Public service by americas Cable Television companies. And is brought to you today by your cable or satellite provider. At this hearing on the fcc budget, topics include Net Neutrality and expanding Broadband Internet access. Mr. Pai and commissioners testify. Minutes. Hour and 25 sen. Capito i think well go ahead and start. My Ranking Member, senator coons will be here shortly. I will go ahead and make my statement and then we can begin testimony. Thank you all for being here this afternoon. I appreciate it. Commissioner pai, personally id like to thank you for your comments last week about the tone of civility we need to strike. I think youll find that here in this subcommittee. So i thank you for that. , today marks the first hearing in the Financial Service and general Government Subcommittee for the 115th congress. The Financial Service and general Government Subcommittee for the 115 congress. This is also my first hearing in my new role as the chair pm woman of this subcommittee. I am honored to be serving with senator coons. As we begin the budget request we welcome our witnesses. Fcc chairman ajit pai and commissioners Mignon Clyburn and michael orielly. We look forward to hearing from you all about the fccs budget request and the work you are doing to carry out the agencys mission. The commission has requested a total of 322 million. The fcc funding is offset by the fees that does not minimize our duty to ensure the agency is operating effectively and the funds are being spent responsible this is important because the fees are passed on to the American Consumer and impact the Economic Growth and potential. That impact is especially critical in Rural America. Communities in my state of West Virginia have been hit hard by job loss and two visitors have seen this first hand. Broadband access can provide West Virginians with opportunities to new jobs and higher wages. Potential investors need to see West Virginia is open for work. According to the fcc, more than 30 million americans lack access to highspeed Broadband Internet including a disproportionate number of rural communities. These communities struggle to compete in todays interenet base world. In 2015 i launched by plan jump starting a statewide conversation about the need to connect our state. Broadband should be easily available and affordable. It is that simple and at the federal level we have been trying to make this a reality. The benefits of Broadband Access are numerous but too many parts cannot attract the investment they need to get online despite significant federal and private funding West Virginia is less connectedly than oh other state. We have lack of competition between providers, burden some regulations and failed to mackmize existing resources. Communities like the white water resorts in faithful county need robust internet. These communities can capitalize on Natural Beauty and attract a workforce base that needs a community and strong activity. We must a equip them with the right tools. The giga bit opportunity, or go act, incolonels new investment to connect rural and urban communities by empowering governors and states to direct investments to areawise the greatest needs this proposal ensures communities with the highest potential for Economic Development a prioritized for funding. The proposal eliminating bearr r barriers to new investment. The fcc is directed to release a framework to streamline broadband laws throughout the state. We have talked about this with the commissioners. This will eliminate the duplicated laws that occur in all states. Once adopt, the governor would be able to section off a portion of the areas as go investment zones and areas would benefit from targeted taxes and other incentives. Internet access should be available regardless of whether you live in a small town or big city and it is essential to growing the nations economy and in particular West Virginias economy. With all the focus on Rural America now is the time to level the Playing Field and close that Digital Divide. I will let senator coons have his Opening Statement and turn to the witnesses and chairman pai i will ask you to begin with your testimony. Chairman, thank you for holding this hearing. Thank you for inviting us here today to prevent the fcc fiscal year 2018 budget request. And commissioners Mignon Clyburn and mike orielly. It is a privilege to work alongside each of them. For fy18 we have developed a carefully crafted budget with request of approximately 322 million, 5. 2 below the previous year. We will not need redirected moves or stacking funds. In addition, we propose to reduce our spectrum option cap from 117 million to approximately 111 million enableling us to transfer 6 million more to the treasury. We can all agree that budget reductions dont come easily. We will face the same challenges as other agencies doing more with less. Impleme implementing budget cuts means rolling up our sleeves and rethinking how the Commission Functions and does business. In the past, the fcc chairman emphasized we are an entirely fee funded agency. But it is important to remember someone is paying our freight and that is Small Businesses individual licenses and Larger Companies which pass along those fee do is American Consumers. It is imperative for the fcc to be fiscally responsible and avoid unnecessary spending. I firmly believe if we refrain from Regulatory Overreach we will realize additional cost savings and Economic Growth. Results that benefit everyone. While we have experienced staffing reductions over the years, administrative efficiency have ensured the range is productive. With 100 fewer staff than last year we have pursueed an aggressive schedule for open meetings where commissioners consider the highest profile matters. In 2017, we are averaging more than double the amount of items per meeting than we considered last year and i expect this to continue into fy18. Since becoming chairman in january, we have been aggressive in looking for cost savings and our staff identified substantial reductions lying closing offsight warehouse and improving our Mail Services for a projected saving of 851,000. We will save another 280,000 by reducing the number of on sight printers and copy machines. As we move into fiscal year 2018 we will focus on advancing the four strategic goals. We will concentrate on closing the Digital Divide. We will implement the connect America Fund Phase two and the Mobility Fund reverse auctions to bring fixed broadband and 4glte to Rural America. Our task force has a solid plan were getting the job done. If i may say madam chair pm woman, i appreciate your initiative in introducing the go act. I thank you for your leadership in that regard. Second we will work to promote innovation from implementing policies to ensuring leadership to authorizing Television Broadcasters to use the next Generation Television standard. We will move full speed ahead to get more airwaves into the commercial marketplace. We will focus on protecting consumers and Public Safety from combating illegal robot calls and improving calls for deaf and hard of hearing americans. When it comes to Public Safety we will continue to support those on the front lines across the country who protect all of us each and every day. And fourth and finally we will focus on reforming the fccs processes. The American People deserve to have a transparent and responsive regulator. We have made progress on this part like making Public Commission items at least three weeks before we vote on them but there is much more to do and do it we will. I am excited about how the fcc can bring Digital Opportunity to more americans, protect the American People and improve our agencies operations. I believe this budget requests helps advance these goals in a fiscally responsible way. Now, i would like to turn to commissioner cylburn and ask for her to present her testimony. Thank you. Ranking member coons, and members of the subcommittee, good afternoon. It is my distinct mreergs pleasure to appear before you and offer my perspective on the fcc fy18 request. Yesterday marked the fccs 83rd anniversary and while much as changed since 1934 our responsible when it comes to protecting consumers, advancing competition and ensuring the reliability of Public SafetyCommunications Remains unchanged. To achieve these goals the fcc needs a fully staffed workforce. However the agency finds itself with fewer fte than in years. It is creating deficiency and in others it is requiring employees to double up on responsibilities with little if not any pay increase. This thought only puts at risk the quality of the final work outcome but has a direct impact on worklife balance. Each year the federal Employee Viewpoint survia asks fcc employees whether they agree or disagree they have sufficient resources to get their job done. In 2011, just over 30 of fcc employees disagreed with this statement. By 2016, that figure had rise next to nearly 38 and additi additional cuts and budget cuts will likely lead to an increase in the coming years. Likely more, an increasing number of employees are eligible for requirement. Today, 362 fcc employees are retirement eligible equally 23 of our workforce. 124 employees already departed the agency this year and this figure is only expected to increase. Some retire while others leaves for new job opportunities. While we have no choice but to think about a future which recruits and retains the nations next generations best and brightest we must do so and do so we will. You may have also heard me speak about the need for better broadband data in part because i have heard from far too many communities that take issue with the fccs figures. They said that where our data shows there is fixed or mobile broadband cover in actuality the service ranges from spotty to non existent. It should not be this difficult for the Expert Agency to have accurate data down to the street level for we know that improved data enables us to better target our infrastructure efforts and improve the accuracy of our National Broadband map. I am a strong believer in the power of broadband to tackle some of our nations greatest challenges particularly when it comes it health care. Thanks to the connected Health Task Force we have a clearer picture of where the greatest needs exist. Chairman pai is committed to carrying on the work of the task force and i am hopeful through a sustained investment in this initiative it will continue to inform us in rural communities. As the subcommittee prepares the appropriation bill for fy18 i am hopeful it infrastructure will be top of mine. Modern it infrastructure should be able to handle a few 100,000 Public Comments without grinding to a halt. And to demonstrate the agencys commitment to it modernization in cybersecurity future budget requests should include a dedicated subaccount supporting these critical needs. Finally, i would like to talk about the agencys spectrum auction program. Despite several auctions in development and more in the pipeline the commissions budget requests cuts 5. 8 million from the program. Our options produce a tremendous return on investment and are a winwin for consumers, industry and the federal government. With 5g on the horizon, we need to look long term and focus on how we will provide funding necessary to administrator auctions in a timely manner. A sustained investment will help unlock the next generation of wireless broadband and ensure america is a leader in wireless innovation. Returning to the Central Commission mission it is great disappointment to me that this fcc is on the track to dismantle many of the key rules involving Consumer Protection and competition. Is this a prelude to the commission that ultimately allows large countries to exist in a regulatory free zone . I ask this because the American People count on the fcc to be the referee on the field ensuring providers play by the rules and consumervise chance to be on the winning team but only if the agency plays the right plays will it be able to say they are truly putting consumers first. Thank you for inviting me. I look forward to any questions. Now i would like to turn it over to commission orielly. Welcome. Chairman capito, Ranking Member members of the Ranking Member and memberofs of come committee thank you for allowing be to be here. Changes can be made without under lying. Support for further work on the commissions universal service fund within the wireless competition bureau. On another note, relocating the headquarters is final i think it is necessary to comment the move will have a negative impact on the agency. I know of several seasoned agencies professionals who will chose to leave the Commission Rather than transfer to the new location. In terms of the commission structure, i would argue we maintain out dated burrows and divisions based on by gone eras. They are based on transmission mechanisms that predate the internet and the radical conversion that has occurred since then. I would suggest this subcommittee consider requesting transformative plans for the structure. This commission is focused on the fy18 budget but it seems appropriate to raise quality issues. First, as mentioned is the Top Commission priority to make broadband available to as Many Americans as possible. In addition, the commission completed reform on the rate of return regulation and this bipartisan effort supported then and still by the affected industry allocates just over two billion for rate of return carriers so they can bring service to consumers. Additionally, i would be remiss if are didnt mention my find the app in remote areas fund. Second, reviewing to prepare to move the broadband deployment m imposed by state and local government including excessive fees are being replicated and cannot be allowed to continue if we are to ever make Broadband Availability as abiquitious as possible. And not collecting fees for 911 purposes and the commission to identify in 2016 eight states and a u. S. Territory continue that practice. I have previously outlined a few possibilities for the commissions to push the states to stop this behavior this committee maintains the ability to commission billion ins grants and funding providing the fees which could be a great course corrector on this subject. Lastly, the commission has allowed individuals to illegally setup shop in radio bands causing harm to legitimate broadcasters and the american public. Thankf thankfully the commission is preparing a different track toward the illegal operators and it is welcome as we set forth to end this practice. Thank you for the opportunity to be before and look forward to any questions you have. I want to turn to senator coons for the Opening Statement. Welcome. Our first meeting together. Thank you for being grace gracious and allowing me to make an opening later in the hero. I want to thank you the entire committee for being present. I look forward to working on a number of the challenging if yous we have. Welcome chairman pai, well known to all of us and commissioner cylburn and commissioner orielly. I welcome the opportunity to examine the budget request and discuss your crucial role in ensuring communication is reliable, efficient and continuously innovative. The proposal is 5 below the current operating level. The fcc funding has been frozen since 09 forcing funding in a variety of ways. These have been found through productive means in some cases but i am concerned there are no more easy proficiencies improvements to be found and it may affect the heart of the mission to lose more. To achieve the proposed productions, the staff cuts will result in the lowest Staffing Levels on record for the agency. I look forward to hearing from the witnesses about how this means of achieving this production will be accomplished without impacting the core mission of the agency. I think there is positive news in that we share an excitement for improving Broadband Access the 10 billion universal fund expands access to vital communication necess