Transcripts For CSPAN Key Capitol Hill Hearings 20131216

Motors chair and ceo daniel son he will beer speaking on the state of the audio industry. The house has completed its legislative work for the year but it will gather at 11 00 a. M. For a brief pro forma session. Tw nominationso remain. Several other major items include the budget agreement and the bill setting out the defense policies for next year. Furthermore, we spoke this morning with a capitol hill reporter. Host thank you for joining as. This is the final week in session. Give us what we can see over the next couple of days . Theyre coming into session after he got this afternoon and to work there a couple more nominations with folks at 530 as is fairly normal on monday afternoons. We will see the confirmation of and patterson to be a state as well as the confirmation of jeh johnson to be the secretary of homeland security. That will clear the decks out to. E able to move forward it will limit debate on the budget deal with the Defense Authorization falling a little bit later in the week. Host lets talk about the bills for a second. From what youre hearing, doesnt have enough support of Senate Republicans to pass . It looks like it will. Sunday from ron johnson who said he was going to support it. We heard a number of republicans who have signaled that they may vote for cloture. They would vote to break a potential filibuster which is the vote on which the democrats will really need. Even if they vote against the measure itself. It would be tough to see the. Eal of not going through this is happened before. There have been situations in the past where Minority Leader Mitch Mcconnell has pulled his caucus away from agreements and what has happened is that there are no longer the votes for something that previously a lot of people thought would have. Barring that situation, that deal will get through. The defense bill looks like it will probably be an easier ride at the end of the day. Partly because the Defense Authorization bill has been passed by Congress Every year for 52 years. Is one of these annual traditions. Day, that billhe will get through before the end of the week. There will be some consternation of thee stalling because way the bill basically came to the senate floor and did not have any votes for amendments to speak of. Anytime that happens you get a number of people who are not happy with what is going on. At the end of the day that will get through to. Both measures will be heading to president obamas desk before he leaves for the holidays in hawaii. Last time we spoke harry reid was about to deploy the Nuclear Option to change Senate Procedure rules. I know a lot of Lawmakers Said they thought that would think reese what is already a very bitter partisan divide in congress. Has actually gotten worse . I think it clearly has. The first one being last weeks marathon session. The senate was in session for more than 48 hours continuously. As democrats look to push through a number of nominations, taking advantage of the new procedural rules they set up for themselves, much to the consternation of republicans. I will also give you an anecdote, which is myself and several other reporters were talking to john mccain late last sayingd he basically was he was one of the republicans who was frequently part of these yield making coalitions these was making coalitions, he saying that a lot of the normal dealmaking that would normally go on would not happen. Out for sure when the senate goes to leave for the year whether or not they are routineclear this nominations package that they normally too late at night when very few people are watching, which is largely routine military but routine military if all of that gets jammed up, we know we are going to have real trouble as the senate moves and 2014. Host if you are in middle or high school student, we want to know what is the most important Issue Congress should address next year. Make a five to seven minute video and include cspan programming for a chance to win the grand prize of 5,000. The deadline is january 20. Get more video information a studentcam. Org i wish you a Merry Christmas and a bright and prosperous new year. This is beginning on thanksgiving day. Would you mind autographing some of the christmas ones as a special favor for santa claus . This is one of the things that i do best. It is a good thing you have santa claus. Likeu must have perform this before. My father santa claus gave it to me. That explain some of the dog hair in it. The first ladies influence in image. Edith roosevelt weeknights at 9 00. The current head of the economics team, nathan sheets, so this has provided stimulus to the economy but it is not a Silver Bullet to the economy. He was speaking at a symposium about the history. Other participants included a former governor of the central bank of cyprus any former member bank of the policy committee hosted by George Washington university. This is about 50 minutes. Thank you all for coming. I know you have been focused on the federal we are going to try to go global and pullback of the lens. Here we are five years after the crisis. The worlds major Central Banks are still the biggest players in the economy. I am sure they wish they moved on by now. Japan, and the bank of england we will focus on. To start, they have a lot in common. They all had to deal with the crisis, the recession, and have struggled to revive their economies during the sluggish recovery. They talked together all the time. The meat and. They share they meet. They share. They studied and talked together. They are a special club right now of Economic Policy makers. At the same time, there are differences. Mandate has a different that is the marching orders from their respective government. Different economies and Banking Systems that present challenges. What we would like to do is talk about how these differences affected their response to the crisis. What lessons can we learn . Is there anyway to consider how it might affect policy Going Forward . It explain tot, us the different mandate and how they about to be so different from the others. Think George Washington university for hosting this event. Us really started our careers in the Federal Reserve system. That is what we share in common. Going back to the question, before the crisis, a consensus had evolved globally about how Central Banks would operate and in particular about how Monetary Policy would be designed around the globe. Recognized price stability among the lives of what they had mentioned this morning. Mandate terribly long term and the ability of Monetary Policy to help economies grow as long as they kept their focus on price stability. Consensusmy mind the at least before the crisis that are doing this both as a result of Academic Work in very much the practical experience before that. Legal mandates a very quite a bit. Here is where we have the Federal Reserve with the deal mandate that was developed in the 1970s. Essentially, instructing the Federal Reserve to place on a full or maximum employment mandate as well as price stability. That is in contrast to what we have seen in the European Union where we have the bank of england. Add may talk more about that. Union dy in the european bees the mandate of this to the price stability as the primary objective. It is only subject to maintaining price stability. There are other objective of government. Before the crisis, this was in theeted similarly anded states and in europe many other countries and economies. The crisis, we could see differences. In the last couple of years when the Federal Reserve has introduced language with explicit mention of the Unemployment Rate as a threshold for policy and the explicit mention in the statements they put out this january about the attention to unemployment. I think we have seen the Federal Reserve go closer to the legal texts than what the european banks are. This has appeared right now. If i can pick up on that. At the federal bank of new york when they were at the board. I do not get hired by the board. It is interesting that there was this convergence. Aagree that it started to be more apparent diversions in the last couple of years. There is a mistake we are making to emphasize too much to mandate. If you go back through recent history or the last couple of years, they have very little predictive power. Swiss National Bank which was one of the most price stability oriented banks and always delivered very low inflation had a mandate of about eight different targets including something to do with agricultural milk prices. Fed isot just that the more literally interpreting the mandate, it is that the ac ecb is more ostentatiously ignoring the mandate. In what way . It is supposed to have a pursuing price stability, meaning an inflation rate of close to or below 2 measured in the way they specify and theyre supposed to be having a monetary color for monetary growth. The euro area has been below the inflation target by a significant month and the growth area. They decided they will not do anything about it. They have other goals they want to pursue. This idea mandate is misleading. Does it not matter . The bank of japan ignored to the mandate for years, too. Go. Et me let nathan i appreciate that. I think adam is right in 99 of the cases. I really do believe that in recent years we have seen some of the 1 manifest itself. It would haveif you hav been harder for the Federal Reserve to justify the qe. Inflation was very close to 2 . That was the only objective for the Federal Reserve, coming in with these big guns of 85 million a month a month the would have been very difficult to justify. This was very much about hoping the labor market had a dual mandate. Athink that if the ecp had dual mandate, i think there would have been additional pressures on the ecb to respond to the soft economic performance. Hat we have seen there if you think hard about the mandate that they have, that they have not been vigorous in trying to achieve it, i think if there have had been another leg been it would have additional institutional pressures on them to stimulate. I the bank of england while was there, we have an inflation target. But we interpreted the mandate to say we are not going to kill the economy. You can look forward. You cannot sacrifice your price stability anchor. To say that we were somehow constrained by our target is wrong. Is my next question. I want to respond. At least a little bit to adams suggestions. Is violatinghe ecb its legal mandate . Absolutely. I should respond to that. [laughter] it is not true. Thent to highlight one of major difficulties of the Central Banks including the Federal Reserve. Central banks around the world or incredibly overburdened. Need different solutions. We have problems in the United States. And many other problems in japan. Area, wese of the euro have a major structural flaw in the way the euro is structured and that the governments have not figured out how to help each other get out of the crisis. To seto has not managed up an entity that would take care of the crisis. To holdis really asked the euro area together. That is the second objective it to price stability. I agree with you that it would have been nice if the ecb could have engineered higher inflation to be closer to 2 . We would agree with that. The question is how much they can with a fraction of that system. [crosstalk] everything is a mandate acc. They are ignoring price stability right now. Let me jump here on the overburdened point. Upshot of aof the Global Financial crisis is the now Central Banks throughout the an implicitize additional mandate. That is a mandate for price stability. Now you have a Federal Reserve that is facing for employment, price stability i. If you lay on additional responsibilities, one risk is you have to choose. Which way do you go . Much Human Capital can one institution have . Some people would argue in washington that the fed should have a single mandate. By giving them a dual mandate youre setting them up for failure because Central Banks can only control inflation and not employment. Your leading authorities off the hook. That the fed is overburdened by the mandate or that the other banks are too restrictive by their single mandate. The actually agree with components of a single primary mandates. This is how politics interferes with central Banking Systems. And the importance of loosening them. Think about easing policy and tightening policy and how you need to be symmetric in order to maintain price stability. Direct. Ess is not it is much harder to tighten policy when a central bank needs to tighten price stability. Asymmetricom being in this way. I believe in the policies we have seen. I believe how the fed has operated over the years. Lets be clear. How it is unrelated to reality. There is the time and consistent model of inflation. It has dominated academic discourse. It has ever had any in. Support. It is not sure that the curve is vertical in the short or medium term. A is not sure that it is difficult to get inflation down. Your political claim which is supposed to be the real basis is not sure either. The Federal Reserve is under a thee attack right now from rightwing. You should have a single mandate and have been stymied from things they would otherwise like to do. There are such a huge political reaction. Is what is happening right now. You look at europe right now. Be more in europe would reactive to the banks. The political pressures are all about making sure the german and french banks do not get losses. Totally deflationary. Youre saying things that are demonstrably wrong. To i do not agree with you. I think i agree with adam on this. I do believe that mandates matter give them my religion and background i like the dual mandate. I think the justification for it is in reality Central Banks do have to trade off price stability again something. Two legs of the mandate is manageable. When he moved to three i start getting nervous. When you move on to three i start to get nervous. There have been more books written about the banks response to crisis. How would each of you rate the Central Banks response to the crisis culturally or individually in if theres anything you would do differently . Tell me one thing you would recommend. You need to break up the crisis in two parts. The first part is the severe seizing up of the Financial System from same mid2007 to the end of 2009. On that when i think the Central Banks were fabulous. I think they were innovative. They were created. It was true of all of the major Central Banks. I say we give them an a plus. Where it gets difficult is how to judge and graded the 2010 2013 timeframe. Ontory is very much out this. We will have to see. Students will be writing their dissertations about this for decades ahead. I will personally give the fed and a minus. Responded to passively. O the financial crisis ill probably give all in maybe a b minus for the ecb. Englandive the bank of about the same as the fed. What would you do differently . Glaring mistake that i think be Central Banks made ecbs lagging response to the financial crisis that emerged. Inhink if they had gone early in 2010 and establish that, i do not mean there was necessarily any predetermined mandate from the heavens that there would have been an enormous european crisis. I think the slow response opened the door and led to be fumes back in from 2009 and let them out again. We have another round of crisis. I would first agree with nathan on the response following the lehman episode. It was phenomenal. It was probably the best example in the corporation among Central Banks but we have been here it was very coordinated of an effort to keep the system afloat. In the past it would have generated a lot of conflict and questions among the measures of currency. Goond that, i am going to back to the issue of what do we expect Central Banks to deliver when they do not have the tools . In japan fiscal crisis for example. Do we expect the bank of japan to fix that . Couple of to talk a minutes about europe. In europe, we did have what was really a very tiny hiccup in late 2009. Is only 2 of gdp. Even if you thought they had a problem equal to 50 of their gdp, it would still be 1 of gdp of the euro area. There it was mishandled. Very mishandled. Was that an issue for the central bank . Where i would differ with her. I do not think this was a problem that the central bank would fix. The euro area was designed to monitor where governments had to figure out where to help each other. Miserably on that front. Should the central bank try to predict that the governments are going to mishandled the crisis a year or two later and try to undo some of the damage with Monetary Policy or doing things outside the mandate . I do not think this was feasible to do. Even though the outcomes are terrible in the euro area, it is not clear to me they are terrible because the ecb could 2010 ore things since 2011 and did not. [crosstalk] gentlemen. When you wait. Tell me one thing you would change in the we will go ahead. Why dont you wait . Tell me one thing you would change and then we will go ahead. I will agree with adam. Inflation,g of the all the Monetary Policy [indiscernible] would solve that think that was solve the existential problem. This is the ecb, something that he asked this morning at a panel. I was interpreting the way he answered for the euro area. Should the ecb had confronted them and explained we cannot help you. Even help not temporarily with interventions in the secretary bond market for greece. In 2000 10 the ecb inrted buying greek bonds order to calm markets a little bit. I would daresay that it would have been better for the ecb not allowed tobecause it governments to get off the hook. To 2010have gone back and said in retrospect that decision was the wrong decision. The ecb should not have try to help the government postponed the problems by being in this gray area for the mandate of the ecb. I basically agree. Here is this Division Like most people, i would emphasize that was a very common response in late 2008 through 2009. It was generally good. I give the ecb credit. They had a lot of facilities and things they were doing that the fed and bank of england had to play catchup and learn from in 2008 2009. I would change two things. I would give an a minus to everybody then. I would give a c minus to the ecb now. One of the things i would change, one of the things i think the fed and the bank of up in theally messed first half of 2008 is that we bear stearns time went down it was only a matter of time before other things. Of debatell kind about the record. My reading was other was not enough action taken by the authorities. England. The bank of playingthem go and games in that giving out makes things worse. There was a very bad situation. I have to briefly disagree. He said the choice was between should they have been used or not used should they have eased or not eased . Not was reason they did because they thought they should be playing a game with governments and try to force them to do something else. Duchesses ofing crying, if they had kept Interest Rates down, and a lot of human beings would have been better off. Lets talk about the politics. Each of these is operating in very different political environments. How do those differences play out in the crisis in terms of limiting or pressuring . Let me use the structural response to adam. To 18 compare the ecb governments, it is so vastly different from the plainvanilla problems that the bank of england is facing. The policy could have been much easier. You would have wanted the ecb to do traces off the government bonds of the countries and their stress. Is it legal . There are varying interpretations of this for the very simple reason that the treaty states that monetary financing is prohibited. Know financing does not preclude this. This is the problem that the bank of england might have face. Issue that iser much more pressing for the euro area. The assumption of debt is prohibited by other countries. The ecb is saying all of the thek debt in order to stop greek crisis essentially would the shifted the cost of greek government to the other governments. It is not as clearcut. Buying bonds by the size of the country would have not stopped the crisis. This is where [indiscernible] not have stopped the crisis. You would have run out of german debt. We have to look at the differences in the operating procedures so the ecb could becausets Balance Sheet of the much broader collateral bases. These are technical issues we do not need to get to. This is not a matter of not easing Monetary Policy enough. Andd the ecb pick a country say were going to focus all of our firepower in saving this country without having a prior agreement of the other governments that they were willing to let the ecb actually impose the costs . The not think the ecb had legal or political ability to do this. Force berlusconi out of italy. He did not get out of his job. Even though some actions have this. Most clearly you cannot blame the ecb for the terrible outcomes we have an unemployment. Of course you can. The institutional structure that the ecb faces is far more complicated than that of the Federal Reserve and the bank of england or japan. You have a German Economy that is performing very well. You have these peripherals that are struggling. How do you put together in Monetary Policy in a financial Crisis Response on the other hand . Acceptable to everyone. What has ended up happening for the ecb is the ecb has been a little bit like the guy that has one foot in scalding hot water and the other in ice water. Of necessity, that is where the ecb has been. Theres a question about where this is. One more point in response to what you have said. Athanasios, we have argued our Central Banks. Last resort. The the only thing worse than the central bank being the crisis fired is not being the last resort given the framework that we have to have. Itll would be great if the euro developing these. They step back. That is too dirty for us. We do not want to get our hands into that. Hazard. Es a moral i think europe would have been better served if they had been more aggressive. Even going back to the first question, what are Central Banks doing . There. Re the question is how do you do being asked tore shift resources from one country . I do not think they had the the legitimacy to ask this. Whether you take the taxpayer money and shifted to brazil or argentina when they have a crisis. This is an equivalent. If they agree to this, the Federal Reserve would be able to do this. Ok. Lets get back to reality. The first point. The ecb is the most independent central bank in the world. It has no parliament that sits over it. They can ignore it. They have no power to change the mandate rules prerogative. That is all in the master treaty. You have to reopen an international treaty. The ecb should be more gutsy, not less. When the ecb has wanted to ignore accountability and popular mandates, it has done so repeatedly. Ecb is understanding the limits of politics, you do not full anybody. Ever central bankers tell you things are too complicated and hard for technical reasons because they do not have tools, you should hear a warning sign the off. That is what the bank of japan did. We cannot really do anything. Deflations really do this to demographics. We do not have any tools. Never trust a central bank to whine to you about its tools. It is like a military whining to you that i cannot go to war were the officials want me to go as i do not have enough tanks. That is not the issue. We Start Talking about these issues of transfers it is not a fair statement to say it is transferred from the u. S. To argentina. They are members of a partial union. Say thaticulous to putting things on the Balance Sheet is a quick went to a transfer. Over time, the debts get paid off. They would not be in trouble of being paid off if he bought the bonds. If that is true, the ecb could not have the target balances. Do not believe any of that. Focus on the fact that the Central Banks need to be held accountable for meeting their goals. The goals have to be set for the political process. The ecb has been too cowardly to do what it should do. We agree on that. Lets move onto to policy. Lets talk qad. Keepmeans buying bonds to Interest Rates very low. How effective do you think it is . I think the framework is that tose major Central Banks their policy rates to an effective lower value. They seem to be reevaluating this in recent months. They took their policy rates to very low levels. The next question is what do you do to stimulate your economy from there . Following the lead of the bank of japan their its qe time frame. They went into very aggressive asset purchase programs. This has grown from a little less than a trillion dollars. I think this is the general framework. The underlying idea is the fed goes into the market. They keep assets out of private hands. The desire is that the person that have that asset goes a little bit further out the risk curve and a little bit further out the maturity structure. Like it has seems inn moderately effective stirring economic activity. If United States had not seen qe from the Federal Reserve, the level of gdp might be a couple of Percentage Points lower. Has provided meaningful stimulus. They can provide support and stimulus. At the end of the day we need to have consumers that are willing to consume. We need businesses who are willing to deploy their Balance Sheets. Their investment and hiring. My feeling is the policies that have been pursued are well advised. They have been stimulated. They have been helpful. Economye helped the through a difficult time. We are waiting to see whether that next leg of recovery kicks in. The thing that makes me a little in aus about where we are little more nervous about qe3 as i do believe there are benefits up front that we experience. Are things like managing the Balance Sheet word we will struggle to evaluate it. Maybe they are big. Maybe they are small. Who will bedoctors dealing with this over the next decade or so. Let me start by saying all three of us were starting with that. You fall in love with unconventional measures. Supporting the expansion of the Balance Sheet. Unconventional measures show the Balance Sheet. Then youre thinking about the composition of the Balance Sheet. Quantitative easing or other measures expanding the Balance Sheet of the central bank. It has been a very important tool during this crisis. How you do this depends on the framework. Do the expansion of the Balance Sheet the same way as the fed or the bank of england. Why . A market forhave the euro area as a whole. This will be like asking the Federal Reserve to expand Monetary Policy in the United States by buying detroit bonds and puerto rico bonds. Im not sure how well this policy would have gone. Virtually zero Interest Rate money. They could have done more. I agree with adam that it could have been more expansionary. This is just looting of the Balance Sheet of the ecb. They had accelerated with the infinity. Quantitative easing has been effective. It is more uncertain than conventional policy. You should never trust a central banker tells you they cannot generate inflation. Beacon have miscalibrations for the years. Cannot have them for 50 years. We live on the same page. This was extremely powerful and providing the additional combinations they needed at his needed as aey result of the crisis. Im not sure the same reasoning applies for the affinity problem that started a year ago. They do have a deep concern about the current way of even communicating the policy. If the fomc does nothing, they keep extending the Balance Sheet. If they did nothing, that meant [indiscernible] we have changed the definition of what being mutual is. I am a bit of an outlier. Theou were to go back to jackson hole conference a year ago, chairman bernanke gave a speech about quantitative easing was she very clearly summarize the literature. There is a bit of a sleight of hand that we should be clear about. When you are trying to measure , is alwayslicy difficult to determine what the impact is. You have to take into account what the expectations are. He won a nobel prize for doing the identification of military policy. Accusing them of doing this. Say i will use the certain Interest Rates. You do not know what happened to the real economy. Therefore the queue we cannot be effective. A bar. Much too high if we go and look back at the Federal Reserve, use the same methods and you get the same result. Sometimes the economy does not expand the way you hope it is. Fiscal policy is being tightening in various places. That qe somehow is demonstrably not working is misguided. I agree. Everything would be solved. That is not my point. The discussion that central bankers have allowed themselves to get into the trap and within. Ing that im get in and get the job done. There are more or less politically popular ways of doing it the gift the job done. Qe is getting is part of the job done. I think we have microphones around the room that can be passed. If you get one, please wait. Raise your hand. Is the one here . If you could just identify who you are. Videotaped four hour outside viewers. Our outside viewers. U. S. , part of the strategy seemed to include steps where banks were allowed to consolidate and get larger. Europe, less so. Is that a correct impression . If it is a correct impression, and did the United States make a mistake by allowing banks to get larger . I will go first this time. It is a natural and constructive Immediate Response to a crisis to do bank consolidation. Usually as you know what youre doing is trying to avoid systemic disruption. You hope it is a weaker bank. You can quickly take it over. There is some value left. It is an understandable crisis. So, i think you and Simon Johnson and many other people have a point. There has been a great deal of. Ariation across it is not up to the Central Banks or even mostly up to the Central Banks. This is where upper agencies get involved. Let me be clear. We were asked earlier to give grades. This is a place where the combined bank of england and u. K. Government gets a very poor grade. With four banks running the entire Financial System. It has been very problematic. The euro is the most extreme consolidation. Even japan did nothing like that. It has very real costs. I fought against it totally ineffectively. I think the u. K. Made a major mistake. If i were to add to that, i agree with what adam justin mentioned. If you have a weak bank, it is. Nly natural to ask asis true that in europe well, we ended up with larger banks. In terms of grades, for the euro area i would have a hard time soosing between a. D. And in on how to governments a ;d ; fand an this goes back to the dysfunction of the euro area. Out are really fighting it with each other. It is a very different situation. You may have one banking lobby and when governments in the euro area. They would have been very clear of different states trying to shift losses and have gained competitive advantage to banks and other member states. Disaster because governments have collectively allowed these things to happen. Building forward we have larger banks. The banking situation is terrible right now. Were asking the ecb to take over the Banking System without having created an fdic. Just to give you an idea about ,ow dysfunctional the set up is frankly, i do not think we have the ability yet on how the euro area will get out of this mess. It is they at present. Until we fix the Banking System. I agree with athanasios. I think the ongoing deleveraging of the Banking System in the euro area, on the one hand because they have very large Balance Sheets and on the other hand because capital injections have not been forthcoming. They are shrinking their way to glory. They are bringing their Balance Sheet size down by reducing a variety of assets including lending. Crunch creating a credit that sets a powerful headwind on growth given the dependence. Other than that, i hear my officer saying today for are in brief pro forma session. No legislative business will be conducted today as members are away for their holiday break. The speaker pro tempore the house will be in order. The chair lays before the house a communication from the speaker. The clerk the speakers room, washington, d. C. , december 16, 2013. I hereby appoint the honorable f. James sensenbrenner jr. To act as speaker pro tempore on this day. Signed, john a. Boehner, speaker of the house of representatives. The speaker pro tempore the prayer will be offered by our guest chaplain, the reverend father patrick rifle of st. Peters Catholic Church in washington. Patrick riffel of st. Peters Catholic Church in washington. The chaplain we as your people pause and reflect on your abundant blessings. We thank you for family and friends. We thank you for the gift of this great nation and for the gift of our liberty. And while we reflect on our many blessings, we also remember those among us who are in need, especially the poor and narge nationalized of our society. We remember those who are separated from family and friends. Especially the many and women of our armed forces. May they know of our untiring support for them and their families and for the sacrifices they make for us each day. Father, we ask you in a particular way to show your love upon these, our brothers and sisters, that our love and concern for them may be an act of gratitude for the blessings you have bestowed upon us. We ask this all in your most holy name. Amen. The speaker pro tempore pursuant to section 6a of House Resolution 438, the journal of the last days proceedings is approved. The chair will lead the house in the pledge of allegiance. And will everybody present please rise . I pledge allegiance to the flag of the United States of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. The chair lays before the house a communication. The clerk the honorable the speaker, house of representatives. Sir, pursuant to the permission granted in clause 2h of rule 2 of the rules of the u. S. House of representatives, the clerk received the following message from the secretary of the senate on december 13, 2013, at 2 59 p. M. That the Senate Passed without amendment h. R. 3458, signed sincerely, karen l. Haas. The speaker pro tempore pursuant to section 6b of House Resolution 438, the house stands adjourned until 11 00 a. M. On thursday, december 19, 2013. No legislative Business Today and for the several weeks as members are away for their holiday break. We are expecting sessions to occur every three days until in a german resolution is agreed to. Live coverage when they come back on cspan. The senate also in session this afternoon, starting at 3 00 eastern. At five 30, lawmakers will consider nominations and votes after that. You can see live coverage of the senate on cspan 2. We will have more live coverage this afternoon on cspan. We will hear from General Motors chair and ceo daniel ackerson. He is speaking about the progress of the company and its investment plan, as well as the state of the auto industry. That will be live at 1 00 p. M. Eastern. I wish you both a very happy christmas and a bright and prosperous new year. Is a pleasure to meet you mr. Santa claus and to have you onn the seals that begins thanks giving day for this year. Would you mind autographing some of the christmas seals as a special favor for santa claus . I should be delighted. It is one of the things that i do best. That is a good pen you have. Yes, indeed. My father gave it to me. First ladys influence and image. Season two. Edith roosevelt to grace coolidge. Fcc provided the first country in the world to provide allocated spectrum. This is something that allows monitoring of vital signs without having to have intrusive monitors. It can be a game changer in terms of tracking peoples health. Wireless,a remote, remote patient monitoring solution to be able to put inpatientsevices homes. We can monitor and keep them well. This device is an anticoagulation device. Typically, a patient that is on coumadin would have to go to their doctor once a week to get a blood reading. As the data goes into this device, it goes to our Service Center where they can help monitor the patient if there is a problem, they can alert the patients cardiologist. We are working on providing a apps. Notice for health haps some people care about sodium, other people care about sugar or fat. Similarly, we are developing a address mobile and nonmobile apps. This can help you say, these folks do not resell my information or this is how they use it. A consumer can navigate this newly growing and exploding field. The governments role in supporting mobile health care technology. Last week, the sec announced that the broadcast spectrum auction to free up space would be postponed until mid2015. On thursday, tom wheeler and his colleagues testified before the house energy and commerce subcommittee about that decision. Over two hours. Called to order the communications, and it is a delight to welcome all five members of the federal Communications Commission, fully installed, bright shiny faces, ready to go today. We especially welcome you and look forward to working with you to set the Communications Agenda for the United States. The fcc is the harm of our the arm of our government tasked with fostering some of the most important parts of our national economy, among them the telecommunications industry, media distribution, and the internet. Given the Economic Significance of these industries, the changes from congress, the charge of congress to encourage competition, license the National Spectrum assets, and facilitate technological advances is one that must be discharged with transparency, accountability, and a long view of the technological landscape. It is with this in mind that this subcommittee has worked over the last three years on efforts to improve the processes. As a subcommittee with jurisdiction over the fcc, we take this task very seriously and with great care to ensure the commission not only remain a Vital Institution but one that serves as an example for other federal agencies of accountability and efficiency. Bipartisan majority of the subcommittee is deeply committed to this cause and is proud to have reported a bipartisan fcc process reform bill to the full house of representatives yesterday. Chairman wheeler, it is clear that you want to improve the agency. I appreciate your conversations and comments and like to commend you for turning your attention to this task as one of your first roles as chairman by asking one of your top advisers to review the fcc process and submit recommendations for improvement by early 2014. While there are a number of large proceedings pending at the commission, many of which we will talk about today, i am particularly the concerned with returning the commission to some of its long overdue response abilities. For example, despite multiple unsuccessful trips to the Third Circuit court of appeals, the commissions responsibility to adress the media ownership address the media ownership proceeding remains unfulfilled. Additionally, licensing one of the original reasons for the creation of the commission has falling woefully behind. Of particular note is the tragic pace of processing of applications and commissions media bureau. The a. M. Radio industry has been clamoring for the ability to use fm translators to give new life to that classic medium. I appreciate what the commissioner has done taking on this issue and it is very good work. As a former licensee, i know firsthand they are in no rush to address translator applications. My own application sat unresolved 10 years. To put this in context, my wife had actually sold our radio stations, our son went off and graduate from college, and every full Power Television station in the country convert it from converted from analog to digital broadcasting. The commission can do better than that, should do better than that, and i am hopeful that we will improve that bureau. As the only one on the panel with the unique experience of having been a licensee of commercial broadcast and still under your jurisdiction with an amateur radio license, i would offer two pieces of advice. First, where congress has spoken, i urge you to heed the words in statute and reject calls to act in ways contrary to congressional intent. For example, in the incentive auction proceedings, some were calling on the commission to exclude bidders from artistic participating in the auction. Others are calling for excessive guard bands in the attempt to and run the requirements to license, reclaim tv band spectrum. Im just saying that both are bad ideas. Second, even seemingly small changes in your rules can have Significant Impact on the markets. The decision to apply and complete rules to its uhf discount has caused many problems. The problem is not that the commission needs to update the uhf discount rule, the problem is absent a decision, how and when the commission will move forward has pressed pause for an indefinite time. I applaud the recent announcement of the schedule for the spectrum incentive auctions. Both broadcast and Wireless Industries are waiting with bated breath to see how the fcc addresses this first of its kind auction, to say nothing of the Public Safety agencies that are counting on the fund to fund first net. It is good for stakeholders and commission. Finally, during the proceeding, turning to the proceedings the commission has on its plate, we are working to tackle the tough issues like the ip translation, universal service reform, media ownership. Chairman upton and i recently launched a large perceiving of our own. To update the Communications Act. Each of you brings a unique perspective to your work on the commission, industry lobbyist, a couple of lawyers, and staffers. That experience, combined with your expertise on the fcc staff and your own work on the commission will be viable in our efforts as we Work Together to update and modernize the Communications Act. Chairman wheeler, commissioner oreilly, we especially welcome you aboard the fcc. And commissioners, well come welcome back not only to the commission but before the committee. Thank you all for joining us today and we look forward to working together in this very critical sector of americas economy to spur further innovation and jobs. Thank you, mr. Chairman, for holding this hearing. Its wonderful to see a full federal Communications Commission before us. Welcome to each one of you. A special welcome to the new chairman. I think you start out with total goodwill. With everyone that is on this committee. I think the full committee. In fact, i think the congress. There have been many months where we did not have a full commission. I want to once again thank commissioner clyburn for her Exceptional Leadership during that time, welcome to each one of the commissioners, and of course to the newest. Who served on the other side of that table. When i first came to the committee, he was here when we began the telecom act, and now, guess what, we get to trudge through that all over again according to the chairman. So i guess there are some things we just never finish with. As chairman wheeler announced last week, the commission has made the upcoming incentive auction of broadcast Television Spectrum the top priority of the commission. And i agree. This is a rare opportunity to auction spectrum under one gigahertz, and the fcc has to structure rules to promote competitive wireless landscape sure carriers en of all sizes both regional and national have an opportunity to bid competitively for licensed spectrum, and it has to be done right. It is the first time in the history of the world that an auction has been structured this way, and i appreciate, mr. Chairman, and all the commissioners your understanding the delicacy of this needing to be done right, well, and successfully. Similarly, recognizing the Enormous Economic and societal benefits of licensed spectrum, which is tucked away in one corner of my telecom heart, the fcc has an opportunity to structure a band plan that nationwide block spectrum under one gigahertz dedicated for unlicensed innovation. With unlicensed spectrum being a critical tool to bring broadband to underserved areas, including rural america. This opportunity must be seized. In addition to this role the fcc has freeing up more spectrum for mobile broadband, i would like to highlight for issues the commission should make a top priority in the 2014. And i think youre going to. First, during the three months since i released a draft legislation, the message from individuals communications companies, and consumer groups has been abundantly clear. Our video laws are in need of reform. They are broken. Independent of such legislation, the commission has an important responsibility to promote competition, consumer choice, and localism across the video marketplace. Second, i hope the commission will continue its focus on modernizing the Erate Program to support schools and libraries. In june, we called for such an update, and i am pleased that the white house and the fcc agree with us and have made this issue a key priority. He have to stay on it. We have to move. And we have to make it much better. It has to be a 21stcentury plan. Third, the commission should uphold i think the goals of section 629 and ensure a vibrant, competitive retail set top box market. A successor to the current cable card regime, whether by fcc rule or more preferably a voluntary industry agreement will usher in a new generation of technologies that will give consumers greater choice and ensure that innovation flourishes. Finally, im pleased that the commission has made the transition to nextgeneration 911, as well as improving the indoor location accuracy of 911 calls to key priority. Later today it is my understanding the commission will vote on an order that will improve the reliability of 911, and i look forward to continued updates as the commission perceives with the implementation of nexgen 911. Mr. Chairman, thank you for holding this hearing. I look forward to the report, testimony of chairman wheeler and each of the commissioners. Importantly, i pledge to work with each of you to make americas communication sector the most effective and most admired in the world. And with that i yield back. The chairman now recognizes mr. Upton from michigan, i believe. The great state of michigan, thank you, mr. Chairman. Today we welcome the fully constituted fcc back to the energy and commerce committee. The last time we heard from the full commission was in july of 2012. The fcc has Regulatory Authority over a sector of our economy that is critical to innovation, jobs, and our nations Global Leadership and technology. The communication sector is also an integral part of our daily lives, connecting us to loved ones, alerting us to natural disasters, entertaining and educating us, every single day. As a Regulatory Agency of these industries, the fcc has the immensely important task of promoting growth and competition. The hearing today will examine actions the fcc has taken since the Commission Last appeared and said expectations for the future. As the Oversight Authority for the commission, our Committee Works hard to ensure the fcc functions to the benefit of American Consumers as well as companies. We also want to make sure this Agency Functions efficiently and transparently as all Government Agencies should. I am glad to say this is not a partisan concern. The bipartisan majority on a voice vote of the full committee reported in fcc process reform bill yesterday that will help the fcc operate more openly and effectively, and we expected to be on the house floor in the nottoodistant future. The bill is needed. There are several stalled proceedings and ambiguous projects at the commission that caused concern, to me and other members of the committee. We have sent a number of letters regarding media ownership proceedings. Vice chair has gone to the extent of drafting a bill to and the cable set top box integration ban, a bill that seems to make a lot of sense and which the fcc should have considered doing a while ago. My concern and hope is that we can start a productive dialogue today with our esteemed witnesses on these and many other important issues, pending at the commission. Commissioner o reilly, welcome back to the energy and commerce committee. Chairman wheeler, though you are from ohio, known as the big house, now the dingell room, i hope that you appreciate the green and white decor [laughter] and yes, we were for sparty. Welcome back. And i yield to the other republican members. We now recognize mr. Latter, from ohio. [laughter] home of the speaker of the house. [laughter] thank you very much for yielding, mr. Chairman, and thank you very much to our commissioners for being with us today, and welcome to our newest members of the commission. Really appreciate you having us here today. The communications and technology has been a consistently bright spot in economy, creating millions of american jobs, significant investment and innovation, and empowered consumers who are the driving force behind robust competition in the communications marketplace. As usbased businesses lead the world in technological advances, we have a responsibility to ensure the fcc fosters continued growth and development in the communication sector. This can be achieved by the fcc incorporating more transparency and accountability in its processes, operating within the bounds of the Statutory Authority and acting upon legislation according to congressional intent. I look forward to continuing to work with the chairman upton and members of this committee and also congressman green on my hr 3196 which is legislation to eliminate the integration of set top boxes and allow the marketplace to get to the next generation of innovation without the regulatory barriers in front of it. I look forward to hearing your testimony today and mr. Chairman, i yield back. Thank you. The chair recognizes the vice chair. I want to welcome all of the commissioners and publicly commend commissioner clyburn for the wonderful work she did when she served as the acting chair. We appreciate that leadership. And chairman wheeler, we look forward to having you continue and work in a collaborative manner to find results for the public sector. We would hope that the commission will be proactive, not get beyond its mission, but to stay focused on the core mission. Pay attention to economic analysis. Look at costbenefit analysis, and make certain that you dont suffer Mission Creep which is casting a shadow over the private sector. With that, i yield back. The chair recognizes mr. Waxman. Thank you very much and i want to welcome the members of the commission, chairman wheeler, and all of commissioners. I also want to join commending commissioner clyburn for the incredible job she did is acting chairwoman of the industry agreement on interoperability and longoverdue reforms on prison phone rates. Your brief chairmanship will be remembered for the remarkable amount you accomplished. Chairman wheeler, congratulations on your confirmation we are pleased to have you here. You join the fcc at a time when our country is under going dramatic and perhaps fundamental transformations in Communications Networks and technologies, and the decisions you make at the commission will no doubt have a Lasting Impact on our Nations Communications landscape. At the top of the agenda is the spectrum auctions authorized by the Public Safety inspector auction act last year, and im pleased to see the fcc is moving ahead to conduct the h block auction in january in addition to allocating new wireless spectrum to address our nations spectrum shortage. This auction will provide significant down payment for the nationwide interoperable Public Safety network. I also support chairman wheeler your recently announced a timetable for the incentive auction. This auction has many layers of complexity, and i applaud your commitment to getting the technical issues right. Congress gave the fcc the toll to at least the Economic Opportunities for both licensed and unlicensed spectrum, revolutionize Public Safety, communications, ensure a vibrant and competitive wireless market, all the while protecting consumer access to free over the air television. And i think the fcc must remain faithful to these goals as you implement the law. You also must bear in mind the principles under girding the Communications Act as we consider the next evolution in our nations wireless networks. Our values do not change with each successor generation of technology. Whether the infrastructure is copper or fiber optics, the commissions charge is to protect and promote the long standing goals of competition, universal access, and consumer protection. Chairman upton and walden have recently called for multiyear examination of possible updates to the Communications Act, and i welcome the opportunity for a bipartisan consideration of these issues and i hope the commission will be a partner in this endeavor. In 2010, this committee spent many hours working to preserve the principle of an open internet. That process led to a sensible set of rules governing the broadband market that was supported by a Diverse Group of stakeholders and provided the foundation for the fccs open Internet Order. I believe the open Internet Order will be upheld in the court. Whatever the outcome, i will be looking to you to ensure the internet remains an open platform for innovation and Economic Growth. I want to at this point yield the balance of my time to my fellow californian and good friend. Thank you very much, Ranking Member waxman, for yielding the time. It is wonderful to see the full complement of the commission today. I want to join in welcoming chairman wheeler, who brings a wealth of knowledge and experience to the fcc, and i would also like to congratulate commissioner oreilly. And i would also like to commend commissioner clyburn for her leadership during the interim period. Think you very much. Thank you very much. Mr. Chairman, the subcommittee is working diligently to find Bipartisan Solutions for smart and sound spectrum policy for nation. We are to create a path for dod to develop the 7080 megahertz band. Dod and broadcasters should be applauded for the landmark sharing agreement. Moreover, i joined with representative guthrie for the incentive act which passed yesterday in a bipartisan manner. The bill is the first of its kind that offers a fresh approach that would create a federal spectrum incentive auction. I look forward to working closely with my colleagues and administration in moving this bill to the floor. There are tough decisions ahead and i want to encourage the fcc to move forward with the usf reform efforts, modernizing the usf for broadband, particularly the Lifeline Program to provide a path for universal Broadband Adoption in this country. And with that i yield back the balance of my time. All the time is been consumed and we will now go to our witnesses. Again, thank you very much for being here today and the Public Service work you are all undertaking. Mr. Wheeler, as the chairman of the fcc, we lead off with you. Hold the microphone close, and you are good to go. Thank you very much, chairman walden, Ranking Member eshoo and members of the subcommittee, i appreciate this opportunity to testify before you today concerning the oversight of the federal Communications Commission. All of us are honored to be working with the quality men and women. Today is my 39th day on the job, and ive enjoyed the informal discussion i have been able to have with many of you in the interim, and look forward to today having the even more complete discussions and working with you afterwards. As i think everybody has indicated, we are in a very exciting time, in the midst of a Great Network revolution. The lesson of history is that revolutions like that come chock full of challenges. And we will have to Work Together on how we address those challenges. We have tended to look at this look at those challenges through three prisms. We adopt and do promote Economic Growth and maintain national leadership. Clearly at the root of those are issues such as competition and maintaining the necessary assets such as spectrum. The second prism is what we have begun to call the network compact. There has for a century developed a set of values that represent the relationship between those who operate networks and those who use networks. Those values must be preserved regardless of the type of Technology Used in the network. And thirdly is the goal that Networks Work for everyone. That it is not what broadband it is not just the delivery of broadband but what broadband enables. That is what is important. If we dont have 21st century education capabilities, if we dont make sure that americans with disabilities have access to the capabilities of the new technology network, if we dont make sure that tribal americans have opportunities to use the networks, then we have failed in our goal. So those three things Economic Growth, the network compact, and what networks and ouare the three pillars of policy. But at the heart of them as competition. It has become a joke, at least in my office, i keep saying competition, competition, competition, but that is very much what we believe. Let me do a quick look at the three areas where the commission is keeping pace with that innovative economy. First is process reform. The committees bipartisan effort yesterday is significant and noted and appreciated. On my second day, mr. Chairman, i began the process that will produce a report in 60 days, looking at how to enhance accountability through deadlines and tracking systems, how to expedite the licensing process, like you referenced, how to shorten the processing time of applications for review, and the commissioner has an interesting idea. How to streamline Consumer Complaint collection and a searchable database, and how to attack the backlog, as commissioner clyburn did when she was chairwoman. We also want to weed out outdated items and incorporate performance measures. The second focus will be the spectrum auctions, especially the incentive auction. This committee, working with and ia and dod, has great leadership on the 17551780 band, and we look forward to moving back to auction. The guthriematsui bill which has been referenced takes the incentive auction idea and applies it to federal agencies, and that is a great step forward. And speaking of incentives, he we have the incentive auction coming up. We have established a schedule now with policy recommendations in january. We will have consideration and discussion of that until spring, when we make a decision, and then we have the auction in the middle of 2015. But while we are discussing spectrum and regulatory process, i would be remiss if i do not bring up an item we will be considering today, a proposal to ask for comments on a rule to reflect the realities of new onboard aircraft technology. There have been lots of misconceptions about that. Let me see if we can address these up front. One, we are proposing to consider to continue the ban on mobile devices that can interfere with terrestrial networks. But where there is new Onboard Technology that eliminates that potential for interference, and then there is no need for an interference rule. This is the responsible thing to do, with a rationale for a rule does not exist, the rule should not exist. We are the expert Technical Agency, and new Technology Removes the technical justification of this rule. In that regard, i should imagine i should mention i have spoken with the transportation secretary fox this morning, and he has told me that, yes, the fcc is the Technical Agency and that the department of transportation is the aviation agency, and that they will be moving on a rule to address voice calls on airplanes. I am the last person in the world who wants to listen to someone talking to me while i fly across the country, but we are the Technical Agency and we will make the Technical Rules that reflect the way the new technology works. Finally, item three. We have all talked about the ip transitions, because there is not just one transition. It is a multifaceted process. In todays meeting we will hear a report from the task force which will lay out a schedule including a plan for a january order that will invite experiments in the field, real life experiments, recommend data collection, and create a framework for policy decisions. We have a full agenda, as you have all said. It is a privilege to be here, to be able to work with all you, all of you, and i look forward to doing that in the time coming. Chairman wheeler, thank you for your Public Service and for recognizing our concerns. Now we will switch to former chairwoman clyburn. Please go ahead with your statement. Thank you. Thank you again for allowing me to appear before you today. Since our last visit, i have had an Incredible Opportunity to serve as acting chair, and im glad to note that with the support of my colleagues and the assistance of a skilled and dedicated staff we were able to move a number of items which clearly advance the public interest. This hearing comes a critical stage in our policy continuing. Continue one him con tinuum. We are experiencing tremendous technological change that affects every aspect of our lives. As we look ahead to the challenges of tomorrow, i believe it is important to and the terrain over which we have traveled. We reached a voluntary interoperability solution to address an issue that for years had been impeding the deployment of valuable spectrum. We launched a proceeding to modernize the fccs schools and Libraries Program to ensure that our children have the resources and connectivity they need to support Digital Learning and become the leaders of tomorrow. We adopted an order to address rule completion. It is unacceptable in todays world that calls to nonurban areas are not being completed. We adopted an order to reform Inmate Calling Services to finally provide relief to millions of families who have been paying unreasonably high rates to stay connected with loved ones. We enabled the aws proposal to take major steps forward on government and commercial spectrum sharing. We made ongoing reforms to lifeline and with chairman wheeler and my fellow commissioners, i look forward to building on the progress we have made. We have made clear, the voluntary incentive auction proceeding continues to be a top priority. For broadcast television licensees who want to continue to use their spectrum, the acts mandate the commission make all reasonable efforts to preserve the Coverage Area and population served. The act has clear directives for the proceeds from the forward auction, including contributions to the Public Safety trust fund and the national deficit. Congress also gave the Commission Authority to propose a ban plan with an appropriate balance of unlicensed and licensed spectrum. Unlicensed spectrum plays a Critical Role in ensuring be more efficient use of spectrum, and commercial wireless carriers are increasingly using unlicensed services to offload smartphone traffic. In addition, chairman wheeler has announced the commission will consider an order to lunch to launch trials regarding the ongoing technology transmission. I believe the trial, if structured properly, can produce helpful insights in how to best approach reform. I will be keeping an eye on how the reforms affect all consumers. Process reform is where we have the opportunity to develop an even more efficient agency. Yesterday the committee passed the process reform act of 2013. I am pleased that the proposed modifications to the sunshine act would facilitate federal commissioners participation on boards and conferences. I would also encourage you to review the paperwork reduction act and how it can be improved. For example, the fcc is using its website to better inform consumers and the industry, yet to obtain voluntary feedback on our website the pra requires omb approval. As a result, the commission cannot be as responsive to users without engaging in a lengthy omb approval process. As you can see, we have both challenges and opportunities ahead. I look forward to working with each of you to address our evolving communications landscape. I appreciate your attention and would be glad to answer any questions you may have. Thank you for your work, your testimony, your recommendations. We will now go to commissioner rosenworcel. Thank you for being here. It is good to be back. Good morning, chairman wallman, chairman walden, Ranking Member eshoo, and members of the subcommittee. It is an honor to appear here in the company of my colleagues at the fcc. By some measures, Communications Technologies accounts for as much as 1 6 of our economy. These are the networks that carry all aspects of our modern commercial and civic life. They are changing at a breathtaking pace. Keeping up requires taking a fresh look at policies, to think boldly about the future. In the weeks ahead, we will do this as we wrestle with the upcoming transition to internet protocol and think about spectrum auctions, including incentive auctions. But i think we make a mistake if we focus only on networks themselves. After all, there is great beauty and power in what we can do with them. Our new networks can change the way we connect, create, and conduct commerce. They can change the ways we learn and seek security. In my brief time before you today, this is what i want to talk about, how the broadband beneath us and the airway is all airwaves all around us can improve education and improve Public Safety. First, i want to talk about the Erate Program. It helps connect schools and libraries across the country to the internet. It is a byproduct of the teleCommunications Act of 1996. Remember 1996 . Probably everyone in this room called the internet the information superhighway. It was a long time ago. In 1996, only 14 of Public Schools were connected to the internet. Today, thanks to the erate, that number is north of 95 , which sounds good. It sounds like the job is done. But nothing could be further from the truth. Because the challenge today is not connection. It is capacity. Too many of our erate schools access the internet at speeds as low as 3 megabits. That is too slow for High Definition video. It is not fast enough for the most innovative teaching tools. It is definitely not fast enough to prepare the next generation with the stem skills that are so essential to compete. Contrast this with efforts underway in some of our world neighbors. In south korea, 100 percent of schools are connected to highspeed broadband and all schools are converting to digital textbooks by 2016. Ireland will have all schools connected to 100 megabits next year. Finland will have all schools connected to 100 megabits the year after that. Meanwhile, in both turkey and thailand the government is seeking a vendor to supply Tablet Computers to millions of students for a new era of broadbandenabled Digital Learning. We can wait and see where the status quo takes us and let other nations lead the way. Or we can choose a future where all American Students have the access to the broadband they need to compete, no matter who they are, where they live, or where they go to school. I think it is time to compete. I think it is time for erate 2. 0. The fcc has a rulemaking proceeding underway to reboot and recharge the Erate Program. I think we need to make it a high priority. I think we need to find ways to bring 100 megabits to all schools in the near term and 1 gigabit to all schools in the long term. While we are at it, we must find ways to reduce the bureaucracy of this program and make it easier for small and rural schools to participate. Second, i want to talk about a number all of us know by heart, but none of us hopes to ever use. I want to talk about 911. In my time at the fcc, i have visited 911 call centers all across the country. I am always struck by the steely calm of those who answer the phones and help ensure that help is on the way. I am also struck by how many emergency calls now come in from Wireless Phones. In fact, nationwide more than 70 of calls made to 911 are made from Wireless Phones. That is over 400,000 calls per day. If you use your Wireless Phone to call 911 from outdoors, your location is reported, sometimes to within 50 meters under fcc location accuracy standards. But if you use your Wireless Phone to call 911 from indoors, you should cross your fingers, because no fcc location accuracy standards apply. I think this is an unacceptable gap in Public Safety communications. It deserves your attention, and ours. Because no matter where you are when you call 911, you want First Responders to find you. Moreover, as our networks evolve and the ways we use them change, we must make sure our Public Safety policies keep pace. In fact, our approaches to networks, both wired and wireless, need to evolve as markets of all. As markets e balls. Evolve. But in our efforts, we must not lose sight of why networks matter. Because they can do more than connect us. They can strengthen education and enhance our security. And of course, grow our economy in new and exciting ways. Thank you. I look forward to answering any questions you may have. Commissioner rosenworcel, thank you for your work and testimony and suggestions. We go now to commissioner pai. Thank you for being here, and thank you for all the work you are doing. Please go ahead with your opening statement. Chairman walden, Ranking Member eshoo, and members of the subcommittee, it is a privilege. Thank you for holding this hearing. It has been exactly one year since i last appear before you. Much has happened in the time since. Most notably, we have lost two colleagues and gained two new ones. Chairman wheeler and commissioner orielly have gotten off to strong starts, and im pleased we have gotten to full strength. We have made progress in a number of areas, but there is much more work to be done. This morning i will touch on two of the issues i find most pressing. The incentive option and erate reform. A fuller list of fcc priorities is detailed in my written statement. Perhaps the most daunting challenge is the looming spectrum crunch. To meet this challenge, we are focused on implementing the responsibilities Congress Gave us in the spectrum act, especially with respect to the broadcast incentive option. The auction is the best chance to push a large amount of spectrum wellsuited for mobile broadband into the commercial marketplace. I support chairman wheelers recent announcement setting the middle of 2015 as the new target. It is much more important to get the auction done right than to get it done right now. If any part of our software were to fail during the incentive auction, like another government website that shall not be named, the commission by law would not get a second bite at the apple. My greatest worry about the incentive auction, however, is not the technology. It is about the participation. In order for the incentive auction to be successful, we will need robust participation by both broadcasters and wireless carriers. The Commission Must avoid choices that will deter participation. For the reverse auction, prices paid to broadcasters should be determined by markets, not set by administrative fiat. Any attempts to restrict payments to broadcasters, including a couple kids scoring including a complicated scoring scheme, will deter broadcaster participation and risk causing the incentive auction to fail. For the forward auction, the commission should not limit the carriers ability to partisan ability to participate by setting a cap or narrowing the spectrum screen. This would result in less broadband,r mobile less revenue to Fund National priorities, and a greater chance of a failed auction. Another issue that will impact participation in the forward auction is the size of the geographic licenses to be offered. We propose using economic areas, but some argue this would make it too difficult for smaller carriers to participate in the auction. Our goal should be to allow as many carriers as possible to bid, whether they be nationwide, regional, or rural. So i am pleased to see alternative proposals, such as the newlycoined partial economic areas. If technically feasible, these proposals deserve serious consideration. Aside from the incentive auction, there are many other opportunities when it comes to spectrum. In the auction next month, the possible clearing of aws three, and the greater unlicensed use of the five gigahertz band. I hope we seize all these opportunities in the near term. The second issue i will discuss is the universal service fund school and library program, better known as erate. In many ways, erate has been a success, as my colleague pointed out. It has also had difficulties. The funding process can stretch for years. Many schools and libraries feel compelled to hire outside consultants to handle all the complexities. Others dont bother applying at all. There is no meaningful transparency into either the amount or the impact that erate is spending. To solve these problems, i propose a studentcentered program. This means upfront funding and a matching requirement so applicants know how much money they can spend and have greater incentives to spend the money wisely. This means a simple financial simple application process. Targeting funding and next generation technologies while letting local schools set their own priorities. This means making all funding and spending decisions accessible on a central website everyone can see. In its first year, a student centered approach would provide an extra 1 billion for next generation services, all without collecting one extra dime from the american people. I believe it premature to raise the program budget, and under no circumstances should we do so without finding corresponding savings in other parts of the universal service fund. We cannot ask americans to pay even more in monthly phone bills, especially when medium Household Income in this country is now lower than it was in 2007. Thank you again for holding this hearing. I look forward to answering your questions and continuing to work with you and my colleagues in the months to come. Thank you. We appreciate your thoughtful testimony and your recommendations. We will now go to commissioner orielly. Welcome aboard. Welcome back before this committee. You know how the rules work, so please go ahead. Thank you for being here. Thank you. In respect to time, i would like to make five points and move on to answer questions. Point one, i am truly honored to be before the subcommittee. I have worked on the Committee Staffer eight years and it was staff for eight years and it was one of the greatest jobs i will ever have. The breadth of knowledge and command of issues by this committee are of the highest quality. Point two, the fcc is an independent agency, not part of the executive branch. It serves to implement statutes enacted by congress. I firmly believe our role is to enact statutes as written. The commission has no right or authority to ignore a statute or statutory deadlines. Thankfully, i have worked on most communication policy statutes over the last 20 years and have firsthand knowledge of the intent behind many key provisions. Three, the commission has exciting but difficult work ahead. If done correctly, it can have a positive impact on domestic product and national productivity. Our Communication Companies are extremely important to the u. S. Economy, and we must allow them to flourish in a world marketplace. The commissions overall focus must remain on the consumer. Four, in terms of specific items, my focus will be on the immediate work before the commission. The fcc must finish rules on incentive options, proceed with the ip transition trials, and complete our media ownership procedures. Five, part of the role of an fcc commissioner is to provide information to the public. I take this seriously, and that is why i am choosing to spend time on distracted driving caused by wireless device users. Drivers need to put away Wireless Phones and focus on the drive. Let me be clear. My view is the Wireless Industry is doing work to get out the message. If they are aware of the they are aware of the problem, are dedicating resources, and are working hard to prevent the horrible tragedies caused by texting, viewing, emailing, tweeting, mapping, posting, im anothers among others while driving. It does not appear more government regulation would be helpful in this space. Instead, i am talking to my colleagues to find ways to use our voice in nonregulatory ways to educate the public and prevent senseless accidents. Thank you. You win the prize. Two minutes and 37 seconds. I know this committee very well. [laughter] yes, indeed. Some will learn along the way. We appreciate all your testimony and your recommendations. It is good to have all five commissioners in place, the four commissioners and chair in place. It has been a year to the day, i think, since we had the commissioners here. Welcome aboard. I know we all have a lot of questions. I learned at the heels of the former chairman about trying to get answers at a relatively rapid rate. I will try to post some of these, not as skillfully as he does, but in a yes or no format. I would start with mr. Wheeler. I know you are voting on this mprm today. I want to stress, it would be helpful if the public got to see that. That is one of the process issues i hope you will break through. Maybe this will be the last mprm that is not public first. I want to followup and figure out how you are going to permit, as your testimony indicates, airlines to choose whether or not to allow voice calls. Is the Commission Planning to waive either the common carrier obligation to complete calls or the Net Neutrality rules on blocking voip packets . Both seem to be necessary to prevent voice calling from aircraft. Thank you. First, to your point, the mprm we are considering today will be complete in listing the words of a rule we are considering. In light of the philosophy you and i share, lets get it out there. The purpose of this is to do just that, to put the language out so people can see it and give us their comments. To your specific question, the open Internet Order specifically provides what is called premises exemption, and that means that coffee shops, bookstores, and airlines mentioned by name are exempted from the order. In that, under the definition of reasonable network management, which is one of the tools that are allowed, premises owners, including airlines, have the ability to pick and choose exactly what comes over. All right. We will follow up more on the other piece you might have to deal with as well. I want to ask you about title two. There has been a proceeding open at the commission for a long time. Are you planning to keep that open, or planning to close it . We are in a situation right now where we are waiting for a Court Opinion on exactly what our authorities are in a broad sense. And that there is no rush between now and then to make a decision on title two. I will note, however, that as you mentioned, this has been open for a long time and it has not had the threatened Chilling Effect that some have worried about on investment in wireless and broadband infrastructure. Investment in wireless and broadband infrastructure. This is an issue that clearly is going to have to be dealt with. We will start with the courts decision. Three more questions i want to get in. We understand the fcc launched a study on critical information needs. Apparently it includes a qualitative media analysis which would require interviewing reporters and editors to figure out how the media decide what stories to run. Are these kinds of questions questions a government should be