FCC’s Path Debated at House Oversight Hearing
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Wednesday, July 25, 2018

FCC’s Path Debated at House Oversight Hearing

During a House communications and technology subcommittee FCC oversight hearing this afternoon celebrated by Republican lawmakers as the first since the reauthorization of the agency earlier this year and viewed by Democratic members as overdue, FCC Chairman Ajit Pai and his two fellow Republican Commissioners proudly recounted changes in the agency’s direction on issues such as net neutrality, deregulation, and wireline facilities deployment as boosting broadband rollout and closing the digital divide, while the agency’s lone Democrat, Commissioner Jessica Rosenworcel, criticized that new direction as placing the interests of large carriers over those of consumers, small companies, and innovators.

The hearing also provided an opportunity for Democratic lawmakers to question Chairman Pai and the other commissioners about whether President Trump’s tweet yesterday evening regarding the proposed merger of Sinclair Broadcast, Inc., with Tribune Media Co. would or should influence their review of the transaction.

The president tweeted, “So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune. This would have been a great and much needed Conservative voice for and of the People. Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”

In her opening statement, subcommittee Chairman Marsha Blackburn (R., Tenn.) referenced the reauthorization of the FCC as part of the RAY BAUM’S Act earlier this year, adding, “I know we can deliver the same bipartisan accomplishment [of agency reauthorization] for your colleagues at NTIA,” or the National Telecommunications and Information Administration.

In his opening statement, subcommittee ranking member Mike Doyle (D., Pa.), however, took a more pessimistic tone, saying, “In the nine months since our last hearing, the Commission has expanded its track record [for taking] anti-consumer, anti-small-business, anti-innovation [actions.]”.

He expressed hope that the House will follow the Senate’s lead in passing a Congressional Review Act (CRA) resolution to nullify the FCC’s December 2017 actions in eliminating most of the open Internet rules adopted in 2015 under Democratic former Chairman Tom Wheeler.

He criticized the FCC’s “bizarre and onerous challenge process” for areas identified by carriers as served by high-speed wireless and thus ineligible for bidding in the Mobility Fund Phase II auction. The challenge process requires parties to “walk through cornfields and backyards trying to prove” that broadband wireless is not available.

Rep. Doyle criticized the current FCC’s approach to broadband data services and retirement of legacy copper facilities, noting that NTIA recently wrote to the FCC to express concern that the agency’s approach to streamlined discontinuance of service leaves federal agencies vulnerable to being stranded without communications capabilities (TR Daily, July 20). He suggested that the Commission is putting the interests of carriers above those of national security.

He raised the issue of wireless carriers’ sharing location data with data aggregators and other third parties, which in turn shared the information with law enforcement without a warrant. “How was Commission so in the dark about a widespread industry practice?” he asked.

Rep. Doyle said he was “extremely concerned that the president has waded into” the Sinclair-Tribune merger review. “I hope you can assure us that a presidential tweet” will not affect the ALJ proceeding, he added.

Full Energy and Commerce Committee ranking member Frank Pallone Jr. criticized the Republican majority for being “unwilling to carry through” on a commitment to hold FCC oversight hearings every quarter. “This is the first oversight hearing in nine months, and only the third in this Congress,” he said.

In his statement, Chairman Pai thanked the subcommittee for launching the RAY BAUM’S Act, which, he noted, included a provision that corrected a barrier to spectrum auctions created by conflicting rules on the kind of account in which the FCC could deposit auction revenues.

Chairman Pai said that fiber investment increased in 2017, suggesting this was due to the expectation that the FCC under his leadership would reverse the 2015 net neutrality rules, which it did.

The U.S. Telecom Association said in a blog post today that its preliminary analysis of the 2017 capital expenditures of wireline, wireless, and cable broadband service providers suggests that “the two-year decline in private capital investment in U.S. broadband infrastructure from 2014 to 2016 appears to be in the rearview mirror.” It said that the two-year decline “coincided with the previous FCC—in its final two years—abruptly shifting course down a sharply more regulatory path headlined by the controversial attempt to subject consumer broadband services to heavy, archaic regulations written nearly a century ago,” while the 2017 capex recovery “coincides with the current FCC leadership’s emphasis on consistent, modern policies that seek to create a more level playing field across the internet ecosystem—ensuring company investments will be treated fairly AND consumers will be protected consistently wherever they go online.”

In his testimony at the hearing, Chairman Pai cited the commitment by Vermont carrier Vtel, “as a result of recent FCC policies,” to spend $4 million “‘to purchase equipment and services from Ericsson to upgrade its LTE core to enable voice roaming and Wi-Fi calling to all our Vermont rural subscribers and to simultaneously begin rolling out faster mobile broadband that will start our transition to 5G.’” Chairman Pai quote a Vtel official as saying that the company “is quite optimistic about the future, and the current FCC is a significant reason for our optimism.”

In his opening statement, Commissioner Mike O’Rielly said that “without additional tools provided by Congress,” the FCC “can only go so far to eliminate the harmful practice of pirate radio.”

He also said that “additional federal action” is needed to address 911 fee diversion by states, which have not all proved susceptible to “naming and shaming.” He cited the proposed 9-1-1 Fee Integrity Act (HR 6424) introduced by Reps. Chris Collins (R., N.Y.), Anna G. Eshoo (D., Calif.), and Leonard Lance (R., N.J.), which aims to prevent 911 fee diversion (TR Daily, July 20).

Commissioner O’Rielly urged the inclusion in the farm bill of provisions to prohibit duplication of government broadband funding.

As for spectrum, he said, “As you are well aware, there are no greenfield mid-band frequencies available for 5G. The 3.7 to 4.2 GHz band, or C-band downlink, is attractive, however, because it provides significant contiguous spectrum and the largest satellite operators are receptive to reducing their spectrum footprint using a market-based spectrum reallocation approach. The Commission must conclude the proceeding for determining how to reallocate this band promptly given its importance both domestically and internationally for future wireless offerings. In doing so, I believe that any reallocation plan must be completed fairly quickly; release a sufficient amount of spectrum, such as 200 to 300 megahertz or more; and ensure that current users of the C-band satellite services — primarily broadcasters and cable providers — will be accommodated on the remaining C-band, other satellite spectrum, or through different technologies.”

Commissioner Brendan Carr recounted some of his encounters with Americans who lack broadband and with those who use broadband to address a variety of challenges, including telehealth.

Commissioner Rosenworcel said, “Too many Americans still lack access to broadband. Let me put a number on it. Right now, 24 million Americans do not have access to high-speed service. That’s not acceptable. We need to do better.”

Criticizing the Republican-controlled FCC, she said, “Too often during the last nine months the agency acted at the behest of the corporate forces that surround it, shortchanging the American people. You can see that clearly with our roll back of net neutrality … [as well as in the] failure to fully engage those who need a voice in our policies — the cities and towns that should be our partners in the process, the Tribal communities that are entitled to government-to-government consultation, and the Department of Commerce which just last week expressed concern about how our rush to reform could harm national security and public safety services. Likewise, you see it in proposed reforms that undermine our Lifeline program—and the populations that rely on it, including those served by domestic violence shelters, military veterans, homeless youth, and residents of Puerto Rico who are still recovering from a harrowing storm and grave humanitarian crisis.”

In questioning the Commissioners, Chairman Blackburn noted that committee members had written to LocationSmart and Securus about their use of location data obtained from wireless carriers. “I’m pleased that you all are investigating this as well,” she said.

Ranking member Doyle asked about the issue of using census tract licensing areas for priority access licenses (PALs) for the 3.5 gigahertz band Citizens Broadband Radio Service (CBRS).

Chairman Pai declined to comment, saying that he had “delegated this issue to Commissioner O’Rielly” and that he didn’t “want to presuppose to what he would recommend.”

Commissioner O’Reilly said he did not favor the use of census tract license areas.

Commissioner Carr said the agency hasn’t made a decision on the issue yet.

Commissioner Rosenworcel said that “we’re going to need smaller licenses” if rural America is going to be served with wireless broadband.

Rep. Doyle said that BDS (business data service) customers “are telling us their bills have increased by 175%” and he said that the letter from NTIA on service discontinuance streamlining suggests that the FCC is endangering public safety and national security.

Chairman Pai said, “With respect to NTIA, we certainly welcome this submission.” He added that the “overall tenor” of NTIA’s letter “is supportive of our approach.” He said that in deregulating BDS pricing, the FCC preserved its authority.

Full committee ranking member Pallone asked the Commissioners whether they agreed with President Trump’s tweet about Sinclair.

Chairman Pai said that he stood by the agency’s decision to refer certain issues to an ALJ hearing.

Commissioner O’Rielly said that he could not answer because of the status of the proceeding.

Commissioner Carr said that the hearing designation order “lays out our views.”

Commissioner Rosenworcel, who had retweeted President Trump’s tweet about Sinclair yesterday evening with the one-word comment, “Disagree,” told Rep. Pallone, “I do not agree with that.”

Rep. Pallone asked for a commitment to publicly disclose any contact from the president or the White House on the Sinclair matter.

Chairman Pai said the agency would do so, “consistent with restricted ex parte rules.”

Subcommittee Vice Chairman Lance asked whether FCC auction technology is out of date, and, if so, what effect that has on the FCC’s ability to conduct multiple auctions.

Commissioner O’Rielly said that the technology is “not as advanced as it should be,” and that “one of reasons I had to say no to ranking member Pallone on 3.5 [gigahertz] census tract [licenses] was that it would not have been an auction but sealed bids,” and the FCC auction system could not handle that process for so many licenses.

Commissioner Rosenworcel said, “If that’s a problem, we need to commit time, energy, and resources to fixing it.”

Chairman Pai said, “I agree,” and that is why he has requested budgeting authority to allow him to allocate funds to update the auction system.

Rep. John Shimkus (R., Ill.) asked about the “perception that we’re going to take away local rights” in an effort to smooth the deployment of wireless facilities.

Commissioner Carr, who has been tasked with responsibility for wireless facilities issues by Chairman Pai, said, “We’ve had a lot of good, productive conversations” with local officials, and he acknowledged that local officials, not the FCC, are the ones who hear from constituents “if an ugly small cell goes up.”

Rep. Peter Welch (D., Vt.) said that in quoting from Vtel, Chairman Pai neglected to mention that the company received $130 million in American Recovery and Reconstruction Act grant funding. “There was actual public money that went into helping the buildout,” he said.

Rep. Debbie Dingell (D., Mich.) criticized Chairman Pai for his “lack of response to a letter [from lawmakers] on the DDOS attack” on FCC systems.

Chairman Pai said that the FCC’s Office of General Counsel had “opined that we required a letter from the committee [not from individual committee members] to share certain information.”

Chairman Pai added that the FCC has been working with the Government Accountability Office and the FCC’s own Office of Inspector General on these issues, and that he expects the IG to release “more information on this in the very near future.”

Rep. Brett Guthrie (R., Ky.) asked about the timing for the notice of proposed rulemaking on the 6 gigahertz band.

Commissioner O’Rielly said that the 2.4 and 5 GHz bands are congested and “we need to add more unlicensed spectrum to the portfolio,” including 6 GHz band spectrum.

“I believe the goal is to have an NPRM [in] this fall timeframe,” he said.

Rep. Jerry McNerney (D., Calif.) said that there have been reports of VPN filters with cyber vulnerabilities on “hundreds of thousands of routers” rented by ISPs (Internet service providers) to their subscribers, and he asked whether the FCC is “encouraging” ISPs to inform their customers of the risk.

Chairman Pai said, “I can’t comment on things that might have some classification to them.”

Commissioner Rosenworcel said that she believes the FCC has a role in ensuring cybersecurity for consumers. She also noted that the routers in question have to be authorized by the FCC and that the agency could thus “look into” using the review process under its part 15 equipment rules to address this issue. —Lynn Stanton, lynn.stanton@wolterskluwer.com

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