tv Key Capitol Hill Hearings CSPAN November 3, 2015 2:00am-4:01am EST
that's at c-sp c-span.org/landmarkcases. tsa administrator peter nefinger and other homeland security testify on airport security tomorrow morning. watch this live at 10:00 a.m. eastern. the house rules committee considers hundreds of potential amendments to a bill relate stod a six-year highway and transit policy bill. which this live tomorrow at 3:00 p.m. eastern. c-span has your coverage of the road to the white house 2016 where you'll find the candidates, the speeches, the debates and most importantly your questions. this year, we're taking our road to the white house coverage into classrooms across the country with our student cam contest. giving students the opportunity to discuss what important issues they want to hear the most from the candidates.
follow c-span student cam contest and road to the white house coverage 2016 on tv, on the radio and online at c-span.org. commissioners from the fcc spoke at the technology policy institute's annual aspen forrum this summer. the first panel focuses on internet privacy. together they're about 1:45. so let's just jump right into it. you know, i wanted to start with a thought experiments. we were talking about how communications technology change so quickly and so much. whether you're talking about over the top video or high speed fiber. so, you know, i guess we spend a lot of time talking about those but also about how to protect and manage legacy systems.
i guess the question for you to start is, if you could -- looking at how the competitive landscape looks like now, if you could redesign the fcc from the ground up, what would that look like? what would your priorities be? how would you allocate resources? what would you want to -- what kind of interests would you be hoping to promote and maybe commissioner riley i'll start with you. >> please, commissioner. >> you know, good morning, everyone. i'm from the south so we always say good morning and thank you for the opportunity to spend my second full day also in aspen. so i'm going to redesign because it's what i do kind of take a liberal interpretation, not because i'm a liberal necessarily. to your question, because i think part of the benefits that we're realizing right now is because of legacy regulation and
platform. we're learning platforms. we're learning. so i would not be an advocate of redesigning. i am always advocate of being nimble and forward thinking when it comes to policies and the things that we've learned in this space. so, when you hear me speak and take positions, you know, particularly with the notices, you talk about over the top in our quest to seek whether or not things should be redefined and the like, looking at the landscape ever changing, i think it's important for us to always keep in mind those four pillars that we speak about in communications act and how it's applicable to these spaces. we want competition. we want choice. we want consumer protections. we want all of those things. how do we achieve that in the different -- in the different media or telecommunications flat
forms? i think that's the most important foundation for me. so i am advocate of having a diversity in voices. i am advocate in diversity in terms of choices. that's what you see me doing based again on the experiences on the things we learned. respecting legacy platforms but knowing that all of these things need to be kpli men tear as we approach regulatory -- our regulatory posturing. >> to you the fcc is mainly an agency that is trying to promote choice for people. >> and we learn from both the things that we've done right and those things that we have misstepped and i think that's why i'm not necessarily proponent of, you know, starting over. but again learning and grasping and growing from those experiences. >> commissioner riley, what is the fcc for? >> thank you for having me and please continue to eat. but, i think i would start by
saying i'm not one of those people and there is a debate that has been long standing we should get rid of the fcc. i still think there's value in having an fcc. your question is what would it look like going forward in my perfect vision in i don't know that i want to go through every component. video is a very good place to start. i would spend considerable amount of time removing legacy regulations. you saw dinner last night from what google is able to do on youtube, what a number of over the top providers are able to do today, all that's being done without the fcc. then you think about the regulations that we put on current providers and the burdens that come from consumers, that cost is going to consumers in one form or another. i would remove a number of those barriers rather than -- i articulated saying we'll have an item later this year. i have very little interest in capturing those companies that will trying to provide over the top into title 6. if i were still in congress working for members, i would be
very interested in spending time on title 6 because i think it's outdated and has a lot of work to catch up to our modern video marketplace. >> so, just to touch on another agency that's been in the news lately, the federal trade commission recently released a set of guidelines sort of defining more clearly what it means by competition. are there certain authorities at the fcc that you think would benefit from a similar kind of clarification? we talk a lot about getting congress to update just what the fcc's authorities are, but are there things that the fcc can do itself to clarify -- what if any would be sort of authorities of the fcc? >> we could have a number of things to eat up to do just that. we are always reinventing ourselves and i think that's a positive. and i would take slight i don't want to say issue but exception -- >> so early to issue. >> you know, to what you say
because, yes, we talked about and we see the magic of youtube and other similarly situated evolutionary technologies, and i think that is in part because of our regulatory continually regulatory -- our ability to reinvent ourselves. and i think it's in part because of the fcc's willingness to be forward thinking. we don't live in vacuums. and so, you know, a pebble, an fcc pebble in the water has a ripple effect going forward. so i think all of these things are influenced, complimentary. sometimes they kind of rub against the norm and i think all of those things are positive. we are doing that. again, various decisions that you will hear about over the course of the next few months and we'll continue to do so. >> i still don't think that the providers that are providing
over the top today have benefitted from the fcc. they've been fitted from not having fcc. that's a wonderful thing. i also don't know and maybe i might disagree that we are forward-looking agency. i would like to hope we are but i don't believe we are at the current structure and the current decisions we make. but, so i'm a little troubled on that side and may disagree, but we're very good friends. >> that's fine. >> most days. >> provide a lively discussion. >> so, i just think that there's a great deal of things that the commission can do to provide more clarity in a number of different areas. the difficulty is that every time that we provide -- take neutrality for example. we spend a great deal of time on that issue yesterday. we opened up great swaths of area and just said, this is called a catch-all. go do what you want. that is not any clarity for industry to try to figure out how they're supposed to operate going forward. every time we try to provide
some clarity, at the same time we seem to open up unknowns and companies have no idea how to operate within our structure. we talked about yesterday the enforcement guidelines and how i personally believe they will be useful or harmful going forward. no one knows what that process will be. it is whatever the agency, the burr rue feels at that given moment. that's not the clarity that we need to offer services in our current environment. >> so one of the things that i see in anything we do particularly in a regulatory space, is you have a quest for clarity and perfection. getting there oftentimes is bumpy and uncomfortable. but not allowing -- if you travel around the world, you will see different regulatory frame works that do not allow for the engagement in which we do. so, democracy, robust engagement, notices and further notices all of those things can
be regulartively uncomfortable, relatively messy, i'll go on record the and you can quote me on that. but its a framework which is inclusive and that in and of itself to me is worth all of the imperfections that we speak about. and it doesn't lock, you know, every incumbents or new entrance into a new paradigm. i think in and of itself, that is a price worth paying for any type of discomfort or bumps along the road that we may be realizing. so i take what you say in terms of our -- i think our quest for continual information flow and i believe the capacity to keep learning and doing better again it's going to be imperfect.
and we'll just keep working towards a perfect until we get it as close to right as possible. i don't want to get it 100% right because i think that would lead to stagnation. being stagnant. a little friction, a continual friction i think is a positive. most of you in this room are here as a result of a little friction and less stagnation. >> i don't think we have to worry about ever getting close to perfect at the fcc. >> point taken. >> i think we have plenty of room to provide as much friction and provided a lot of opportunity people in washington to make a lot of money. god bless them. >> i'm for making money. >> switching gears from friction to cooperation something you both have worked on is giving rate of return carriers the ability to collect universal service funds for stand alone broad band. are we still on track for a mechanism for that by the end of the year? can you give an update on that? >> yes. my colleagues and i are trying to provide a mechanism that
would address the issue of stand alone broad band for rate of return carriers. we would like to do that by the end of the year. but it's more important to get it right. we're trying to do that in collaborative way working with all interested parties not trying to force the answer on any particular company or association. we're trying to figure out the best way we can do that with sound principles behind it. but i have approached this, too, saying this is an important task. but my real concern is, you know, most of these providers are offering these services. the question is should they get subsidies and that's something we would like to answer. until we can answer these questions, we can't deal with other issues because it's front and center. the areas that -- the concerns that i have most are those areas in america that have no service today or just dialup or something really poor. i've traveled around the country and seen and talked to people about how bad their service is and trying to figure out how can we get -- we can't address that until we can solve this issue.
it is a very important issue and i think we're doing a good job. we have similar thoughts on this. so we're doing the hard work that's needed to try to find a solution, but i really want to solve it and move on to the bigger, more difficult questions going forward. >> and this is -- i want to give credit where credit is due. you often hear and see us disagree on key issues. on this one, we're working collaboratively and we're looking at the rate of return carriers. we're looking at making the universal service fund as a whole more efficient. getting rid of any waste fraud and abuse that exists. one of the things that was striking to me, you know, leading -- when you look at where subsidies are going and as my colleague said, not going. subsidies for years were going to maintain, support for disney world.
disney world. a lot of need for subsidies there, right? and so we need to really look at our framework and recalibrate it so the moneys are flowing where needed. that where haircuts and other clips that need to be made are made. because this fund was set up to bridge communication gaps. not to maintain either gold plated or platinum plated systems. i'm just going to put it out there. so this is what we are working -- this is where i might have a little harder edge than my colleague and i will be the first to say that sometimes i go a little further than he would verbally speaking. but i'm very passionate about -- when i go home to south carolina, the common refrain particularly in rural areas is we need broad band in order to thrive. the money is not flowing there
but the money is flowing at disney world. got a problem with that. i really do. >> so let's talk now about another program, lifeline. and commissioner o'reilly floated a cap on lifeline spending at current rates i think the figure is 1.6 billion. but commissioner, clyburn, you said before, what you would really like to see is you described it as disciplining program expenditures. the question to you is in how much in savings are there before you have to think about disciplining with the cap? >> well, what has not been said enough in this space is how much money we've saved since the reforms in 2012. we saved $2.75 billion in lifeline alone because of the reforms already in place. i don't see any exposes about that. but this is one of those areas
where i think we have maybe the same overarching goal but different ways of getting there. so you're going to see a little bit of debate. if you came here for that, you're going to see a little bit in a second. and so, i was not a proponent of setting a cap at this point in time in a program because the cap that was proposed, you mentioned the $1.6 billion, this is a 30-year old program. and to establish a cap that just looks at one year or one snapshot in time that would in essence foreclose the opportunities for 60% of those eligible was not something that i was willing to sign up for. what i was -- what i did sign up for is i was asking the questions of what it should be. so, this is a program that has been stuck in a 30-year time warp. it has not been modernized for
the information age. i am passionate about what tools do we have in our arsenal to close the digital and communications divide? i think a recalibrated, rebooted program -- and i jokingly say the program formerly known -- soon to be formerly known as lifeline, i think we should sunset the current program and reestablish what i propose to call i bridge now which would be just what it sounds like. an information technology driven bridge to the future which would allow -- which will enable those who are temporarily down on the economically down on their luck to have an opportunity to have a monetary assistance to help them bridge their communications challenges. i don't know if you saw a program -- the news last night
where there was this lady that would have brought you to tears that just picked up a computer for her 16-year-old a refurbished commuter and she refurbished computer, and she said i couldn't have afforded, i cannot convey to you how moving that exchange was with that reporter. she could not afford to provide her 16-year-old with an information, with the current tools needed. there are millions in this country who do not have the ability to connect. and i think a rebooted, you know, program that will allow all of those eligible to sign on is one in which i would endorse. >> i would say that i, we have a lot of commonality in this issue, all of universal services, it starts from a point, when i came in, there was already, you know, down the tracks, so it's not something i would have designed exactly how we are, but we are where we are.
and i would have preferred, and appreciate the commissioner's comments in terms of rebooting, i would prefer we fix a number of things on fraud, waste and abuse. the commissioner talks about savings that we've been able to john rate, but that shows you how out of whack we were. if your reductions in spending is $2.75 billion, it tells you how out-of-bounds you were. i'm supportive of that, but we've got more work to do on that space. so i am for a lifeline program or whatever we want to call it. i'm for -- >> appreciate the support for ibridge. >> i'm willing to trade that for a cap, if you want. >> the right cap, we'll talk. >> i originally started with it, i think a cap is important. i also was willing to be flexible. and i went to what i was call ago hard budget.
this is the one piece that doesn't have a budget. hopefully we can find common ground. i'm open to what that number is. i started with a place, but we can figure out how best to get to home. because it's something i generally would like to see us find a 5- 0 scenario, but there are things we have to do to improve this program going forward, and hopefully we'll be able to do that. >> and to put another point on this, i am fortinu continual reforms. i put a five-step, i think, blueprint to do this. i just happen to be of the mind that we can walk and chew gum at the same time. that we can improve a pathway of provisioning services. people cannot wait for con activity. that 16 year old, if she had to wait would have graduated without the tools she needed. i don't want another person similarly situated if this will
make a difference for them to be connected for them to be without. so, again, our timelines may be a bit different. our goals are relatively in synch. and we'll duke it out. >> well, no. you have a very good man. she had five points, i put ten points forward. >> he was jealous. >> one of them is the cap. your point is valid. we want those people who absolutely need it to be able to been fit from it, but i also want those people who do not need the program to not benefit from it. >> so we're in synch with that in terms of the entire universal service, the entire portfolio where it is not needed, the money should not flow, where there is not eligibility the benefits should not flow. so we're in synch with that. >> i wanted to press you a little bit, when commissioner clyburn, you said you're in favor of a right cap.
>> or a budget. because i like him today. you know, but i'm from a budg budgetary framework. >> i understand you can't float out a hard number or you may not want to. >> one of the things i may mention, right now we're at a little less than 40% of those who are eligible in taking part in the program. any type of budget framework should have a realistic, should take into account as close to 100% as possible. i believe. but if it's not used, it's not spent. and that's why, you know, i was in favor of asking questions about a budget or a cap. but this is one of those programs, if you don't sign up, the money does not flow. but i did not want to, and would not endorse anything that would
foreclose opportunities. that is my point. if it's properly marketed, properly designed, it's a dignified program that, and one of the main things that one of my five points reenforce, and this is not gaucnegotiatable. the carriers. that is at the heart, optically is at the heart. if we get rid of the levels of inefficiency or in some cases, outright fraud, i'll put it out there. that would be gone. >> and we can work on having a row gram that will be targeted and deliver the opportunities needed for those without. >> so i just comment on that.
and i agree with a lot of that. i would say that i'm not committed to a number that is such a scope of if it at 40% we're spending 1.6, and what's the total to get 180? $4 billion? that $4 billion has to come, that's more than doubling the program, that has to come from all of the consumers in america today. and so the woman who couldn't afford a computer, we're going to take more from her, you know, in her phone rates, in her services, so we can pay for the other programs. and that's a problem for me, is that i worry about the, those folks who are in middle, middle income and lower middle income and the burden we already place on them. we're already imposing a fee of 17.1%, i think's the current number, and if we're talking about adding on top of that another $2.5 billion, we've already increased last year the a spending we're doing for
schools and libraries and doubled that budget, basically, so there's more spending going out the door. and i'm really concerned about how much we're taking from consumers and how that impacts their daily lives. >> so i share a concern, and i know you want to move on. >> this is great, by the way. >> if we look at what we call the connect america fund or the high-cost program, you talk about an unequitable of distribution in terms of, you know, and you've got the study. the next panel will be one of the authors of the study to prove just that. poor people are not getting their proportion of what they're paying in, what they're taxed for. that money is not flowing to those who need it the most. that money is flowing to disney world and probably aspen. i purposely did not look up the aspen numbers because i did not want to be unset this morning. i know the money is flowing, and when i saw that airport and saw that flash that i could buy a
home for $27 million. i don't think that person needs a subsidy. i just don't. so these are the things. i look at this lifeline as but one of the programs, but i look at the entire universital servi pie. in terms of how do we look at it and make sure that the moneys are flowing to where it's needed. we need to make some hard, probably politically unpopular decisions to do just that. and if we do just that, that equity that you're speaking of, that lady which you're speaking about, if she has a service, that money is not being appropriately spent if you believe in the word nfair, whic i don't use that very often anymore. if you believe in equity, she's not being well treated. >> i have worked on a number of issues in the past and if my previous life where we've done greater means testing. so i think means testing would
be very applicable in this space. and lifeline is one that is a best example of somewhere where we do means testing. we do a little bit of it. some of it goes in schools and libraries. rural health care is so small it's not the same. we do fund those that are extremely wealthy, and i doesn' think that makes sense. if you have a gross income above some number, $10 million, $100 million, whatever, that we don't subsidize you. i think that's a fair point. i think everyone would agree. >> not everyone. >> consumers who have greater income pay more for medicare. and congress has bipartisanly agreed to do so recently. so i think that's needed. i don't know what the number is. and i don't pretend to know. but i'm sure there is an artificial number we can agree to and can have some savings and
realize we're not subsidizing every american, no matter how well think you might be. >> yesterday we heard a lot about, you know, david redle was talking about how the fcc was applying the privacy act and looking to tell isps what they can and can't do with private information such as social security numbers and others. so what other kind of personal information might potentially fall into this category? what's your interpretation, commissioner o'reilly of how the definition of cp and i could change in the future? >> i would just say we are, i believe the chairman has announced that he's going to do an item later this fall, start it with an rprm.
i've talked about the difficulty in terms what have it means for different agencies that would oversee the same kinds of information. but the difficulty i have is 222 is fairly narrowly written. it deals with telephone records. i know there's many people within the commission who would like to expand that, and weav'v seen that. they'd like to expand what the definition is, but that's not something congress has given to the agency. that's something they can affirmatively do, and we will certainly implement it to their instructions. i have difficulty on where we're trying to go on 222. what it means for different providers. we also are trying to reinterpret 201. and what does it mean for throwing in 706. you know, it is an attempt to impose burdens.
i said yesterday that i fully believe that we're going to expand that scope to the end provider side. there will be more going forward, and that's extremely problematic. >> i mean, as a consumer, i tend to think of, you know, if we're applying the cp and i frame work to internet providers, my mind goes to okay, all the traffic, meta data associated with my web browsing history, my ip address, is that sort of the level of granularity we're talking about here? >> for me, i didn't have a problem with it. we talk about this a lot. we've got quite a few interactions and briefings, you know, when i read, though not a lawyer. you know, 222a, it talked about, and to me, it affirmed our duty to protect retired, proprietary
information. what's more proprietary than your social security munumber? i'm sorry. you have individuals who entrusted a company. filled out their applications. had their ssns on there. with the click of a mouse i would have had that. and i believe that the fcc had a duty, was aware of it, and had a duty to act. i also believe that where there is either shared or gray area by way of authorities, by way of authority with our sister agencies, we have and will continue to work collaboratively to ensure that nothing falls beneath the cracks, but i think we had a -- we, and i mean this in a collective family we -- had a duty to respond and act and to affirm to that company and the other similarly situated that
you will not, you know, be have a casual, you know, arrangement or lack of arrangement with somebody's personal, you know, identifiable information. and we acted swift, as swiftly in fcc time frame, we acted swiftly and put out a definite signal to those that this will not be tolerated. >> i think my colleague's comments highlight some of the problems i have. if you look at pii, it's not in the statute. we're reinterpreting and creating definitions that don't exist in the law to serve a particular purpose, and i certainly support your point that you don't want anyone falling through the cracks, but what that really means is we're going to double agencies and double regulations for providers. which means people fighting amongst themselves, do i do this
for the fcc? and this for the fcc? how do i do this with so many regulators? so i have extreme problem on that side, and i think we're heading in a collision course later this fall. >> i did not hear of any other agency that was poised to act on the behalf of these consumers, a lot of them who are not that well-heeled and had nowhere to go to get presented. i hear what you're saying. i think the mechanisms are in lace for us not to step on each other's toes, but having, to be able to go on a website and access somebody's social security number, that is unacceptable, and i think we had to act. >> let's take an audience question or two. there's a roving mic going around. if you have a question, raise your hand. yeah, in the back. >> peter pitcher with intel.
the levees, should that include broadband? >> i have had deep concerns about expanding the collection side of the equation until we resolve many of the other spending sides. what seems to me is we're going to spend as much as we possibly can and we'll do the collection side reform. then we'll add broadband because it will look like the number's going down. and i'm, if the goal is just to spend as much as you can and collect it on this side, no. i'm not for that. and if you want to have a, if people want to have a thoughtful conversation about collection reform, i'm always for that. >> and i think the conversation needs to continue and to tone down the rhetoric when we talk about contribution reforms. you know, i highlighted it earlier in terms of where what has been happening over the
years is whether it is explicitly said or not, our funding has been going to support broadband. and so i really think it's time for us to have, you know, an adult conversation about what the contributions, you know, those proportions look like and just really, you know, be, you know, go, go to a place where it's as equitable as possible about, you know, where the money is actually flowing and how efficient and effective this current framework is, which quite honestly i don't believe is as, it's not as efficient and effective as it should be. >> i'm always ready for an adult conversation. i have difficulty because so many adults have answered this question. if you go to the congress, are you for imposing the tax.
the acknowledgement has made by the congress that imposing this fee or some type of, all the state and local taxes would increase the cost and therefore decrease adoption. so we would be doing the same thing that congress, the people who give us authority have said don't do. >> and i say that the moneys are flowing. they are supporting the construction of broadband networks, and we need to have a conversation about that and what that means as it relates to contributions. >> all right, let's take another question. mm-hm, yeah. >> alan rawls, i've enjoyed the healthy debate on whether there's statutory authority for enforcing against privacy for personal information that's not proprietary information and whether there was fair notice before the terracom decision was
handed down. but my question is about penalties. i think in the terracom case, they started out saying this could be a $10 billion penalty, but in the exercise of grace, it was remitted down to i think $10 million, and it may have ended up lower, but isn't there a fairness issue with regard to the range of discretion that the agency has to establish notice of apparent liability amounts? >> so i'm not going to counter what you said. i will affirm that, you know, every case is different. when you talk about your social security number, which you can't get another one, as far as i know, legally. you know, to me, that's serious. i don't know what that troubles to. but you could talk about other
instances where in terms of some of the lifeline potential, you know, decisions that those are very troubled if you talk to some of the providers based upon what their proposed, i mean, what the alleged infraction, so always i believe that there needs to be, you know, conversations and checks and balances as it relates to that. but every situation is different, so it's kind of a, you know, difficult for me to say hard and fast, i'm not going to disagree with you. but that's, will be something that we will continue to look at, but some discretion, i believe, is needed, because, again, every case is different, and the severity of that may differ, depending on who you're representing. >> so i could, i'll take the opposite view. i'll agree with your point.
i think the problem we have now, two fold. one is we're gasping for numbers out of thin air. they're not based on anything at all. and i've tried to get numbers, and it's just not there. the second part is, if it was sound enforcement for purposes and there's a number of reason, and i've talked about this in a number of different settings, the one that we've seen focussed on today, activities is to get the biggest headline we possibly can. we want the headline to say this is the largest fee for this purpose, the largest penalty for this purpose. that is not the purpose of enforcement, to make somebody happy that they have a headline in whatever trade publication or newspaper to make themselves feel better. this has a number of sound issues. and we seem to be ignoring it. i gave a speech recently, not too long ago that talked about,
you know, the, some of the folks within the agency had gone to provide and said we think the number we're starting with is 1 billion. $1 billion? where do you think the money is coming from? they think it's going to come from the pockets of the ceo or the rich dividend recipients? that is going to come from the about the om li bottom line of the company. that's problematic just of itself. and secondly, they don't have a justification for the number in the first place. it becomes a charade. >> one of the things to keep in mind is if you get an action had, or if you get to that point all is not right. i'm sorry. if you get the attention of the enforcement bureau, all is not rosie. so let's, you know, work from that baseline. we could talk about the amount of trouble damages. i'm willing to have that
conversation. but more often than not, when a decision is handed down, it's not because everybody was cli t compliant. >> lynn stanton. i want to follow up on your apparent agreement about means testing. >> i'm sorry? >> i wanted to follow up on means testing for high cost subsidies, and i was wondering if either of you had any concrete vision of how that would work in reality, because other than turning it into a voucher program for individuals, i'm not being able to picture anything. i was wondering what your thoughts were. >> i would start and say this. i'm, right now i am focussed on trying to solve the issue that
we are both tackling on rate of return, stand alone broadband. i've done quite a bit of work in my past life. i would set a cap to have annual certification that you're not making $10 million. we can peckick a number and anything out. it's never going to get to the point where you get down to the exact number of who should get a subsidy in a high-cost program, but we can certainly exclude a number of people who definitely do not need it. that's my take. >> and one of the things that's troubling to me, so the answer is no, i haven't worked out, i don't have a template to present to you this morning. but one of the things that i am mindful and that is in the works is we're going to include the allowables, what's allowable and what's not. believe it or not, we did not have that menu, you know, of, you know, what's acceptable
spending or not. so you had, and i bring this up. this is where my age comes in. so you had certain companies that were, you know, with excessive, ceos with excessive salaries. you had people buying meat artwork, extravagant travel and the like. you had those types of things going on. that needs to cease. you talk about, i don't know what fraud is, but i think i recognize waste and abuse when i see it, and that is it. no headlines, i didn't see the headlines in the media, but that's just a personal push from me. so these are the types of things that i think are steps toward that. outside of that, we've got a lot of work to do. it's very difficult. it's a $4 billion right now, you know, $4 billion plus framework. a lot of companies, and this is going to take, this is going to be a continual collaboration with our state counterparts,
because a lot of the abuses that i'm aware of came from state regulatory authorities who went inside of the books, they do that better than we do, by the way, inside of the books and do that. so i'm sorry to be so verbose, but we're working toward that. >> we're out of time. >> i'm on it, don't worry about it. >> i wanted to close by asking one more question about privacy, which is, you know, should consumers be expected to have different expectations of what kinds of privacy protections they're going to get when it comes to a, edge providers, and b, the internet providers? >> i'll let you go first. >> i would answer, because i think there is, i've spent a great deal of time on privacy. i think there is an expectation of different treatment based on information in and of itself. not on who is the provider under whether it be the platform or
the j provider. they do have more sensitivity to health records and health information. they have more sensitivity to financial information in some regards, and we have great, you know, we have a number of laws that cover that today. the difficulty with privacy is it's a number of laws and a number of agencies and a number of governing structures that make it very difficult going forward, and we're going to add another one coupme this fall. >> so i answered this i guess in a broader sense that each team we check on a mouse or access we give up a little of ourselves. and i think that level of privacy and honestly gets chipped away each time we fill out a form and we share our personal information. so i think we need to have a healthy, realistic series of expectations when it comes to -- and what's definition of privacy anymore? i've seep the videos, it's very
liberal. and i don't mean party liberal. but still, when you entrust your personal information to a company or an individual there are certain expectations you should have. and i think that a regulatory backstop is the best, one of the best means, you know, to help, you know, send out and affirm that signal. >> let me add one final comment that information sharing is what is making the current internet operating to do. you saw the amazing things google's able to do. that's from information sharing that does happen today. >> commissioner o'reilly, commissioner clyburn, thank you so much for joining me on this panel. [ applause ] all right, so now we are moving into the universal service panel. and the conversation that we just heard was i think a good introduction to it. so, as we know, the universal
service fund was originally intended to subsidize voice communications for rural and low income consumers, and it's steadily focusing on broadband. it became the connect america fund and began to subsidize rural broadband. and this year, the white house announced the connect ed program. and the fcc is currently considering how to, how to reform the lifeline program to subsidize broadband instead of voice for low income people. that was much of the discussion we just heard. and overall the fund now collects and redistributes about $8 billion a year. the money comes from fees imposed on certain communications services. so both the communication mechanisms have been ediscussed.
and we want to provide in ways that are equitable and efficient. our panel will discuss these issues, and we have on this panel. james asieh who is with the telecommunications association. commissioner clyburn, an fcc commissioner and has a long history in utility regulation and prior to her swearing in she served as the representative of south carolina's sixth district, including several years as chair. blair levin is non-resident fellow at the brookings institute. greg roberts professor of economics by courtesy at stanford. and brad whimmer from las vegas.
now before we start, i want to, we'll ask questions at the end, and i also, like i did last time, i'll be following twitter, and i will respond to some things that come up there. when i last moderated, somebody actually pointed out a mistake i made while i was speaking. that was helpful. now i'd like to start with commissioner clyburn, if she, to sort of expand on what she was talking about in the, in her discussion with commissioner o'reilly where you said that you want to think about universal service program more holistical holistically. how to help the most people. if you would expand on that, that would be great. >> one of the things i talk about is when people talk about my focus on lifeline, they say lifeline and universal service,
and i said lifeline is a part of universal service, and that's why it's so, and i'm glad you teed that question up. because i think it's important for us to look at this universal service program. each program, as part of one leg in a four-legged stool. you mentioned the high cost now connected america program. the reason part of the push for reform is because the moneys that were flowing to those companies were being used very explicitly, even though we didn't explicitly support it to support broadband infrastructure. and so we said, you know, because had this is the wave of now and in the future that we will be more explicit about that and will you know, affirm that in order to get money going forward. you will be required in a certain number of years to construct a framework that is in
synch with the way the world is trending. the lifeline program, we talked about that e-rate in the program to help connect health care facilities. all of those are important and should be looked at in concert, pause because if there's one thing in that mix that is out whack then i think the entire stool is at risk. those who are in need are receiving assistance from those health care facilities would not have the ability for continuum of care. as much as we should be speaking about e-rate and the president's connect home initiative, from the e-rate perspective, schools close. libraries close. there should not be a discontinual, a continuum in
terms of people being able to do their homework or to continue their educational and business experience if they can't afford it, which is why lifeline is so important. so i look at it holistically because again, if we don't talk about not just the infrastructure build side, not just providing connectivity for rural health care clinics, not just ensuring that schools and libraries have the state-of-the-art connectivity we need to be forward-thinking learning centers. if there is not the ability for those most in need to be able to afford service then we're going to have inefficiencies that will continue to manifest itself economically in a negative way on this society. so, again, that's why i look at it as seamlessly as possible, because if's important for us to think about the adoption,
affordability, the accessibility side of the equation and not separate this. >> in the draft order, you've expressed interest in moving us it to, i don't think you used the word voucher, but a system that is more focussed on individuals rather than, for example, you don't have the company certify them. does that, is that something that you would prefer to seek more throughout the system? >> i was, you know, pleased to speak with my colleague and those who are similarly c lly calibrated so to speak for us to talk, to really discuss about, you know, how we bring, we keep talking about contributions. and the levels that are hovering around 17. -- i can't remember what it is, this particular quarter and what we can do to
address that. the only way i know to do that is to be more efficient and to really go back to where we began in terms of rereading what the purpose of universal service, what the purpose of the funding construct is. and that is to bridge a communications divide. that is to be, for this to be a means or a conduit to provide service where the market is not flowing. i think it's important for us to reread and revisit that to continue to calibrate these programs to be reflective, and yes, i think the only way to either arrest or address the issues as it relates to contributions is to remind ourselves that we need to make sure the money is flowing where needed, because it is not doing that effectively, and i am, again, a proponent of looking at
that and making the adjustments where necessary. >> brad, you and greg are probably responsible for three quarters of the checks literature on universal service, so what's your take on sort of the overall effectiveness of the program so far, and especially, i was thinking about your 2011 paper where you looked at lifeline and link-up. and then, if possible, you know, what you think the lessons are from that research to how we would reform the system. >> okay. well, i agree with the commissioner. the most important thing is to be more efficient. and so to be more efficient what we have to look at is what are we getting for our money. what is being delivered, what are the outcomes. in research that greg and i have done, there's been a couple of things that come forward. and so this could help us design
a program. the first thing is a lot of the money from the lifeline program goes to households that would subscribe for, to telephone service, even if there were no subsidy. so the question is, what do we want to accomplish? do we want to try to transfer income from one group to another, or do we want to try to increase penetration rates? and i think the bigger bang for your buck is to concentrate on the greater number of people who have access to your network. that leads to the second point that low income households have a very difficult time with up front payments. which is important when it comes to computers. so they got rid of the link-up program, which was up-front funding. there are issues being addressed in this next round of rule making to take care of the fraud and abuse. but moving money from reducing
the monthly charge to moving it to the up front will do two things. one, it addresses that issue of the ability to fund up-front payments, and two, it's better targeted. because it would be targeted at people who doesn't have sn't ha. so we think these moves could improve the efficiency of the system, reduce costs. >> i'm sorry to be rude early, but that's me. i said hello, and that was the nicest. >> that was very nice. >> i take, i do not argue with what you said about the efficiencies, i got your paper right here. when it comes to the link-up program and respectfully, that's where a lot of the savings from our reforms came from. so, you know, full disclosure from that point, but i do take
issue with what you said about, and my colleague and i have this conversation quite a bit, about those who would be signed up for it anyway. so, you know, people want to communicate. all around the world, they're making incredible economic sacrifices to communicate. so i'm going to yield to you on that point, but should they be making the tradeoffs that we know they're making in order to communicate? and that's a question that i am proud to say that we are addressing and asking in this country, and another series of facts that was released by pugh. it said that yes, you might be right there, but 44% of those who are low income who have a smartphone because of economic hardships discontinue or disconnect their service over the course of the year. and those who rely on broadband only, mobile, mobile broadband
connect, 48% of those are forced to cut off, shut off service, you know, because of economic hardships. so yes, while they might sign up, almost 50% of them are disconnected because of hardship. so we need to look at, when we talk about data, you know, look at it from that perspective as to if they sign up, do they stay signed up. and that's part of the, i think, the conversation that i hope we will continue to have. >> first off, when i talk about it, i said move some of the, in terms of the weight, you might want more of the weight on the up front charges, because that's where the difficulty is. they have difficulty funding those things. and also there's evidence that you know, you may need to reduce the thing. but what i worry about is it becomes just a straight income transfer program, because whether it's just a straight income transfer program, the way
we collect the money is not the most efficient way to do that. because raising a dollar by increasing 15%, 16%, 17% takes more than a dollar. we have to collect the money and administration f fees. the fact that you're taxing things is going to change the way people behave. you're going to help another group with a father fairly narr. i think there are other programs better suited for income transfer. >> can i offer an observation? when we talk about universal service, i find that there's a really big thing missing. we are talking about pennies, and we should be talking about dollars. it is absolutely certain at some point in the program we are using money inefficiently.
by the way, i've spent most of my life in the private sector. private sector people do the same thing. it's hard to get things efficient. and when you run a government program you have to follow certain rules. so while i'm sympathetic to trying to be efficient and certainly, by the way, i want to commend scott for his great work on the national broadband plan, because there were a number of efficiencies in the program that other people have talked about that really came out of his work at that time. that's not the only thing. antd b and the big thing that's missing is how much more gi efficient would the government be if it knew everyone was
online. there was a high tech study that said if governments switched to a total i.t. platform, it's about a trillion dollars savings. all of that is not simply by getting everybody on. this is true at the state level, the federal level, if governments knew that everybody had connect in the home, it would save lots and lots of money, so whenever we talk about this, this is different than universal service in the telephone era which was fundamentally making sure everybody had access to 911 and emergencies and things like that. this is actually about improving the commons for how we operate in information age. so while it's important to be efficient, there's a huge up side to the country by getting everybody on and all the
institutions connected and all that. >> i think there's a lot of money available to target in different ways if we concentrate on exactly that. let's get people connected and make that the goal and make that the measuring stick and put programs in place that adheef that. so we've got a number of ways to do that. >> let he follme follow up on t. so, you e-rate was your baby at some point, anyway. >> i think other people claim it as their baby, but i would view it as victory has 1,000 fathers and defeat is an orphan. >> but it's always put together, schools and libraries is usually talked about under one rubric. there are different organizations. isn't it right that they're lumped together, given what you just said about the importance
of getting everybody connected to the government in some way? libraries are an important place of connection for people, which a little bit different from schools. should these be part of the same program? do they really have the similar objectives? should we be looking at them the same way? >> i go back to what commissioner clyburn said. the universal service is a precept of problems, but they need to be solved similar. the third is low income individuals, or something we don't talk about for example but also in universal services is hard-of-hearing individuals. in that sense, i think it's perfectly fine to put together. it might be that you could more
efficiently do it if you broke out the programs, but i don't think so, at least i haven't seen compelling evidence of that. but i could be wrong about that. but, you know, again, i think we, there are certain moments in time had had where you want to debate certain issues. and i, scott, i don't see that issue as being timely. let me quickly point out that in the previous panel, the commissioners were arguing about a cap and a budget. that's a really important debate in 2017. it's not a really important debate in 2015. the important debate, in my opinion, is how do we create a program platform for lifeline that allows people in 2017 to right size the program. and the reason i say that is the electorate will decide the right size of the program. that's just a practical reality. this commission will, in the approximately end of this year
or in january decide how to reform it, and i'm completely on the side of commissioner clyburn in taking the certification away from the carriers, moving to a benefits card, things she outlined in her speech, but once you do that, but the budget really doesn't go into effect until the program changes are done, and that's not going to be done until after the election, so i would hope that we could actually put aside for now the discussion of budgets and when i think of right-sizing the program but really focus on how do we have an efficient program that serves consumers, serves carriers, helps eliminate waste, fraud and abuse and serves the needs of the program and provides the funds to the people who need it. >> i think that's a great lead in to what greg, an economic framework of how we should address these issues. >> scott was afraid that brad and i would say a lot of the same things. it's a good fear.
so in terms of bedrock economic principles. if we have a subsidy, there should be a goal. age and what the goal is, nobody likes to hear it's an income transfer program. it's going from urban to rural people from people who don't necessarily need a subsidy. ted turner bought a ranch in new mexico try quarters the size of rhode island and presumably he was getting rural universal subsidies. it's not the kind of thing that we should be thinking about. so i was very encouraged this morning to hear the two commissioners talk about having more of a target that this is trying to increase penetration and trying to elim mate the idea of it being an income transfer program to people who don't need it for sure.
the other, once you have a goal, let's minimize the cost of spending. the idea of a $10 million income limit seems a little high to me. just even though i am in silicon valley, that's still high. you know, the affordable care act gives subsidies for people up to h400% of the poverty leve. a lot of people were upset at that that was kind of high. at least you can think there are income limits on programs and also the subsidies in that. and then you want to minimize the cost of raising the money. so, as brad talked about, distortions from taxes. you want to have a broad based, public finance teaches you the way to minimize these distortions is to have a broad-based tax. we should fund this out of general government revenue thsr.
and the other thing that public finance teaches you is ramsey pricing. you want too t tax something ths demanded. same with wireless. these things are relatively deemdee demanded now. we need to get better estimates now. what this overall says to me, and as blair says, we're thinking about cents, not dollars, the lifeline program getting so much heat is one third the cost of the rural broadband program or the rural subjectdies. why not try and think about where it is. and the lifeline program transfers money to people who need it. it taxes people who are in urban
areas who often are poor. so i do have compliments to the commissioners about their ideas of trying to improve this and to have a program that's more targeted. it seems that the logical conclusion is to have it based on income. and firms would have an incentive to serve them. commissioner clyburn talked about competition and choice. vouchers give the incentive to serve these areas because they know their customers are going to have the vouchers to provide them with their low income, and they'll have the money to pay for it if they're not low income. but choice is also important. one of the things i noticed, how many of you are staying in this hotel and signed up for wi-fi in your room. can you raise your hands? now keep your hand up for a second. now keep your hand up and look around and see there are
probably 15 people who have their hands up. how many of you actually picked the premium service. >> okay. three. two? no, there's try. most of you didn't. you had a choice of 3 gigabit or 10 g 10 gigabit. you value technology. and almost none of you picked the premium service of 10 megabits per second. they are defining broadband at 25 megabits per second. it seems that a voucher should give people choice. would you rather have 5 or 10 megabits? the fcc is saying it should be 25 megabits fixed but it seems
competition and choice should allow consumers to push what services they want. >> i agree with a lot of what greg said, particularly about the rural areas, but i find myself in the odd position of actually defending rural phone companies in this regard. >> we're going to cut your mic off. [ laughter n. >> because those who know me know i've spent a lot of time diebti debating them. where part of the problem with universal service in the high-cost areas is in the similar in e-rate is we are trying to fund what is fundamentally a capital project, but we keep mixing up capex and op ex. you take all the money and actually you could take half the money and accomplish more. you get, you know, you raise, i
think order of magnitude $100 billion over 20 years or something like that. whatever. and then you have a reverse auction. and you see how far you get. and then you end the program. because the capex is paid for. the problem is you can't rely on that over a long stream of time. to essentially up front build, put the fiber or put whatever facilities you need to go in there, and so i just think that as we focus on that as opposed to lifeline, which is fundamentally giving people the ability to buy networks that are already in place, there are problems with that. i certainly agree that economically, it would be better to have it be out of the tax base, but i have to say rural
phone companies could not finance the construction of companies if they said don't worry, congress will fund this every year, whereas the fcc and universal service fund is seen as consistent enough to get various financing. so i think part of the challenge for universal service is how do we, we're essentially funding it on an operating basis, but we funding mostly what is a capital cost. and there's certain inefficiencies in that, but it's really challenging in terms of the practical political realities, and let me close by saying i agree with you on contribution form. it's very tough politically. in 2008, kevin mash continue kn to do it with phone numbers. it would have been nice to do that. it was killed and then they spent the last years
complaining. but the point is it's a political difficulty of changing that system. >> before we move on to rural, if we do it at all. another effect of rural is competitive effects. representing the companies that basically don't get any of those subsidies. >> thank you, scott. i found myself listening to greg and trying to write down as quickly as i could the notes of his outline because it was so good. the problem is, if we were all working off a blank sheet of paper, that's what we would work off of. the problem is we're not on a blank sheet of paper, and how do we get from the world where universal service was essentially compact with a monopoly to fun the fund the go
we all share today. the fact of the matter is that the cabletry in particul indust particular, we've built out to 93% of households in america without any government funding. speeds are hitting a gigabit. and the next generation will have multi-gigabit speeds. we are competing oftentimes with people who are receiving government subsidies. and it just seems to me that while there are some signs that we are recognizing the competitive world we're living in, the glashl pace that we're moving, i want to commend commissioner o'reilly and clyburn for the work that they
recently did and noting that we probably don't need to subsidize rural carriers who are covered by a competitor who reaches 100% of the homes in that area without any type of subsidy, but, you know, that is the tip of the iceberg when it comes to recognizing the distortions that can play into the current regime. so the more that we can do to recognize the, and unleash the power of private investment and to steer scarce government funds into the areas where you don't have a competitive alternative, i think, you know, we need to do. and you know, i fear that we're moving too slow on a lot of these areas, and, you know, we have areas with price cap carriers that have rights of first refusal to build dsl, you know, over six years, it's not
even broadband today from what i read. so we need to take a more sob sobering assessment. and rye doub redouble our efforts in that regard. >> i'm going to ask a question that's probably not fair. but it comes from greg's side, so it's probably his fault. you can imagine a scenario where it's, we have means-tested vouchers for low-income people to apply to any carrier they want, which would include potentially cable, cable broadband. but that we'd also tax broadband because it's an interlassic service. >> on the contribution side? you know, i won't say it's, i would certainly say it's not a preferred outcome at this point, certainly because you know, at
the time that we're wonts to impose broadband, why do we want to impose on people's broadband bills. all of these programs change over time, and it's certainly a conversation that we want to be a part of. i do think on the actual subsidy side, you know, one of the things that our industry has done a lot of work on, comcast probably at the lead of the pack with their own adoption programs, but certainly cox, sudden link, other carriers that have partnered with other groups, such as connect and compete and other non-profits is to really try and work outside of the idea of a government program, because one of the things that we often focus on the cost, because i think policymakers feel that's the one thing that they can control, but, you know, i think all the research shows us that that is
really only one factor in the adoption conundrum, and it's probably not even the most important factor when you're talking about issues like is it relevant to my daily life, what is the cost of the computer, that sort of thing. so, you know, i think for these programs to really be successful, they need to, you know, focus on kind of a holistic approach to getting people to connect, showing that there is value in the broadband connection and to really, you know, moving the needle in that regard. i also think it, to the extent and i think the order on link-up is long overdue. we need to get more participation. and bee have these regulatory barnacles of requirements like you have to be an eligible telecommunications carrier that really make no sense to me at least in this modern age, and i'm glad to see that the
commission recognizes the potential obstacles that can create and is looking at ways to kind of streamline that process. and the last point in addition to participation is that we have to be fiscally prudent. i wasn't sure when blair was speaking about the idea of a cap or a budget, i wasn't sure whether he was saying we should fight about it or we shouldn't fight about it. >> we should fight about it later. >> that's one thing, when i was a kid, i wanted dessert first, and i'd tell my mom, i'll fight about the spin ach later. but one of the things it is as a disciplining factor if we try to operate in a budget, it forces us to be more efficient in the choices we make, so i would rather have that debate sooner rather than later. >> if i could illustrate a point really quickly. i think it's really important to create a platform that allows the consumers of lifeline to
know what might be available, like training programs or device subsidies and things like that. that's part of creating the platform. we don't have that today. that's job of the fcc today. my only point about the budget, that's an i have legitimate debate. we have going to spend a huge a capital in 2015 on an issue where it will be revisited in 2017 and hopefully we have a platform that gives us some data that allows us to right size the program. how do you allocate financial capital? >> to further enlarge the target on my back that i'm about to, you know, make more visible. the fact of the matter is, under the current universal service construct, we are subsidizing, we, you know, broadband enable networks, so when you talk about, you know, what i think should be an adult -- i keep
using that word -- part of the conversation, you know, debate, we need to talk about, you know, what that means and whether or not that pie should be broadened in line or in synch with where the money is going anyway, you know. disproportionately, those had who are least benefitting are paying the most. and that part of it, i don't think, is enough of the part of the conversation that, i don't think we're having that conversation much beyond academic exchanges, and i think that's unfortunate. >> i think an academic wants to say something about that. >> to follow up on a couple comments. one of the thing is economic principles to structure a system where you can have cable and wireless be competitors, the system was set up for a monopoly
provider, we want it set for competitors. in terms of a broadband tax, one thing i didn't, i neglected to mention is that there are lots of different tiers of broadband service. broadband connection may be interlastic, but it might change based on the elasticity. and the final thing i want to talk about was price discrimination. economists think this can be a good thing or a bad thing. it sounds pejoratively bad. but one of the things that the low-income programs that have been these voluntary conditions, in quotes. of mergers have been to provide low-income service. this, to me is a price discrimination tool, that the broadband providers are able to charge a lower price to people who might not otherwise sign up. if this is indeed the way it's
working, this is a good thing. you get them and increase quantity and that's the definition of how economists look at discrimination is increasing quantity. and this is a very efficient way of providing low-income service is almost to make it politically good, not just acceptable but politically good to price discriminate. >> i wasn't sure where you were leaded with that sense. if you were to look at, if you were to do a -- i can't think of what it is right now. but if they were to take samples of fingerprints that are on some of those had voluntary agreements, you might find my finger prints somewhere. >> i think it's great. >> just one thing, back to yesterday's conversation. one thing about the act, it allowed competition to enter. what it did was before the
telecom act, the prices that we had didn't make a lot of since. all kinds of different cross subsidies. 25 cent a minute long distance, all these other things. it forced all the prices to get rationalized and it moved to cost. one thing that, you know, there's really, i think the benefits in terms of investment and other things in the high-cost areas is where people could come up with new ideas and new techniques to try to serve these people. and i worry that the rules and the way that they're being put in place is not allowing that innovation and prices to work to try to provide service that will bring lower priced, higher-quality service to people in low-cost areas. or high cost, sorry. >> before, i wanted to ask about some of the innovations the fcc has done, like implementing reverse auctions.
but before i do that, i want to ask blair. you mentioned the or maybe it was james, the importance of non-governmental, yeah, james, mentioned the importance of non-governmental programs. that's sort of what you've been involved in for a few years now in trying to bring new broadband networks. now maybe the kwhucommunities w you involved with were different, but are there lessons that you learned from trying to bring in new networks that might be useful in a universal service context in. >> yes. because at the end of the i da, what we're trying to do is fill in that puzzle. the way we looked at filling in that puzzle in 1913 is different and the way we did it in 1984 when we deregulated cable or '92 or '96. and these things keep changing.