The obvious infrastructure deployment requires the expectation of a healthy return on capital. That should be taken as a given but all too often in my experience the issue of return on capital is either ignored or misunderstood in policy forums. Its not a matter of whether a business is or isnt profitable. It is instead a matter of whether a business is sufficiently profitable to warrant the high levels of Capital Investment required for the deployment of infrasfrur. We that in mind, in 2014, the Largest Companies in the cable industry earned a very healthy return. The physical assets of comcast, time warner cable, charter and cablevision, the four publicly traded Cable Operators in 2014 all earned healthy returns in excess of their cost of capital with returns ranging from 13 to 33 . Those returns were unusually high for a capital intensive industry. On the other hand it should be noted the cable industry earned returns below the cost of capital for decades. Any longterm return on Network Infra infrastructure has to earn returns to yuf set when were typically years or even decades of losses. By contrast large incumbent Telephone Companies do not earn attractive returns on their wire line businesses. For example, a decade after first undertaking their fios fiber to the home buildout to 18 million homes verizon has not come close to earning a return in reference to cost of capital. It earned a paltry 1. 2 return against a cost of capital of 5 . For the nonfinancial types in the room thats the equivalent of borrowing money at 5 interest in order to earn 1 interest. Thats a good way to go bankrupt. No one would undertake to replicate those disastrous financial returns. At t which at around the same time deployed a much less robust and less costly fiber to the node network has low returns. It has been declining for a decade and is like verizons well below the cost of capital. At t is committed to the fcc to make fiber available to a total of i now believe its 12. 5 million homes as of what was reported last night to their footprint in order to make their acquisition of directv more available to policymakers but its hard to be optimistic theyll do much better this time around. That said, there have been some changes in the market that make deployment of competitive Broadband Networks less unattractive thannenive that been in the best. Corning has developed bendable fiber that has lowered the cost. Google has popularized the concept where communities pledge to subscribe to Network Services before the network is built so that google can target areas where the company has the best chance of earning an acceptable return and while some critics would call that redlining as it typically means that broadband wont be built to the lower income communities, it has been successful in boosting overall project returns. And you can think of it as a way of ensuring that all the children in the class really are above average. Sfil, the broader takeaway here being the second or third broadband provider in a market are generally poor. Let that sink in for a moment. It means that markets are unable to full yy yield. Wireless networks simply arent edgeered for the kind of sustained through put required for services. And Wireless Networks also generally earn relatively poor returns on capital. Returns for verizon and at t are middling and for sprint and t. Mobile are very poor as a consequence of aggressive price competition in the wireless market. Neither is satellite broadband a compelling replacement for wired broadband in any but the most rural areas. Costs are high and its the nature of satellite connection that it has to travel 220,000 miles and back such that latency will be a problem. The simple economic reality is that overbuilding will be somewhat limited given relatively poor financial returns that can be expected and alternatives are far and few between. That gives rise to the impulse among some to regulate incumbent networks that are already there. That is it is not an unseasonable assumption that any attempts to foster competition will be unsuccessful and that regulation of incumbents in this case, the cable operator, is therefore required. The counter argument that regulation will only stifle investment among incumbent providers and will make the problem worse and will in the process generate unwelcome, unintended consequences is equally well intentioned and is equally supported by the historical evidence. That is to say theres no easy answers here. Ill conclude by adding a few additional observations about the cable industry. Everybody understands the business is facing unprecedented pressure. Cord cutting has been talked about for years but is showing up in a meaningful way in the numbers. Have a Cable Operators perspective, the video business and the broadband business are opposite sides of the same coin. It is after all, all one infrastructure. Pressure on the video profit pool will naturally trigger a pricing response in broadband where Cable Operators have greater leverage. That may sound nefarious but it is simply an observation that Cable Operators have historically benefited from the fact that their infrastructure can support two separate businesses and each can be delivered in a lower cost than if that were not the case. A aca or American Cable Association has made this kag eloquently in arguing that absent reforms to restrain runaway programming cost growth, video will be unprofitable and broadband will be left to carry the entire burden of incremental deployment. All else being equal that means that even new builds of broadband will become increasingly economic challenged and therefore will become less and less likely or as im quick to add this is my own editorial rather than acas point theyll have to sharply raise the price of broadband. The pressures are broadbased and are attributable to more than programming cost inflation and that this may be an unavoidable scenario. Ill leave my remarks there. If they sound gloomy, theyre not meant to. The u. S. Broadband infrastructure is the envy of the world notwithstanding statistics that would say otherwise. Simply the case that broadband is an infrastructure that is very difficult to support two of and in some cases even one of. And i would submit a clear acknowledgment of the microeconomics business deserves or demands a seat at the policy table. Thank you for your time and the opportunity to testify today. Thank you very much, mr. Moffett. We go to michael slinger. We welcome you. Thank you for being here. The floor is yours. Chairman walden, Ranking Member you will need to pull a microphone very close and push the little button there till the light stays on. Chairman walden, Ranking Member eshoo and members of the subcommittee, thank you for the invitation to testify today about investment in broadband infrastructure. We believe a successful agenda for bandwidth abundance will benefit consumers, Small Business and the economy. My name is michael slinger. I currently serve as the director of google fine city teams. I oversee the operations, Business Strategy and on Ground Network to bring speeds to cities where we deploy google fiber across the United States. We have long believed that the next chapter of the internet will be built on gig babit speeds. We knows fast connections unleash innovation and entrepreneurship. Think about it in these terms. If today were riding a bike, having a gig means we could be driver a race car. Its just that much faster. Thats why we launched google fiber which provides download and upload connections of up to 1,000 mega bits per second to make the web faster, affordable, relevant and useful for everyone. We launched the service five years ago. Today its available in kansas city kansas kansas city missouri, austin texas and provo, ute aw. In addition, were in the process of building our network in six other markets and exploring bringing it to others. We built a network from scratch, one street, one pole, one house at a time. This means reviewing infrastructure and working closely with cities to make sure were ready to design a brand new network. This experience has given us insight into barriers to deployment. Ill outline thoughts on policy changes that could reduce delays and barriers. First, policymakers can ease gaining access to existing infrastructure. To construct high Speed Networks, broadband providers need access to existing utility infrastructure such as poles conduits, on a consistent and Cost Effective and timely basis. While the fcc has taken important steps to improve rules related to infrastructure access, our own experience in building new Broadband Networks demonstrates that more work needs to be done to reduce delays and barriers. Second policymakers can ease rights of way. The expense and complexity of obtaining access to public rights of way in some jurisdictions may increase the cost and slow the pace of broadband deployment. Policies that facilitate partnerships between entities and companies doing local construction can be beneficial. We see a lot of benefit in instituting dig once policies which may involve the installation of an oversized conduit bank by any new Network Builder within the right of way. Third, policymakers can help resolve the challenge of high rates for access to video programming. This would help smaller players in the business negotiate fair terms for access to popular broadcasts and cable content and make it easier to attract and retain subscribers for Broadband Networks. Finally, i would be remiss if i failed to mention the importance of balance spectrum policies that promote innovation in the wireless sector. Federal agencies should pursue a balanced approach to spectrum reallocation that allows for licensed and unlicensed commercial uses at a variety of frequencies. I will note as we think about deploying giga bit Speed Networks we need to keep in mind that about 30 of Americans Still dont use the internet at home. This means they are at a disadvantage when it comes to education, job opportunities, social and civic engagement. So one of our main priorities in Building Digital inclusion into our deployment plans from the beginning, we are guided by a couple of main principles. Make the internet more affordable, make access a part of the community and teach people how to get online. Just last week as part of the connect Home Initiative announced by president obama and hud secretary castro, we committed to bringing google Fiber Internet Service to residents in select Affordable HousingProperties Across our cities for zero dollars per month with no installation fee. We are partnering with Community Organizations on computer labs and Digital Literacy programming. We are grateful for your attention to this important topic. Thank you again for the invitation to speak at this hearing and share our views on how we can remove barriers give americans more choices at higher speeds and help reach the goal of nationwide broadband abundance. Thank you, mr. Slinger, we appreciate your testimony. Well go to our final witness today, deb socia, exec fivutive director of next century cities. Thank you, and please go ahead with your comments. Good afternoon. Thank you for holding this hearing on such an important topic. My name is deb socia and im the executive director of nick century cities, a city to city collaborative formed just last october. We have grown to over 100 member cities, all of whom are dedicated to ensuring access to fast, affordable and reliable brond band. High speed access is essential to americas future. Its as simple as that. What can be complicated is making it happen on the ground. Cities face a range of technical, economic and political changes, including obstacles at the state and federal levels. More and more providing for this critical need has emerged as a core responsibility for local governments. Many cities and towns from around the country are taking diverse and creative steps to secure their internet future. When it comes to providing access to high quality internet, everyone has a role to play. Its an issue that spans political party, an issue that crosses the urban rural divide, and an issue that relies on many sectors of our society. Theres no single pathway to next generation broadband network. In several of the most Innovative Solutions have emerged in unexpected places. The small towns of amman idaho and mt. Vernon washington have developed a gigabyte open access network. Local developments, directly involved in building the infrastructure and leasing access to competing private providers. Just outside of baltimore, westminster, maryland, have initiated a partnership with king, a provider of fine internet service. With google fiber in kansas City Residents can now experience gig level speeds at an affordable rate. Cities like lafayette, louisiana and chattanooga, tennessee have built their own networks and now have some of the fastest and globally accessible internets available. Our membership represents an inclusive crosssection of america from small Rural Communities such as winthrop, minnesota, to large urban areas like l. A. And boston. What unites these is a commitment to the imperative of Broadband Access for continued growth and an understanding that local governments are best situated to understand and provide for the needs of their residents. Its an exciting time, a time for creative local solutions to usher in a new generation of innovation as the internet continues to transform all aspects of society. Next century city has recently developed a policy agenda showing how multiple stakeholders can help communities develop the crucial infrastructure needed today. Consistent with our mission, this new resource provides guidance that will be useful to communities regardless of how they choose to pursue their broadband goals. Part of the policy agenda looks at steps local and State Government can use to ensure high quality access. Locally governments can institute dig once policies that minimize disruption as well as take other steps to ensure their cities are fiber ready. At the state level, the policy agenda addresses changes such as modernizing state regulations and making investments in the middle mile infrastructure. Blu but were here on capitol hill today. And i wanted to emphasize some recommendations we heard from mayors about steps the federal government could take to help empower local communities. First and foremost, congress can encourage competitive local markets through National Legislation and other avenues. In addition, you have the ability to provide a National Platform for the issue of broadband as necessary infrastructure. Hearings such as this help to elevate this discussion and attract National Attention to this critical issue. Finally, the policy agenda discusses how congress could better require information about available internet access, including speed of connection, price for consumers and areas of operation for service providers. As is clear from everything weve heard so far today, the need for fast affordable and reliable Broadband Internet access is undeniable. Innovative leaders in communities across the country recognize this urgent need and are developing the critical broadband infrastructure that will allow their residents and their cities to thrive. Its evident by the over 100 next century cities im speaking on behalf of today, communities that represent over 18 million americans. Thank you for providing this platform for communities to share their experiences and develop opportunities for collaboration with federal policymakers. I look forward to working with members of this committee and your colleagues to ensure that communities across the country have the next generation access that all americans need and deserve. Thank you. Ms. Socia, thank you for your testimony and your insights. Ill start off with questions. Commissioner adelstein as you know know, a master contract to simplify the placement of wireless antennas on federal buildings and other property. Last year the administrator of the gsa told congress that the master contract was complete and available for use by executive land holding agencies. In your opinion, do you believe that gsa, General Services administration, has done everything in its power to give life to the directives embodied in section 6409 that you referenced in your at the time of middle class tax relief act . Mr. Chairman, i do not believe they have. As a matter of fact, im a former administrator myself of the federal agency and if i had implemented something too poorly that congress instructed me to do id be embarrassed. Theres an executive order by the president of the United States correcting gsa to move faster to try to get these master contracts together. And to date nothings been done. Three years after congress enacted this legislation progress has been slow gsa hasnt been proactive. Forms and applications to provide clarity to agencies in the wireless industry. I think our members are having to negotiate for each and every site individually just as they have in the past. Gsa has not implemented the intent of congress and we cant wait three more years for whats needed i think today. Theres an urgent lack of coverage on federal lands. The ad