have you back before our subcommittee. we look forward to your testimony. please go ahead. >> thank you. >> make sure your microphone -- >> particularly welcome to new members of the committee. nothing like starting with something easy. it is a fundamental constitutional principle. the congress establishes the law and federal agencies implement it. the net neutrality debate raises critical institutional policy and practical problems that only congress can fully address. the open internet struggle hag
long and torturous because there is not a clear foundation for the fcc to act. for ten years trying to adopt a simple set of internet regulations. twice the court rebuked it where they found merit in the rules themselves. if congressional authority is the problem, surely congressional action is the solution. in the absence of such action, the commission is poised to try again with another are approach prompting a third round of litigation with a certain outcome. congress has the power and the responsibility to end this roller coaster, which is damaging to everyone other than loyers and advocates. it should further concern the institution that the title two approach being pursued is a framework over the internet that
congress has yet to fully consider and adopt itself. congress adopted title 2 80 years ago. the technologies were ratically different. consumers were passive recipients of service rather than active publishers and creators. the telefwoen era did not have giant internet companies. networks were specialized for a single purpose unlike the convergence of today. has congress or anyone fully thought through whether this analog analog system should govern our future. they will advance legislation to rewrite our telekom laws. but we stand with the precipice of having that decision made through congress hather than by congress in the name of net
neutrality. five unelected regulators should no have the final word. the institution that represents 320 million americans should zitd them. by changing the status quo, the commission would affect a major and dramatic shift with sweeping consequences. countries like russia, china and iran saurt to subject internet access to telephone regulation and give the state greater authority over infrastructure. they will cheer the news. the bevy of legal and practical problems of title two for one the strong desire to ban prioritization is precarious, which bans unjust and unreasonable practices. under decades they have been
able to provide service without violating the inquirement. it will face serious head winds from well established precedent. only statutorily banned will understand this risk. other problems are sure to follow. one action's agencies will narrow the jurisdiction of another. if the fwc declares it is brad band service, other problem is the recollaboration can result in new fees on internet service, raising bills for consumers and hurting our international efforts at adoption. america has an ambitious national broadband goal. a strong desire to reach more americans in more places. it will take nearly $300 billion by the fcc's all americans.
now we dream of gig bit speets. no one can claim that prifthey will meet meet this. one person's weeds are another person's fruit. and the continuous and vigorous battle over this should it be included, and excluded is a massive undertaking fraught with uncertainty and litigation risk. congress has the power to eliminate all of this legal uncertainty and working together in good faith and consensus we yield it will be popular legislation. thank you, mr. chairman. >> thank the gentleman for his
testimony. now to mr. chad dickerson, the ceo of etsy. please make sure your microphone is on and we look forward to your testimony. >> thank you. thank you, chairman walden ranking member eshoo and members of the subcommittee. as the ceo of a rapidly broing ind net company technology company, i'm ear because the internet with the businesses deed pending on it is under threat. we democratized access to entrepreneurship for over 1.2 million sellers. 88% are women who collectively sold $1.35 billion worth of goods in 2013. many are sole proprietors that work from home. 18 18% of those support themselves
full time on etsy. we raised more than $91 million in capital and we employ over 600 people worldwide. without the incredible power of the free and open internet we would not be where we are today. we had humble beginnings, wept from idea to launching in just a few months. no one had to ask permission or pay for the privilege of reaching consumers. we proved ourselves on the open market. without clear bright line rules that preserve a level playing field online millions of startups will suffer. et sy is a low manch margin business. we take 3.5% of every transaction. we know that delays of mill
seconds have a direct and long-term impact on revenue this isn't just about high bandwidth services it is about every company. without strong rules to prevent strimtion online, we would be forced to raise our fees to have the same quality of services or accept the restvenue loss. et sy's users understand what is at stake. that's why 30,000 of them joined internet outer erusers. the sentiments of many microbusinesses, we rely on all my sales to make ends meet. any charge in those it is a different between balanced meals for my children and cereal for dib dinner. the discussion draft legislation addresses many of our concerns
and we're encouraged to see bipartisan agreement on many points. in particular we support the outright ban on paid prioritization blocking and throttling. we're encouraged to see the rules would apply to mobile. giving that the majority of et sy's traffic apply. at the same time, we're concerned the proposal does not ban all types of discrimination online, leaving loopholes that could be easily exploited. for example, under this bill broadband companies could prioritize their own services over others. even more concerning the legislation would remove the s.e.c.'s authority to address new and anticipated types of discrimination. i worked in this industry my whole adult life and i know how quickly technologies change. so how can we be sure this bill anticipates every possible form of discrimination. we also have serious concerns
that by revoking the authority under section 706 the bill would undermine the ability to provide rapid broadband across the country. linda, a seller from michigan said a free internet is so important to me because as someone who moved to a rural area from an urban center i rely on fair and open access to the internet to grow my business. while we understand the legislation is focused on the last mile connection, the door to the last mile is just as important. this bill doesn't prevent broadband companies from creating choke points athe entrance to the last mile or grant the fcc the authority to regulate this issue leaving a loophole despite the good intentions. our position today is the same as it has been all along. we encourage the government to establish clear bright line
rules that ban paid prioritization, discrimination, access fees and blocking online and to apply those rules equally to fixed and mobile broadband and at the point of interconnection with last mile providers. we believe the fcc has all the authority it needs to implement such rules and congress has an important role to play as well, particularly in helping to address the litigation risk that would follow fcc action. we welcome the opportunity to to work with you to protect the internet once and for all. >> thank you for your testimony. we'll go to paul misner for amazon.com. a slightly larger platform for sales. please go ahead. good to have you back. >> thank you very much. good to be back. thank you for yawar attentionour attention to this important issue and inviting me back. amazon supported maintaining the fundamental openness of the internet, so beneficial to consumers and innovation.
now there is widespread acceptance of the need for dwoft action to ensure that internet openness and policymakers need to decide how to ensure that the internet openness of net neutrality is maintained and effective. our business practice is to start with customers and work backwards. we begin projects by determining what customers want and how we can inouenovate for them. here in the context of net neutrality we have done the same. we take our position from our customers, consumers point of view. they want to keep the open to the internet and the choice it provides. they will recognize if their net neutrality is taken from them. if it is taken, they won't care how or for example where in the network infrastructure it is taken. we believe the fcc has ample authority to maintain net neutrality. but, of course, congress has the power to set new policies for net neutrality through a new statute or a mix of new and
existing statutory authority. amazon remains very grateful for congress' continuing attention to net neutrality. it is worth your vigilant oversight. thank you for creating and ensuring your discussion draft bill and for providing the opportunity to begin discussing it today. the principles contained in the discussion draft are excellent. for example, the draft acknowledges that throttling and paid privatization must be banned, that net neutrality new apply to wireless and wire line and providers must disclose the practices. of course, for these excellent principles to be open they need to be effective. the discussion draft could be interpreted to undermine that effectiveness. so the bill should be not phied accordingly. first, while requiring consumer choice the bill would exempt specialized services from that requirement. that could create a huge loophole.
consumer choices baked into the internet, nothing would protect consumer choice more than protecting the open internet from interference. second in subsection f, they could engage in reasonable network management. any claim should be viewed suspiciously if in practice it undermines prohibitions of blocking throttling, prioritization, et cetera. third, the discussion draft bill is unclear or silent on an important point of clarification. which bartparts of the network are covered by the net neutrality protections? as indicated earlier consumer will not care where in her service provider's network any interference with net neutrality occurs, only whether it occurs. these three areas of discussion should be modified in order to ensure the internet open necessary is maintained and effective. in addition to discussion draft should be modified to provide adequate legal detail and certainty to consumers and
businesses in the internet ecosystem. like all businesses, internet companies need confidence in the state of law and regulation in order to innovate and invest in products and services and behalf of their customers. details including the factors considered during formal complaint procedures are essential for businesses and consumers to have the confidence to maybe informed choices about investments and purchases. we believe the fcc should be empowered to create adequate legal certainty and detail through enforcement tools and notice income at rule-making. the draft bill says the s.e.c. may not expand obligations beyond the obligations established in the bill. if the intention here is to establish a ceiling for the obligations, that's congress' productive and reasonable expectation had which we support if the bill went so far. however, with such a cerealing in place it is not necessary to rescind the authority under title two of the communications act which as in subsection e which could lead the agency
helpless to address improper behaviors well within its authority under the ceiling. we leave consumers and businesses in the ecosystem without adequate certainty. also in part because subsection b could be direct to the fcc to establish formal complaint procedures, this could be interpreted from notice is comment and rule making. directing the fcc not to expand established obligations is one thing. we think it would be a mistake to prohibit them from providing certainty to customers consumers and businesses below that ceiling. in conclusion i look forward to working with you and your committee and the fcc to ensure the internet open necessary of net neutrality is maintained and effective. i welcome your questions. >> thank you very much. we look forward to working with you as well. we have got ways to address a lot of what you pointed out and
may actually already have. we'll look forward to working with you. next to jessica gonzalez, general council of the national hispanic media coalition. we are delighted to have you here as well. we look forward to your testimony. >> thank you, mr. chairman, for having me back. ranking member eshoo and all the members of the subcommittee. the open internet as we heard already today is a crucial tool for all people to engage in our democracy, participate in our economy, become better educated and share their stories. i am pleased that members on both sides of the aisle recognize the pervasive threat that blocking, throttling and paid prioritization pose to the american people and our economy. because the open internet truly is a bipartisan issue. i'm not on this panel to represent vast industries. i'm here to speak for the millions of americans who follow this issue with a level of awareness that is actually very uncommon for inside the beltway telecom policy.
over the past year i've been surprised to align on this issue with everyone from my conservative in-laws and the deep south to my liberal friends on the west coast. none of whom are particularly well well steeped in federal policy, particularly not telecom policy. but they get this because it personally affects their lives. and although in hmc supports congressional attention to this matter to best protect consumers, i respectfully urge congress to allow the fcc to exercise its title to authority, complete its rule making process and enact light touch open internet rules. this is the most certain path to ensure that individuals and businesses are protected without delay. it would allow the expert agency flexibility to respond to innovation and changes in the marketplace. the fcc has wide support from nearly 7 million americans that submitted comments or signed
petitions as well as public interests, civil rights and consumer advocacy. the discussion on the table today would represent a seismic policy shift with repercussions far beyond the open internet debate. it is drawn criticism for four main reasons. first, it would strip the country's expert communications agency of authority to protect consumers on the communications platform of the 21st century. upending consumer protections that americans have come to expect and this subcommittee has supported for decades. privacy, network reliability, access to 911 services disability access. just to name a few. it effectively freezes the fcc in time only allowing it to ever confront a handful of harmful practices that we have contemplated based on market conditions and technology that exists today.
second, it would pour cement on fcc efforts to close the digital divide, such as rural broadband subsidies and modernization of lifeline which could bring greater broadband affordability to the working poor. today nearly 1 in 3 american people still lack home broadband access. the vast majority of these people are rural, poor, brown, black or a combination thereof. at the same time, standardized testing is moving to digital formats. it is critically important that we do no harm with legislation that would undermine serious efforts to achieve the now indie viz visible goals. it would offer consumers limited and inferior protections. does not ban unreasonable discrimination and creates an exception for specialized
services that threatens to swallow the rules. fourth, it would create market uncertainty by relying on a flawed adjudication process. consumers and aggrieved parties would have the benefit to report report, but most of us lack the expertise to identify the violations, the source or have the legal expertise to pursue enforcement or both. those who oppose reclassification point to four concerns. my written testimony goes into greater detail about those arguments. but let me summarize. there is no evidence that title two would harm investment or innovation hamper broadband adoption, lead to higher taxes or fees or welcome protracted litigation. in fact, the hard evidence including statements from the isps themselves suggest just the opposite. the open internet has allowed americans to engage in our democracy at a whole new level. tea party activists, dreamers,
organizers of black lives matter are all excellent examples of regular people who have harnessed the power of the open internet to disseminate their messages and engage in the political process. this is democracy and free speech at work and it is a virtue deserving of the strongest protections. thank you very much for having me here today. i look forward to questions. >> delighted to have you back. thanks for your comments on the legislation and the issue at hand. we'll now turn to dr. nicole turner lee, the vice president and chief research and policy officer from minority media and telecommunications council. please go ahead with your testimony. >> thank you very much chairman walden and distinguished members of the committee. and i do have to say as vice president chief research and policy officer that we just changed our name today at 9:00 a.m. to the multicultural media telecom and internet council.
>> we reserve the right to revise and extend our remark. and at mmtc we actually support and work to represent for those of you that aren't aware organizations that consist of the naacp the national urban league, rainbow push coalition, aajc among others. so as my colleague ms. gonzalez has recognized we also stand on the side of people who are on the other side of the digital divide. and i think that's pretty important on the topic of open internet because we have been actively engaged in the debate as historically disadvantaged communities embark on a journey towards first class digital citizenship and all of the opportunities. so we welcome and applaud the draft legislation addressing the president's values. i want to use my time to bring three issues to the committee's attention today. my statement is on record and much more detailed, but my time is best spent on these points. i first would like to highlight the unique benefits and populations who we represent and
encourage the committee's consideration of legislation that promotes an open internet. and finally, i'd like to offer two friendly recommendations designed to strengthen and ensure that the legislation realizes the value of all consumers who want to acknowledge the promise of digital equality. i want to affirm the words of ranking member eschu that they are civil rights prerequisites. broadband allows people to gain new skills, secure jobs, attain quality education and receive greater access to health care. today, however too many americans still do not benefit from all that broadband enables. the rate of broadband adoption among vulnerable populations is disproportionately low contributing to a persistent digital divide. despite growth in broadband adoption. rates among african-americans and hispanics are stimll lower than whites. still exhibit especially low rates, 45% of african-american seniors are internet users, yet 30% only have broadband at home
compared to 63% and 51% respectively for white seniors. nonusers overall cite a perceived lack of relevance, affordability and the lack of a device in that order as their prime reasons for not being online. so closing the digital divide should and must be an important goal for policymakers and steering the right course of action to promote and protect an open internet is one of the ways to get there. i want to acknowledge that congress has had a proud history of recognizing structural injustices in our society and acting to correct them. in the 1860s congress framed and passed the 13th, 14th and 15th amendments which extended protection and enfranchised millions of americans. congress enacted the civil rights of '64, the voting rights of '65 and the fair housing act of 1968 due in great measure to the reverend martin luther king which we just celebrated. today, congress has the opportunity to show that
leadership again. by enacting a solution that preserves the open internet, we all enjoy congress can extend the promise of justice, equality and democracy to all. and avoid a legal quagmire that will lead to an unending uncertainty or our economy and citizens. i agree with jessica gonzalez for broadband which stimulates infrastructure innovation. at mmtc, we know firsthand in this. and it's our beliefs that increase investment in broadband, also improves access adoption and the types of innovations we drive in our communities. but, of course the way that we get there is going to have an impact. for the past 20 years, administration and fcc chairs from both political parties have charted a successful regulatory platform for the internet and communities of color have benefitted. look at the state of wireless adoption among people of color. under the current regulatory program
framework, cell phone owners use the devices to access the internet more than the overall population. and people of color have embraced it as a tool of empowerment. under the current rules, we've actually seen the type of collective mobilization in ferguson, missouri, new york city, and columbus, ohio. these stats to drive policymakers to continue the progress that's already being made. meaningful internet rules have failed in the fcc. last year the d.c. circuit court struck down the open internet order and notwithstanding the current regulatory framework that has allowed broadband to flourish and adoption to take hold. we believe as national civil rights organizations is ill-suited to the current realities. imposing such heavy handed framework on the internet would only serve to stifle broadband deployment, discourage investment and harm innovation. it would place uncertainty for
consumers through egressive taxation. some have argued that the averse effects of title two regulation through judicious application. we think that misses the point. if the commission could exercise the authority and productive manner, it still would take years to sort out an appropriately calibrated set of rules. and this uncertainty will continue to drive us away from the attention of those issues that our community needs the most, the modernization of our schools, universal service reform and other areas. so in closing it's for those reasons that our groups have actually asked that we steer away from a tight regulatory framework to something that has more flexibility to allow the eco system to continue to grow. and we think the proposed legislation is close in actually getting there. i'd like to close again with two additional recommendations for congress to ponder in this debate as we look at this issue. first, congress should address the harmful practice of digital red lining, digital red lining is the refusal to build and
serve lower income communities in essence imposes digital segregation. sadly, as the experience of our country shows, segregation harms and degrades all of us. and this is no less true in the digital age. congress should empower the fcc to prohibit digital red lining. and we urge in this legislation that congress also look at how to prevent that. because currently, this is a problem. second congress should ensure that its open internet rules will be enforced. mmtc has recommended to the commission the creation of an accessible affordable and expedited procedure for the reporting and resolution of complaints. one approach would be to use a consumer friendly complaint process under the title 7 framework of the civil rights act of 1964. under title 7, a -- a similar mechanism in a communications context, the core principle here
remains the same. consumers, particularly individuals from vulnerable populations deserve as it's been mentioned an accessible affordable and expedited procedure for ensuring that the government protects them. and this must apply at whatever solution that we seek. my friends the time is now to get past the morass. we the a mmtc think we can make it happen. and we look forward to working with congress to do such so we can get to the issues that mean the most for our communities. universal service, public safety and ensuring that we actually allow the internet to grow to the next level of innovation to solve our social problems. thank you very much. >> doctor, thank you for your testimony and your suggestions. we'll turn to our final witness this morning. meredith atwell baker, president and ceo of ctia, the wireless association. ms. baker glad to have you back
before the subcommittee, as well. look forward to your comments. >> chairman, ranking member, and members of the subcommittee. at the outset, i want to be clear, america's wireless industry fully supports an open internet. wireless users demand it in a marketplace where competition has never been more vigorous. in the past 20 years the wireless industry has grown from a luxury product to a key driver of economic growth. we all benefit from faster speeds, more services and lower prices. the u.s. is a global leader in wireless by any metric and at the forefront of innovation at health, automotive and payment fields. central to that growth was congress' foresight in establishing section 332. a mobile-specific regulatory framework outside of title 2. congress has the opportunity to provide the same stability for broadband.
a regulatory foundation for future innovation with common sense net neutrality provisions. the draft is an excellent start and offers a viable path to preserve an open internet with enforceable requirements. properly crafted legislation will guarantee the protections the president has called for while allowing broadband providers to continue to invest billions, create jobs and innovate products. we do not ask wireless be exempt from new laws. only that new any requirements reflect our reflect. first, mobile services are technically different and depend upon limited spectrum resources. this requires substantial network management millisecond by millisecond to deliver service to consumers. remarkably there is more bandwidth in a single strand of fiber than all of the spectrum
allocated to mobile services. second, we are competitively different, more than 8 out of 10 americans can choose from four or more mobile broadband providers. services, offerings and differentiation that benefits consumers. third, we are evolutionary different. 4g networks are less than five years old. and the future is bright with advancements like lte broadcast 5g services and connected life applications. it is vital that any legislation is sufficiently flexible to provide the competition differentiation and innovation, mobile consumers enjoy today. we are optimistic that the process on the hill will enhance the experience for all americans, we have significant reservations with the fcc's proposed path of title 2. the application of title 2 in any form to wireless broadband
would harm consumers and our economy. title 2 was designed for another technology in another era an era in which competition was largely nonexistent if at all. and innovation came slowly if at all. given our industry's great success with mobile broadband outside of title 2, we have significant concerns with how title 2 and its 682 pages of regulation would apply to the dynamic mobile broadband space. if the commission proceeds with title 2, as opposed to the 706 path the court contemplated a year ago, the wireless industry will have no choice but to look to the courts. given a clear language of section 332 we have every confidence that we would prevail. but it is not our preferred course. under section 332, mobile broadband is legally different, too. in 1993, congress exempted
future nonvoice mobile services like mobile broadband from common carriage regulation. it did so unambiguously. given our industry's great success, we have significant concerns of how title two and the 682 pages of regulation would apply. and litigation would harm consumers with a year or more with uncertainty and delay. as leaders across the globe are trying to replicate our success and embrace 5g this is the wrong time to inject uncertainty and delay into our nation's efforts. we risk falling behind when the stakes have never been higher in our connected life and global competitiveness are more within
reach. the better approach would be for congress to act and end this debate. to do so would free us, spectrum reform and modernization. by acting, congress can help ensure that the united states. thank you for the opportunity to appear on today's panel and i look forward to your comments. >> you've blessed us with really good thought starts. some of you like what we're doing, some of you don't. i think we can all agree on the principles at stake here. it's a matter of how we get there. >> i'll lead off. to follow up on your testimony, ms. baker regarding section 332. i'm not trying to mimic our former chairman mr. dingell. but in the essence of time, i've got a couple of yes and no questions that would be helpful. and i'd start and work down. yes or no, do you agree with ms. baker that mobile would not be
covered under the fcc's existing authority when it comes to applying these new net neutrality standards. mr. powell? turn on the microphone there. >> we believe that the fcc could reach wireless by reclassifying as much as they're proposing to do with respect to fix broadband. >> uh you think they could get there? >> not without risk. but we do believe they -- >> all right. mr. dickerson? >> i'm not an attorney. >> that's two of us. i stayed in a -- >> i think the most important thing for us there's no difference between mobile and broadband. >> you want them both covered? >> yes. >> i agree with chairman powell's assessment. legal assessment. i also agree that consumers view these interchangeably. >> you think it's legally sustainable?
ms. gonzalez? >> it's legally sustainable. >> all right. >> i'm not an attorney, i think title 2 -- >> mobile broadband has never been under title 2 because of the explicit expression of congress. it's not sustainable. >> might be an opportunity for litigation you might think? this is my point. we've got talented people, some are attorneys some are not. some are backed up by really smart attorneys as well. there's division right here on this panel. this is where i think certainly matters and legislating matters. yes or no? have you actually seen what the fcc is proposing? >> no. >> mr. powell? mr. dickerson? >> we've seen principles. >> have you seen the language? >> no. >> got it. mr. misner. >> i've heard a great deal about what's in it.
>> haven't read it? >> no. >> don't know nothing. >> ms. baker? >> no. >> and does anybody anticipate they'll see it before they vote on it? >> no. >> could you repeat that question? >> does anybody anticipate actually being able to see before the commissioners are called upon to vote on it? >> no. >> mr. dickerson? >> we found the fcc process so far to be quite open. so we believe it's quite possible that we could. >> all right. mr. misner? >> no. >> not sure if we'd see it. >> right? >> probably not. >> nope. >> two commissioners, former commissioners both of whom said very unlikely, nope, that you'll actually see. that's part of why we put -- this is a better process. you'll get to see it through a legislative, transparent open environment. text is posted, you all have given us great input as we move forward. there's a disagreement regarding
the application of the universal service fund fees. some believe it would allow it. some think our bill would procollude it. some wouldn't. my question to you is when it comes to universal service fees, under what we know would the internet now be subject top usf levee. mr. powell? >> yes, the way it works is that congress requires an assessment of universal service from any telecommunication services provider. if the fcc reclassifies broadband, it will immediately be in that classification and subject to that assessment. as an argument that the commission could theoretically fore forbear from that. increased charges on federal universal services.
>> there's also an argument out there in the public. some agree, some disagree, that if the fcc goes down a title 2 path and declares that the internet is a public utility under title 2 that nearly totally eliminates the federal trade commission's authority because they don't have authority on regulated common carriers, correct? mr. powell, can you speak to that? >> the ftc is prohibited from exercising its authority over privacy, data security and a number of other things against telecommunications services providers. they're obviously a champion of privacy today and have broad reaching authority to do so. that would be disenfranchised by this decision. >> all right. finally, you raised concerns in your testimony about specialized services. you're not the only one. that exemption in our draft legislation. now, both the fcc and the president have set a specialized services exemption is necessary. and the language in our draft
tracks the fcc's proposals. has there been a net neutrality rule proposed that does not acknowledge the need for specialized services? >> i can't say there hasn't been one. but we're concerned about if that becomes a substitute for paid prioritization. that is the concern whether someone has proposed it elsewhere, i don't know. i will point out, however, in light of the prior comments by chairman powell that he's viewing title 2 as a binary thing. it's all there or not. the commission did forbear from title two across the board. it need not have in 2002. and so, it could be partially un unforborn and not view it as an all or nothing solution. >> you could also have another commission that decides to change all that, too. and so that gets a certainty.
i've gone over my time. i recognize the gentle lady from california. >> thank you. and i want to thank all of the witnesses. i think you've done a marvelous job through your testimony today to you know to highlight what you like and what you don't. where you agree and where you don't. and i think that you've done it very well and grateful to you for it. i just want to make a comment before i begin with my questions. it is thrown around and it's a heavy charge because everyone cares about this. and that is that if we go, we move in a certain direction that the private sector will stop investing. that's a big chill. for me and for everyone else. but there isn't anything to
substantiate that. i mean, when you look at the wireless auction, billions of dollars have come in. and when we began that effort, chairman walden, myself and the subcommittee people laughed and they said you're not going to raise a dime out of this. $45 billion so far. well i don't know about anyone else, i think $45 billion is a lot of money. that's a lot of investment. that's worth something. and the cfo of verizon said we'll keep investing. whether there's title 2, or not. the cto of sprint, i don't think these are insignificant comments. so i -- i think it's important for the record if someone makes that charge then we should, it should be backed up for us. because we need, we need facts.
and the evidence that comes with the facts. i think that would be most helpful to us. so i want to go to mr. dickerson and i should say to everyone today's the first time i met mr. etsy, but get a life anna i met him on c-span. he was part of a conference. the idea, washington ideas conference and i was so taken with how he presented himself, what he knew and what his company's been able to do i said let's invite him in and be a witness. so thank you for being here. and thank you for all of the jobs you've created. the proposed bill doesn't prevent a broadband provider from prioritizing content from one of its own affiliates. so my question to you is if a broadband provider were to prioritize an affiliate's
content, what effect would that have on etsy? and most importantly, everyone that deals with you is a company. they've created a new company. what kind of an effect would that have? >> yes, you know, one thing that you may not know about me, i was actually chief technology officer before i was ceo. so i know a lot about technology. and one of the things that we know is that for commerce sites, for business sites and this is i define this broadly from etsy to amazon to google that the speed of your website is absolutely directly correlated with revenue. so if things are slower revenue drops. if things are faster, revenue goes up. so in a world of paid prioritization, if smaller companies were disadvantaged against larger companies, then you could see the larger companies see advantages purely based on speed higher revenues you know, and this would hurt
the etsy sellers who, you know, receiving lower speeds than some of the other competitors. >> could it put them out of business? >> put them out of business. and as i said in my remarks, we have sellers who are making money using the internet in rural areas and elsewhere. and they're using this money to feed their families, pay for school do all the things they need to do in their lives. >> let me go to mr. misner. under the proposed legislation the problem of interconnection abuse is not only ignored but the fcc is prevented from doing anything about it. in the future. now, if -- do you believe that if interconnection isn't explicitly addressed, how would your business and the ability to serve your customers, what would happen? >> i'm not so clear in the bill
whether it is or whether it is precluded or not. some believe strongly it's precluded. i think it's silent and needs to be explicit it is included. and to leave that out is a major gap in the legislation and i'd like to see that filled. >> good. let's see. i'm over time. i just mr. chairman, i've failed to ask for a unanimous consent request to include in the record a letter dated january 20th from the mayors of new york and san francisco and the letter urges the fcc to adopt the strongest possible open internet rules using title two. and i ask that letters from the national association of realtors and a group of racial justice organizations be included in the record.
both reiterate should not hold up the fcc from moving forward with strongly enforceable open internet rules. thank you, mr. chairman, yield back. >> well, the chair recognizes himself for five minutes. and thanks to the panel for being here today. and as the gentle lady just said, it's been an interesting discussion today. mr. powell, if i could start with a question for you. i find your testimony very interesting about when we're dealing with regulations in this town about trying to put round pegs in square holes and all the different things folks out there are facing. for many of us we have diverse districts, we represent suburban, urban rural but with many of the cable operators that i have in my area, there have been concerns that the prospect of title 2 regulation may require them to overhaul their
billing practices, change their -- require them to review all of the customer privacy terms and conditions and subject them to new enforcement rules. potential harms with the new regulatory burdens doesn't seem to be equitable. should small providers be exempt from any network neutrality rules? >> first of all, i would say we as an industry, and i would think that my small members would concur are supportive of the concept of internet. it's a false choice to suggest that we are opposed to the core and substantive effort to do so. what we are concerned about is in the effort to do so, we will employ a comprehensive complex regulatory regime that will substantially raise the cost of being in the isp business.
cost management is a critical concern for small businesses, much more than even the larger and on the margins of uneconomic regions that have difficulty like rural america anything that adds to the cost of deploying that infrastructure in those places will dampen both the ability and the enthusiasm to reach the hardest parts of the country. >> thank you. ms. baker if i could turn to your testimony. also, had some discussion about rural america in it. under the section under significant risk of title 2, you mentioned that if the commission goes -- proceeds down that path there's, you know, litigation would inevitably have more delays and certainties out there there. and then also, interesting that the harm for rural customers as
a collection of regional providers applying a common carriage regime to our service would stifle innovation and investment and do a service to rural america. could you elaborate on that service to rural america? >> of course. we -- our association this year is chaired by ron smith who is president and ceo of bluegrass cellular from kentucky. and we brought our rural carriers in to visit with the fcc. they don't have armies of regulatory lawyers to go and comply with transparency and other burdens. mobile broadband has never been under title 2. the uncertainty has already stifled their deployment. they are worried. they do not know what title 2 brings. and additionally, you know, the wireless -- the wireless industry is extremely competitive. they need to differentiate to serve their communities. they need to make sure they can compete with different
different concepts. and they're not sure what title 2 will bring them in that respect. different lawyers and what title 2 would bring is unknown competition and differentiation are important to the rural carriers and i think that's at risk under title 2. >> let me ask you this. when i'm out talking to folks. especially if you're a small business way out in an area that might have very good coverage. you know, i just talked with someone two weeks ago that they have a problem with, you know being able to connect with their customers that people are trying to contact them. so are you saying that buildout and things like that for some of these folks would be hampered because of that, because of title 2? >> buildout and advance services. >> okay. thank you. if i could go back to your testimony, you going into detail about how the current light touch regulatory structure spurred rapidly evolving and successful broadband eco system.
will title 2 regulations do anything to encourage continued growth as we've seen over the past 15 years? and with the reclassification encourage providers to enter the market? >> i think all hyperbole aside, the issue isn't whether people will invest, of course they will. they have businesses to run. the real question, will it be a diminished and dampened level compared to the velocity and ambitions that the country has? we hear the president and other people talk about wanting the nation to achieve world class top broadband speed and status. we want gigabit to every american. and we're impatient about that. networks are rebuilt every 18 to 24 months to the tune of $30 billion to $50 billion annually. we're talking about hundreds of billions of dollars required over some amount of time. it's simply common sense to understand increasing regulatory cost increasing uncertainty
certainly will slow the magnitude or the velocity or the timing or the pace of those evolutions. and i'm sure even in companies like mr. etsys or amazon, they have a comparative high growth evolution of network capacity as the primary tool input to the businesses they provide. so we do believe both the increased costs associated with the regulatory environment the cost of borrowing that will go up when the rate of return is based on being a regulatory industry rather than ha lightly regulated one. and the years of uncertainty to truly finalize and settle and stabilize the rules will probably have a negative and depressive effect. all you have to do is look at the recession when the companies had plenty of capital but were unwilling to deploy or hire or invest because of the uncertainties that surrounded the market during the depths of the recession to have an example of how this works.
>> thank you very much. and my time has expired. and the chair recognizes mr. palone for five minutes. >> i yield. >> i thank the gentleman. i want to state for the record something that's very important given what ms. baker said. wireless voice has been as you know, a former commissioner of the fcc under title 2 since 1993. so i think everyone needs to have an appreciation of that. and i don't think the testimony reflected that. thank you. >> thank you. i think we agree that putting protections into law would be a win for consumers. i think what's on the table
today, there's serious threats this undermines fcc efforts to bridge the digital divide. which brings could have the potential to bring affordable broadband to the working poor. undermines privacy truth in billing, consumer protections that we have come to expect and rely on calls into question the ability to continue protecting us on the communications platform of the 21st century. >> thank you, my republicans colleagues characterize it as consistent with the fcc's 2010 net neutrality rules. do you agree it provides the same level of protection as the 2010 rules? >> i think it's true, there are some rules that look like the 2010 rules. i think -- and there's a number of distinctions i laid out in my
testimony. but i think the critical distinction it strips the fcc of any flexibility to oversee consumer protections and ensure there are not harmful discriminatory practices on the internet. and that's the concern. it essentially freezes the fcc in time and so it cannot address any harms that fall outside of the principles laid out in the draft legislation. nor can it address any new harms that present themselves as technology in the marketplace evolve. >> thank you. mr. powell, we've heard the argument today that title 2 will stifle innovation and investment. in fact, i think the chairman called it the nuclear option. how would we evaluate this argument in light of the fact that cable companies stock prices are up since president obama announced his support for title 2? >> well, public stock prices are a complex question. i'm no market expert, but you know, a careful examination
historically over periods of regulatory intervention versus periods of light regulation will demonstrate a clear pattern in the wake of the '92 act when cable rates were regulated investment was depressed for several years, until the prospect of the 1996 act which deregulated the rates again and they soared. in 2001 and 2002 when the decisions to regulate broadband as an information service were put in place, it unleashed a radical increase in investment totaling $1 trillion over the course of the year. i sincerely believe that the market believes in the assertions and promises that title 2 will not include rate regulation and will not include the whole bevy of onerous regulations that exist. but unless that is clearly identified in an unequivocal way, i don't think it's priced into the market. and very likely would be in anything changed. >> maybe maybe the economy's just getting so good that -- >> could be that, too.
>> we're just seeing it soar these days based oen edd on what the president said last night. most broadband providers including your member companies say they're already in compliance with network neutrality and what they're really afraid of is the rate regulation by the fcc. but both the president and the fcc have said they support forbearance. so if we all agree rate regulations should be off the table, couldn't congress narrowly address that issue in legislation? and couldn't there be unintended consequences in placing broad restrictions in the draft bill? >> thank you sir. i would say two things. first of all, rate regulation is the most dangerous of all of the provisions. but i wouldn't concede that of the thousands of regulations in title 2 that alone is the sole focus of our concern. we do appreciate the president saying that rate regulations should be forborn from.
but we've heard chairman wheeler talk about the adoption of sections 201 202 and 208. section 201 is the statutory provision where rate regulation is derived. that is the basis and the historical division. we don't have confidence that the words are matching the order. and whether the government will make clear that rate regulations off the table or merely say they have the power to rate regulate but for now are choosing not to. >> thank you, mr. chairman. >> thank you, the gentleman. will now recognize the gentleman from illinois. >> a chance to respond to the
statement made by my friend anna. >> thank you, i appreciate that. ranking member is correct. when congress -- first of all we know the current framework is working. we have $112 billion of investment in the wireless industry in the last four years. let's go to 1993 when congress was enacting section 332 and deregulating wireless. they did it two ways. they did two buckets, cmrs, which was mobile voice and they did that subjected to limited title 2 requirements. they separately created a second bucket which called pmrs, and that was for all new services like mobile broadband and they specifically exempt the fcc from applying title 2 requirements on mobile -- new services. court has upheld it's not regulated by title 2 and cannot be, according to the explicit language of congress. >> great. thank you. and i've -- and i know my
colleagues have given some credit to the chairman of the subcommittee on movement. i mean i'm a paid prioritization guy. that's where i come from in this debate. and i've always been the point that if you're going to make the $30 billion of investment every 18 months to upgrade the pipes you've got to have revenue to do that. or you've got to have a business model to do that. my whole position in this has not been limited in government control of the existing pipes but encouragement the expansion of more. and so but that was then, this is now, we're in a new world order where i think we have now looked at the debate. we need to get this monkey off our back, we need to get rules.
again, credit to the chairman by saying, okay, let's go back to the previous debate, look at what was put out in front by our colleagues where can we find middle ground? i believe that's the product that the chairman has set forth. now with great consternation from my friends on the other side. so i'm with the chairman. i'm a legislator. right? this process, we want to legislate. we want to define a law and allow the executive branch to implement the law. as chairman said, if another fcc comes and is established by some other president, it could get
turned topsy turvy again. i wanted to just in the big point, just give some credit about how even chairman walden has brought some of us kicking and screaming along with him. >> boy, can he kick. >> on this policy. >> would the gentleman yield for a second? >> yeah. i would. >> i'm catholic. and we understand confession. so thank you. >> well i still believe in the paid prioritization and incentivizing buildout. i'm not sure we get there this way. and that's my concern. >> appreciate it. would the gentleman yield? >> i would. >> i appreciate that. and remember, part of what drives us to legislation, first of all, we would want the fcc before they go off and regulate, what we have today has been light touch regulation. that's how it's been billed out. there's no overwhelming evidence
of clear market failure that would drive to deep regulatory control from washington top down. that's where some of us have been, you know why we have to go down this path. what is before us today, though, is the president is now turning the fcc into his own puppeteer here. and saying here's what you've got to do which goes beyond where the fcc chairman said he thought he should go or what was right for the market. he's being pushed. and then he said we're going to by february 26th. and none of us here is necessarily going to see that order. that's part of our reform effort, which we've passed out of the house. so they're moving we don't know precisely what that's going to look like. we'd rather give certainty because of this issue because ms. baker has outlined regarding mobile devices because mr. esty and misner as you know, we're going to a mobile world.
and statute is clear, that authority doesn't exist at the fcc. they may try to go there and there's dispute whether you can go there and sort of hook something around. you're going to be in court. consumers aren't going to get certainty, the marketplace isn't going to have certainty. and for the third or fourth time, the lawyers are going to get rich. and mr. dickerson, you and i aren't lawyers. i'd prefer to get committee together, do what we do as a committee, find a common ground here, and that's why we started and with the 2010 order. we started with a lot of the work that the democrats, frankly, had done. if you go through section by section, you'll see that here. and then we just want to give pause to the market. so anyway i've overextended your time. >> i yield back the balance of my time. >> thank you. where do we go now? we go now to mr. doyle who hopefully will be streamed on the internet on this version of his comments. >> thank you, mr. chairman. let me start by saying i'm very concerned about the way in which
this bill strips the fcc of its authority under section 706 and prevents the fcc of giving new entrance access to key infrastructure under title 2. the fcc needs access to every tool in its arsenal to promote and encourage the buildout of advance broadband infrastructure. municipal broadband, a new entrance into the marketplace like google fire, they're driving innovation and driving isps to offer faster, cheaper services by bringing much-needed competition to the broadband market. these buildouts also create jobs across the country and it's often in areas where isps have opted not to make the investment theirselves. both of your companies offer innovate and high bandwidth applications. i understand that amazon has recently begun streaming in 4k. are either of you concerned that the draft bill does not include
any mention of interconnection? particularly given how congestion at points of interconnection has recently been used to leverage payments from providers? >> i'll speak first. we're absolutely concerned that interconnection is not included. i agree with what mr. misner said earlier. we think very much about you know, our customer experience and their experience of the internet. so regardless of whether the choke point may happen you know, upstream or in the last mile doesn't matter. so interconnection is very important to us. >> mr. misner? >> i share that view on behalf of our customers. it's one thing that customers should simply not need to care about. throttle or discrimination takes place in a network they shouldn't care. and shouldn't care about where in the statute their rights are protected where net neutrality extended. it could be done in congress, done at the commission a mix of the two.
and i -- i would suggest consumers really don't care. they just want their net neutrality. >> thank you. do you want to add to that? >> thank you. congressman doyle. i think we should consider anything that impacts a consumer's ability to access what they want to access on the internet. the discussion drafts strips the fcc of authority to even investigate this issue. and that's very concerning. >> thank you. >> would the gentleman -- just on that point i don't believe our draft does that. >> as long as you give me all my time back. >> i'll give you your time back. i don't believe our discussion draft does that and would welcome that opportunity. on the interconnection piece, we leave that authority with the fcc. we don't do away with that here. so although it's absent in the bill, it's still resonant at the commission. so that interconnection piece we felt was taken care of we'd be happy to have a further discussion. i yield back. >> thank you, mr. chairman. mr. misner, the draft bill also
provides this carve out -- could you envision this to sell preferred treatment or advantaging one competitor over another. or even they themselves that compete in the marketplace? >> absolutely. i think the language could allow for many applications that could be to discrimination -- so, yes. >> mr. doyle certainly we permit it with respect to affiliated content. so the network provider itself could engage in the provision of specialized services which would look a lot like paid prioritization as a matter of ownership as opposed to payment of a third party. >> thank you. i just want to add on to what she was saying about, too, we read several news reports that senior executives from major
companies that are represented by chairman powell and ms. baker have made statements about title 2 which mr. chairman i'd like to enter into the record. the first is one that comcast, charter and time warner all members of the chairman's organization. and charter chief executive chief rutledge added that so long as the commission waived parts of title 2 that weren't relevant, a step that net neutrality advocates support it would be an acceptable outcome. similar statements made by comcast and time warner cable. the chief technology officer of verizon. i'm sorry of sprint a member of ms. baker's organization said sprint will continue to invest in networks regardless of whether they are regulated by title 2, section 706 or some other light touch regulatory regime.
the cfo of verizon said i mean to be real clear. i mean this does not influence the way we invest. i mean, we're going to continue to invest in our networks and our platforms both in wireless and wire line fios where we need to. nothing will influence that. i'd like to enter these three into the record. >> without objection. >> i thank you and yield back. >> gentleman yields back. >> we now turn to mr. guthrie for five minutes. oh, wait a minute. mr. barton is back. i'm sorry. >> i need to get re-connected, mr. chairman. >> all right. then he'll yield and i think next is mr. guthrie. >> thank you very much. it's a privilege to be here. and sorry, on this committee, we have so many subcommittees going on with interesting testimony. i was out just a few minutes ago and i understand you mentioned bluegrass cellular which is in my district. and we're proud to have a very interesting concept and a successful rural carrier. and i understand you also talked about issues facing a small
rural carriers. but in the context of evaluating what constitutes reasonable network management, how are congestion issues different for wireless networks particularly in small rural carriers? >> well, that's a great question. i did talk about bluegrass cellular, they are chairman this year, and they are deeply concerned they have issued a letter in the record to the fcc. so with no objection. so there we go. as far as the technical capacity and the reasonable network management standard, we have to be very careful if say the chairman walden watching, reliving the national football championship and ranking woman eschu, if we had a bunch of 16-year-olds walk in through, you know, doing a tour of what
congress looks like, that's a millisecond by millisecond management that has to happen by carriers. that's the same cell. it's constrained. one strand of fiber is the same capacity of the entire electromagnetic spectrum. there's an awful lot of management that goes on. it's pretty much updated, you know, these people -- if you're a cto of one of these larger or smaller carriers, you're updating any sort of things that help you handle this data capacity just amazing upload. it's no surprise the data that we use is increased by 730%. >> was that the same as congestion issues and interference issues different? and how are they different? what's the different? >> the data's increasing, the congestion is increasing, so we're all using more data. so it's -- it's more and more congested and we have to manage our network more and more. >> about interference issues.
>> interferences. if we're all using the same, if it's raining outside. if more people come on to our cell site, we have to manage it. we have to make sure it's optimized so all of us have the best user experience. >> and thank you for mentioning bluegrass cellular. it's a great business. and i have a question. i know this issue was touched here earlier, but i want your input. the fcc, do they need to act in february? everyone wants internet to remain open and vibrant. but is there some particular reason the fcc shouldn't wait and see whether congress could enact a bipartisan bill? >> it's really the decision of the commission and the chairman you know that's the schedule he establishes. he has that authority under the statute. i do believe that the commission should always be respectful of the legislative process and provide both the expertise it needs to make a decision. but i also do respect their separate and different authorities. and they set their own time limits. >> when you were chairman in 2002 when cable modem service
was determined an information service. they indicated that the record the record shows that today's increasingly sophisticated broadband services fall even more squarely within the definition of information service than ever before, unquote. and could you explain this from the perspective and understanding of technology that you had before you in 2002 to the ncta comments expressed to the fcc last year? >> i'll try my best. i think one thing to note is the draft legislation as i understand it, rather than disenfranchising the fcc of authority is classifying a service the same way this commission has classified that service for over 12 years. through both republican and democratic administrations, including most recently in 2010 by president obama's first chairman of the fcc who also agreed it was an information service. commission's been operating under that definition for -- since the very beginning of broadband. that is not new.
it's important to remember this isn't completely discretionary. congress creates classes of service and defines them. it defines what a telecom service is and defines what what an information service is. when broad band first emerged and i was privileged to see it come onto the scene when i was at the commission there was an open question as to whether the nature of that new integrated internet service would either a telecommunication service or an information service under our precedence. it was our judgment that the factual characteristics the nature of the service the way it was used was much more faithful to the definition congress set out for information services than the one they set out for telephone services. that went all the way to the united states supreme court, who agree with the commission's judgment. the commission now is proposing to try to reinterpret the facts and apply it to the other
definition. certainly it's their prerogative to try but the facts are fundamentally the same as they were in 2002. that will be a very serious source of litigation risk for the commission when it fundamentally changes its mind about the factual nature of the service. >> gentleman's time has expired. we'll go to mr. welch for his five minutes. >> thank you, mr. chairman. a couple of points and then a few questions. number one, i thank you and the ranking member. this is an excellent hearing. number two, we're way ahead of where we were last year. this draft bill does contain, i think, real responses to the over 3 million comments that were offered to the fcc, so that's terrific. third i think the fcc itself, chairman we'ller has been extremely responsive and i've had comments his experience in the industry as well as on the public sector side, makes him someone who we can have
confidence with respect to light touch regulation. number four, this is the heart of it for me whatever we do my concern is for access to the internet and the costs. and three out of four americans and this is essentialpecially true in rural america, they have one provider. so they have no competition in many parts of the country. so, this question of what do we do has been answered affirmatively about trying to maintain net neutrality in this legislation but there's been injected into it a major new issue, which is new. that is, do we take away jurisdiction from the fc? and that is awe fundamental question that requires i think an enormous amount of attention before we make a decision to go forward. mr. powell, i appreciate the point you made about uncertainty because if you're making big
investment decisions, obviously knowing what the rules of the road are, are important to you. but the uncertainty goes both ways. if you have legislation, it's very hard to change it. let's be real. we know that. if you have a regulatory policy it's there and if it's done right, it can respond to issues. so, i want to go to a couple of things that mr. misener said. third, which parts of the broad band are protected by network connection. and under this legislation, if there were a problem in any one of those three areas who would resolve the dispute or provide the remedy to somebody adversely affected? >> thank you mr. welch. it's unclear. i mean there is a direction in the bill to establish an expost
adjudicate kaer to process. it does not provide the kind of certainty and detail both consumers and business seek. >> mr. powell, who would resolve those issues? there's not a dispute here that there's not a definition in our legislation. we could all anticipate there will be disputes. how would they be resolved? >> first thing important to note is the commission under judicial precedent has the right and the obligation to interpret the words of congress. what spshlized terms would splulgts be within the commission's power to interpret and enforce as best they understood it. >> so, let me just understand. that's important, i think, to me, at least what you just said. if there were a dispute, you're saying the fcc would have jurisdiction even though we're taking jurisdiction away from the fcc in this legislation? >> the statute certainty -- the draft, as i read certainty contemplates the fcc
enforcing -- >> this is serious. we know this question is coming. let's say amazon had a dispute. where would they go to resolve it. would they go to their legislator or to the fcc? >> surely, they would complain to the fcc, who is fully empowered to resolve that complaint as provisions laid out by congress, as they do with every other complaint in their regulatory jurisdiction. >> ms. baker, i have a -- thank you, mr. powell. >> you're welcome. >> one of the confess i have is most internet talk centers around -- happens around the -- most of the open internet talk centers around over the last mile between the enter set service provider and the end consumer. but aren't there very real competitive concerns and potential consumer impacts that arise in the exchange of data between the isps and networks, too? and how can we ensure under this legislation that the interconnection continues to happen for smaller competitive carriers in the telecommunication marketplace?
>> that actually might be a better question for chairman powell. we've been very focused on the mobile industry and the technical parameters that are around the mobile industry and the competitive factors on the mobile industry. you mentioned competition and only one provider in the mobile industry, eight out of ten americans have a choice of four or more providers. 94% have three or more providers. so, it's a very different issue. you may want to redirect your question. >> well, i think my time's expired, so thank you. yield back. >> gentleman's time expired. i would like to ask you consent to submit to the record a letter to ms. marlene h.dorch secretary of federal communications commission from various companies, bluegrass cellular and others. without objection, it will be entered into the record. we'll now turn to the gentleman from texas mr. barton, for five
minutes. >> thank you, mr. chairman. i'm going to ask kind of a general information question. the gentlemen at the end of the table down there mr. powell, i used to know a michael powell but his hair -- he had some hair and his -- >> he's reached perfection. >> that was at the again of net neutrality. >> is this the same michael powell who used to be important used to be chairman of the fcc? >> gentleman would yield i think that's the case and he has reached follic perfection. >> i wanted to make sure before i asked a question. mr. powell now that i know who you are. i'm kid you. i wouldn't kid you if i didn't know you pretty well. but he is blush willing, mr. chairman. let the record show. when you were chairman of the fcc, did your commission give any thought to regulating the internet under title 2?
>> no. as i said, this was a question of first impression when the broadband was, in essence invented, and that question was presented to the commission of how should it be properly classified under congressional law. so, we did weigh whether to title it telecommunication under title 2 or whether to regulate as information service provider under title 1. the commission voted to do the latter. >> are you aware of any academic or industry study that claims the internet is a natural monopoly? >> i am not aware of any study. in fact i think one of the most substantial decisions made by this body in 1996, when it passed the telecom act, was to abandon that thesis of regulatory policy that the markets are not natural monopolies. they should be subject to
competitive forces. and it shouldn't be regulated as such. i mean i think that's one of the things that concerns us about the historical title of title 2, is the assumption that the market is served most efficiently by a monopoly. a state-sanctioned monopoly as at&t once was for a very, very long time. >> assuming -- and i think it's a correct assumption, that the internet is not a natural monopoly. that it is, in fact, a competitive market. given your knowledge, both in your prior capacity as chairman of the fcc and current capacity as an industry leader do you view any participant on the based provider part of the market to have what would be called monopoly market power? >> no not during my tenure.
and i disagree that's the case today. you know, as an old anti-trust lawyer we know you don't count noses. you look at the effects in the market. has capacity expanded? capacity has expanded 1500% in a decade. has the market continued to invest? it's invested over $1 trillion in a decade. have prices gone up to monopoly rent levels? prices have stayed flat and declined on a per mega basis. i don't think any anti-trust scholar or justice department could conclude that it is an unhealthy, uncompetitive market based on the actual characteristics of the market they used to measure that question. >> if it's not a natural monopoly and there's no participant in the provider sector of the market that has monopoly market power, then it stands to reason the committee draft