>> f.c.c. chair tom wheeler will be before the senate appropriations subcommittee this morning talking about the budget request and joining us is ajit pai. we'll have live coverage in about half an hour here. also live at 11:25 on c-span3, president obama will take part in a roundtable discussion on ways to address poverty in the u.s. it's part of a three-day catholic evangelical summit at georgetown university. again, that's 11:25 a.m. eastern. and also at 2:30 on c-span3, the veterans' affairs committee will talk to deputy veterans affairs secretary sloan gibson. it will include representatives from several veterans' interest groups. that's on c-span3 at 2:30 eastern. >> this weekend the c-span cities tour partnered with comcast to learn about the history and literary life of fort lauderdale, florida. >> so this was really cultural tourism and so when they set up their villages along the way, along the trail sometimes only leaned to the buses would stop because here's the tourist attraction. the seminoles camping by the road. so when they came in to the tourist attractions they were getting food, a weekly allotment of food and they were also getting sometimes like sewing machines where coppenger would rent. and they also sometimes get fabric because it behooved the tourist attraction people to supply them with fabric so they were sitting there sewing and making things for a craft market. this is a little boy's shirt. belted shirt from the 1920's. this was an experimental time for patchwork and you can see that on the bottom this is not a design, let's say, that's made it down today. this is a little experimental design. the designs were bigger in the 1920's. sometimes they weren't used any longer than that particular decade. >> the thing about the devil's triangle bermuda triangle, all things happened. it was a regular navigation mission, training mission. they would take off from the base and then flight 19's, they would go east out towards the bahamas. they would drop bombs on that and they would continue on another 70 miles or so and they were supposed to make a turn north and go 100-something miles and make a turn back west towards fort lauderdale. they never came back. later at night after they were sure they were out of fuel they sent out these big rescue planes and that plane disappeared. it had 13 men aboard. and the next day they had a five-day search with hundreds of planes and ships and never found anything. >> watch awful our events from fort lauderdale saturday at 5:30 eastern on "book tv" and sunday at 2:00 on "american history tv" on c-span3. >> first lady michelle obama gave the commencement address at tuskegee university over the weekend. we took phone calls on this morning's "washington journal." we'll show you her comments now. this is under half an hour. [applause] mrs. obama: thank you all. thank you so much. let's let our graduates rest themselves. you've worked hard for those seats. well let me start by thanking president johnson for that very gracious introduction and for awarding me with this honorary degree from an extraordinary institution. i am proud to have this degree. i am proud. thank you. thank you so much. i want to recognize major general williams congresswoman sewell, zachary colana, to all the trustees, the faculty, the staff here at tuskegee university. thank you, thank you so much for this warm welcome, this tremendous hospitality. i'm so glad to be here. but -- [applause] mrs. obama: before i begin i just want to say my heart goes out to everyone who knew and loved eric marx jr. i understand he was such a talented young man a promising aerospace engineer who was well on his way to following in the steps of the task gee air men and eric was taken from as you far too soon and our thoughts and prayers will continue to be with his family, his friends and this entire community. [applause] mrs. obama: i also have to recognize the concert quire. wow. you -- choir. wow. you guys are good. beautiful song. and i have to join in recognizing all the folks up in the stands, the parents siblings, friends so many others who have poured their love and support into these graduates every step of the way. yeah, this is your day. your day. now, on this day before mother's day, i got to give a special shoutout to all the moms here. [cheers and applause] mrs. obama: yeah, moms. and i want you to consider this as a public service announcement for anyone who hasn't bought the flowers or the cards or the gift yet. all right. i'm trying to cover you. [laughter] mrs. obama: but remember that one rule is keep mom happy. all right. and finally most of all, i want to congratulate the men and women of the tuskegee university class of 2015! [cheers and applause] mrs. obama: t.u. i love that. we can do that all day. i'm so proud of you all. and you look good. well done. you all have come here from all across the country to study, to learn, maybe have a little fun along the way. from freshmen year at adams young hall to those late-night food runs to the coop. i did my research. to those mornings you woke up early to get a spot on the shed to watch the golden tigers play. yeah. i've been watching. at the white house we got all kinds of ways. and whether you played sports yourself or sang in the choir or played in the band, joined a fraternity or sore record, -- sorority, after today, you will take a long line in the spot of men and women who have came here and distinguished themselves for this university. you'll follow alums like many of your parents, grandparents, aunts and uncles, leaders like robert robinson taylor the groundbreaking architect and administrator here who was recently honored on a postage stamp. you will follow heros like dr. boynton robinson who survived the tear gas of bloody sunday in selma. the story of tuskegee is full of stories like theirs. men and women who came to this city seized their own futures and wound up shaping the arc of history for african-americans and all americans. and i'd like to begin today by reflecting on that history. starting back at the time when the army chose tuskegee as the site of its air field and flight school for black pilots. back then -- [applause] mrs. obama: black soldiers faced all kinds of obstacles. there was so-called scientific studies who said black men's brains were smaller than white men's. official army reports stated that black soldiers were child-like shiftless unmoral and untruthful and as one quote stated if fed, loyal and compliant. so while the airmen selected for this program are actually highly educated, many already had college degrees and pilot licenses they were presumed to be inferior. during training they were often assigned to menial tasks like housekeeping or landscaping. many suffered verbal abuse at the hands of their instructors. when they ventured off base, the white sheriff here in town called them boy and ticketed them for the most minor offenses. and when they finally deployed overseas white soldiers often wouldn't even return their salutes. now, just think about what that must have been like for those young men. here they were trained to operate some of the most complicated, high-tech machines of their day flying at hundreds of miles an hour with the tips of their wings just six inches apart. yet, when they hit the ground folks treated them like they were nobody. as if their very existence meant nothing. now, those air men could easily have let that experience clip their wings, but as you all know instead of being defined by the discrimination and the doubts of those around them, they became one of the most successful pursuit squadrons in our military. [applause] mrs. obama: they went on to show the world that if black folks and white folks could fight together and fly together, then surely, surely they could eat at a lunch counter together. surely their kids could go to school together. you see, those air men always understood that they had a double duty. one to their country and another to all the black folks who were counting on them to pave the way forward. so for those air men, the act of flying itself was a symbol of liberation for themselves and for all african-americans. one of those first pilots, a man named charles debow, put it this way. he said a takeoff was in his words a never-failing miracle where all the bumps would smooth off you're in the air out of this world, free. and when he was up in the sky, charles sometimes looked down to see black folks out in the cotton fields not far from here, the same fields where decades before their ancestors worked as slaves and he knew that he was taking to the skies for them to give them and their children something more to hope for, something to aspire to and in so many ways that never failing miracle the constant work to rise above the bumps in our path to greater freedom for our brothers and sisters, that has always been the story of african-americans here at tuskegee. just think about the arc of this university's history. back in the late 1800's, the school needed a new dormitory, but there was no money to pay for it. so booker t. washington pawned his pocket watch to buy a kiln and students used their bare hands to make bricks to build that dorm and a few other buildings along the way. a few years later when george washington carver first came here for his research, there was no laboratory. so he dug through trash piles and collected old bottles and tea cups and fruit jars to use in his first experiments. generation after generation, students here have shown that same grit, that same resilience to soar past obstacles and outrages, past the threats of countryside lynching, past the humiliation of jim crow, past the turmoil of the civil rights era. and then they went on to become scientists engineers nurses and teachers in communities all across the country and continue to lift others up along the way. and while the history of this campus isn't perfect, the defining story of tuskegee is the story of rising hopes and fortunes for all african-americans. and now, graduates it's your turn to take up that cause. and let me tell you, you should feel so proud of making it to this day. and i hope that you're spited to get started on that -- excited to get started on that next chapter, but i also imagine you might think about all that history, all those heroes who came before you and you might also feel a little pressure, you know. pressure to live up to the legacy of those who came before you, pressure to meet the expectations of others and believe me, i understand that kind of pressure. [laughter] mrs. obama: i've experienced a little bit of it myself. you see, graduates, i didn't start out as the fully formed first lady who stands before you today. no no. i had my share of bumps along the way. back when my husband first started campaigning for president, folks had all sorts of questions of me. what kind of first lady would i be? what kinds of issues would i take on? would i be more like laura bush or hillary clinton or nancy reagan and the same truth, those same questions would be posed to any candidate spouse. that's just the way the process works. but as potentially the first african-american first lady, i was also the focus of another set of questions and speculations conversations sometimes rooted in the fears and misperceptions of others. was i too loud or too angry or too emass could you -- emasculatting or was i too soft too much of a mom, not enough of a career woman? then there was the first time i was on a magazine cover. it was a cartoon drawing of me with a huge afro and a machine gun. now, yeah, it was satire, but if i'm really being honest, that knocked me back a bit. it made me wonder, just how are people seeing me? or you might remember the onstage celebratory first bump between me and my husband during the primary that was said it was a first jab. one said i exhibited a little bit of upityyism. and another said i was one of my husband's crony of others. cable news referred to me as obama's baby mama. and of course barack has his fair share of insults and sleights. even today there are still folks questioning his citizenship. and all of this used to really get to me. back in those days i had a lot of sleepless nights worrying about what people thought of me. wondering if i might be hurting my husband's chances of winning his election, fearing how my girls would feel that they found out what some people were saying about their mom. but eventually i realized that if i wanted to keep my sanity and not let others define me, there was only one thing i could do and that was to have faith in god's plan for me. [applause] mrs. obama: i had to ignore all of the noise and be true to myself and the rest would work itself out. so throughout this journey, i have learned to block everything out and focus on my truth. i had to answer some basic questions for myself. who am i? no, really who am i? what do i care about? and the answers to those questions have resulted in the woman who stands before you today. [applause] mrs. obama: a woman who is first and foremost a mom. look, i love our daughters more than anything in the world, more than life itself, and while that may not be the first thing that some folks want to hear from an ivy league educated lawyer, it is truly who i am. so for me being mom and chief is and always will be job number one. next i've always felt a deep sense of obligation to make the biggest impact possible with this incredible platform, so i took on issues that were personal to me. issues like helping families raise healthier kids, honoring the incredible military families that i've met out on the campaign trail, inspiring our young people to value their education and finish college. now, some folks criticized my choices for not being bold enough, but these were my choices, my issues and i decided to tackle them in a way that felt most authentic to me and a way that was both substantive and strategic but also fun and hopefully inspiring. so i immersed myself in the policy details. i worked with congress on legislation. i gave speeches to c.e.o.'s, military generals, hollywood executives. but i also worked to ensure that my efforts would resonate with kids and families and that meant doing things in a creative and unconventional way. so, yeah, i planted a garden and hula hooped with kids on the white house lawn. i did some tv with kermit the frog. i asked folks to wear their alma mater t-shirts for college signing day. and at the end of the day, by staying true to the me i've always known i found that this journey has been incredibly freeing because no matter what happened i had the piece of mind of knowing that all of the chatter, the name calling, the doubting all of it was just noise. it did not define me. it didn't change who i was. and most importantly, it couldn't hold me back. i have learned that as long as i hold fast to my beliefs and values and follow my own moral compass, then the only expectations that i need to live up to are my own. so graduates, that's what i want for all of you. i want -- i want you all to stay true to the most real most sincere most authentic parts of yourselves. i want you to ask those basic questions. who do you want to be? what inspires you? how do you want to give back? and then i want you to take a deep breath and trust yourselves to chart your own course and make your mark on the world. playboy it feels like you're supposed to go to law school but what you really want to do is teach little kids. maybe your parents are expected you to come back home after you graduate but you're feeling a pull to travel the world. i want you to listen to those thoughts. i want you to act with both your mind but also your heart. and no matter what path you choose, i want you to make sure it's you choosing it and not someone else. [applause] mrs. obama: because here's the thing. the road ahead is not going to be easy. it never is, especially for folks like you and me, because while we've come so far, the truth is that those age old problems are stubborn and they haven't fully gone away. so there will be times, just like for those air men when you feel like folks look right past you or they see just a fraction of who you really are. the world won't always see you in those caps and gowns. they won't know how hard you worked and how much you sacrificed to make it to this day. the countless hours you spent studying to get this diploma, the multiple jobs you worked to pay for school, the times you had to drive home and take care of your grandma, the evenings you gave up to volunteer at a food bank or organize a campus fundraiser. they don't know that part of you. instead, they will make assumptions about who they think you are based on their limited notion of the world. and my husband and i know how frustrating that experience can be. we've both felt the sting of those daily sleights throughout our entire lives. the folks who cross the street in fear of their safety. the clerks who kept a close eye on us in all those department stores. the people at formal events who assumed we were the help. and those who have questioned our intelligence, our honesty even our love for this country. and i know that these are obviously nothing compared to what folks across the country are dealing with every single day. those nagging worries that you're going to get stopped or pulled over for absolutely no reason. the fear that your job application will be overlooked because of the way your name sounds. the agony of sending your kids to school that may no longer be separate but are far from equal. the realization that no matter how far you rise in life, how hard you work to be a good person, a good parent, a good citizen for some folks it will never be enough. and all of that is going to be a heavy burden to carry. it can feel isolating. can make you feel like your life somehow doesn't matter. that you're like the invisible man that ralph ellison wrote all those years ago. and as we've seen over the past few years, those feelings are real. they're rooted in decades of structural challenges that have made too many folks feel frustrated and invisible and those feelings are playing out in communities like baltimore and ferguson and so many others across this country. but graduates today i want to be very clear that those feelings are not an excuse to just throw up our hands and give up. not an excuse. they are not an excuse to lose hope, to succumb to feelings of despair and anger only means that in the end we lose. but here's the thing. our history provides us with a better story a better blueprint for how we can win. it teaches us that when we pull ourselves out of the lowest emotional depths and we channel our frustrations into studying and organizing and banding together then we can build ourselves and our communities up. we can take on those deep-rooted problems and together, together we can overcome anything that stands in our way. and the first thing we have to do is vote. hey, no, not just once in a while. not just when my husband or somebody you like is on the ballot but in every election at every level all of the time. because here's the truth. if you want to have a say in your community if you truly want the power to control your own destiny, then you got to be involved. you got to be at the table. you've got to vote, vote, vote, vote. that's it. that's the way we move forward. that's how we make progress for ourselves and for our country. that's what's always happened here at tuskegee. think about those students who made bricks with their bare hands. they did it so others could follow them and learn on this campus too. think about that brilliant scientist who made his lab from a trash pile. he did it because he ultimately wanted to help share croppers feed their families. those air men who rose above brutal discrimination, they did it so that the whole world could see just how high blacks folks could soar. that's the spirit we got to summon to take on the challenges we face today. and you don't have to be president of the united states to start addressing things like poverty and education and lack of opportunity. graduates, today, today you can mentor a young person and make sure he or she takes the right path. today you can volunteer at an after-school program or food pantry. today you can help your cousin fill out her college financial aid form so they can be sitting in those chairs one day. but just like all those folks who came before us, you've got to do something, to lay the groundwork for future generations. that pilot i mentioned earlier, charles, he didn't rest on his laurels after making history. instead, after the army he finished his education. he became a high school english teacher and a college lecturer. he kept fulfilling his double duty long after he hung up his uniform. and graduates that's what we need from all of you. we need you to channel the magic of tuskegee toward the challenges of today. and here's what i really want you to know. you have got everything you need to do this. you've got it in you because even if you're nervous or unsure about what path to take in the years ahead, i want you to realize that you got everything you need right now to succeed. you've got it. you got the knowledge and the skills honed here on this hallowed campus. you got families up in the stands who will support you every step of the way. and most of all, you've got yourselves and all the heart [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> today, the subcommittee will consider the fiscal year 2016 budget request for the federal communications commission. i'd like to welcome our witnesses f.c.c. chairman tom wheeler and commissioner ajit pai. we'd like to hear the details of the f.c.c. budget request and the work that you are now doing to carry out the agency's core commission. we're mindful of the ongoing need to clear the way for economic opportunity and for international competitiveness. the f.c.c. plays an important role ensuring that united states continues to lead the world in innovation and communication. however, i fear this leading role is slipping. under previous chairman, the agency released a book highlighting the critical importance of regulatory independence and transparency and the success of the telecom sector. according to the book, quote, if the regulators tied closely to the encurvent governor it could heighten investment risk and serve potentially to deter future investment, unquote. unfortunately, the lessons of yesterday may have been lost on today's i decisionmakers. with the f.c.c.'s embrace of the president's plan for internet regulation, the commission moved farther fart and farther away from the independence, transparency and regulatory certainty our nation deserves. the f.c.c.'s policies and actions have an enormous impact on our country's economic growth and potential. i'm interested to hear more about the commission's other efforts to promote economic growth reduce regulatory burdens and increase transparency, predict ict and accountability in the regulatory process. as members of this committee, we have the tremendous responsibility to ensure the funds we oversee are spent wisely. under the budget control act and the budget resolution the discretionary spending cap for fiscal year 2016 limits nondefense spending to $493 billion. this represents an increase of just $1.1 billion over the fiscal year 2015 level for all nondefense departments and agencies. while the f.c.c.'s funding is offset by fees, that does not in any way minimize our doubty to ensure the agency is operating effectively and the funds are being spent responsibly. this year the f.c.c. is requesting an increase of $73 million, 21% more than what it received in fiscal year 2015. in a disappointing move, the budget proposes to pay for over part of that increase by transferring $25 million from the universal service fund to augment the f.c.c.'s operating budget. the universal service fund is intended to help ensure that all americans have access to telecommunication services. it's not intended to be a reserve fund to pay for the f.c.c.'s operating expenses. many people in arkansas think the f.c.c. has forgotten about rural america. transferring money away from the broadband deployment to offset agency spending in d.c. aggravating that all-too-real perception. all agencies need to best allocate resources. spending on staffing contracting, space, equipment and needs and technology must all be appropriately balanced to make sure that agencies carry out their core statutory mission and functions. as we've seen too often, access to more funding does not necessarily ensure that an agency will successfully achieve its mission or spend that funding wisely. finally, as we review your budget request, i'm interested to hear what decisions you have made to operate more efficiently in order to carry out your responsibilities within current funding levels and would appreciate more specific information regarding the cost of the f.c.c.'s projected move of its headquarters. the american people want a government that works for them, not against them. they want us to curb wasteful spending and promote economic opportunities for everyone. these are the priorities of the american people. they will be reflected in the critical oversight we conduct as we consider the fiscal year 2016 budget request for all of the agencies within our jurisdiction. again, i look forward to your testimony today and to working with you to address the challenges before us and to clear the way for continued leadership in communications. thank you. i will now turn to my ranking member, senator coon, -- senator coons,. senator coons: i want to thank chairman wheeler and commissioner pai. i want to thank you for your service and appreciate you being here today given the difficult and important jobs you have. i want to examine the f.c.c.'s budget request and ensure our national communications are infrastructure is reliable, effective, efficient and constantly innovating. as americans grow to be ever more connected, we demand even more from our connections. mobile broadband, smart homes, vehicle-to-vehicle communications hdtv, interactive television all exist but on a foundation of shared, limited public resources. and as the f.c.c. continues to work to foster an environment that encourages these technological achievements, it must ensure our communications systems work for all americans, regardless whether they're rich or poor, urban or rural, young or old. even though the f.c.c. is relatively speaking a small agencies, it touches the leaves of -- agency, it touches the lives of millions of americans every day. about 2/3 of adults use smart phones. cell phone companies need spectrum resources to expand their networks. already this year the f.c.c. has auctioned 65 megahertz of spectrum in the 1.7 and 2.1 gigahertz bands, the aw-3-s auctions allowing verizon to affect their life bringing in $44 billion to the u.s. treasury. the upcoming incentive auction will be the f.c.c.'s most complex yet and will continue to make more spectrum available while bringing in significant resources for the treasury. so i look forward to hearing more about the f.c.c.'s progress in preparing for the upcoming auction and resources you might need. i'm just -- just as cell phone use is becoming common it's critical office horgese offices and schools have fast and reliable broadband services. they oversea the universal service fund which expands access to communications systems vital to all meerns. the f.c.c. has worked in the past few years to modernize the fund, to ensure that it includes broadband access while also reducing waste. not only is it important that every student in america have access to state-of-the-art tools to power their education but also that every town, no matter how rural, have some connection to the vital information systems that drive our economy and increasingly our way of life. the f.c.c. also has a crucial safety and security role our nation's communications networks do more than keep us in touch with friends and families and job opportunities and emergencies, robust networks also save lives. i look forward to an update about your efforts to improve 911 services, in particular and to enhance the emergency alert system as well as your role in helping passenger and freight trains meet new safety requirements. your budget request for this year, as the chairman reference, is $413 million, $73 million over the f.y. -- over the 2015 level. fully offset by fees and with a new proposed transfer from the usf which i look forward to hearing you discuss. the f.c.c. also requests $117 million for the auction and fully offset by fees so none of this has an impact on the deficit. i'm curious to hear more about the investments you propose to make in the next fiscal year. aging i.t. infrastructure in particular may cause inefficiencies and lead to mission critical vulnerabilities to cyberattacks. these rimbings are especially concerning as you plan to conduct your first-ever volunteer incentive auction. funding has been frozen for several years and the forecast for f.y. 2016 i regret to say, is not encouraging so i hope you will also take this opportunity to explain in detail how the f.c.c. is identifying cost savings through increased efficiency and eliminating waste. we have a lot to discuss today. some important ground to cover. so thank you again for coming, to share your perspectives on the f.c.c.'s spending requirements and program goals. chairman boozman, i thank you for your leadership and i'm eager to keep working together to advance these bipartisan initiatives. thank you. senator boozman: thank you, senator coons. chairman wheeler, i invite you to share your testimony. chairman wheeler: thank you very much, mr. chairman. senator coons, members of the committee, you know, you have my printed statement. i'm kind of -- i'm an old businessman and i'm presenting to my board of directors here and i thought i'd present like i did back in the day and so you also have a slide deck there that we can walk through hopefully. if you look at slide 2, our current reality is that we are paying too much in rent, that we have inefficient field operations, that we're missing the ability of -- to use technology to reduce costs and that we're burdening fee payers for benefits they don't receive while at the same point in time risking the universal service fund. our response is a budget with the lowest f.t.e.'s in 20 years , the first requested f.t.e. reduction in 10 years, the first review of field operations in 20 years and a reduction in contractors. now, i've heard this described as the quote biggest ever f.c.c. budget. it's not quite that way. the fee-generated budget is lower than last year's budget before the extraordinary items of our move and a few unfunded mandates. if you look at the next slide slide 3, gives you -- this gives you a quick view of the trends in the agency. as you can see on the left, funding has been flat for the last five or so years. it's a period of time that we had 8% inflation so in essence it's an 8% decline, and you're seeing our f.t.e.'s at the lowest level ever. slide 4 talks about how this is happening at a time of increasing demands that are of great importance to the economy. the chairman talked about this is an agency of economic opportunity. the kinds of things you see on the left in terms of new equipment authorizations, licensing is how that opportunity gets expressed in the economy, and we are putting fewer people against that increase in things that are necessary for the growth of the economy. if you take a look at page 5, we can walk through the cost reductions that we are proposing in this year's budget. we are not filling vacancies. we'll have between 100 and 150 people leave the agency for one reason or another this year, and we're not going to fill all of those positions. we are updating our field office activity. when you have the kind of plat funding we're looking at, we have to be more efficient. and that's one way of doing it. we're going to reduce the number of contractors. we're asking for more i.t. funds so that we can reduce the number of contractors. everybody knows contractors are the most expensive bodies that you can hire. and this is the kind of business-like assessment that we'll make on an ongoing basis. so that reflects itself on page 6 in how you build the budget itself. it is the fee-generated budget, as i said earlier, is lower than last year before the extraordinary items. the move, which will save money but which we have to pay for upfront, it will save $190 million gross, requires a $51 million down payment. and in a few hundred billion dollar budget that's a big skew. the mandates we had imposed, that we've been told to carry out but not funded, such as broadcaster relocation, such as public safety, do-not-call, such as the broadband map, such as cost-of-living increases, together they come to about $65 million, $66 million. you move those to and reduce that budget by $66 million and that kind of puts in perspective really where we are on an apples-to-apples budget. on page 7 we look at how that increase breaks down in percentages. 71% are these unavoidable costs that i just discussed. 18% goes for i.t. improvements which, again, are the underpinning of being able to be more efficient and have cost reduction. 9% goes to the mandates that we have, and 2% goes to cyber fixes that we have been told we have to have in place. but if you look at page 8, you know controlling costs through technology is how business handles the kind of situation that we find ourselves in. and so let's take a quick look what we're doing with technology. we're going to move to the cloud. that saves us $1 million to $2 million a year. we're going to have a single architecture. that means less maintenance which means fewer consultants and more productivity. and we're going to move to a common core platform which again will save us $1 million to $2 million a year. but as i said, the big enchilada in this budget is the move. the way the government accounting works is you have to pay it upfront. the chart an page 9 talks about why it needs to happen, illustrates why it needs to happen. we're going to move to smaller space. we're going to move from 650,000 square feet to 475,000 square feet. we're going to move to lower cost space. we're paying about $60 a square foot right now. i think we can get it -- g.s.a. says we can get it to about $45 a square foot. and to make these kind of savings which will total $190 million, we need to invest $51 million this year. the question has been asked on the last slide, expressed on the last slide, the question is why don't you just stay where you are? our lease is up. we could stay in place. if i were the landlord, i would use that great bargaining position that i have to make sure that the rates go up substantially. we would have to have some relocation activities just like we have to have for another move. we have to have new physical assets because of a newly designed spaces and so actually you end up spending about $4 million more to stay in the same place than if we were to move. so that's why we think it's a prudent investment to spend $51 million this year to save $190 million over the life of the lease, and i look forward to discussing it with you further. thank you. senator boozman: commissioner. thank you, chairman wheeler. commissioner pai, you're welcome to give us your testimony. commissioner ajit: thank you. chairman boozman ranking member coons members of the subcommittee it's a pleasure to appear before you today. thank you for inviting me to testify on the f.c.c. budget request. we ask a 17% increase in the budget authority or a baseline budget of $413 million. although while commissioners are asked to vote on a budget proposed by the chairman, i've not been asked to participate in the development of this request and i'm unable to support it. here's some perspective. when the f.c.c. faced the monumental task of conducting 80 separate rule makings to implement the telecommunications act of 1996, the agency's baseline budget after adjusting for inflation was only $277 million. or 33% less than this budget request. at a time when domestic discretionary spending is generally scheduled to remain flat under the current budget caps i don't believe that this request is fiscally responsible, and at a time when median family income in this country is still lower than what it was in 2007, federal agencies should be looking for ways to tighten their belts. for these reasons, i'd like to offer three specific suggestions as the subcommittee crafts the f.c.c.'s fiscal year 2016 budget. first, i do not favor transferring $25 million from the universal service fund, or u.s.f., to the commission to fund the f.c.c.'s work. wherever possible, money from the u.s.f. should be spent across the country to realize the promise of universal access to communications networks to every american no matter how rural, as ranking member coons aptly put it. not here in washington on administrative expenses. second funds from moving the f.c.c.'s headquarters should not be in the general budget authority. instead, congress should give us specific budget authority for this purpose. if these funds are included within our general appropriation amount, it will paint a misleading picture of the commission's baseline budget and make it harder to reduce that budget when the need is no longer there to spend money on moving expenses. third, congress should deny the commission the use of appropriated funds to implement or enforce the plan the f.c.c. recently adopted to regulate the internet. whether applying the general internet conduct standard to new business practices, drafting advisory opinions and the enforcement bureau or hiring a new om buds person for the internet, the commission will spend a lot of money and time applying regulations that are wasteful and unnecessary. and that are already proving harmful to the american public. given that f.c.c. is struggling to fulfill core responsibilities under the communications act it is irresponsible to spend millions of dollars regulating the internet. outside the budget, there is another issue with a fiscal impact that i'd like to discuss this morning. the f.c.c. must take immediate action to end abuse of the designated entity program. what was once a well-intentioned program designed to help small businesses has become a play pen for corporate giants. the f.c.c.'s recent aws-3 spectrum auction is a shocking case in point. earlier this year the f.c.c. disclosed that two companies, each of which claimed it was a, quote, very small business, with less than $15 million in revenues to get over $13 billion in spectrum licenses. those very small businesses are now claiming over $3 billion in taxpayer funded discounts. how could this be? dish network which has annual revenues of approximately $14 billion and a market capitalization of over $31 billion has an 85% ownership stake in each of those supposedly small businesses. to be frank, i'm appalled that a corporate giant has attempted to use small business discounts to rip off american taxpayers to the tune of $3.3 billion. this is money that otherwise would have been deposited into the u.s. treasury and it could have been used to fund over 581,000 pell grants to pay for the school lunches of over 8.3 million schoolchildren over a school year or have the tax credits for the hiring of u.s. veterans over the next decade. as appropriators, as taxpayers, you know that this is real money. the dish entities applications are pending before the f.c.c. if dish didn't comply with the f.c.c.'s rules we must reject any discounts, and going forward, the f.c.c. must fundamentally reform the d.e. program to prevent big business from ripping off the american taxpayer ever again. the american people deserve no less. chairman boozman ranking member coons members of the subcommittee, thank you once again for inviting me to testify. i look forward to answering your questions and to working with you and your staffs in the days to come. senator boozman: thank you. thank you, commissioner pai. the -- let me ask you, and you touched on this. the f.c.c.'s 2016 budget request contains spending increases of more than $73 million. this represents a 22% increase above current levels. in your testimony you said that you did not support that. are there any areas where you believe the f.c.c. should shift resources from current activities to pursue other priorities? commissioner pai: i do thank you there are other areas that would benefit from more f.c.c. sustained attention. eliminating waste, fraud and abuse to lifeline. making sure we have a stand-alone support mechanism supporting broadband in rural america. that has been on the shelf for a couple of years. it would be great to get that kick-started. additionably, freeing up more spectrum for both licensed and unlicensed use in the five gigahertz band, accelerating the i.p. transition. and providing relief to the a.m. radio band. there are great broadcasters who have been dying for over 22 years and the f.c.c. could foe counsels that. there are many areas that could benefit from that if the f.c.c. focused on it. senator boozman: how has the agency's focus on internet regulation affect its allocation of resources? commissioner pai: mr. chairman, i think it's no question it's diverted a substantial amount of staff hours and financial resources toward what was essentially discretionary projects. i often said that net neutrality was a solution in search of a problem. the agency has spent an inordinant amount of time what has been over 300 pages of regulations which are going to have to be implemented and enforced in the coming years. it will have to litigate those issues in the courts and it has detracted from the core purpose of the f.c.c. under section 1. which is to realize the promise of communication services for every american. so if we focus on rural broadband, if we focus on providing more resources to schools and inner cities, there are many things we can do to increase broadband deployment but net neutrality has been a diversion. senator boozman: chairman wheeler, all five f.c.c. commissioners promised the senate commerce committee that by year's end they would complete the u.s. rate of turn to allow support for stand-alone broadband. this is an effort that the commissioner support and this is what the committee supports. these are areas where we can make a difference. could you update us regarding the status of that effort? chairman wheeler: yes. thank you, mr. chairman. it was -- first of all, i don't change one comma in the commitment that we will have this done this year. three of the five commission offices, mine included, actually sat down with the rate of return carriers to begin to work through the process of just how do you build this new model to make sure that we're delivering broadband by rate of return carriers. there is -- the challenge in this there will be puts and takes for individual companies and we're trying to say, how do we keep our eye on the ball, which is to deliver broadband in rural areas and at the same point in time not create extensions that unnecessarily burden those companies that are trying to provide that kind of service. i think we made good progress. i expect that we will be moving towards a new model, that we will release and propose shortly, but we are dedicated at the proposition and we are going to get this done. senator boozman: the next month or two? chairman wheeler: by football season. senator boozman: i can relate to that. let me ask you despite rapid changes in the marketplace, the f.c.c. is not substantially updated the regulatory fee structure. will you commit to updating the way your agency collects regulatory fees to ensure the fees are equitablely spread throughout the industries that f.c.c. regulates? chairman wheeler: yes, sir mr. chairman. that's an ongoing effort. we're trying to do is we're trying to peg the regulatory fees to the expenses that are associated with them. because -- and this is one of the things that's at the heart of this universal service fund issue that we've been talking about. because broadcasters are paying for the administration of universal service, and other licensees that don't participate in universal service. and so how do you make sure there is a relationship between that which you get charged and the services that you receive? we have also moved to reduce the burden on small businesses. if your fee is less than $500, you shouldn't have to hire some lawyer or accountant for a couple thousand bucks to make your filing for you. and so we just eliminated that altogether. but, yes to your specific question changing how we do fees is a very important part of what we're doing. senator boozman: commissioner pai, would you like to comment? commissioner pai: i share the chairman's vision of making sure our regulatory fee structure is calibrated to the realities in the marketplace as it stands. without revealing nonpublic information, what i can say is the commission is on the brink of making additional progress toward that goal. senator boozman: senator coons. senator coons: thank you, chairman boozman and i appreciate the opportunity to continue some of this conversation. if i would, i mentioned in my opening statement i'm very interested in the incentive auction and the auction fund. chairman wheeler if you'd start. congress authorized the f.c.c. to conduct three different auctions in 2012. you're preparing for the third. the voluntary incentive auction. could you go in a little more detail why this is so much more complicate and how the aging i.t. infrastructure of the f.c.c. continues to operate with is in some ways a barrier to a successful auction and whether you expect to meet the goals of starting the auction making spectrum as badly needed ideally suited for broadband by early 2016 and how you'll ensure that broadcasters might be made whole while maximizing the spectrum auctions? chairman wheeler: a laundry list there kind of lays out exactly why this is a big undertaking. i keep calling it a rubic's cube because what we're doing is we're having to go into the marketplace and buy spectrum from broadcasters. then we turn around and repurpose it and sell it in a forward auction to the wireless carriers. but that center ring in the rubic's cube is where the real action takes place because as the amount coming in varies, as somebody says, ok, i'm out of the auction now, you have to have real-time rebanding that determines what your auctioning out here. that -- you're auctioning out here. i'll be very candid, sir when i walked in this job about 18 months ago, i sat down with a team that's a terrific team. this has never been tried before in the world ok. and the policy issues and how they are going through this is terrific. i said hey folks, i used to run software companies. i'm worried about this software component. and i'm soar rid about our ability to -- worried about our ability to have the i.t. infrastructure that can do the job. so i requested a six-month delay so we could get that right. we are going to have this auction the first quarter of 2016. the software's going to work, actually just had a briefing on it last week. we had a red team working on it. we are actually trying to run this like a software company. i'm confident we'll have a successful auction in 2016. senator coons: i appreciate you talking about how proactive investments in dealing with aging infrastructure and proactive investments, although significant, in a relocation may actually net positive to the taxpayer over time but why some of the government accounting rules requires you to do so in a lump sum. chairman wheeler: thank you, senator. let's separate the real estate from the i.t. aspect. on i.t., we have 100,000 unique data sets in the agency. this had grown kind of like topsy over the years. somebody says hey, i need -- and something gets created. we have 207 different platforms that don't speak to each other. the maintenance of those alone is an expensive proposition. if we can rationalize all of those, put them in the cloud, have a common platform, we are going to be able to reduce f.t.e.s that support them and even beyond that the consultants who you bring in to have to do the fix on this or fix on that but you need somebody that's a specialist in this because you haven't built the program. for instance, we did an update using the new -- using our new approach of our consumer site that the brought in for a fraction of what the consultant said he would charge us for. we want to do that across the whole agency. that's on the i.t. side. on the real estate side, i used to -- when i did real estate deals, normally you would just take the build out cost and everything and amortize them over the course of the lease. obviously the owner of the building takes a little more in that process. the government says, no, that's not the way we do things. we do things, we pay them up front because that's what's best for the taxpayer. and it's going to cost us up front $51 million this year to save $190 million over the course of the lease. and i think that's a good investment, sir. senator coons: commissioner pai raised the concern if we approve or authorize the appropriations that will in some ways distend future considerations of what the base budget is. is that a legitimate concern? is that a reason not to do this? chairman wheeler: i don't think it is a reason not do it. i think commissioner pai's idea it should be segregated and flagged this is what it is. is a terrific idea. senator coons: commissioner pai, any idea you would like to offer on anything or the last question how the taxpayers receive benefit yet the appropriators get a reasonable baseline going forward? commissioner pai: turning to the voluntary incentive auction, i believe that we have to get this right. congress gave us only one chance to get it right. so i think it's critical that we get it right instead of getting it done based on a particular deadline. in terms of getting it done right, i have three general buckets of concerns. one, we tend to be making the inside auction more complicated than it already is. as the chairman pointed out sort of like a rubix cube. there are different proposals on the table. for example, dynamic reserve pricing, the variable band plan. different spectrum blocks with different levels of impairment people will have to figure out. going to make it even tougher for broadcasters and wireless companies to make the decision to come to the table and to come to the table with sufficient resources. secondly, i think there are important technical questions that need to be ironed out. for example, as the chairman pointed out, how do we know the repacking software is going to work in crunch time? similarly, what types of uses should be allowed in the guard band. that's something that engineers have to inform us about. then there are also other -- third bucket is other factors outside of our control. we heard from a number of carriers and from the capital markets that given the amount of money that was unexpectedly raised in the auction, it might be difficult for some of the carriers to turn around on a dime and participate as robustly as we would like them to in the incentive auction. that's how each of these three items plays out, i mean not in terms of the timing, but it's critical for us to sort them out regardless. timeline to make sure that we manage to meet congress' expectation for this auction. senator coons: thank you. senator boozman: senator moran. senator moran: mr. chairman thank you. senator coons for having this year. when i was in the position as ranking member, it had been nine years since the s.e.c. testified in front of this committee. chairman powell came that year and we had the f.c.c. in frovent us every year since. i think it's one of the most important agencies this subcommittee has jurisdiction over. i thank you for conducting this hearing. i thank the chairman and the commissioner for joining us. can chairman compeel, over the last week i asked several people who come in contact in their business lives in the f.c.c. what questions they would like me to ask you. the ultimate suggestion was, whatever you do, ask for a yes or no answer. and i'm going to try to do that as often as i can. although now i'm the one using up my time. senator coons asked a question about the incentive auction. and what i heard you say is that you are confident that the auction will occur early in 2016. that's a yes. chairman wheeler: that's a question. senator moran: my question is you have been having meetings with broadcasters. do you believe they now have the information necessary to make an informed decision whether or not to participate in that auction? chairman wheeler: for the most part yes. but we are not complete in the set of rules that we are developing. so -- which will get those done in the next couple months. then they will have the information. senator moran: do you have the ability at this point to predict how interested the broadcasters are in allowing their spectrum to be auctioned? chairman wheeler: wow. predicting a market. i can say that there has been great interest. i have had major broadcast c.e.o.s in my office saying that they are seriously looking at whether or not they would put their spectrum up. i think that there is great interest in participating in that auction. we won't know until we open the doors. senator moran: likewise, senator boozman asked a question about rural broadband. i want to focus on the universal service fund. the circumstance we find ourselves in -- first of all, i'm pleased to see we are moving in the direction toward the order that was entered prior to your arrival mr. chairman. in your visit with me at the time of your confirmation, you committed to reforming the reforms and i'd like to see that to continue expeditiouslyly with a great deal of common sense and sensitivity toward how rural the country and how small many of those providers are. one of the things that i'd like to ask about this morning, though is the universal service fund in so many instances the land line is no longer the desired option by the customer. yet the universal service fund collects money on that service, but we need that money to be used to deploy broadband in rural america. what is the plan to transition the universal service fund phone support to help support broadband so that rural customers can access that broadband at comparable rates? chairman wheeler: thank you, senator. first of all i want you to know i'll continue to live up to that commitment to you. i came right in and said this q.r.a. stuff which you and hi a long discussion about, is ridiculous and it's gone. and as i said earlier, we are in the process of looking at just how we put together a rate of return package. i agree that it doesn't make much sense to have the linkage between narrow band and broadband. i know commissioner pai and i are in agreement on that point. the difficulty is it's harder than just cutting the cord here because we need to break sure that we are not just supporting existing broadband but we are also providing funds to the nonserved areas. and how we get that right is essentially what we are going through right now. but we need to cover more of rural america, and we will do that and we are doing it in this order, in the other order that the commissioner pai and i both just voted favorably for a couple months ago, and we just actually took the action a couple weeks ago, we released $10 billion to be spent over the next six years by six companies in the price company carrier arrangement. then we put in behind that a structure that says that those areas, they are not going to serve, we are going to auction off. we are going to put auctions back to work to say, ok who wants to serve this area and what will it cost to serve it? one of the things we are going through is -- we are going through both changing the existing models that people are used to working with and the problem is as i said, that's something that affects companies, but also changing the overall construct and saying it's not just your father's u.s.f. program anymore. we want to look at bringing new people in. we want to look at having markets decide things by auction. that's what we are committed to doing. senator moran: if the industry could come up with a plan is that a way it could be considered within the f.c.c.? chairman wheeler: yes, sir. that's what we were saying when the three commissioner's offices got together with them and said, where you stand, depends where you sit, sir. we have to make sure everybody understands they are sitting in the same place. senator moran: : how long do you see a transition making? chairman wheeler: to? senator moran: to that broadband support. chairman wheeler: i hope we could have the plans in place this year. senator moran: let me ask about call completion. what progress is or isn't being made? chairman wheeler: there are three components to call completion. one is enforcement. we find wind stream $2.5 million. level three almost $1 million. the second is that they had this fraudent activity going on where you would hear a ring even though the call wasn't being completed. we have passed a rule and commissioner pai and i again worked together on this to make that illegal and to be able to take enforcement actions against that. and then the third question becomes, ok, beyond that, how do we quantify what's going on? so we have a data inquiry out to the affected carriers right now saying, we want to know what happens about this, what happens about this about this. that will help us define what any further steps need to be taken. senator moran: when can you share that report? chairman wheeler: i hope that's something that will be ton towards the end of this year. senator moran: busy year, mr. chairman. commissioner pai i intended to ask you to respond to anything you wanted. my time -- with the chairman's indulgence commissioner pai, anything you'd like to respond to the questions i asked the chairman? commissioner pai: build on briefly to the chairman's answer with respect to the mechanism for supporting stand alone broadband. this is something we long had a colloquy about. we have seen it for ourselves in kansas. the need is acute and we need to get this dofpblet i join the chairman in both my commitment to getting it done and commitment to finishing the project by the end of the year. this is part of the reason why i proposed -- support for stand alone broadband a couple years ago. these carriers are a hobson's choice, either they go it alone with stand alone broadband or they risk losing the customers. so i think we do -- i'm glad on a bipartisan basis we keyed up a lot of these issues, including how the mechanisms should be structured. in the proposed rule making last june. we had a number of other different proposals. we need to be clear. we don't need a second path for carriers. we don't need an elegant mathematical model. we don't need a follow-up to the q.r.a. increasingly optimistic about we can adopt targeted reforms to our rules. in particular part 36 and part 54 accounting rules. that regulatory tweak, which we would have all the legal authority in the world to do, i believe could help some rate of return carriers offer stand alone broadband without effectively being penalized for it. those green shoots hopefully will blossom over the next couple months. i stand ready to work with the chairman, our other colleagues, and of course with you to make sure that the mechanism is something that works for rural america. senator moran: thank you very much. senator boozman: senator lankford. senator lankford: thank you both for being here. i want to follow up on the investigation of the program and potential now about $3 billion in lost revenue. where does that stand for the future? what is the process at this point for re-evaluating the program and how it's managed? as you alluded to before, closing a loophole on this. what's the conversation right now? chairman wheeler: paragraphs it into two parts. -- pars it into two parts. -- parse it into two parts. the first part commissioner pai spoke eloquently about the reality that up in the d.s. 3 auction. i can't find a lot to argue with in that. i think we are strongly of the belief that this was designed for designated entities. the -- how the rules were, in fact administered, not administer -- administered, used, followed by the bidders, is an item that now is finally before us because yesterday was the day that opportunities to challenge those licenses closed. and we have like a dozen challenges to them. you may have noticed that the wireless bureau was slow in getting those out because we wanted to make sure that we understood everything there was in those. so that we would be able to respond in this kind of situation. we are now to the point where there are challenges to those licenses and we will respond accordingly. that's kind of what happened. on the broader designated entity question again, commissioner pai and i are in agreement. this program needs to be updated. i was around when it was created in 1993. it has the right kind of philosophy and it's a mandate from the congress that we need to make sure that there are opportunities created for small businesses. and the problem is that the world has changed a lot since then and our rules haven't. so what we did a few weeks ago, i think probably a month ago now, was to put in a public notice. we wanted to make sure we got the record to support everything we do. we put out a public notice saying, here are the kind of issues that got raised, give us input on that. and it's our intention that we are going to have a rule making that will be in plenty of time before the incentive auction so the people will know what the rules are there and change the structure of the designated entity rules to make sure that they meet the mandate of congress and to make sure that they don't run afoul of the kind of things that we have seen happening. senator lankford: thank you. anything else you want to add? commissioner pai: no. we are working in common purpose and i hope that some of the common sense changes teed up in the public notice will be adopted as fundamental reforms to this program. senator lankford: transition to the lifeline program. you-all have put some reforms in place over the last couple years. that program rapidly accelerated and then it's starting to be able to draw back some. it still has a distance to go. what are the madgor reforms still pending whether it be pending rule making or proposals or whether that be changes that are in operation that you would see? my state of oklahoma is one of the prime examples of that. i have already mentioned to you as well i'm willing to be able to work together to make sure that those individuals that rell ingible for this receive it and those individuals that are not do not. as we walkthrough the process. what is pending at this point? chairman wheeler: we will bring out a reform of the lifeline program, notice of proposed rule making, in the next couple months. it will address the kinds of issues that you mentioned here and many others. there was just a report by the government accountability office in which they came out and said, you know there's been great progress in helping to clean up this progress and move it forward, but there aren't enough specific management goals. you're not shooting to these specific targets and saying are you hitting them? we are going to be developing those. so that we can have a managementlike approach to lifeline. and as i say, we expect this to start in the next couple months. senator lankford: is it your ah summings they'll get a phone for free? chairman wheeler: that is specifically one of the questions that we are going to ask and we'll make the decision based on the record. senator lankford: what is your ah summings? what's the conversation happening in that? do you need to save that for the record? chairman wheeler: i have heard arguments on both sides. so what we are going to do is tee up in the nprm this specific discussion and try and tease out from everybody and have people debating the various topics so we can have the best record to make that decision on. senator lankford: there's also a conversation with a large native population in other states, that they were set up for individuals that were native american, but it seems to be the assumption was on tribal lands to try to expand that out into tribal members. it seems to be expanding well beyond what it is intended for. in my state there are more individuals on lifeline than total tribal members in the state. that get the travel subsidy. there is a problem with that. i assume it's in other states as well. is that part of the rule making? chairman wheeler: one of the things i learned when i came to the commission that all of oklahoma was tribal lands. i didn't realize that myself. you pointed out to me the other day that tribal members carry an identification card that say i am a tribal member. the reality is that when -- multiple years ago during the bush administration when lifeline was expanded to nonfacilities based carriers, that a whole series of things were triggered that we now have to address. and that clearly is one of the obvious things. i can assure you, sir, that will be in the nprm. senator lankford: let me do one more quefment we need to talk about some of the open internet conversations. i understand the issues that are flowing through this and the opinions out there. my question really circles around why not a legislative fix for this? why do a rule making? there are so many different exception that is were built in and the areas to say these 30 different parts you don't apply to this. these 700 different rules you don't apply to this. there sems to be so many exceptions. it looks like a round peg in a square hole. when there was a congressional conversation about some of these same issues and resolve it, why do it through a rule making and adapt rather than wait on congress to respond to it? the second part is, is there any questions at this point in your budget, long term, the cost of litigation based on this as you're beginning to prepare for that? chairman wheeler: the -- thank you, senator. the legislation that is been proposed in both houses as you know. i read in the trades this morning that in this body senator thune and senator nelson are discussing how to come together on legislation that is the prerogative of the congress. and we would certainly bough to whatever decision -- bow to whatever decision the congress makes. insofar as the budgetary impact we don't sit down and say, well this is specifically what it's going to take to do this program or that program. with the possible exception of lifeline where we reduce it down and say we have 155 people dedicated to lifeline. we don't have that ning with open internet. senator lankford: do you have any guess on litigation cost? when you dip into this you got to know there will be tremendous litigation. we looked at that as well. what's about to happen on costs of litigation? chairman wheeler: i don't have an estimate. senator lankford: more than $10 million? chairman wheeler: i don't have an estimate. it's a fixed cost. we are not going to go out and hire ted olson. it's a fixed cost that we have an appellate group inside the office of general counsel. and they are worrying about u.s.f. the next day and they are worrying about this the next day. senator lankford: thank you. senator boozman: chairman wheeler, the f.c.c. announced in march that 16 of the 24 enforcement bureau offices around the country would be closed. what impact will these closings have on the f.c.c.'s ability to address interference concerns? chairman wheeler: thank you, mr. chairman. it will improve our abilities. one of the reels realities that we have is that the -- one of the realities that we have is the offices were placed there 20 years ago in an entirely different era when radio frequency interference was not an issue. on average, less than 40% of their time is spent on r.f. interference issues. we ought to be spending more time on the challenges to the future economy, which is a wireless economy rather than trying to figure out if the local broadcaster has painted his tower. and so what we are proposing is a structure that will put electrical engineers in a strategicically low a -- eight strategicically located offices so that they can then get out of those offices and deal with the issue which is never in the office, it's out there. and in addition, we then want to -- we get a lot of complabets from the industry -- complaints from the industry, i tell you about some kind of r.f. problem and it falls into a black hole. back to senator coons' i.t. question. if we have the right kind of i.t. structure, i want to have a dashboard so you can say, let me look up who's responsible for this where it is in the status and what the outcome is. but we are not structured to that right now. we are structured a to an era when you used to go and inspect broadcasters' records which are -- used to be in files at their offices and now are online. where you used to worry about whether towers were lit and we got to ask the question, is that the broadcasters' responsibility for should we have 234 field offices -- 24 field offices out there doing that? we are trying to reallocate our resources to do weighter job. senator boozman: the resources you save then is going to go towards interference as opposed across other enforcement or just within the agency itself? chairman wheeler: we believe that we will be improving our interference. we believe we'll save about $9 million a year because -- senator boozman: that's going back into -- chairman wheeler: that goes into the general fund. it will be -- it will be used, obviously, for paying for what will be increased cost of travel and this sort of stuff. we want to have a coordinator at headquarters so that oversees -- we want to build the dashboard, all of those will cost money. senator boozman: so you're not committing to putting it in interference for sure. it's going in the general fund. chairman wheeler: the focus of the field offices is going to be interference. senator boozman: commissioner pai, under the title 2 reclassification, if someone files a complaint with the particular firks then an internet service provider is charging unreasonable rates, isn't the f.c.c. legally obligated to investigate the complaint and make a determination under section 201? commissioner pai: that would be the f.c.c.'s obligation, which is why ex-post rate regulation is on the table as a result of the regulations. chairman wheeler: one last thing there, senator. i hope somebody files on that. i said this with commissioner pai and i have had this discussion before. i hope somebody files with this because if they do i hope we will be able to, as a commission, take an action that makes it clear that ex-post rate regulation is not what we are after here. and that we will produce a decision that makes it clear that that's not what we are trying to do here. we are in strong agreement on the effect, if not how to get there. senator boozman: mr. pie. commissioner pai: mr. chairman, you due to respect to my chairman, the order says they won't get engaged in regulation that means tariffs and methodology. senator boozman: we are talking about consumer as well as internext rates. commissioner pai: exactly. as i read the open internet order, it explicitly permits ex-post rate regulation both of the consumer facing service as well as interconnection under section 201 of the communications action. senator boozman: chairman wheeler, you're not interested in interconnection rates. chairman wheeler: our goal is not to have red regulation. the 201-b interpretations some people have said this gives us some kind of ex-post authority, i would like to be able to make it clear that it is not a rate regulation tool. senator boozman: either consumer or energy connection. chairman wheeler: that we need it specifically for consumer regulation. as we look at interconnection, i think we need to make sure that we make decisions based on what the facts in the situation are. i'm not trying to dodge your question. i'm trying to say absent understanding what the facts are, i think we need to wait for that. senator boozman: i guess the question then is would you have objection to congress prohibiting the f.c.c. from spending money on regulating rhett charges, charged for the broadband internet access service, including those four interconnection? chairman wheeler: i think one of the things that's most interesting is that as i believe senator lankford pointed out we foreboor a loft sections in title 2. there has been a concern raised, ok, this commission will state out of that, but what about the next commission? if congress wants to come along and say that's off the table for the next commissioner, too, i have no difficulty with that. senator boozman: thank you, mr. chairman of the senator coons. senator coons: thank you, chairman boozman. thank you for a broad and vigorous conversation about a lot of different issues. i want to take us back to the access to broadband and making sure that we've got a rate program and u.s.f. that works. you announced sweeping reforms last year to the erik program to bring broadband and wifi to schools and libraries while modernizing the program while eliminating funding for lower priority programs. how will this provide funds to assure every child has the ability to access the internet or complete their homework at school or home? how will that lay out in reality? chairman wheeler: thank you, senator, for the question. literally we just closed the funding period and there is about $3.9 billion in requests that came in. that we will be able to fund. and the exciting thing about what's happened this funding year is that because of some of the good work that john wilkins our managing director did here, he was able to identify a couple of billion dollars in u.s.f. funds that was literally just sitting there. and without any impact on ratepayers to be able to reprioritize those so that they could deliver wifi to the desk of the student. because it's one thing to connect the school but getting it to the principal's office or computer lab isn't enough. it's got to be to the desk. we have always provided for that in the rules, but there was never any money because it got sucked up by the first part. what's called category one. now there is the ability to do that. as a result of that, 20 million students are going to be connected at their desks that weren't before. that's a significant thing. the other thing that's really important is well, the connecting the schools, the worst situation for high speed connectivity was in rural america. now, that's no great surprise. but there were unique challenges that exist in rural america that we addressed in the new rules so that we could close the rural fiber gap to get the connection to the schools so it could go wifi to the desk. as i say the first itgration under the new rules has -- iteration under the new rules has just happened. senator coons: i suspect something you'll find bipartisan agreement about is the need to continue for rural access. many people don't think of delaware as a rural state. we have rural communities. i hear regularly in southern delaware about their concerns about broadband access by various schools, homes. in my former role as county executive i was responsible for a 9-1-1 call center and spent a lot of time on upgrading its response and. so transition from a predominantly landline world to a cell phone world. i know you have been working hard on some investments to strengthen. commissioner pai, could you explain more about the recent f.c.c. rules on the topic and any other 9-1-1 improvements you think are necessary. chairman wheeler the f.c.c. budget if i remember provides $850,000 for do not call registry. if you could explain what that would be used for. i would appreciate a few minutes. commissioner pai: thank you for the question, senator. i think our responsibilities are rarely cast into as sharp relief as when we are talking about public safety. the f.c.c. has taken a number of steps to improve 9-1-1 function at across the contry. -- functionality across the country. one of the -- probably the most fundamental aspect of a 9-1-1 call is for emergency response to figure out where is the person in need? and that was increasingly difficult in this world where people are calling from cell phones and it was difficult to figure out a location. thanks in part to our bipartisan efforts on that issue, i think we are moving forward with standards that hopefully will lace hasten the day when anyone calling from any kind of device will be able to be found very quickly. additionally we are kicking off an initiative to study the architecture of our public safety answering points nationwide. unlike a lot of contry, we have over 6,000 of those apps right now. some big, some large. i visited the new york city peace effort. it is massive, rows and rows of dedicated profession alleges. i visited some with just one or two people. they have to be there at all hours of the day. is there some way to rationalize that structure to make sure that we deliver public safety value while also being careful stewards of taxpayer funds? that's something the s.e.c. is shepherding a conversation -- f.c.c. is shepherd a conversation about. the f.c.c. isn't just issuing man dates from on high, we are leading by example. i want to thank the chairman for our recent announcement that the f.c.c. beginning on june 1 now be allowing f.c.c. employees and the headquarters here in washington, d.c. to them steffs directly access 9-1-1 where previously they would have to dial an access code such as 9. you might think an access code isn't a big deal, but in the press of an emergency that's not one of the things people think about. you know the number 9-1-1. we'll be leading by examples that hopefully other federal agencies, other private sector entities will do the same. those are three of the things that spring to my mind. senator coons: can i pile on there and give credit where credit is due on that last item thasm was entirely because commissioner pai brought this issue to us and championed this issue chairman wheeler: he's also done and outstanding job working with hotels around the country to get them to voluntarily do the same thing. commissioner pai: very grateful for the chairman for the kind words. if they decide to move the f.c.c. to wichita i will support him in that endid he ever. i thought i would push the envelope. planes trains e. and automobiles go there. chairman wheeler: not cost-effective. senator coons: the do not call registry -- chairman wheeler: so there -- we need to create get row bow calls. that's what the issue is. and it waists the time of these people -- wastes the time of these people that commissioner pai was talking about. we need a registry for that. the difficulty we are facing is congress said create this registry and it's a terrific idea, but we are asking you for the money to fund it. senator coons: one last question if i might. about positive train control. complex and difficult public safety investment improvement. could you give us an update on progress towards the deadline and what the f.c.c. can or should be doing to help expedite the process so that it's possible to meet the deadline for a number of infrastructure investments and processes that need to be done? chairman wheeler: there are two parts to positive train control one is spectrum, the other is the placement of the antennas that will control that spectrum. we have been opening up spectrum. transferring -- for instance for commuter lines we recently eased their power restrictions so they can push out more power over the same spectrum. for amtrak, we have new spectrum in the northeast corridor. and we did some spectrum license transfers last week. that's kind of the spectrum side. then there is the process that is required for us to carry out under the e.p.a. and historical protection act that we create a structure for knitive american communities to be able to review the placement of the poles that hold the antennas. and when i walked in there was a huge problem that it was not structured in a way that could handle the terrific input that was coming from the railroads. i'm happy to say that thanks to the cooperation and working hard with tribal leaders we now have in place a process that will handle 2,800 requests every two weeks. and it is, frankly, a process that the railroads have not been able to fill, we are about 27% capacity right now. which is good news. i'd rather have excess capacity than struggling. not casting aspersions here. i think we are making some real serious progress on p.t.c. senator coons: thank you, mr. chairman. senator boozman: senator moran. senator moran: thank you very much. first of all i want to thank the commission. i mentioned in a hearing the last time we were together, which i think was empty commerce committee, an e-rate case pending since 2011. within a week of that hearing the case was settled and the kansas board of regents appreciate -- chairman wheeler: isn't it amazing those kind of things happen. senator moran: let me turn to a letter that i and 28 of my colleagues recently worked on including senator coons, related to mexican border spectrum issues. there is significant public well-being at stake here along that border. and it's -- the effort here is to implement a 2012 agreement that the mexican government entered into. my question is, does your budget reflect the necessary resources? and do you have necessary expertise to -- critical to get this issue resolved and addressing this issue? chairman wheeler: thank you, sir. i think the answer is yes. i think i got some good news on that. we are as you know in ongoing negotiations with the mexican government. and i believe that we are now to a point where we have reached a structure where there can be rolling approvals, if you will. so we bring forward and say, here are a group of licenses we have to worry about. and they deal with those. we can deal with them on that kind of a basis rather than just dropping a whole load of hypotheticals on the table and say deal with that. our international bureau has been doing a great job on this. and i think that we have crested the hill, sir. senator more yan: the new standard is if i raise a topic it's resolved within a week? chairman wheeler: well, sir -- senator moran: let me turn to money. the president budget requested a diversion $20 million directly from the universal service fund for the purpose of identifying improve payments of waste, fraud, and abuse. i consider those dollars within the universal service fund pretty scarce and important and based upon what i know about the inspector general's report. in 2008, this is just an example, the i.g. predicted to congress they would find $608 million in potential improper payments. as i understand it the number after this onerous audit was a mere $79,000. my question is, what evidence -- what my questions are, what does the f.c.c. have to indicate that regulators would find $25 million of waste, fraud, and abuse. in other words to allocate the money you would think you would get a greater return from the money spent. secondly, wouldn't it be bettory take those dollars from the general operation budget than take them out of the universal service fund? chairman wheeler: thank you, sir. you just gave me an identify dee. i frankly hadn't thought about comparing ins and outs. i know within the last six weeks we fined at&t over $10 million on a lifeline fraud. so i am -- i can virtually guarantee, but i will submit for the record the specific ability to recapture those funds. the point that i was trying to make earlier senator, is that we have 155 people working on universal service. it's about 10% of our employees. and we are in a situation where we are cutting employees. how do we hold universal service management enforcement and appeals harmless from budget cuts? i think the model was established by the congress when you said to us, the point you just made, about inspector general, we want inspector general's activities on waste, fraud, and abuse to be paid for not by the f.c.c. but by the universal service fund. the database that we had to build to go after that waste, fraud, and abuse was paid for out of the universal service fund as it should be. it's the same kind of concept where the cost of managing the auction is paid for out of the auction proceeds. and i just think it is good business to associate expense with revenue. i also think it is good equity for the ratepayers. you were asking me previously about how we were setting the rates. we ought to establish that there is -- this is the benefits that you get and this is what you pay. but not load in the costs for somebody else into what a broadcaster has to pay, for instance. and so -- what's really important to mention here is that those 155 people, that $25 million, we got to pay that one way or another. it's not going to go away. so what i'm suggesting is that there should be a dollar for dollar reduction in the general fees charged by the agentcy. -- agency, so that we can assure that universal service is protected from any f.t.e. reductions or any of the other things, and is paid for out of the funds generated by it. yes, sir i can virtually guarantee that i'll bring you years of history that it's always been paid for by enforcement. senator moran: let me make one final point then turn to commissioner pai for any response. i have asked you, i think i submitted in writing i.t.t. infrastructure questions at our commerce hearing in march. i'll resubmit those today and look forward -- commissioner pai. commissioner pai: sorry, -- senator more yan: anything in particular on the $25 million? commissioner pai: thank you for the question. my concern is twofold. first, we should think about what the universal service fund is. this is basically a tax on consumers, any consumeer with a phone bill pays into the universal service fund. by definition if you exstract $25 million from that fund, the consumer will have to make up that gap eventually. to accommodate this $25 million transfer or any further transfers in future years, if this were to be approved, the tax on coum sears would -- consumers would have to go up to cover that gap. secondly, on how the money will be spent i agree enforcement of the rules regarding universal service fund are essential. i have been -- since i started the f.c.c., i have been talking about the need for more effective enforcement of our life line rules. making sure people don't take advantage of the system. but we need to reprioritize in my view the s.e.c.'s operations in washington to streamline our operations, make ourselves more efficient, to free up funds to go after that enforcement rather than diverting it from the universal service. my concern is this is essentially the camel's nose under the tent. i would prefer that we keep the two activities separate for the sake of the consumers. senator more yan: thank you very much. -- senator more yan: thank you very much. senator boozman: senator coons. senator coons: thank you for your service and testimony today and the businesslike way you approach both the solutions to the challenges in front of you and working together. thank you. senator boozman: thank you, senator coons. and thank you-all for being here. we had a good hearing. i think we really do have -- we've got some profound disagreements, yet we really do have some areas we all agree on. one thing as i go out and about throughout the state, i know it's true of my colleagues, in the old days when you talked about infrastructure, you talked about roads and bridges and water. now electricity. now, infrastructure, what you're doing with broadband connectivity is so very, very important. i think that we are all agreeing that this needs to get done. and certainly we are looking for ways to help you get it done. so again, that's so important. not only for rural america, which we are concerned about, but also we are also very, very concerned about urban america, the whole thing. we appreciate you being here. if there are no further questions -- other thing before i go on, i want to thank you, but i also want to thank your staffs. i know you worked really hard in getting you all prepared. chairman wheeler: you want to thank your staffs, sir. senator boozman: exactly. our staffs have also. we do appreciate them. if there are no further questions, the hearing record will remain opened until next tuesday, may 19, at noon for subcommittee members to submit any statements or questions to the witnesses for the record. subcommittee hearing is hereby adjourned. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> if you missed any of this hearing it's available online at c-span.org. check the c-span video library. on the senate floor tarksde senators are debating president obama's fast track trade authority proposal. giving the president leeway to reach trade agreements with other countries and get quick congressional approval or denial. senators will vote at 2:30 eastern on whether to advance that measure. you'll be able to watch that debate and vote on c-span2. just to let you know that president obama is busy this morning taking part in ruined table discussion on ways to address poverty in the u.s. that's part after three-day catholic evangelical leadership meeting at georgetown university. you can see live congress of that on our companion network c-span3. also live this afternoon, at 3:20 eastern on c-span3, the senate veterans' affairs committee will hear from deputy veterans' affairs secretary gibson about veterans' access to health care and benefits. other witnesses include representatives from several veterans interest groups. it looks like the time on that has been updated. it now starts at 2:45 eastern. again you'll be able to see it on c-span3. and the u.s. house will be gaveling in in about nine minutes from now. for general speeches. legislative work will set get under way at 4:00 eastern. members will consider going -- five bills today including one to block new definitions of u.s. water subjected to federal regulations. also four bills dealing with police benefits. we'll have live coverage that have debate. any recorded votes will take place at 6:30 eastern today to give members more time to return to capitol hill as their workweek gets under way. again the house coming in live at noon eastern. until then a look at this morning's "washington journal." washington journal continues. host: dan lamothe is a national security writer for the washington post and he joins us now to talk about jade helm 15 and some of the concern it sparked in certain corners of the internet. what is j helm? guest: jade helm is a new exercise beginning in june. it includes about 1200 special operations troops. it will span a good portion of the southwest. texas, utah, southern california. what the military says they are looking to do is work on how they interact around the public. some of it is covert. they will be in civilian attire trying to blend in. they have done other exercises that are similar. this one sticks out because the scope and size is larger. host: why is the size larger? why is it different from other ones in the past? guest: you will see 100 or 200 troops. what they say is they are looking to prepare for long-range inserts where you will take a helicopter for the sake of argument, utah and landed in texas. they are trying to prepare for future operations that may or may not come up overseas. i think we can take them at face value on a lot of that. host: is there specific places they are expecting to fight overseas that they are trying to re-create in some of these states where the exercises are taking place? guest: they would never tell you which operations they are preparing for. i think we can safely say they read the news and are tracking the events like everyone else. they are looking at where they may operate in the future. when we talk about where the military is likely to deploy, they are always tried to be aware of where they may be needed in the middle east, africa. they are doing more they're all the time. any of the above could be possible. host: why is this particular exercise raising concerns among people who are worried about what the military is doing? guest: i think it comes down to the way this news came out in march. there were briefings that were posted on the internet with a lack of. context. it was capped at this -- as this tv is exercise. -- this devious exercise. setting a stage for future martial law. epic a lot of us -- i think a lot of us have a hard time seeing that. there are things where you could look at it and say, they did not really tell the truth about this or that, the way a war is going but this exercise seems routine. host: explain the cause of a lot of this to serve. every creation of the map. labels of different states in red labeled as hostile. blue permissive and uncertain in brown. explain this map. guest: they are setting the stage for what they plan to do. one of the things that caught some concern, they did label texas utah and a part of california as potentially hostile. that is a personal. that is proper -- that is a rehearsal, that is make-believe in a lot of ways. i set the stage for what they might have to do in a fictional country -- they set the stage for what they might have to do anything shall country and are playing around that in this exercise. a couple years back i covered an exercise and it was sort of the same scheme. they had an assault that went ashore from the atlantic ocean. they called it the treasure coast scenario. -- the treasure cove scenario. parts of the southeast were labeled as potentially unsafe areas. they are trying to work around we need to pick a place, prepare for it, assault it and take it over. it is all a dress reversal. it is not to be taken seriously. host: talk about the reaction from elected officials to jade helm 15. the governor of texas, submitted a letter to the texas state guard putting them on alert to watch the training exercise. a bit we can read from the letter. it is important that texans know that their safety, prior property rights in civil libert between my office and the commanders of the operation jade helm to ensure adequate measures are in place for texans. guest: i read that letter and i think a lot of people tracking the military read that letter and said he is trying to play a middle ground here between taking the concern seriously, as far-fetched as it may be, and doing nothing. he looked and said, if we are going to have hundreds or whatever troops in my state, i think it is important to note they are doing. i would like to have communication with local authorities. that is fair, i think. where the concerns were raised and where he has received mockery is by using the texas guard as opposed to local police or something else like that, which is common. it had the appearance of, i'm going to use watch -- i'm going to use my troops to watch yours. i don't know if that is the message to send. host: what is the conspiracy for those who think there is a conspiracy going on? guest: there is a range. one of the most common is the american military is going to take over portions of the southwest this year. in particular, texas has been labeled as an area that is hostile and texas is an area that they're going to come in, take our guns. all the sorts of things you would expect in a federal government take over. there is no real sense that that would happen. you look at the number of troops. 1200 troops spread out over the span of six or seven states, that does not really give you any kind of manpower to do that sort of thing. host: phone lines are open for those who want to talk about jade helm 15. democrats, (202) 748-8000. republicans, (202) 748-8001. independents, (202) 748-8002. a special line for texas residents, (202) 748-8003. dan, you are a first. caller: i'm a vietnam veteran. i served in our military and security specialist. in smithfield, when they had this town meeting with people, they said the commander used the excuse they are using this for terrain. italy problem is, -- the only problem >> we'll leave this discussion at this point as the u.s. house is about it gavel in for general speeches today. legislative work will get under way at 4:00 eastern. five bills on the agenda, including one to block new definitions of u.s. waters subjected to federal regulation. this is live coverage of the house here on c-span. the speaker pro tempore: the house will be in order. the chair lays before the house a communication. the clerk: the speaker's room, washington d.c., may 12, 2015. i hereby appoint the honorable steve womack to act as speaker pro tempore on this day. signed, john a. boehner, speaker of the house of representatives. the speaker pro tempore: pursuant to the order of the house of january 6, 2015, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour debate. the chair will alternate recognition between the parties

Related Keywords

Vietnam , Republic Of , New York , United States , Arkansas , Texas , Florida , Delaware , California , Washington , District Of Columbia , Bahamas , The , Mexico , Oklahoma , Wichita , Kansas , Fort Lauderdale , Smithfield , Hollywood , Capitol Hill , Georgetown University , Italy , Utah , Bermuda , Texans , Americans , America , Mexican , American , Robert Robinson Taylor , Dan Lamothe , Ted Olson , Eric Marx Jr , Michelle Obama , John A Boehner , Tom Wheeler , Sloan Gibson , Atlantic Ocean , Boynton Robinson , Ralph Ellison , Hillary Clinton , John Wilkins ,