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Hearing of the Telecommunications and the Internet Subcommittee of the House Energy and Commerce Committee - H.R. 5353, The Internet Freedom Preservation Act of 2008


Location: Washington, DC


REP. CHARLES W. "CHIP" PICKERING (R-MS): Thank you, Mr. Chairman.

And what I'd like to do today is put today's hearing in context of the history that this committee has had dealing with and confronting this issue, what we've seen in the private sector and the principles as we go forward on this legislation.

The Internet has been a great American success story -- probably one of the greatest examples of free market capitalism that we've ever seen in the entire history of the world. And it's been driven by a number of principles that characterize it.

One, it has been private-sector led. It was not regulated by the government. And this Congress has taken a position that we would not tax the Internet. So no taxation, openness, private-sector led. Commissioner Powell, back in the early days of the Bush administration, set out principles for how we would see network neutrality and define network neutrality.

Now, Commissioner and Chairman Powell is probably one of the most recognized free-market advocates, deregulatory advocates, but he saw the purpose of having an open network, so he set the principles out. It 's been maintained by another Republican chairman, Kevin Martin, and this committee last year -- in the last Congress -- excuse me -- as we laid out the COPE Act, we reaffirmed in that legislation network neutrality principles.

In fact, we codified them, and in some of the negotiations we had agreed to do a proceeding, much further than where this bill is. This bill does codify those principles first expressed in most part by Chairman Powell, then reaffirmed by Kevin Martin, and it has been a successful approach of setting what the principles are and then being able to have enforcement on a case-by-case basis.

Now, there are some who question whether the FCC has the authority to enforce on a case-by-case basis these principles of network neutrality, the principles of openness which have given us the greatest free market capitalist example in telecommunications policy in this century.

So I think that this legislation is very helpful, that it says very clearly, we will codify these principles, but we do not want -- I do not want the government intervention and regulation or to try to define in a very intrusive way some time of regulatory framework on network neutrality. The case-by-case is working.

If we call for -- and this bill does call for -- additional hearings and comments from around the country, I believe it is a good way to have accountability as we see in the context of pretty intense concentration of the industry in telecommunications. Are we going to maintain a private-sector led openness for the Internet and for consumers and a bedrock of the freedom that everybody can get anything on the Internet that they so choose, or will we see exclusives on content?

We are now seeing exclusives on devices in the telecommunications industry and the iPhone. What does it take for one step to say, we're not only going to have an exclusive arrangement on a device that we then do exclusives on content, and then upsetting the great principle of openness and freedom that we've had in the Internet?

So that's why we want to send a very strong signal that we do not want government intervention, we do not want government regulation, but we want the private sector to continue to take a leadership role in keeping an open policy and an open business model. And that's the purpose, my purpose, of joining with Chairman Markey on this legislation.

And I thank you, Mr. Chairman.


REP. PICKERING: Will the gentleman yield?


REP. PICKERING: Is that in policy or is that in statute?

REP. SHIMKUS: That is a policy statement by the FCC.

REP. PICKERING: Does policy have --

REP. SHIMKUS: Dated --

REP. PICKERING: Will the gentleman yield?

REP. SHIMKUS: Dated September 23rd, 2005.

REP. PICKERING: Does the policy have the same clarity as --

REP. SHIMKUS: Are you going to give some of your time? Are you filibustering me, Mr. Pickering? (Laughs.)

Reclaiming my time, Mr. McCormick why is it so important that broadband providers be able to manage their networks and prioritize Internet traffic in the absence of government regulation?


REP. PICKERING: I just wanted to -- a quick follow-up question and then close, summarize real quickly.

Mr. McCormick, do you think that the FCC has the current authority on a case-by-case basis to enforce their network neutrality principles?

MR. MCCORMICK: I think that based upon the Supreme Court's decision in Brand X that the FCC has authority -- ancillary authority to take action against what it would consider to be activities that would not be in conformance with its principles.

REP. PICKERING: Mr. Yoo, you had summarized in your statement that a case-by-case approach could be the best way to proceed. If the FCC has the authority, whether that's in dispute or not, but if it's clarified and in the outcome of this effort was to strengthen and give certainty that the FCC does have that authority on a case-by-case basis, would that be a good outcome?

MR. YOO: I think that would be a good outcome. The only question I have about the current legislation is it doesn't -- it actually makes a commitment to a set of baseline principles which could actually interfere with case-by-case decision making to the extent to which we have one baseline for one technological reality or be shaped by one technology. We have a different technology or a new technology come along and then all of a sudden the baseline is no longer really well-designed for that context.

But the idea of a case-by-case method I support. It's the notion of baseline principles that give me pause and trouble.

REP. PICKERING: And Mr. McSlarrow, Mr. McCormick, let me just ask one question of whether this is a legitimate concern or not. Because I think in the marketplace today we are not seeing many problems, to be honest. But we do have concentration occurring in cable and telecom and wireless.

And the question is as you begin, for example, in wireless to have an exclusive Apple with iPhone, do you see a business model where you would want to do an exclusive with Yahoo or Microsoft or content providers or, if not an exclusive, a preferential agreement that may be with the big record producers but not the independent record producers or with some in Hollywood but not others in Hollywood? Do you all see that type of business model being considered and would it make sense?

MR. MCCORMICK: I am not aware of any instance where any of our companies are looking at a business model that would, for example, disadvantage access to the shoe website.

REP. PICKERING: But in the future do you want the -- do you want the option -- does codifying to principles, does it take away that option from you and does that concern you?

MR. MCCORMICK: I believe that if you have a competitive environment, as we do today, where the barriers to investment in offering broadband services are extraordinarily low that as people are investing in broadband, one of the ways they may capitalize their investment is through innovative partnerships. We're seeing that with university networks. We're seeing that with a variety of unlicensed wireless-based networks. And therefore I think that it would be a mistake to preemptively prohibit innovative partnerships that may lead to our goal of increased broadband deployment and competition.

REP. PICKERING: Thank you, Mr. McCormick.

I see that my time -- and I'm about to defer to the chairman. I want to thank you for working with me on this legislation. I do think it is the reasonable common ground, that it clarifies current policy and principles. I do not believe it will lead -- and I hope it actually prevents us from having a new regulatory scheme adopted. I hope it gives clarity and certainty that this will be the business model going forward.

And from a principle and philosophical point of view, it's the way to maximize freedom, whether it's economic, political or personal, that we have on the Internet. And if we can combine from the -- if we can have support from the Christian Coalition to the Planned Parenthood, from independent record producers to major labels, to the writers and the creative community, to the small business community, I think that it's a wise and well-reasoned and principled, from a freedom point of view, way to go.

And it is not as -- if you look at the counterpart on the Senate, Snowe-Dorgan, very regulatory, very prescriptive. This is very balanced and it is consistent with the committee's work under Republican majority and consistent with the Republican commission's principles adopted.

And I do think that it clarifies network management or strengthens it and it clarifies lawful to unlawful uses and that this is a good ground upon which to start in this committee of getting the consensus to promote American values and ideals in a good way.

And I hope that we're successful, Mr. Chairman, in our efforts to do so and I look forward to working with you on that.


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