Transcripts For CSPAN2 Key Capitol Hill Hearings 20131024

Entry. So you did not tested prior to october 1 . No, sir. Again that hearing you can see in its entirety tonight at 8 00 p. M. Eastern on cspan. And yesterday the house energy and commerce subcommittee on communications and Technology Held a hearing on wired communications and internet protocolbased networks. Some of the topics discussed include the telecommunication laws surrounding those networks as well as the impact of Communications Advancements on consumers and businesses. This is a little more than two hours. [inaudible conversations] we will call the subcommitsubcommit tee on communications and technology to order and begin our hearing on the evolution of wired Communications Networks. Wired Communications Networks have come a long way since the days of the telegraph or the rotary phone. It is getting harder and harder to remember at a time when you wanted to reach out and touch someone ma bell twisted copper wires were the only option. Todays consumers have so many more options. Cable wireless satellite and yes even the Telephone Companies are operating america connectivity to communicate with the world. As all they can stand alone Networks Voice and video were increasingly data operations completion between providers has never been more vigorous and overthetop providers like skype, apple spacetime netflix and hulu are bringing a new facet to competition for Consumers Communications dollars. While their competitors of successive generations of technological improvements wired Communication Networks have languished. This isnt because of innovatioinnovatio n but rather a declining user base high cost and unique regulatory mandates that have conspired to make the economics of the upgrade untenable. Today however we stand on the cusp of two transitions in the wires network. The ip transition and the upgrade of networks to fiber. These transitions are a Natural Evolution as Technology Advances greater capabilities develop, prices dropping competition forces the market to respond. While some of the costs of the costs of upgrades have changed and wireline providers are increasingly branching out beyond their Voice Service rouse the updated regulations one enacted to break up monopoly remained her consumers have come to expect as well as they should Competition Among providers and the innovation innovative offerings that result from that competition. The question we face today is this what is the appropriate role for the federal government in this transition . We should be looking not only in the theoretical impact of competition on policies on the market as they exist today but also the Practical Impact of the rules in an uncertain future. Ilec is looking to invest should be allowed to do so without the spectrum maintaining Legacy Networks. Those in the Competitive Community should be able to work to the future with the certainty that they have the opportunity to serve their customers and consumers should be able to embrace this transition without interruption in the services they already enjoy. We must strike the appropriate balance between protecting consumers promoting competition and not slowing the pace of innovation. The internet and wireless worlds have thrived without heavy regulation. The last and we want to do is stifle the impreza and in the growth and innovation of the internet by subject and you too complicated outdated government imposed rules of the plain old Telephone Networks. Its time to look a hard look at the role of wired Communications Network marketplace and our witnesses are here to help us do just that. I think the witnesses for their testimony and now ive will yield to my colleague from texas mr. Barton. Thank you mr. Chairman. That is Perfect Timing i just want you to know. I want to thank you for holding this hearing on the transaction from internet protocol. Its a topic that we have not discussed but we need to discuss in this congress. I was actually serving on the subcommittee and full committee back in 1996 and participated in many conversations and markups regarding that act. I remember discussing how we could make the marketplace more competitive and at that time at t did basically have a monopoly we believe in creating the local exchange the aisle x. And the Competitive Local Exchange was a good solution for competition. That marketplace then and the marketplace today mr. Chairman as you know are not the same. A new question now whether we need the title ii protections that we put in place back in 1996 and i think this hearing is a good start to answering that question. Thank you and i now recognize the gentleman from ohio mr. Latta. Thank you very much mr. Chairman and i appreciate our witnesses for being here today. Within the last three decades we have entered digital age of of communication have witnessed the emergence of multimodal dynamic internet ecosystem that is replacing the public switched telephone up work in multiplex enter cold as we continue to see the convergence and evolution of our Telecommunications Marketplace the future of regulations is a topic that must be addressed though it does not thwart future investment innovation or Economic Growth. We need to ensure that current laws and regulations reflect the technologies and Competitive Dynamics of todays marketplace while protecting consumers ability to access the Communication Services of the choice in safeguarding the reliability and security of those services. I would ask to submit this chart mr. Chairman for the record showing the declining share of u. S. Households with the ilx Landline Service as a primary line service for the last 10 years and i look forward to hearing from our Witnesses Today and i yield that. Without objection to charge you reference will be submitted for the record. I turned to my friend and colleague from california ms. Eshoo for her opening statement. Thank you mr. Chairman and 17 years ago of the 1996 act stated its intention to promote competition and encourage the Rapid Development or deployment of new telecommunication technologies. In the years that have followed hundreds of new entrants have emerged and with their creativity and ingenuity billions of dollars have an been invested and thousands of new jobs have been created. So there have been a lot of good things that have come from that. As the title of todays hearing suggests the evolution, and i underscorunderscor e the word evolution, in wired communicacommunica tion networks is underway creating new ways of delivering a familiar service, a phonecall. For over a decade Communications Companies have been making the transition to ip. So i think its incumbent upon all of us here to decide why we would remove rules that have helped pave the way for greater competition and innovation in the marketplace and its a worthy examination. Changes in technology and infrastructure do not alter the National Goals that have always guided our communication policies. As commissioner and Public Knowledge have articulated our conversation should begin by laying out the core values and principles that will guide the transition to all ip Voice Networks. Fundamentally the fcc must ensure universal service to all americans. And the rules of the road for competition as well as strong Consumer Protections and access to 911. Consumers and businesses have to have confidence in the reliability and the functionality of the services particularly during times of emergency and im sure its an area that we will hear about and concentrate on today. The reality is that consumers dont consider whether a phonecall is delivered through a traditional switch network or via ip and just expect their phonecall to connect as it always has. We all support investments that enable companies to offer their consumers new and Innovative Services and do so more efficiently and reliably. The changes in technology dont automatically dont automatically make markets more competitive. I look forward to our witnesses respected son how we can ensure the ip transition results in more Competitive Choices and finally its important that the investment of job creation to remember that the investment of job creation do not come from two or three companies but rather an ecosystem and we are blessed to have that in our country that includes hundreds of Communications Companies both small, medium and large. Earlier this year a study found that a dated competition policies would stimulate the hiring of 650,000 new employees in the Telecom Sector over the next five years and 184 billion of private funds into the u. S. TeleCommunications Networks so mr. Chairman the topic of todays hearing raises first of all the its important topic and also it raises important questions. Its our responsibility to have thoroughly answered. As the migration to all ip networks continues the testimony of our witnesses and our sterling panel today will help ensure that our laws and regulations promote new investment competition and Consumer Choice. I would like to ask unanimous consent mr. Chairman that this letter from the Competitive Carriers Association reiterated in the importance of longstanding tech neutral internet interconnection requirements be submitted for the record. Without objection. Thank you and i yield back. The gentlelady yields back her time. The gentlelady from tennessee ms. Blackburn. Thank you mr. Chairman and i want to thank you for holding this hearing. It is important and its in timely and i want to welcome our witnesses. Thank you for being here. Competition and looking at how that has changed and the Communications Marketplace and today we have that intermodal Competition Among the ilx, clecs Cable Network and others but these Competitive Services are subject to different rules based on outdated assumptions and i think its not easy for regulators in the federal government and here in d. C. To change how they think about the treatment toward communications in todays marketplace. And i do feel that it is our responsibility to look at how we create the appropriate environment for some regulatory certainty in place and then encourage that private capital and investment and focus on creating jobs. There are three things that i want to drill down on a little bit today with you all. Number one is it fair to tell someone who wants to invest in Tomorrows Technology they need to slow down in order to maintain an old network that they dont want to invest in any more . Number two, does it still makes sense for the old rotary dial regulatory model and yes some of us do remember that model, to hold back the Communications Revolution that is before us now . And number three how can we make the transition to the internet protocol as seamless and dependable as possible . Those are questions worthy of discussion. I thank you all for your time and at this time i will yield to any other member. I do not have anyone in the queue. Does anyone else on the republican side want to make any comments . If not the gentlelady yields back and i recognize my friend the gentleman from california mr. Waxman for five minutes. Thank you very much mr. Chairman. Since the days of the black rotary phone americans have been able to count on the phone network to call friends and family come to conduct business and reach Emergency Services when needed. Today thanks to innovation and competition consumers can connect to the phone networking in more ways than ever before. When we pick up a wireless smart phone or a dial in number over voiceover Internet Protocol Service few of us pause to consider the technology involved we simply expect their phonecalls to go through. The ongoing transition from traditional circuit switched networks to internet protocol or Ip Based Networks is the technical backdrop for todays hearing. But our phone network is more than a system of wires, switches and technical protocols. Its an essential part of the social and economic fabric of the United States. As we consider this next Network Evolution we must continue to protect the core values that have guided our Communications Policy for nearly a century. Many of todays witnesses have articulated some version of these values and there is widespread agreement on these principles. Our commitment to universal service is a recognition that all of us benefit when everyone is connect it. We protect competition because it is the most efficient way to generate new products and lower prices with the added methods of limiting regulation. We have rules for Consumer Protection because the marketplace needs oversight to ensure that Services Like 911 are provided either and if the market is not yet demanding them. This is a mandate congress has entrusted to the fcc and it does not change with new generations of technologtechnolog y. I think we all recognize that the transition to ipbased networks is already happening and this is a good thing. The transition means more investment and opportunities for Economic Growth and new services that can improve everything from Health Care Delivery to energy efficiency. The challenge we face is how to manage this transition in a way that does not disrupt businesses and consumers that rely on Traditional Services today. I agree with mr. Cicconi that we need the fcc as an Expert Agency to help guide the evolution to an all ip network but i caution against using the ipbased services as a vehicle to try to undermine the fccs authority to preserve competition and protect the public. Whether addressing complaints about rural call completion or ensuring Network Reliability during disasters we need the fcc to address the impacts of the ip transition. A vibrant and vital fcc is critical to ensuring that the transition ultimately achieves the goal we all share which is a world Class Network that delivers greater benefits for consumers and our economy. I think chairman walter for holding this important hearing and working with us to assemble a balanced panel. Mr. Chairman i would like to ask unanimous consent to enter into the edit paper by professor kevin were bought entitled no dial tone, at the end of the public switched Telephone Network. Without objection. Mr. Chairman at this time i yield the balance of my time to the gentleman from vermont mr. Welch. Thank you very much. I had the privilege of introducing john burke from castleton vermont a 12 year member of the Public Service workers it to a decommissioned. John has served on the committee on telecommunications with the National Association of rural utility commissioners and one of the things that he is so good at is talking about the impact on rural areas of Telecom Policy and congressman latta started a rural caucus to take a specific look at how the policies we have to and the met will affect rural areas and there is no person with more experience and wiser counsel than the person we are going to hear from, john burke from the great town of castleton vermont. Thank you, john. Think you mr. Chairman. I yield back. The gentleman yields back is time and the gentleman from california yields back is time. We thank you all for your testimony. Its most enlightening even if there is conflict among you which is why you are all here so without people start off with jim cicconi the Senior Executive Vice President of internal affairs for at t. Thank you for being with us and we look forward to your comments. And we are still on an old wire Copper Network so if you could turn on that microphone. [laughter] thats embarrassing. Chairman waldman Ranking Member eshoo distinguish members of such many thanks for the opportunity to testify with you today and thanks for holding this hearing. Four years ago as you know the fcc issued a National Broadband plan as directed by you hear that plan concluded that bringing modern Broadband Services to all americans is vital and to do so we must have Communications Policies rooted in the future and not the past. In my testimony today want to focus on 14 points concerning this very important ip transformation. First transition to all ip networks is happening today and i think the chart that we have up here demonstrates that is over a 10 year period and the smallest part of that at the end of that is is that hard for you to see or for us to see . I had hoped the committee would have it but this is based on Government Data but we chose that by the end of this year only about 25 of americans will actually be taking advantage of the legacy wireline services. Threequarters of americans would move to alternatives. The National Broadband plan i think recognizes that this ip transition is well underway and is happening today and i posit to all my fellow panelists recognize this as well. The Communications Marketplace has changed magically and so has my company in response to that. Today we provide broadband Communication Services in robustly competitive markets where consumers have an almost overwhelming array of choices. Believe me they exercise those choices on a daily basis. Today consumers and businesses are abandoning the old circuit switch Wireline Network in droves in moving to ip and mobile Services Offered by a host of different providers. In fact its estimated that what we lovingly call Plain Old Telephone Service as i mentioned earlier in the chart demonstrates would be confined to only 25 of u. S. Households. In fact in florida and michigan to states that are now wireline footprint only about 15 of homes are still connected to legacy Wireline Networks today. The second this transition to an all ip network is a good thing and it should embrace. This is a huge and crucial undertaking for our country and we are replacing the networks who have served us well for 100 years with far more advanced and Capable Networks that will serve us well for the next 100 years. National rodman concluded the Smart Networks are vital to our Nations Economic Development and maintaining our global competitiveness. These networks dont happen by themselves. After we built the Companies Need the right incentives to invest. Most importantly Companies Must be able to retire old infrastructure in order to make the investments to new infrastructure just like any other business would do. To do otherwise makes little sense and would impede with the National Broadband plan rightly has made a national imperative. The third point, we have the time to do this right. This is not a the transition to all ip networks will take place over the course of this decade but we have to use that time wisely. The fccs technical visor Committee Suggests the old Legacy Networks be retired by 2018 and the fcc should in any event set a date certain for their retirement. My Company Believes it will ask would take us until 2020 to accomplish that and even then require maximum effort on our part. In the meantime we have asked the fcc to conduct the industrywide trials. In our case we suggested converting to pilot wire centers out of some 4700 wire centers in our footprint to all ip. We feel trials are critical. As careful as our planning is no one can anticipate every issue that may arise when we transition off the legacy wireline infrastructure. Trials will help us learn while we still have the safety net in place and as we learned all of this industry governmengovernmen t customers and stakeholders can then Work Together over the coming years to address the problems we find. This leads to my final point which is the importance of an overall framework of values and principles to guide us during this transition to all ip networks. In that regard some of her friends in the Public Interest community including one of my colleagues on the panel here today have a think served us very well. They have stressed that this transition from a old to the new should consider things we have all come to see as fundamental universal connectivity Consumer Protection and reliability, Public Safety and interconnection. We know and ill nor are we seeking out. But we do feel that many regulation should be rooted in the problems of today, cannot the problems of a bygone era. Regulation should also recognize the difference in the choices of consumers and what are now highly competitive markets and treat all providers equally regardless of technology or their companies lineage. This is not the first time as noted by the National Broadband plan we need wise Government Policies to ensure that legacy regulations do not impede the investments our country needs and that the interest of consumers are protected in these new technologies deployed. Thank you again for holding this hearing today and i look forward to your questions. Mr. Cicconi thank you for your testimony. We appreciate your participation in the hearing. We now go to mark iannuzzi. We are thankful youre here to represent the industry and yourself and please turn on the hiker found. Pull it up close and we look forward to your comments as well sir. Thank you for joining us. Chairman waldman chairman upton Ranking Member eshoo Ranking Member waxman and to each of the members of the committee thank you for the opportunity to speak today. Im mark iannuzzi. Aitkins competitive carrier providing telecommunications and and of Broadband Services. We are headquartered in troy michigan and we michigan and we are privileged and proud to be the Communication Service provider district offices in kalamazoo and saint joyce saint joseph michigan. It offers a complete range of essential Communications Services to small to middle sized businesses including classic voice ip telephony posted ip applications and advanced data networking services. This increasingly connected world we help unify and simplify all the ways that businesses communicate and collaborate, providing them big Business Solutions to Small Businesses and prices that they can afford. Today i am pleased to appear on behalf of cantelle. Nearly twothirds of the members are small to middle sized businesses. A majority of which have 10 million or less in revenues and fewer than 100 employees. However the dna of these companies is about entrepreneurs serving entrepreneurs. A little background about myself. I was born and raised in detroit. Im an american engineer and entrepreneur. I built telnet with my brothers 15 years ago from the dirt out of the basement of our home. To this day though however since that time we have invested upward of 100 million employing now over 100 Career Associates in our company and we are proud to have created the First Network in the state of michigan which integrates the vast majority of the state of the service area greater than at t and frontier combined. One of the things that is indelible upon me was a conversation i had with my father when i was five years old when i had to do a book report on poverty. I asked my father, no what is poverty . My father told me poverty is about persons without a choice. I 10 years old i didnt quite grasp what that was all about and not having a lot of money. It was his pride of being an italian immigrant and a u. S. Citizen to be a part of this great land of opportunity that he had choice for himself and our family. So with that is if a drop, i want to make it clear as we have these debates, guy or the competiticompetiti ve community we are not against at t. We are not against the ilec. At t is a proud american company. We want all companies to do well. Its in our interest. When they raise themselves and raised the entire industry and we have the ability to serve customers better. Its not about what we are against. Its about what we are for. We are for robust competition for merit over might. As much as things change in this technological age some things never change. One of which is the enduring truth of free functioning competitive markets to bring about the greatest good for the widest array of people the world has ever seen. We are for the rule of law which means trust. It means certainty and keeping our collective including those of the Capital Market would have invested themselves in our endeavors. And finally we are for ensuring that there are no artificial barriers to progress. Not only for those of us currently in the market today but for all those who are yet to be born who will take up the mantle that we have set forth. So let us begin lets start at the beginning in 1996. The 1996 and least the greatest advancements in communications since the history of communication. Our capabilities in terms of the kate Competitive Position and the productivity in this country are mindboggling. To that extent i would like to extend my sincere salute to chairman upton congressman dingell and all the members who were participatory in that act because your leadership was instrumental infor ing a Bipartisan Team for this landmark legislation which has revolutionized the industry of communications. At the very soul of that act, the very soul, was designed specifically to open up competition. Including the ability for the incumbent dominic companies to expand their service offerings. And they have done very well. They entered the ld market and ultimately ma bell. Now there are some here that would say that there are technical limitations in the act i say to them as they say to you that act is not and cannot be about tech illogical limitations. It is rather about Technology Inspiration through a simple framework for free functioning competitive markets to exist. Why this matters. We understand Small Business as a belief. That is why we came into being. This is where we thrive. Small businesses seek to be relative and what they do not necessarily experts in technology. Small businesses cannot afford to go out and pay for the consultants who sort out the alphabet soup of technology. Rather its often wear their nextdoor neighbors nephews cousin comes in to help them figure out some of the themes going on here. The Competitive Industry can touch these Small Businesses. We sit across the table and we examined their needs. We established solutions tailored to those needs and help them go from crawling to walking to running. God bless them but this is not the at ts for today. Our goal and in fact our promise to our customers to be the last Service Provider that they ever need. We want them for life. To do this we must ensure that we can futureproof their investments and deliver ongoing value. So lets get to the heart of the matter. There are three things that are key to this conversation in the next generation of networks. The last mile of the essential Business Building block for functioning Competitive Networks regardless of technology. Our network is the best in the world but its only as good as its weakest link and that is the last mile. Secondly its important that these networks are interconnected that we can Exchange Traffic and adjusts reasonable rates and our terms and conditions regardless of technology. And third we need to be sure that the business agreements in pricing between the competitive are adjudicated with the firewall backstop of our local public utility commissions. Mr. Iannuzzi i am going to have to have the wrapup. You are about two and a half minutes over. I came into this business 15 years ago with a driving desire to make things better and less expensive through business process improvement and technology advancement. If i ever had any doubt that there was a technological limitation in a tech business that would have been a nonstarter. The telenets of the world come and go but we must never perish from this great nation is that we do not erect barriers which impoverished but we stayed to true to her competitive spirit for those ingredients that promote prosperity and wellbeing for all. Thank you very much for the opportunity to testify. Mr. Iannuzzi thank you for your comments and we appreciate your testimony. We will go to herald sub for senior Vice President of Public Knowledge and we welcome you back before subcommittee and we look forward to your testimony as well. Mr. Feld. Thank you for inviting me to testify today. The transition of our Wireline Network to internet protocolbased services is a tremendous opportunity for our nation but we must make sure the transition results in an actual upgrade in technology and not a downgrade in the Services Upon which america depends. For decades our country has used the reasonable rules based on fundamental principles to build a phone network that became the envy of the world. We are the country that wrought a phone to every farm the country that built a network we could count on. The accomplices by moving certain fundamental values with us as their networks evolve and we have faced the opportunities and challenges of implementing the next generation of Communication Technology we must continue to leave no one behind. Americans are so used to relying on the protections of the phone network they often dont even notice them. We conduct their business and personal communications so we can trust the phone network will just work, because it has. During emergencies we can always call for help for firefighters in hospitals. When someone calls a friend on a phone Network Backhaul will always go through regardless of which carriers they subscribe to or where they live. In a rare instance in a part of the system breaks down government authorities at the local state and federal levels act as if our life depended on us because they do. Everyone of these benefits is the result of deliberate policy choices that serve specific basic values. Our phone network came the envy of the world because her fault policymakers value the five fundamental principles. One, service to all americans. Two competition and interconnection. Three Consumer Protection. Four Network Reliability and five, Public Safety. There are some who believe the ip transition should be a glide path to eliminate fcc oversight but as carriers begin the transition we have concrete examples that many of the essential services we take for granted are at risk. In rural and also rhee areas for individuals and Small Businesses. One of the worst problems is the continuing inability of rural residents to achieve telephone calls reliably. As carrier switch to Ip Technology they can route calls through the lease cost systems leading to latency and calls caught in loops. In a world where we allow the marketplace to work this does not get fixed pretty as one carrier told the complaining subscriber due to living in a rural area you will experience service issues. The fcc will address this at the open meeting next monday but in a world where the fcc can only regulate a some market power or response to unfair or deceptive practices as some have urged Rural America would be out of luck which brings me to my larger point. Ip Technology Brings the potential for new services but also new ways to crash the system. Ip doesnt work with a lot of legacy equipment or services. It brings in all of the cybersecurity issues like malware and cyberattacks without any of the existing defenses. Im not alone in worrying that things can go wrong did apartment defense and federal Aviation Administration have filed with the fcc expressing concern that the ip transition if not handled properly could interfere with vital government operations. As with rural we may find we actually need the fcc to use it legacy authority to solve these problems. Rather than thinking of the fcc is an obstacle in the way we should think of it are last defense against a total train tn wreck because at the end of the day the measure success in the transition will not the how many regulations did you kill but does the phone Network Still work for everyone . For all these reasons im glad to hear mr. Cicconi acknowledge that this needs to be done right. To everyones surprise Public Knowledge at at t we want the same thing. Competitive modern network for all americans. Unfortunately we still debate this is as if we were for or against up grading our phone system or even for our against at t. This is absurd. We want at t and every other carrier to invest in its network no one is seriously suggesting at t or any carrier while we were feels fiercely disagree on how to make this work we want to make this work and we know must the stakes are high. Most importantly we need to stop thinking of this is at ts transition where at t proposes something and everyone reacts. We need to plan out a transition that reflects our values. This is the transition of the phone system of the United States of america on which 300 Million People depend every single day. We need to recognize we have a shared benefits for making this Network Reach everyone and therefore shared responsibility to make it work for everyone. Thank you. Thank you mr. Feld. Maybe we could create a government web site that we can all work through. Nevermind. Just kidding. All learn from our mistakes. We go to mr. John burke before subcommittee and we appreciate your participation pages board member and Public Service ordered or to the state of vermont. Mr. Burke we are delighted to have you here again and thanks for your testimony and please go ahead. Thank you mr. Chairman and Ranking Member eshoo and members of the sub committee. Thank you for allowing me to testify on the topic of ip transition. In recent months under acting chairwoman clyburn the fcc has greatly increased its interaction with the states. We are particularly pleased with the outreach from the internal fcc task force to its own Federalism Task force. Chairman clyburn is to be applauded for her leadership and for her outreach. In my home state of vermont we face many challenges. Very little fiber is being deployed to the home and there are many areas without rock band access. Theres limited competition even in urban areas. Wireless coverage leads grit much to be desired and even in vermont transition to the ipbased Voice Network is occurring. In this latest evolution which has been underway for quite a few years now networks are migrating away from Voice Data Services to ip services. During the transition like the previous ones is crucial for policymakers to focus on the right issues. No regulator or legislator should intervene in the market to put a thumb on the scale in favor of one technology over another. The market should make those choices. The reason Public Service commissions and agencies like the fcc were created and regulated remains the same. First we regulate where competition is not vigorous enough to adequately protect consumers. Secondly we intervene to impose Public Interest obligations. Regardless of the level of competition some oversight will always be necessary to provide what the market will not including Consumer Protection portability interconnection prioritization of Service Restoration 9 11 Service Disabled access and universal service. The at t requests for the wire Center Trials raises some questions of why trials are needed now. The at t and other providers have no significant problems were significant problems whirling out ipbased service today. The transition is well underway and a major reason why issues remain is because the fcc is focused on the wrong issues. The transition is not about regulation or deregulation. The fcc has ample tools in the 96 act to eliminate unneeded regulation. Nor should the debate he technology focus. Congress established a neutral framework in the 96 act and incorporated the core values of Consumer Protection universal service and competition. The fccs or just follow this framework that for over 10 years the agency has followed what congress has set out but not in exact terms. Instead the agency has been unable on the democratic and republican chairman classifying Voip Services as a telecommunication or Information Service which is undermining the communications market. Leaving this question number saw this created a regulatory arbitrage that undermined intercarrier compensation systems and is the reason for the call completion problems that mr. Feld mansion. It is also leaving consumers who chose ipbased services with fewer protections than they might have had with the circuit switch Service Despite Voice Services being exactly the same from a consumers point of view. The states and industry stakeholders continue to wage significant resources ultimately at the expense of taxpayers and ratepayers and proceedings that would be unnecessary. The fcc realworld voip interconnection trials will not necessarily help the commission clarified the statutory basis for voip interconnection. The clarification begins and ends with interpretations of the state statutes. There is no question that the interconnection is technically feasible. At t and verizon manage that on a daily basis on their own networks. Rather than inventing new legal theories with no statutory support specifically to avoid classifying voip telephony as the fcc did in that november 2011 transformation order the agency should just classify the service. Oversight of Lloyd Services is absolutely nothing to do with either the internet or arrangements. For eisen and at t assure their customers that their Voip Services are not Internet Services on their web sites daily. If the fcc continues along to consider Technology Trials congress should encourage the agency to first seek the benefit of a factbased recommendations from an adequately funded federal usf joint lord. Any proposed trials can only benefit on the significant state involvement. In conclusion while technology has changed the expectations of our consumers do not. Consumers expect the same level of service and protections they have been accustomed to it and its up to us all to ensure that those expectations continue to be met. Thank you for your attention and i look forward to your questions. Thank you very much mr. Burke. We appreciate your counsel today. We go to our final witness on her panel randolph may. Its good to have you back and we look forward to your comments as well. Chairman waltman Ranking Member eshoo distinguish members of the committee thank you for inviting me to testify. I am the president of the Free State Foundation and nonpartisan freemarket oriented thinktank that focuses its work by merrily and the Communications Policy area. I have been involved for 35 years in Communications Policy in various capacities including having served as associate general counsel at the fcc. I appreciate the opportunity to testify in july before this Committee Regarding fcc process reform. That hearing was very important but frankly the topic of this hearing may be even more important. As the transition away from Communication Services to traditional broadband will be existing public utility style framework that still largely governs Communication Service providers be replaced by a freemarket oriented paradigm that accelerates the ongoing broadband Digital Transition or instead will the Regulatory Framework be an impediment to progress . The answer has important implications for the nations economic and social wellbeing because there is widespread agreement that the transition to ip services which indisputably is leading to dramatic marketplace changes will be completed at some point and there is also widespread agreement that completion of the transition is a positive good because ipbased Services Provide consumers with more functionalities and less costly ways than do copperbased tdm services. There is no doubt that the digital revolution has enabled increasing Competition Among broadband providers for their provision of voice highspeed data and video services. Whether these providers of offer their services over wireline Cable Wireless satellite fiber or whatever technology. The relevant point is not that all of the Services Offered by all of the competitors are perfectly substitutable order that they meet every consumers desire at all times. The relevant point for policymakers is that for an increasingly large number of consumers, to these various competitors provide a choice of Service Providers offering a choice of Attractive Service options. Note that i said it of the ip transition almost certainly will be completed at some point in time but the fccs options and possibly congress as too will affect the timing of the transitions completion and whether the Regulatory Regime that emerges is a proper one Going Forward. My testimony explains why in order to benefit consumers and in order to promote investment in new networks and innovation a legacy revelatory framework which is based on assumptions of a monopolistic form in place that no longer exists should be replaced in a timely fashion by freemarket oriented model requiring Telecom Companies to continue to maintain their tdm networks password they are economically viable drains investment dollars from employment for new ip networks. Economists agree that burdening any Service Provider regardless of the platform used with unnecessary costly regulation does deter investment and innovation. So in the ip world the fccs regulatory intervention should be tied closely to tying the use of the fcc may well possess the authority of the committee patients act to implement most of the changes necessary to facilitate completion of the Digital Transition while at the same time safeguarding certain basic Public Safety and universal Service Interests which i recognize are important interests to be safeguarded but to the extent such authority is lacking or the fcc fails to properly exercise such authority in a timely fashion, then congress should be ready to step in. For example congress congressman latta introduced h. R. 2649 which requires the fcc to presume forbearance relief should be granted absent clear and convincing evidence to the contrary would be a useful tool in enabling the agency to act more quickly, especially a forbearance relief is made available for all entities subject to the commissions jurisdiction, as i think it should be. In any event aside from any nearterm legislation that may be desirable to ensure the benefits resulting from the digital revolution are fully realized, ultimately congress should adopt a comprehensive overhaul of the Current Communications act along the lines of the digital age Communications Act model that i have long advocated in which i describe in my testimony. Finally mr. Chairman, i mention i served as associate general counsel at the fcc. That was in the late 1970s and early 80s under the carter administration. At that time traditional economic regulation of the various transportation markets was largely eliminated. In this deregulation initiated by president carters administration was accomplished on a mostly bipartisan basis. The congress and the agencies cooperated productively. The agencies generally initiated the regulatory changes through the administrative process while congress engaged in oversight. Congress eventually legislated and put in place at the Regulatory Regimes that relied for the most part on marketplace competition rather than regulation to protect consumers. I believe that a similar opportunity for positive change now exists. Again thank you for inviting me to testify today and i will be pleased to answer questions. Mr. Me thank you for your indepth testimony which we all have. We are going to start off with questions. Mr. Iannuzzi in your testimony you said tonight quote the prepared testimony as incumbents replace their tdmbased technology with Ip Technology competitive carriers will lose access to connections that have enabled them to push deployment of innovative Broadband Services to american businesses. That is the crux of the argument you represented a, correct . That if at t or other companies abandoned their Copper Networks than you are not going to have the ability to get to that last mile. Correct. Mr. Cicconi from your respective what does that mean in terms of is that accurate . Will at t and other Companies Make last mile connection available and i want to go to mr. May on this and again hit that microphone button. The short answer is of course would make them available and theres nothing we program boats under the same internet interconnecting rates . There is nothing in our proposal that would change the treatment of that. But in terms of an advanced network . I think when youre talking about ethernet for example the fcc has concluded the ethernet is a Competitive Service so if we are rolling out Ethernet Services and replacing them for tdm facilities you get the sense that a tdm facility is not classed as a broadband level facility so if replacing tdm with it a broadband facility for example in a cell tower i think the fcc has concluded ethernet is competitive and i think you know in fact i thinks rent just stated recently that the same price he pays for t1 to a cell tower he can get 20 times the capacity through the even at and the same cell towers so obviously its a competitive market. We wouldnt feel that regulation per se is needed in that area in order to provide an alternative capacity. Mr. Burke what is your reaction to all that . One of the things you look at when you look at the potential for interconnection is that there is supposed to be agreement. The idea is that they are supposed to agree. That doesnt necessarily mean that all the players have an equal bargaining power. It doesnt always work that way. If thats the case it may well be necessary for somebody to take a look at those agreements in the 96 act clearly set and wisely so in my estimation the states can look at that and arbitrate that itd also defined the service to include enhanced services. So 96 acted my estimation had it right in methodology so that you would be able to handle arbitration of these issues if in fact mr. Cicconi and mark agree and i think thats another point that exists in the states position here and what they would have to do in this brave new world moving forward. Mr. Sub five from your prospective . Thank you mr. Chairman. I think part of the premise of the question was based on the continuation of offering of copperbased and just the ability regardless of the underlying infrastructure to have a competitive darker place as an alternative. You no there is a transition going on and from my perspective over time as i said in my oral testimony its important that we not required the maintenance of regulatory fiat of Older Technology that are less efficient than more costly. So eventually i am not in favor of requiring a tnt or anyone else to maintain an existence of technology in a competitive environment that we are moving to. Its not efficient but i want to say one more thing if i could. In mr. Iannuzzis testimony hes talking both about the ability to access facilities of others and to use the last mile facilities and talking about interconnection of facilities and as we talk about this today those are actually two different things. 251 and 252 involve both of those things. From my perspective in terms of where Public Policy wants to go, i am more receptive to arguments that have some regulatory backstop for interconnection saying i have to interconnect my network with mr. Burke or mr. Cicconis then i am regulation which continues to require that if i build a facility that i have to provide access under regulated terms and prices ad infinitum for someone to use those facilities and the simple reason and this is important i think to understand is, when you require that type of sharing of facilities and access that he talks about and he does say that he has some facilities of his own. But when you do that it discourages either him from building his own facilities or it discourages me if im the one that has to provide access from actually investing more in the facilities. My time has expired and i now turn to the gentlelady from california ms. Eshoo for five minutes. He mr. Chairman and thank you to all the witnesses. We will start over here with the italian part of the table. [laughter] who dont agree with each other. Despite their shared background. Ethnically. Mr. Cicconi you stated in your testimony that modern ip networks are both more dynamic and costefficient than a tdmbased voice Telephone Network that we have depended on over the last century. How does a new network and Technology Change the state of competition because i think that really goes to the heart of a lot of what we are talking about here and some of the testimony that we have heard from others. In your view, shouldnt the rules that preserve and promote competition be Technology Neutral . I have always favored Technology Neutral in whatever legislation we do. It has always been something i thought was like a hot stove. Dont go and touch it. It should be neutral. First of all i dont think the telecom itself makes the Technology Neutral. The title of common carriage doesnt apply to Wireless Services. In fact you have an express provision in title iii that it cant be Wireless Service doesnt apply to cable. It applies uniquely to the wireline tdm Services Provided by the legacy wireline carriers so they are not Technology Neutral in that sense. They are uniquely imposed on this part of the business and as you saw from the chart earlier its a declining part of the business at this time. And but you dont agree . I certainly would argue its an appropriate mission for the fcc to continue doing but i would disagree that. I want to. That all the rules needed in. Were not in my office. Okay. Thank you. Without great testimony. I love what you said, and its uncommon for people to come here and speak about you know what their father said, how it remained with you, what you do what youre for, not what your against and where you want to go and why. I think you gave terrific testimony. What incentive do you think the largest providers have to reach a commercial Interconnection Agreement with you . Thank you very much, congresswoman for your kind remarks. Turn the microphone on so everybody can hear you. They can hear you say thank you for your kind words, congresswoman. [laughter] no, you dont hear that; right. What when i got my license, they asked me three questions. Do you have a technical acumen . Do you have a financial wherewithal . Do you have the business knowhow . I would have flunked that test if i was going to go in to a business to compete against a 800pound gorilla without a fire wall. Because our ability to go and negotiate a commercial agreement, the incentives that can Just Economics 101 concepts here. That economic incentive of the incumbent provider they control the connectivity to the customer. Its in their interest not to provide connectivity to other people because they would like to keep the customer. Without the fire wall there to make sure we have fair, equitable, access to the customer, there the Business Case would fall. It would not be there. Thank you very much. I think im out of time. Thank you. Ill submit the rest of my questions for the record. I have them for the other witnesses. Thank you. Well now go to mr. Barton for five minutes. Thank you, mr. Chairman. Last weekend i finally got to go home to texas after the government shutdown, i hadnt been there. It was the first time in the 29 years ive been in the congress i had to spend two consecutive weekends in d. C. Obviously i was glad to get home. When i got home, i walked in to my house, and decided to make a phone call and i department have didnt have a dial tone. And the phone was provided by at t. The legacy carrier [laughter] so i got the phonebook out and i went through the protocol on page 9, you know, dial 1800well be happy to help you. If the problem is on your phone in the house, its not its 99, if its not well fix it for free. I went through that, and finally, you know, selfreported a problem. I did all the things youre supposed to do, and they called back and, you know, said well be out tomorrow by 8 00 p. M. Well, the next day by 8 00 p. M. They werent out. So i picked up my cell phone, which is provided by verizon [laughter] and called and hit 000 i finally got a sweet lady in houston, texas. And my phone isnt working in the home and i havent got service man. She agreed with me and said well be here tomorrow. And by golly, they were and they fixed it. Boom. And the guy could not have been nicer. Could not have been nicer. But the moral of the story is, i had to use a wireless provider to get my hardline phone fixed. In 1996, c lax were they were competitive, and we wanted them to compete with the incumbents. Now since 1996, my Congressional District has changed four times. But were still operating under rules that we put in place for an old system, and its it is time just like our congressional dispricts change every ten years in the case of texas. We have changed two times in addition to those tenyear changes. We really need to relook at this. And i love at t, and i love verizon, and i love the c lax and the independents out there. What i really love is Consumer Choice and market efficiency and competition that works. So my question to and way back when even before i was a congressman, i knew jim. Guarantee access if we did away with some of the regulatory protections under title ii. First, congressman. Iements im sorry for your service problems. Weve had rain problems. But i think you made an important point. That is there are alternatives out there, and wireless has become an alternative for wireline phone service. There are many competitive carriers offering Wireless Services. Cable officers phone service today, im not sure in your area or not. There are an array of choices out there. I think that consumers have the choices today. Now is it a legitimate function of government to ensure that everybody is connected and has the ability to communicate . Absolutely. You know, weve our companies always stood behind the principle of universal service. I think thats an important function of the government to ensure that the choices through there and theyre available to all americans. To the average consumer, a consumer doesnt care where the service what they want is service. What they want is something that works, that is efficient, and that is costcompetitive. You know, so our job on the committee is not protect an existing market segment. Our job is to do the best question to give our consumers choices. And i want the c lax to stay in business. Im not in antiif who we passed in 1996, it might have worked. It doesnt exist today. Lets figure out what exists today and the future. Thank you for the hearing, i yield back. We turn to the gentleman from california, mr. Waxman. Thank you, mr. Chairman. Based on some of the testimony some might think we are building a new networking being built across the country. An i. T. Networking that runs onlines and wireless air waives. Others suggest its not no new networking, but the new electronics added to the copper and fiber structure transporting voice and data throughout the country for years. Why are the distinctions important . What we really care about are basic values like protecting consumers and competition. Universal service and Public Safety. Why does it matter what kind of Infrastructure Communications runs over . Its my understanding that google is currently planning to offer extremely fast Internet Access over new Fiber Networks being deployed in three communities. Although consumers can sign up for video service, to compliment their Internet Access service, google is not offering a voice product. Google has not been shy about stating that it is not offering voice at least in part, due to the complex rules associated with providing telephone service. What do you think of googles argument . Would a company like google be saddled with regulations if it decided to add voice to the video and broadband offering . I think there are a couple of points that need to be very clear. First, when google talks about the regulations that they found too burdensome. Theyre not talking about the 251 252 regulations that have been the focus of the debate here. Theyre talking about the thing we all agree that ought to stay in the system like 911 and Consumer Protection and privacy protection. All the things we said its important. What are they talking about then . Give me examples of what theyre concerned about. Well, its expensive to maintain the 911 system. Its expensive to contribute to the universal Service System to ensure that all americans are connected. Now, we believe that its very important maintain these things. Believe its very important, you know, google likes to collect the information of the people who use the services. Theying a gray gait it. They have one level of privacy protection. Their business smodle based on a couple of things. In the phone world we treat it differently. You cannot treat a phone Call Information the same way you treat a Facebook Status update. People hold that closely. I understand for going toll say we dont want to get to the business, but if we were to say, well, okay we want to encourage google to get to the business we want to eliminate these kinds of vital Consumer Protection, i think that would be a very grave mistake. And i even if they choose not to offer a telephone service, that doesnt leave to the conclusion we have to eliminate the rules for all telephone service. Not at all. Any business looking to enter a market figure the tradeoff and Business Model is. We have a thing valuable in the networking that goes everywhere and using telephone numbers. Ly point out when we have companies that are voice providers, voice providers that want to use the telephone numbers we impose certain obligations on them already. And businesses make the evaluation of whether the benefits of getting that in to that business are worth the expense. Thats their decision for themselves. Yes. For the rest of Public Policy and everybody else, given the importance and complexity of transitioning Voice Services to an alli. T. Networking, wouldnt it make sense to have a trial overseen by the fcc to help collect data based on realworld experience and challenges . This past may, the fcc issued a Public Notice seeking comment and trials related to the i. T. Transition that chairman julius stated. Quote, at the time trials are a smart approach that the fcc deployed before. And the public noted that the fcc invited carriers interested in pursuing a geographic trial like at t. They proposed to a submit a more detailcomprehensive plan including the design of the trial, the data collected, the rules that would need to be waived and the role of the states and the tribes. It seems to me that the fcc is a approaching this issue methodically and thoughtically. Let me ask the short time i have a left to anybody in the panel that ups to jump in. Do you believe the fcc is moving ahead in a kill fill diligent and responsible manner supporting trials on the ap transition. If you dont, what would you do differently . I would say, yes, i think the fcc is behaving exactly appropriately. They have invited further comment. I think that we cannot treat convention of entire wire center as contrary position,. I dont think i would be. It would be directly contrary. I think theres a couple of fundamental points here. When the fcc put out the additional questions, i think we all recognize that the fcc was going through the leadership change from the former chairman to, you know, a chairman not yet confirmed by the senate. And i dont think that honestly, chairman waxman, they were prepared yet to answer the question, but i dont think they should be leaving open the question of whether we should have trials. I think when we filed a petition almost a year ago, you know, we asked them to actually set up the trials. This isnt an at t project, as somebody said earlier. It involves government, it involves the entire industry, and it involves consumers and take shoulders and shouldnt be up to at t to come up with the plan. We actually proposed industrywide trials to the fcc that the fcc would actually help put together in a collaborative way working with everybody. And so i think theyve at least to this point, punted on that decision. I dont think not having trials is an acceptable answer, because i think it would, in essence, say the government saying were not going plan for this. And your point are not method cll methodical. The fcc planned the tv transition, conducted the trial, learned frem from them. It went fairly smoothly. I think that what needs to be happen here. Im hopeful it will happen. My time is expired. Its up to the chairman if you want anybody else to respond. Comment, please . Real quick. With all due respect, the concept of the trial, in my opinion is the reason behind it we do it all over the place today and interior networking and how we connect other cooperative parties. We smart people. We know how to do it. We are losing ground were not trying to make the revolution of ip even more profound. Lets get going with it. Are there things we have to attempt to tweak stuff . Sure. In term of the mechanics of it, its make it sound like water is hard if you want to make it seem complicated. You take anything and make it sound more difficult. Its done today all over the place. All right. We have to move on. We go to mr. Latta for five minutes. Thank you, mr. Chairman. Again, thank you very much for holding the hearing today, and thank you to everyone who is testifying today. I appreciate it in hearing your testimony. If i could start with mr. Size i dont know any. Cicconi. Big for boast us. I have a very big district. I go from urban to suburban to very rural. And one of the things that i have met with a lot of my rural telecoms. They had problems with dropped calls, and this is a serious issue for folks out there. Again, if you have family members that are elderly and youre trying to call them and all of a sudden theyre not picking up the phone, the next recourse is you call the local Law Enforcement or the fire department, aka, to check on family member. And the same way it really hits Small Businesses or any business out on these areas. Again, i have a lot of businesses that are locate the way out, and all the sudden the calls are getting dropped and they cant make the call. Pretty soon they are out of business. As were looking at what is happening out there, as the networking especially the rural providers transition to i. T. , how do you think it this will affect the call completion in the future . Notwithstanding mr. Bartons earlier service problem. [laughter] im not aware that at t has a ruralcall completion problem. Im aware there is a problem there. The fcc has proceeding underway right now to try to deal with it. And to deal with it in a way that applies across all technologies and across automatic providers. Thats the way it should be. And i think its an example what an appropriate role of government should be. You think as we go forward with the i. T. Especially if the rural providers do you think it will help them to make sure they dont have the dropped calls . I would be hopeful, but again, i think its one of the reasons so you to trials to test these things. Make sure they work properly. Make sure the placement technologies are just as reliable as the others. And i just the response to what was said a minute ago. We cant go out and convert a wire center today from tdm to ip without permission from the fcc while its going on. We cant do the fundament tallet investment. Theres 20,000 wire center that have to be converted. Not a single one can be converted without a permission from them. Ensure frankly, the Replacement Services and technologies are really better and dont have the issues. Thank you, mr. May, in reviewing your testimony, in your section number 3, it said Congress Needs replace the Current Communications act with a new digital age Communications Act. It you state that because of the extent of the dray dramatic marketplace changes u brought by the i. T. Transition already described. It seems to me that congress ultimately needs to comprehensively overall the Communications Act by adopting a new freemarket oriented model that breaks thoroughly with the past. Could you elaborate on that, please. Yes. Thank you, congressman latta. One of the Reasons Congress should pass a new act. It really goes to a lot of discussions weve had today back and forth talking about technology whether policies are Technology Neutral or not, and how that relates to the competition. The reality is that current act of is not trnlg Technology Neutral really at the core. We talked so much those in the area those in the area talk about the smokestack or stove pipe regime. In essence, the act establishes different type of regulation based on different type of technical or functional constructs. And what and so that is not the most efficient or most sound way for regulation to go bard. It what should happen, really, in the future is to competitions is obviously important as mrs. Eshoo talked about. We want competition. But what we want to have, really, is an environment and in fact, the digital revolution is enabling more competition. Thats why we have these cable and wireless and fiber and all of these things are part of the digital revolution. But ultimately, in a new act what we would like to have, in my view, would be a standard that ties the regulatory activity of the agency closely to an analysis of the competitive marketplace. And then only if theres a market failure or consumer harm, and those are, you know, i recognize that if theres consumer harm, theres a place for regulation. Im not, like mr. Size yon any im size yon we need to tie regulatory activity, much more closely to an analysis of the marketplace. That really gets away from all of this discussion about this technology and that technology and that type of thing. But the fact that technology is changing, and enables competition that is a reason for policy changes. Its not a reason to do nothing. Thank you. Mr. Chairman, my time is expired. I yield back. The gentleman yields back. We turn to the gentleman from pennsylvania for five minutes. Thank you, mr. Chairman. This morning i read in the newspaper that at t recently notified many of its special access customers that it will eliminate certain longterm discount price plans effectively increasing rates by as much as 24 . Competitive carriers argue that they have no alternatives to gain lastmile access to business customers and must simply accept the higher prices, mr. Chairman, i would like to unanimous consent to place a copy of that article that appeared in the the wall street journal this morning and the copy of the ex parte filing that several Companies Made to the fcc in regard to those rate hikes. Thank you. Let me ask mr. Feld. How can at t institute up to 24 price increases if the markets are competitive . Do you find foment in claims by some that competition today eliminates the need for a regulatory backstop . Particularly in light of at ts action to effectively raise specialt access prices. Sure. They are vital to run the connectivity within our networking. If there was true act for shop and pick the market was working and equal service you could pick the next lowest provider, provided they had equivalent capabilities. I would add that often have a confusion between the underlying infrastructure and the things that ride on top of the underlying infrastructure. And we look at the number of wireless carriers, the number of, you know, carriers that offer service through that underlying infrastructure, and looking at just the service of that we say wow, theres a lot of competition. Whether you get below the surface which it rides, you have still the same kind of networking problem, still the same kind of infrastructure monopolies that you have to worry about. So i think that what weve seen in special access and this is not a new problem, this has been going on for many years, is that there was a lot of open anticipation when we set up criteria about how we were going whether there was competition. Some of that did not happen, but also the criteria were frankly too optimistic and didnt take in to account the difference between people offering Retail Service or people offering different kinds of commercial service and the Critical Infrastructure that so you to get to in order reach the customers to offer that. Thank you. Would you like to respond . Yes, sir, first of all, lets be clear when were talking about the special access facilities mentioned here. Were not talking about services that are broadband. The fcc has not classified the services as broadband. One of the reasons, mr. Doyle, you read the the wall street journal article were not Offering Service contracts out five and seven years because we plan as part of the ip transition, the reason were here today to be replacing the old facilities with modern broadband, fiberbased Services Including ether net. We dont want to offer longterm contract if we replace if. Theres a proceeding away. On were special access current late the fcc designed to gather facts on what are available for other providers to use. We think that the data the fcc collects from all providers, including cable, is going show there was ample alternative facilities there. One the alternative, by the way, build the own facilities. Were, right now, have a project underway and hopefully by the, you know, within two years well have run fiber to a million businesses in our 22 state footprint, and i think any other carrier out there is free to do the same. Listen, as i understand that youre transitioning and that it probably makes sense youre not going go 7year contracts. I think the concern is not so much youre discontinuing the longterm contract but raising the rate youre not passing down the discount. If it were true lay exeat testify market i dont know how years old get away with doing that. [inaudible conversations] i dont think we have raises prices. We have eliminated some plans but i dont think prizes have gone up. I would like to see that. Let me just, well, mr. Chairman, i see my time is expired. Ill wait for another time. Thank you. The gentleman yields back. At this time, the chair would recognize the congresswoman from tennessee, miss black burn. Thank you, mr. Chairman. I want to go back to mr. Waxmans question, talking about the agreements and, mr. May, let me dpom you and i want to hear from you. Do you think the fcc should do a Pilot Project and test some of the ip networks to figure out how to make the transition easier for consumers, for businesses, where you want a Pilot Project . Im in favor of one. But i have to say that im probably dont need to be as delicate as mr. Cicconi may be. I think the delay i think the fcc, you know, has been a little slow, i would say, in getting these trials off the ground. So i would like to see them move quickly. And i think they would yield useful information. But i dont want to seem them used over a long time of watching the fcc. Sometimes i know when you start these things like this, they can be used in ways that delay ultimately the ultimate decision making. That shouldnt be allowed to happen with the projects. What u you started out by mentioning the interconnection, i think, and the i. T. Transition, and, you know, i just want to say it. And i said it in my testimony with regard to ip to ip internet connection. I dont think that and just assuming well have a trial or not. But matily i dont think the fcc would presume its going regulate the Interconnection Agreements in the same way that it did in the tdm world. Its, you know, likely that there wont be interconnection problems. It hasnt been the case with ip to ip connection, thus far, they have been rare there have been disputes. They have ultimately been worked out in a voluntary marketplace way. My counsel would be for the fcc to just presume its not going intervene that we watch the system. If it does turnout that there is a real problem with interconnection, i said in my testimony there could be a regulatory backstop. It shouldnt anything like the current 251 252 process that is basically really resimilarble more of a public utilitystyle regime. It should be a dispute resolution process that ultimately depends on mediation and perhaps ultimately baseballstyle arbitration or Something Like that. Okay. Mr. Feld, anything . First, we support having wellconstructed trielts. I think that the fcc has been behaving responsibly; however, what at t put in so far is more akin to a phase in or beta test, which you goat at the end rather than time delineated trials with suitable safe guards, which are really where we are now. We saw what happened when you try to flip a wire center on fire island this summer, and im very glad to hear that at t say we dont want do a flash cut like that. The issue sheer that the fcc properly sends the Public Notice is while the trial is voluntary for the carrier, it is not voluntary for the customer. And the other point i would make in a networking, if something goes really wrong, and the wire center starts to go down, it can take down other portions of the networking with it. So we believe in being cautious, but we think that as with any other kind of trial, if there needs to be appropriate safety in place, and those need to be described and settled before we initiate any trials rather than after we get in to it. All right. Thank you. Im going yield my time back, mr. Chairman. The gentlelady yields back. At this time, the chair recognized the chairman of the full committee, mr. Dingell. Five minutes. Mr. Chairman, i thank you for your court sincerity. I commend you for this hearing. I also wish to express my thanks to mr. Welsh for his cowrpt sincerity to me. Thank you. I would like to begin by welcoming the fellow citizens of michigan this morning. His company tell net worldwide offers services to the resident business of michigan. Its a transition to ipbase communication networking. As some of the witnesses have noticed the transition is already underway. Has a potential to confirm significant economic and technological benefits on our people. But we need to learn more about that transition means for the future of communications in this industry and particularly how it will affect the consumers. Incumbent carriers make the valid point they are required to maintain tdm networks. Despite the fact only 30 of americans use the networks in 2012. Its my view, that the millions spent to maintain Legacy Networks can be more efficiently based and invested in ipbased networks that will be the backbone of the 21st century telecommunications. This part will help advance the goals of the 2010 National Broadband plan. With that said, i understand that at t has petitioned the federal Communications Commission for fore berns of certain regulations in order establish two geographically ipbased test projects. I think there is real valuable in this approach. It will provide an invaluable case study to consumers, businesses, policy makers, and to the government about what the transition to ipbasedbased networks will entail. I encourage the commission to work with at t to set these projects in motion. Making certain that there are mechanisms in place for monoto monitoring and effectively resolving consumers complaints. In addition to the lessons were learn from at ts trial projects, i suggest that policy makers also keep in mind several fundamental principles. When considering the role of government visavis ipbased communications. As Public Knowledge wisely suggested, our focus should be on ensuring universal connectivity. Interconnection and competition. Consumer protection, networking reliability, and Public Safety. Those are very important principles to be kept in mind as we go forward. I firmly believe there still exists a need for certain obligations. Because the communications purposes to make available insofar as as possible to all emphasize all people of the United States the benefit of our communications system. That presubjects and that comment is as vailed today as it was 79 years ago. Mr. Chairman, i thank you for your courtesy. I have yeemedding yeeltd yielding back 1 24. I thank mr. Welsh and happy to yield. I appreciate it, mr. Dingell. Can i just pursue this issue of the trial . It seems to me, theres kind of a chicken and egg thing going on between the fcc, maybe its because we dont have, you know, a full commission yet, but it seems to me the following, i could be wrong, jim, you jump in and tell me if you think im wrong. Youll do it anyway with but [laughter] you want the trials. You want the fcc to approve give you the green light to go ahead with a trial. It seems to me that the fcc is saying well do a trial but we want the following things in it, and there is not an agreement. Does that look anything like how you see reality . Time is going on. Right. I think what mr. Dingell said its just on the mark. We need to get going. Honestly, i think it may be a function of our timing on this as one chairman on the way out and another isnt in there yet. The questions actually issued were fairly recent, i mean, and they waited until six months after we filed it to actually ask the questions. And, frankly, like a lot of you, ive been around the town awhile, i took the questions as a way of the fcc saying were not ready to answer this yet. But i do take comfort in the fact that we have democratic and republican commissioners both on the fcc who said, yes we should it. Categoryically go forward. The principle author has said absolutely. He would have said yes to the trial on day one. I think the key, congresswoman, is young this isnt about us exclusively. Its industrywide and nationwide. And i, for one, reduck lant to put in the fcc, quote, unquote, an at t plan for conducting the trial. I think the job for the fcc to work with all statelevel government as well to design those trials much like done during the dt finishing transition. Im confident once chairman wheeler gets there that will happen. Thank you. Thank you, mr. Dingell. The lady yields back the gentleman whoas time is expliered. Recognize the gentleman from illinois. Thank you, great hearing. I love trying to stay as long as i can. You never miss the opportunity to hear a member bring up a personal story. So im im sure your staff prepared your the personal story if they didnt you might need to look for other staff members. [laughter] let me address, and i always get concerned when i start agreeing with mr. Waxman every now and then. [laughter] i have to check the data file on that, but i do agree we need to move on a test. We need to move forward. And to his comments on google, i would probably out here or listening. I would encourage them to come in. My guess, it is 251 252 is why theyre not in a voice. Thats what my guess is. Now, if you have talked to them, mr. Feld, and they have given you data. I think theres interconnection issues its very informative that theyre not doing that, and i think that is a lesson we should learn and find out. So having said that, just a blanket statement. I know, the fcc is looking to the dropped calls in a rural areas are a issue. It is a backstop, reinforces the issue of having a backstop. I want to raise that. To mr. Feld, and mr. Size yon any, Public Safety is a big issue for all of us here. We work closely on this. In this move, how do you envision Public Safety being positively or hopefully not negatively we wont accept a negative response on Public Safety. How do we start with that . , i mean, hate to sound like a circular reasoning here. I think its one of the reason we need to have the trial out there. Were fairly confident that we can design these systems in a way that takes account of Public Safety. More over, we fully have to accept they work well for Public Safety. You cant have a new technology deployed where 911 doesnt work or other Public Safety features dont work. So i think its i think we recognize its imperative. I think we need to stress test it to make sure it works and we can transition it accordingly, but i think we all accept the obligation has to be there and we simply cant replace the Old Technology with new technology unless 911 works. Thank you, mr. Feld. Two things, one, planning preseeds trial rather than trial proceeding planning. I get we will need to have some information that will gather in the trial. It thats a point of trials. Before we say, thats throw a switch and see what happens to Public Safety on this stuff. I want to know what the recovery mechanisms are. I want to have limited tests, first, before you move to full tests. The other important factor is we need to start thinking of how we make a more robust Public Safety system in our competitive and differentlyenabled technology universe. There is virtue and redundancy. Maybe we dont have to put everything on every networking in the same way if we have ways in which the nervings will Work Together that are for Public Safety. We have seen some things coming out of Hurricane Sandy hearings that the fcc has been conducting. We have seen how different technologies have different strengths and weaknesses and responded in a different way. I think that one of the exciting advantages of the ipbased transition that it allows us start thinking about how to take advantage of the structures of the internet, which rely on redundancy and flexibility for stability rather requiring the liability from every single networking that has been participates. The last thing ill mention we have to to be weary of new issues that coming up. I mentioned in my testimony the problem of swatting which is calmer idea which allows people send s. W. A. T. Teams to others houses as a joke. Its not a funny joke. These are challenges that need to be resolve the. We need to be accumulating this checklist of what needs to work as we move forward. Yeah, let me finish on this. Ive been involved in trying to raise the issue with the conner convergence of technology. I have given up. I dont think we are change the fcc and what it has. The question is, have you seen the in the business sector, the cutting of the core from landline to cell for the Business Community as we have seen in Residential Services . Congressman, excellent question. In the Business Community, it is a distinctly landlineoriented business. Mobile phone are part of the work force or the common employee. The way that businesses communicate and collaborate is that inherently a landlinetype of function. Its because theres Group Capabilities going on. Youre interabouting with a wide variety of locations, perhaps, and so forth. Which is not conducive to how Cell Technology is deployed. Its more about the individual and how it connects together. If i may, on your very important about security and Public Safety. The Competitive Energy has already my grated, for the most part, to ipbased 911 solution. Its why . Because the ipbased we try to get our customers call to an emergency authority, the ip networking allows us to make sure theres any bottle neck to get to the Public Safety point we have alternate routes to get there or answer it through our own operators to make sure we connect the dots. Further more, we added in Cool Technology where if somebody picks up the phone and they dial 911, we not only send the call to the publishing safety organization. We can stoned the building you can could go to youre on the show and somebody calls 911 from the home. Well send to the cell phone so you know the 911 call was made from the phone. We have knead move already, and this thing about the ipto ip connected fashion. When it comes to and it goes on right now. Thank you very much, the gentlemans time is expired. Recognize the chairman from vermont. Thank you, mr. Chairman. Mr. Burke, thank you for being here. Your testimony mentions if are a few carriers in vermont are investing in cyber. My question what policy decisions would change carrier incentive to invest in rural areas. Are there regulations imposing unnecessary costs that are hindering any of that investment . Thank you for the question, congressman. I think that its a very tricky question when you goat how do we move out in to a Better Business plan and more rural areas. Dollars are dollars. I go back to my grandpa, he was a compair i are farmer. He said you know where the stool has three legs, johnny . And i said no , sir, i dont. He said if it had two it would fall over. [laughter] i think thats what we may be dealing with here. I think we actually have a potential as we move forward in to an ip world. We are moving there to be able to do it in a better and more focused way if, in fact, we use a stool with three legs. The federal leg that obviously is your responsibility and the fccs industrys leg in how we get out there to make you being with part of the process. If its not did it doesnt work the way we want it to work. Last but not least is the states responsibility and the states ability be it with their own usf funds to help manage to get this stuff out there, or be it their policies to help make the move out for industry itself more seamless, easier, and more attractive to their business plan. The states are a vital part of this. Without three legs for the stool, im not so sure it has any chance of succeeding. Thank you. And mr. Cicconi, quickly. What actions are required by the fcc in order to ensure that competition will continue and actually thrive in an allip world. I appreciate if it was quick and abc. I dont have much time. Well start with you mr. Size yon any. I think you have competition today. That is there today. I certainly grant that. But i would suggest that on a Going Forward basis it would be a mistake to asiewment assume the present and the future arent necessarily the same as they were in 1996 or 1934, and so i think the notion of taking legacy rules and applying new technology is something the National Broadband plan folk. It talked about how applying legacy rules could actually retard the investment necessary and have unintended consequence of siphoning investment away from the new technology that were needed. And so i think that would be our main concern is that we not overqerkt here and assume there are problems until we know what those problems are. We need the clarity that removes any the way the act works. Its technically neutral. Communications systems are by their design technical. So if theres not technical advancements, then what are we try dog in term of trying to get where were at. If were not trying to make things better, faster, cheaper, smarter. My point is that the key thing for competition is e vis rate. Underpinning to the x because it was about creating competition. It was a framework to create a marketbased structure so that we can compete. How can it help to address the issue of incomplete calls particularly in rural areas . I think that obviously you have to take a look as you move forward here with where the problems lie. And, you know, if you take a look at what were see in call completion, the order comes out next monday, i believe, at fccs issued. The fact of the matter is call completion is probably a mained duelings that grew from terminating access charges. As leastcost reuters sensed heavy terminating access charges they decided they would not complete the call. And, you know, the routers are innovation too. It may have been the case here. We try to make sure theres a regulatory touch as well that keeps an eye on moving forward in the transition. Mr. Cicconi hasnt said its not the right idea. I point out with call completion that began, and the answer of that began true the states. When the problems occurred, i know you got them, congressman, you said you if. And i believe that you did. But the fact of the matter is most of the time your Public Service commission or the ag office probably got them first as people became unhappy with what they were getting and not getting in Rural America. Hopefully, keeping those regulations in place will allow for a consumers to get the kind of protection they learned to expect in their old networking as we move through to a new one. I want to thank the withins for questioning and testifying. And giving your perspective on the changes in technology. Im excited by when you see the things that people are able to do now as we have the transition to internet protocol and, you know, you also have coupled with that the upgrades being made from copper to fiberoptic. It brings billions of dollar investment. It gives consumers more option to do things with voice, video, and sending larger pact of data. The investment that go with it. I know, mr. Cicconi and your company are investing billions of dollars to help build out the new networks, use the technology in better way even with the current regulatory environment. And i want to ask your take. Some would say the fact youre investing these billions of dollar provest theres no need to change the regulatory structure. How would you answer that . I think that the first thing i would go is kind of refer back to the chart, congressman. That opened the hearing here that talks about the way the market is set up. As opposed the circuit which provide as said earlier we have fewer than 14 million circuit switch telephone customer at at t at at the present time which is a small fraction of the number of any other providers have in the competitive markets. So i think that would be the first point i make. The second point is that the investment that has occurred over the last few years in wireless and Ip Technology is, of course, i think 96 telecommunications how does that actually affect your Investment Decisions . Well, i think on a Going Forward basis with ip i think we hear what google hears which is some companies advocating that we simply take the common model entitled to and apply it as if nothing is changed to modern, competitive ip services. And i certainly think thats not what the act envisioned. I also think it would be a mistake. But it creates regulatory overhang for a company like google or at t and deciding to make wireline investment decision. I think its a leap of faith on the part in term of regulatory environment. We have read the National Broadband plan. We take comfort in the fact that it speaks to these issues. Its been endorsed by the president , its been endorsed by the congress on a bipartisan basis. And i think it gives us confidence Going Forward these regulatory issues and uncertainty will get seelingsed in settled in the proper manner. I think, of course, one of the reasons we file for the trial is kind of spur that along. I appreciate that. I want to ask mr. May. Im running out of time. You have been advocating for teleCommunications Act or reflect digital age. If you can share with me some of the principles you envision, and i left my brick television at home. I didnt want to get it in here. Since i have you here, you might want to something about the 92 cability act which is outdated. Thank you, congressman. Thats outstate state outdated for sure, the 92 act, and the 96 act is as well. At the time it was disopt adopted, you know, it wasnt a transitional piece of legislation that was good. Here are the basic fundamental prince president s principles Going Forward. You have to think about it in the larger sense. Obviously ive talked about some regulatory backstop and safe guarding universal service and so forth. But in a large sense, a new act should get rid of the silo that correct in the present act. The stove pipe. Theyre not Technology Neutral. Theyre based on technology construct. The different titles. And it should replace the Public Interest standard that now is in the act in 110 different places. It delegates authority to the fcc just to act in the Public Interest that in determine standard with the competitionbased standard that is antitrustlike. Im not suggesting youre going to import all of antitrust jurisprudence. Its going focus on the competitive marketplace and regulation; therefore, shouldnt be adopted unless theres a market failure or proof of consumer harm. Then, feanlt, finally, what a new act should do is circumscribe somewhat the fccs general rulemaking authority, which now, as you know, operates in what we would call an anticipate story fashion. When you engage in the process, what you do by definition is conjecture harm that may occur in the future. Because youre trying to conceive of all the potential harms. What happens is generally those type of rule makes are overly broad. Broader than they need to be. So you want to get the fcc to act more in a post hoc capacity. Acting on individual complaint that say theres a specific problem. He said with this carrier and this place, theres a market failure, for some reason. Ive got an interconnection problem. You take it to an adjudicatory context and address that specific problem rather than prescribing a lot of conduct that otherwise might be beneficial to the country otherwise. I appreciate the answers and mr. Chairman, i yield back. Favor much the gentlemans time has exchoired. The chair recognizes the gentleman from new jersey for five minutes. Thank you, mr. Chairman. I think we can agree that the ip transition underway is good for american consumers, the economy, and the country as whole. I welcome this conversation. However, we must work with industry Public Interest groups and consumers to ensure as it progresses these technological advances dont come at the expense of Consumer Choice or access or safety or competition. I think some you know nearly a year ago, october 29th of next year. My district and the state of new jersey were hit hard by Hurricane Sandy. Even when power lines go down so my question of mr. Cicconi is because at t has a large legacy