TR Daily Pai, Simons Defend Agencies’ Budget Requests, Priorities
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Tuesday, May 7, 2019

Pai, Simons Defend Agencies’ Budget Requests, Priorities

Reducing robocalls, protecting consumer privacy, expediting 5G deployment, and closing the digital divide were among the concerns senators asked FCC Chairman Ajit Pai and Federal Trade Commission Chairman Joseph Simons to address during a hearing this afternoon before the Senate Appropriations Committee’s financial services and general government subcommittee on the fiscal year 2020 budget requests for the agencies.

In his opening statement, subcommittee Chairman John Kennedy (R., La.) expressed an interest in the FTC’s new task force to monitor competition in technology markets, as well as the FCC’s efforts to close the digital divide, promote innovation, improve its own regulatory processes, and encourage the deployment of 5G services.

Chairman Kennedy also spoke about net neutrality, saying that "regardless of what one thinks is the correct course, … we need to pick a course and stick with it."

He added, "It’s really time for Congress to act. … I think we have more in common than we don’t."

Chairman Kennedy returned to the issue of net neutrality at the close of the hearing, saying that the "partisan vote" in House passing the Save the Internet Act (HR 1644) "could stifle innovation and could undermine broadband competition in small towns."

During the House vote, only one Republican, Rep. Bill Posey (Fla.), supported passage of the bill (TR Daily, April 10).

Chairman Kennedy said that "the Senate needs to come up with a new bipartisan bill" that will protect consumers and rural communities.

In his opening statement, subcommittee ranking minority member Chris Coons (D., Del.) told Chairman Pai that he is concerned the FCC is requesting a decrease in funding "at the same time we are counting on you" to facilitate the 5G rollout.

During his prepared testimony Chairman Pai said that under the proposed budget, the FCC’s FTE (full-time equivalency) level will stay the same.

Elaborating on some of the agency’s initiatives, Chairman Pai said that under his plan to establish a Rural Digital Opportunities Fund, the current support for rural 10 megabits per second downstream/1 Mbps upstream service would be replaced by support for up to 1-gigabit-per-second service that would be deployed to up to 4 million homes and businesses.

In his opening statement, Sen. Coons similarly told Chairman Simons that he is concerned that the FTC is requesting an increase of less than 1% "at the same time we are expecting more from you" with respect to enforcement in the tech sector, with associated increased costs of litigation.

In his prepared testimony, Chairman Simons said that the $2.6 million in requested additional funding would cover agency needs such as expert witnesses and modernization of the commission’s IT infrastructure, including critical litigation software support.

Sen. Coons noted that Americans receive more than 5 million robocalls a month. "That means that someone in this room is going to get a robocall during this hearing," he said.

In response to a question from Sen. Coons about efforts to combat robocalls, Chairman Simons said that foreign robocallers "have to have an entry into the U.S. phone system, and their calling characteristics are quite distinct." He added, "My understanding is that there are carriers that cater to them, … and we could go after [those carriers] if we could get rid of the common carrier exemption," which bars the FTC from using its authority under section 5 of the FTC Act with respect to common carriers.

Later, Chairman Kennedy asked if the FTC knows which carriers enable foreign robocallers.

Initially, Chairman Simons said, "We haven’t developed a list because we currently don’t have authority over them."

Later in the hearing, when Chairman Kennedy raised the issue again, Chairman Simons said, "I’m told we know [which carriers are involved]. But we don’t have jurisdiction over common carriers."

Chairman Kennedy asked, "Why isn’t the FCC punishing them for the rest of their natural lives?" He added, "Let’s go after the carriers. They’ve got to be violating some laws."

Chairman Pai said he would be happy to look at the facts developed by the FTC.

Sen. Steve Daines (R. Mont.) asked for and received a commitment from both witnesses to work with him to do "whatever it takes to stop illegal robocalls."

Chairman Pai added, "I think we could move very quickly" after passage of legislation such as the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act (S 151), which would authorize the FCC to impose penalties of up to $10,000 per call for those intentionally violating telemarketing restrictions; extend the statute of limitations to three years for the FCC to take enforcement action against restrictions on placing unauthorized robocalls; direct the FCC to adopt within 18 months a requirement for voice service providers to implement a call authentication framework and to create a safe harbor for compliance; and direct the FCC to conduct a rulemaking to protect subscribers from receiving unwanted calls or texts from a caller using an unauthenticated number and a separate proceeding to review its policies for access to numbering resources. The Senate Commerce Committee approved the bill last month (TR Daily, April 3).

Chairman Kennedy asked Chairman Simons when the FTC technology task force "will complete its task so that there will be a policy" on enforcement in that sector.

Chairman Simons said that the agency’s policy "is irrespective of the task force." He explained, "The task force is a law enforcement unit. It will bring cases."

Sen. Coons asked how much money an auction of licenses in the 3.7-4.2 gigahertz C-band would generate.

Chairman Pai said, "I don’t have a verified internal estimate" of auction proceeds. "There’s been a lot of private-sector chatter" on the topic, he noted.

Sen. Coons asked if it could be "tens of billions of dollars."

Chairman Pai said, "I have seen estimates of that, [but] I have no independent verification."

Sen. Chris Van Hollen (D., Md.) asked how the U.S. ended up in a position of not having domestic providers of equipment needed for 5G deployment, and instead has relied on foreign companies, including Huawei Technologies Co. Ltd. and others that have been the subject of security concerns.

"There were long-term economic issues that made it difficult for some of the [domestic equipment] providers," Chairman Pai said. He added that "the Chinese government picks national champions in that space."

Regarding the need for more 5G spectrum, Sen. Kennedy raised the issue of "hoarding" by federal agencies. "Can we get the president to issue an executive order for the agencies to share?" he asked.

Chairman Pai said, "That’s obviously a decision the White House would have to make."

"We need to give them a little incentive [to share]. And I’ll talk to the White House about that. If I can’t convince them, Sen. Van Hollen can," Chairman Kennedy said.

Chairman Kennedy also questioned whether spectrum sales in secondary markets would get "the highest value" for spectrum.

Chairman Pai said that secondary market sales have the advantage of bringing spectrum to market more quickly.

"Why can’t we redesign the system to improve speed to market?" Chairman Kennedy asked. He asked Chairman Pai to "make recommendations to us on laws we need to pass to allow you to achieve maximum revenues in the shortest time."

Sen. Jerry Moran (R., Kan.), who is also a member of the Senate Commerce, Science, and Transportation Committee, said he remains concerned about the accuracy of the FCC’s broadband mapping data.

Chairman Pai said that immediately after he became Chairman, he initiated a "comprehensive review of Form 477 data" for fixed broadband, and that he expects Commission staff to deliver recommendations to him "soon."

"On the mobility [broadband mapping data] side, … we believe one or more carriers may have submitted inaccurate data," and referred that issue "immediately" to staff for an enforcement investigation, he said. "I expect staff to come back to me soon with some conclusions on that investigation," he added.

Sen. Moran asked what the FCC has learned from the challenge process, which allows potential competing carriers and other stakeholders to challenge a carrier’s assertion that an area already has broadband service and thus is ineligible for subsidies.

"It has been illuminating," Chairman Pai said, adding that "consumers and small businesses have been able to pinpoint" areas where there isn’t coverage. "We’re looking at crowd-sourcing as a way to get information" to supplement carrier-provided information about broadband availability, he added.

Sen. Moran asked what resources the FTC needs to pursue data breach enforcement.

Chairman Simons said, "We lack civil penalty authority. We’d like to get targeted rulemaking [authority]. We’d like to get authority over non-profits and common carriers."

Sen. Moran asked, "If Congress gave you those authorities, how would it affect your budget needs?"

"I think they would go up significantly," Chairman Simons said. He noted that while the United Kingdom agency with authority over data privacy has about 4,000 employees, and the Irish data authority has 140 employees, the FTC currently has 40 employees working on those issues.

Sen. James Lankford (R., Okla.) asked when the FCC will finish its report on cell jamming in prisons.

Chairman Pai said, "We are analyzing the recent report on which our own report is dependent," referencing an industry task force report on contraband cellphones in prisons (TR Daily, April 26).

Pressed by Sen. Lankford on how much longer the FCC’s own report would be, Chairman Pai said, "Much closer to one month than six months."

Sen. Coons asked about reports of carriers selling real-time location information.

Chairman Pai said, "I do share that concern" and "immediately directed our Enforcement Bureau to conduct an investigation." —Lynn Stanton, [email protected]

MainStory: FederalNews Congress FCC FTC SpectrumAllocation BroadbandDeployment

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