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SEN. ROCKEFELLER: I think many more of our members will be arriving, but the cream of the crop is here. In welcoming you, I want to say that communications technology is sort of the vibrating, pulsing driver of our nation and it's been led to lapse a bit. For our nation, I think to meet any kind of challenges no matter what you look at, if our communications aren't perfect, our way of communicating with each other aren't perfect, between different strata, different parts of the country aren't perfect, we're in lots and lots of trouble if we're not already.
Because good communications policy will lay the foundation of these noble and hard to achieve goals, we need real expertise. Expertise, that means people who really know what they're talking about as the Federal Communications Commission. As I've said before, I believe that being an FCC commissioner is one of the most daunting, awesome, fearsome, time-consuming, sleep-depriving jobs in Washington, D.C., and I think it's also one of the most underappreciated and is one of the very most important.
The powers of the FCC are absolutely vast. People have no idea that the decisions that it makes impacts every single American one way or another whether they know it or not, whether they care or not. It does. So it has to be done right.
From the bills that we pay for phone and cable services to our ability to reach public safety in times of crisis, there's just a little part of it. From the content that gets broadcasts into millions of living rooms throughout America to the broadband remarks or networks that can bring equal opportunities to our largest cities and our smallest rural areas, FCC oversees it all.
The decisions this agency makes are vital to our nation's future. Because we entrust FCC commissioners with these vast powers --- oh, I didn't let you introduce him, but I will, before he speaks -- we expect a lot from our commissioners. We expect a lot. I apologize, Chuck. Yet over the last decades the agency has, at least to this Senator, been disappointing.
Too often, FCC commissioners are focused on making sure that the policies that they advocate serve the ideas and the needs of the companies that they regulate and their bottom lines. That's not the kind of committee this should be or it's nothing that the FCC should be. Time and time again, the FCC has short-changed consumers and the public interest. The influence of special interest of the agency is especially troubling even noteworthy in the distasteful way that they clamor for their preferred candidates for FCC office.
That is why I remain deeply interested in FCC reform and that is why I continue to weigh the merits of FCC's reauthorization. I want an FCC that is transparent, that inspires public confidence, that makes our digital infrastructure a model for the world. Tragically, this has not been the case for some time. But, if the past has been bleak, we have cause for optimism because I have met the Administration's nominee for the Chairman, that being you, I am thoroughly impressed.
Mr. Genachowski brings to the job both public and private sector experience. He has the enthusiasm for power of communication, but the tasks before him are complex. The days undoubtedly will be long. So, Mr. Genachowski, let me be very clear about what the challenge before you is in my view.
Fix the agency or we will fix it for you. Fix this agency, prove to us that the FCC is not battered beyond repair. Show us that the FCC can put consumers first and give them confidence that, when they interact with the agency, they will get a fair response. Show us that the American people can trust the data that the FCC produces and that it can guide us to good and honest policy. Show us that the American people can have affordable and robust broadband no matter who or what or where they might live. Show us that parents can have confidence to view the programming in their homes without their children being exposed to violent and, I would say, indecent content. Show us that the agency can think beyond its borders. I've worked with industry and government to create jobs, so does the FCC. We've got to expand entrepreneurship, grow educational resources, and improve healthcare.
And that's just for starters.
I wind up by saying that I remind you that the Congress and the American people look to you for these reforms. I thank you for joining us today. I was proud to meet your family whom you must introduce after Senator Schumer introduces you. And your willingness to serve. I'm awed by your willingness to serve because you're going to be a lot older when you're finished. And I look forward to your testimony. I think I should let the Ranking Member go first.
SEN. HUTCHINSON: Mr. Chairman, I do have an opening statement, but I'd be happy to let Senator Schumer introduce the nominee. I'd be happy to. Mr. Chairman, thank you. Thank you for holding this hearing. I have met with Mr. Genachowski and am, too, very impressed. I think he certainly has the capability to handle this job and it is a big one as the Chairman has said eloquently.
I want to talk about a couple of areas that I think are very important and where the FCC is going to have a major role.
Of course, broadband. We know that there was a major commitment to broadband health in the stimulus package and the FCC is currently putting together a broadband map. I believe it is so important that we assure that everyone has broadband access before we go into underserved areas. Unserved should come before underserved as a matter of a level playing field where some have already made an investment, but also, because our rural areas must be able to have broadband before we go into an area that has some but not enough.
Secondly, broadcasters have certainly been through a technology revolution and they have provided invaluable services to our nation. I just hope that we will not overburden broadcasters as they are trying to deal with the increased competition in their field with new regulatory burdens and reporting requirements that would just make it more difficult for them to thrive in this market.
I do think that the FCC has a major role to play in enforcing decency over the airwaves. I'm the mother of two young children and I am amazed at some of the things that are on networks that are supposed to be okay for children. I hope the FCC will look carefully at what is appropriate for children and young people as they are looking at the open airwaves that we all appreciate.
Net neutrality is going to be a huge issue for the FCC and we want to know what the nominees that we are going to hear from today will believe is the right way to go in any future network management proposals. Because I think that it is going to be very important that we, again, keep the ability of a company to have control of its own Internet workings and I hope that there would be less interference in that, except where necessary, of course.
And, last, Mr. Chairman, copyright protections are a critical aspect of promoting richness in programming and entertainment options. I hope that we will hear from the nominees about their views on what we should be doing in protecting copyright in the entertainment industry.
As the Chairman has said and I think I have filled in some of the details, you have a huge portfolio at the FCC. I think responsible, common sense regulation is going to be what I'm looking for for our FCC commissions and I am very pleased that you are here and, Mr. McDowell, after you. Mr. Chairman, thank you for holding this hearing.
SEN. ROCKEFELLER: Thank you very much, Senator Hutchinson. And, now, with the forbearance of the Committee, since we have a most senior democrat, I forget the state, but he's very important, he's very shy, and if I don't call on him, he may just leave the room. Senator Chuck Schumer.
SEN. SCHUMER: Thank you, Mr. Chairman. First, I want to thank you, Ranking Member, all the members, for giving me, really, the honor to introduce Julius Genachowski, one of my former staffers and good friends, before he's confirmed to be Chairman of the FCC.
I've had the pleasure of knowing Julius for more than twenty years. In fact, after his New York upbringing, he went to college, and then I hired him right out of college and he worked for me long and hard. I'd been blessed with a dedicated and hardworking staff, but Julius will always stand out thanks in large part to the work ethic that his family instilled in him. His parents, Israel and Adele, are in the audience today and I've had the pleasure of knowing them, they can speak volumes about the adoration they have for Julius and his brothers, Joey and Alan, who are also here, and I'd like to say hello to his wife, Rachel, and his three beautiful children, Jake, Aaron, and Lila.
I remember that Julius demonstrated a passion for consumer rights from the day he came to Congress. And one of his signature issues was working on what is now called the Schumer Box, which is what is on all credit card applications. It should've been called the Genachowski Box, but his name was too long, so they put mine in but he did most of the work and deserves most of the credit. It has helped dramatically reduce credit card interest rates once people knew what they were. They used to be buried in the fine print. And I know he's going to carry that dedication to consumer right to his role as FCC Chairman, should he be confirmed by this Committee and by the Senate.
I think it's fair to call Julius a real Renaissance man of public service. In addition to working for me, he served on the House Select Committee on the Iran Contra Affair. He's clerked for three Federal judges, including Justices Brennan and Souter. Of course, he's had extensive knowledge of the FCC where he worked as Special Counsel to General Counsel William Kennard who later became Chairman and then to Chairman Reed Hunt. The FCC has been a passion for Julius for a very long time and it's so nice to see him nominated for the position he knows so well and cares so much about.
His resume in the public sector demonstrates a widespread knowledge of agency experience and it gives him a well-rounded background on all the issues that are before the FCC. And he has a great deal that he could -- he's a modest fellow -- but he could boast about in his private sector work which demonstrates his understanding of where the government rubber hits the tech company road and how those two entities must work together to shape the future of telecommunications. He's held numerous positions at IAC Interactive Corp., that's a Fortune 500 media and technology company. He was a Special Advisor for General Atlantic, a global growth equity firm. And, most recently, he co-founded both Launch Box Digital and Rock Creek Ventures, which helped to advise, launch, and accelerate tech companies in their early stages.
So, Julius is creative, knowledgeable, and respected, probably as creative, knowledgeable, and respected a nominee that the FCC has ever seen. I admire his ability to blend pragmatism with bold thinking. He knows that telecommunications in an economy that is fundamentally based on interconnectivity is instrumental to job creating and entrepreneurship in the U.S. The President knows that Julius has the ability to harness telecommunication technology to shape our country's initiatives from healthcare to education to energy and that's why he chose Julius to serve as Chairman of the Technology, Media and Telecommunications Policy Working Group that created the Obama Technology and Innovation Plan.
I couldn't think of a more well-prepared nominee, someone who cares more about the agency, someone who has more qualities that will make him live up to the strong and high, appropriately high, challenges that you, Mr. Chairman, and Ranking Member Hutchinson have laid before him and I'm proud to introduce him to this Committee. Thank you very much for letting me testify.
SEN. ROCKEFELLER: Thank you very much, Senator Schumer. We value you greatly and your presence is most welcome. I would like to call now on Senator Klobuchar.
SEN. KLOBUCHAR: Mr. Chairman, I'm very pleased today to be here for Mr. Genachowski's nomination. I see his family is here which is very exciting and I met his young son out by the bathroom which was also very exciting. I'm very pleased after meeting with him and just his focus on what he wants to do with the agency. One of my pet peeves is, while the agency's Web site was, at one point, a really groundbreaking Web site, I think it's kind of fallen behind and a lot of people complain about access on the Web site and I was glad that he wanted to look at that.
I was telling him outside that the DTV transition is going -- at least in my state; I won't speak for anyone--better than we thought and that the FCC Commissioner McDowell and I talked about this on Friday and the Commerce Department have worked together on this and I think a lot of our fears were unfounded. Of course, there were problems and glitches that will have to be fixed. And then, of course, just as the other senators spoke about, the broadband issue is very important to me.
The other thing -- did you want to have me ask questions, Mr. Chairman, or are we just doing the opening statements? Is this what we're doing here? Are we doing opening?
SEN. ROCKEFELLER: Did you have a treatise in mind?
SEN. KLOBUCHAR: No, I didn't, but I was just so happy to get called on to give an opening statement, so I'll just finish up here.
SEN. ROCKEFELLER: That's fine.
SEN. KLOBUCHAR: Okay. The last thing that we spoke about briefly was something that Senator Warner and I have introduced legislation and we hope other members of the Committee will look at it called "Dig Once." It's this simple idea that if you're going to be building a federal highway, a federal road project and you want to put in conduit for broadband, and we know we want to do this all over the country, that you should be doing it at the same time.
Literally, something like 90 percent of the cost of broadband installation is that roadwork and you can literally save about 10 times the cost if you simply do it at the same time. It certainly was popular in my state yesterday when they were dealing with the road construction season in Minnesota with all of the orange cones and delays and closed highways. And I hope it's something that the FCC will be taking very seriously.
I wanted to wish you and your family the best. We're very excited for your new leadership at the FCC and we're excited to be working with you. Thank you.
SEN. ROCKEFELLER: Thank you. Senator Pryor?
SEN. PRYOR: Thank you, Mr. Chairman.
I'll just submit my opening statement for the record, but I want to welcome Mr. Genachowski to the Committee and, Mr. Chairman, it's good to have you back in the saddle, feeling 100 percent, and running this Committee like you should be. Thank you.
SEN. ROCKEFELLER: Thank you, sir. Senator Udall?
SEN. UDALL: Thank you, Mr. Chairman, and let me also echo what Senator Pryor said about having you back in the saddle. It's good to see you up there, see you vibrant and strong, and we very much appreciate your leadership on this Committee.
SEN. ROCKEFELLER: Do I have to ride horses?
SEN. UDALL: If you come to my state, you're going to ride a horse, okay? We'll saddle you up and you'll do just fine. No doubt about it. I'd like to echo also what the Ranking Member, Senator Hutchinson, said about broadband and I think Senator Klobuchar, Mr. Genachowski also mentioned it. It is so important, I think, that we get the country connected and, you know, if we look at the various points in our history where we weren't connected, with the railroads in the 1880s, we made a major investment and we encouraged railroads to serve the entire country. Then, with FDR in the '30s and '40s, we realized we weren't connected in terms of electricity and we brought electricity to rural areas with rural electric co-ops and I really hope that your tenure at the FCC shows the leadership to lead out on broadband and I applaud Senator Warner and Senator Klobuchar for their bill and thinking through how we put this in.
One of the areas I'd like you to think about and address in your opening statement is Indian country. We have some real problems out there in terms of, not only broadband, but telephones.
I remember when President Clinton was trying to demonstrate the digital divide, and I think I told this to you in our meeting, he started out in the Silicon Valley and he ended up in Shiprock, New Mexico, and the young lady who introduced him was a star student. She got up and did the introduction and she talked about how she won a computer because of her academic prowess. She took it home but she didn't have a phone line, she didn't have the ability to plug it in.
He used that trip from the Silicon Valley to Shiprock, New Mexico, out on the Navajo Reservation to show the huge digital divide.
I hope that your leadership there will move us down the road and this committee will also step up to the plate and it's wonderful to see you here. As Amy said, it was wonderful to see that tie on your son out there. Very impressive, the young man. I don't know where he is. You're going to introduce him, but he seems to have disappeared.
MR. GENACHOWSKI: He's still preparing.
SEN. UDALL: Okay. Thank you very much. Thanks, Mr. Chairman.
SEN. ROCKEFELLER: Thank you. Senator Johanns?
SEN. JOHANNS: Mr. Chairman, thank you very much. I can't be here long today because of some other commitments, but I did want to stop by and offer a few thoughts.
First of all, Mr. Genachowski, we haven't had an opportunity, really, to meet or to talk at any length, so I look forward to that opportunity. But I have to tell you, looking at your background, your resume, a few things come to mind. First is congratulations on kind of a remarkable career. You've prepared yourself well for what you're about to get yourself into which is a job with huge responsibility. Secondly, it just occurs to me, if you're not qualified for this, I don't know who would be qualified. So I really wish you the very, very best and look forward to working with you on a whole range of issues.
So many good things have been mentioned and I don't want to repeat them other than to indicate that yes, of course, for me, issues like broadband, broadband in rural areas, sparsely populated areas, would, of course, be important. Much of Nebraska is that way.
Secondly, whether we hear about it today or maybe sometime you could stop by the office, I would love to visit with you about the community advisory boards. I can't say they are a huge controversy out there, but there is some controversy, there is some concern that, you know, if a local broadcaster doesn't know the community, who could possibly know the community, but again, I don't want to sidetrack you during this hearing on the issue. I think is something that I can visit with you about and I'm anxious to do that.
I would also like to hear some thoughts at some point about economic growth in rural areas. I do think the Commission is uniquely situated to help us in more rural states and maybe it's broadband, maybe it's some other things that we can do together to try to boost economic activity. I already said, as a governor and as a former mayor, creating a job in Omaha is vastly different than creating a job in a community of two thousand people, that is, in a very rural part of the state, so I'd love to visit with you about that.
A second thing, just to wrap up, Mr. Chairman, I do also want to put in a very strong endorsement for someone whom I hope will be your future colleague and that's Commission McDowell who will follow you.
I just think the two of you have a great opportunity to work together. I found Commissioner McDowell to be bright, extremely fair, open-minded. I think you can create a bond and a working relationship that kind of extends across the hour, like, many of us do on this Committee and I really encourage that in urgent. Looking at your resume, knowing him better than I actually know you at this point, I just think there's a tremendous amount of brainpower that, put to work, can really help our great nation.
Final thing. Having sat in your seat at one point in my career, I just want to say congratulations. Your family -- and I'd say the same thing to Commissioner McDowell -- your family can be so proud of this day. This is really great and I wish you the very, very best. I'm very anxious to work with you in the weeks and months ahead.
Thank you, Mr. Chairman.
SEN. ROCKEFELLER: Thank you, Senator, very much. Senator Lautenberg?
SEN. LAUTENBERG: Thank, Mr. Chairman, and welcome Julius Genachowski. I enjoyed our chance to chat and, when we saw what recently happened in the Federal government, the Federal Communications Commission faced a major test when they moved the entire country from analog to digital. This move promises better programming, picture, sound quality for our residents and businesses and it will free up space for wireless broadband and public safety needs. Despite a slow start and a few delays, I am pleased with how successful the transition was and I look forward to the benefits that it will bring to those residents of New Jersey who had been, in previous years, out of good quality of transmission. Commissioner McDowell, as well as Acting Chairman Cox and Commissioner Adelstein, deserve credit for making the transition work. They worked very hard which reflected they showed the kind of leadership that we expect from the FCC.
If you are confirmed, and there's little doubt in my mind, and Robert McDowell is to be confirmed, we expect them to continue the commitment and the leadership that we have seen. Based on the proven track record, I believe that they will be up to the task. We heard from Chuck Schumer about your past experience and we know that he was very impressed with the kind of work that you did and takes total credit for whatever developments you've had.
If these nominees, you and Mr. McDowell, are confirmed, you're going to still have some very critical tasks that have to get attention. Our work on digital transition is not yet done and we need a plan for public safety broadband network using some airwaves that were freed up by the switch to digital. And we still need to make more of our communications system work for the residents of New Jersey. New Jersey is the only state without its own media market.
New Jersey is the only commercial, high-powered state, WWOR, that has failed to meet its obligation of our state, so we're going to talk to you about that and I'm not sure that we're going to have the time to ask questions until these other obligations, in my case. The FCC is drafting a national broadband plan getting broadband in underserved communities, not just beyond the underserved, rural ones, it is essential that we continue to help people continue to learn, get newer, better jobs and keep America competitive.
I look forward to our contact in the future knowing full well that we have an able skipper at the helm and I congratulate you.
SEN. ROCKEFELLER: Thank you, Senator.
SEN. DORGAN (D-ND): Mr. Chairman, thank you very much. I'm going to support both nominees. Mr. McDowell, of course, is nominated for -- Commissioner McDowell for a second term, and I'm pleased to support him.
And let me associate myself with the remarks of the senator from Nebraska. I think Mr. Genachowski, you have a perfect background to assume the chairmanship, and I'll be happy to vote for you. Let me say, however, that we -- it seems to me you will lead a rather unhealthy agency. And by that, I mean we've been through a period of substantial secrecy, I believe a very difficult work environment, questions about unbiased policy, research studies. Some of them, perhaps, don't match someone's impression of what should've come out of the studies so they weren't released.
A lot of very important serious questions were raised about the stewardship of the FCC. And so I'm pleased that we have an opportunity now for a new direction. Commissioner Copps has, I think, done a fine job in an acting capacity, but, you know, we need more transparency, more openness in policy development. You're going to have to develop a national broadband plan, which is a big, big issue and has so many important considerations. Policies on spectrum, what spectrum out there lies fallow. Why? How much of it? Why is it not used?'
What can we do about that? The failed program on forbearance petitions. Net neutrality, which, by the way, you can solve yourself. But we have an active and aggressive debate here in the Congress on net neutrality, but you could actually remove that burden by taking a very significant step in solving that issue and restoring net neutrality provisions. And then the issue of public interest obligations and substantial concentration of broadcast properties around the country, and the fact that many of us think that concentration's been very unhealthy.
So that's a very significant sizeable menu of great importance to the entire country. And again, I'm please when we have nominees come before us who are extraordinarily well qualified. I think that's the case with you, and I'm pleased to support your nomination and Commissioner McDowell's as well.
SEN. ROCKEFELLER: Thank you, Senator Dorgan.
SEN. WARNER (D-VA): Thank you, Mr. Chairman. It's great to have you back, as others have mentioned.
Let me also add one more kudo to Julius' background. I actually had the opportunity to get to know him many, many years ago when we used to play basketball at the YMCA here in town together, and then he stopped playing with me and he started playing with this other guy who now lives down the street, right, at 1600 Pennsylvania Avenue. So it was great for the last few years for Julius and I to reconnect. He's got a pretty mean jump shot, and someone that I know has a deep friendship with the president.
I want to echo a couple of comments that Senator Dorgan made. As somebody who at least used to know a little something about telecom, I do think we have a chance, and I also will be supporting Commissioner McDowell. I've actually got to step away. I hope to come back and be able to introduce my fellow Virginian, somebody I'm proud to support.
But I do think there is a chance to kind of reestablish the statue and prominence of the FCC. It's a terribly important agency that has a critically important scope of work, and I look forward to working with you.
I want to just echo a couple of very quick comments, one on broadband. Making sure we get it right is terribly important. With Senator Klobuchar, her bill on trying to make sure we think smartly about how we deploy a fiber. But it's also important that we think clearly about making sure that we've got an accurate mapping of broadband capabilities around the country, that we really think creatively about last mile concerns.
Broadband, as you know, does no good if you can bring it to a town hall, but you don't have any ability to get it out and find a balance in the community. And I think we really need to be creative about how we put incentives in place and help smaller communities, in particular, aggregate the man so they can have a sustainable broadband network, even if the public sector makes the initial investment. How do we keep that system operating over the long haul'
Senator Dorgan also mentioned some of the issues around spectrum. We're quite successful on the D Block options on the 700- meg space, but trying to make sure that we have that next generation public safety spectrum that's fully interoperable. It is, candidly, I think still an embarrassment in this country that this many years after 9/11 we don't have the fully interoperable, full-functioning public safety spectrum across the whole country. I mean, it's going to be right on your menu.
And then making sure, again, as we do this analysis of what spectrum exists out there and how we make sure we get it out to the public, and perhaps at the same time generate some revenue.
So Julius, I look forward to working with you, and it's great to have you back in the public sector. And again, I'm going to step away for a minute, but I do hope to get back to introduce my fellow Virginian, Robert McDowell, who I know will continue to be a great commissioner and a great partner, I think, with Julius and getting the FCC back on track.
Thank you, Mr. Chairman.
SEN. ROCKEFELLER: Thank you, Senator.
SEN. BEGICH (D-AK): Thank you very much, Mr. Chairman.
I will be very brief, Julius. Thank you for the time that you came and met with me, and your commitment to consider coming to Alaska again and see what we're doing up there. I just want to echo everything that people have said here. Your credentials are incredible, and a great addition to the FCC. So there's no question where' I'm going to be on this. I have some questions I'll probably ask you to put on the record. But again, thank you for being here, and thank you to your family that I know needs to support you in this endeavor as you will be drawn across the country at times to present, discuss and have issues brought to your attention that will require you to leave Washington, D.C. at times.
So again, thank you for your willingness to do this, and again, thank you for the time that we've spent together in going over very Alaskan-type issues. And I'll probably ask a few on the record, but again, congratulations, and I'll leave you at that. Thank you.
SEN. ROCKEFELLER: Thank you, Senator Begich.
SEN. KERRY (D-MA): Thank you very much, Mr. Chairman, and it is good to have you back. I was going to slap you on the thigh and welcome you back, but I didn't know which leg it was, so I didn't.
Mr. McDowell, I want to congratulate you on your second nomination to serve on the Commission, and I look forward to supporting you also. And I particularly want to express my support. We've had a chance to chat, and I think you know I support you, but I want to express it publically. I think you are the right person to lead this commission in a time of great economic uncertainty. And the experience that you bring from your previous tenure at the Commission, as well as your own private sector experience is just the right recipe for the Commission during these difficult times.
The FCC regulates, as you know, an industry that makes up roughly one-fifth of the U.S. economy, and I regret to say that the tenure and stewardship, if you can call it that, of your predecessor really, I thought, was a bleak period, a difficult period for all of us at the FCC.
I think it's a trail of missed opportunities, acts of commission and omission that wound up just not taking advantage of the revolution in the communications world, and the need to come up with some fundamental policies, the least of which is just broadband penetration of our nation, which slipped from something like 4th to 21st. That is not a positive statement about competitiveness or America's preparedness to step up.
And you're going to have an enormous influence on industries that we rely upon to serve as dynamic drivers for the future of our economy, and we're going to look to you for that leadership. And I'm confident, from what you've said already and from your past, that you understand that challenge.
Obviously, this hearing comes at a time of great transformation in the way that we're communicating with each other in this country. Just four days ago, broadcast television stations completed the digital transition, shutting off analog signals that have delivered air broadcast television to households for more than 60 years.
That transition did a lot more than just bring a clear TV picture into those rooms where people got their box and got ready for it. It cleared the way for a vast amount of beachfront spectrum to be put to better use. And Senator Dorgan and others have commented on that use and what we need to do.
But thanks to the digital switch, next generation wireless broadband networks are being built across the country, and consumers are going to reap the benefits of that.
So when confirmed, you're going to begin to craft the FCC's national broadband plan, and that, I think, is perhaps the most important task you're going to face as chairman given the way we've gone backwards, and the level of the challenge. As part of that process, I hope you're going to consider taking a look at the way we manage and allocate spectrum, both publically and privately in order to see that we use it more efficiently.
I've introduced legislation to Senator Snowe and others on this committee to require the Commission to work with NTIA on a comprehensive spectrum inventory. And I think that such an effort would play an integral role in any plan for achieving universal broadband service. There's obviously no shortage of challenges waiting for you as you enter the chairman's office.
The quarterly contribution rate to the Universal Service Fund is as high as it's ever been, yet the fund does not cover broadband service. And nearly eight years after 9/11, shockingly we still have not made good on the 9/11 Commission's recommendation to build an interoperable public safety communications network.
So from addressing these challenges and others to maintaining the openness of the internet, which many of us, I think you know, care about passionately, as well as maintaining a laboratory for innovation, I think you're going to see some of the biggest challenges that we've faced in this field, but I'm confident that this commission is up to the task of implementing the president's technology agenda. And so we look forward to a swift confirmation, and we particularly look forward to working closely with you, and we hope that you will commit here in the hearings to a strong, candid and, you know, really cooperative relationship with the Committee. Thank you.
SEN. ROCKEFELLER: Thank you, Senator Kerry.
I'm going to turn now to you, Julius Genachowski. And for those who may be trying to figure out how to pronounce his name, we've had researchers at work for three days on that, and it's pronounced "chow," not "kowski." Genachowski.
MR. GENACHOWSKI: Well -- (laughter.)
SEN. ROCKEFELLER: You don't agree?
MR. GENACHOWSKI: We've changed our name. (Laughter.)
SEN. ROCKEFELLER: Genachowski.
MR. GENACHOWSKI: It's Genachowski. Thank you, Chairman (laughter.)
SEN. ROCKEFELLER: You know, all these people --
SEN. KERRY: That's your first victory over the chairman.
SEN. ROCKEFELLER: All of these people are going to be laid off in a few days. (Laughter.) I would hope that you would introduce your family.
MR. GENACHOWSKI: Thank you, Chairman Rockefeller first. Thank you to you for your generous --
SEN. ROCKEFELLER: Rockefeller.
MR. GENACHOWSKI: (Laughter.) I should proceed to introducing my family before we lose my kids. I couldn't be happier that my wife, Rachel Goslins, is here, and all three of my children, starting youngest to oldest, Aaron Genachowski, Lilah, and my oldest son, Jake. I'm so pleased that my parents, Azriel and Adele Genachowski were able to come from New York, and my brothers, Joey and Alan. And I believe that a couple of cousins are here too. Rabbi Menachem Genack and Alexis Brooks. So thank you all for coming.
Chairman Rockefeller and Ranking Member Hutchison, distinguished members of the committee, thank you for the opportunity to appear before you today. I'm grateful for this chance. I look forward to answering your questions and seeking your support for my nomination.
Mr. Chairman, over the years I've had a chance to see your commitment to American consumers, your dedication to protecting the safety of our nation's communities. I look forward to working with you on these and other vital issues.
Senator Hutchison, I have great respect for the leadership you bring to the committee, and I look forward to working with you on the vital issues in the communications area.
I'd like to thank Senator Schumer for taking the time to introducing me, and for his decision 24 years ago to give a young college graduate his first job.
Thank you for the chance to having introduced my family. Mr. Chairman, it is a tremendous honor to have been nominated by President Obama to serve as chairman of the Federal Communications Commission. And while this hearing is an honor for me, it is something even more for my family. It's a celebration of the hopes and dreams that brought my parents to the United States about 50 years ago.
My parents are immigrants. My father fled the Nazi terror, and ultimately came to the United States. My mother joined him, and together they raised a loving family and became role models for their children. My father is a hardworking businessman. My mother is a hardworking homemaker. Both completely committed to family and community.
From my parents, I learned the meaning of the American dream. I learned something else, too. My father came to the U.S. to study engineering. I'll never forget the day. I was in high school, about as old as my oldest son is now. My dad and I were on a college trip to Boston. I remember him leading me into the dusty stacks of MIT library and showing me engineering plans he had drafted as a graduate student. They were for a device designed to someday help blind people read words on paper by translating text into physical signals.
The formulas and drawings didn't make much since to me, and dad, I confess, they still don't. But the core lesson has remained with me. Communications technology has the power to transform lives for the better.
We've all seen and lived, and many of the members spoke about it in their opening statements, the implications of the communications revolution. In the 20th Century, we saw a world reshaped by communications technologies and networks.
The telephone, radio and television, satellites, computers and the birth of the internet. Now, in the 21st Century, communications has the potential to unleash new waves of innovation, increasing opportunity and prosperity, driving American competitiveness and leadership, connecting our country, strengthening our democracy and transforming lives for the better.
The Federal Communications Commission has an important role to play in pursuing these goals, and in doing so on behalf of all Americans. If confirmed, I look forward to learning from and working closely with the committee on these essential topics.
In this time of profound economic challenge, our communications sector can make a significant contribution to our nation's near-term economic recovery, and long-term economic success.
Congress has entrusted the FCC with the important task of developing a national broadband plan. A world-leading broadband infrastructure in American can be an ongoing engine for innovation and job creation throughout our country, from our rural towns to our inner cities, while helping address vital national challenges, such as public safety and education, healthcare and energy. Ultimately helping give all of our country's children the future we dream for them.
And as communications devices and networks become ever more essential to the daily lives of every American, and as the media landscape changes dramatically, the need has never been greater for an FCC that sees the world from the prospective of consumers and family.
Mr. Chairman, I'm honored by the possibility of returning to government and serving our country. My two decades of professional experience have been divided between public service and the private sector. I began as a congressional staffer in the 1980's. I remember walking these hallways, knocking on doors, looking for a job.
After law school, I was fortunate to serve as a law clerk in the courts, and I served on the staff of the FCC in the 1990's, at a time when one of the agencies tasks was implementing the historic E- rate provision, championed by you, Mr. Chairman, and Senator Snowe, connecting classrooms and libraries to the internet.
I wanted to work in government because this great country had given so much to my family, and I wanted to give back. And because I believe the government can be a force for good, and help improve the lives of all Americans. These are still my ideas today.
For the last decade, I've worked in the private sector with large media and technology companies, as well as small businesses and entrepreneurial startups. I saw firsthand how communications technologies and networks can serve as foundations for innovation, and for expanding our economy. The experience reinforced my deep respect for private enterprise, the indispensable engine of economic growth.
My time in the private sector also taught me what it means to operate in a dynamic and ever-changing marketplace. I learned the power of pragmatism and the danger of dogma. And if confirmed, I would strive to bring that spirit of commons sense to my role in government.
My career inside and outside government has convinced me that the FCC can be a model for excellence in government. Fighting for consumers and families, fostering investment and innovation through open, fair and date-driven processes, a 21St Century agency for the information age.
The FCC should consult closely with Congress and work effectively and efficiently for the American people. There are so many devoted and talented public servants at the FCC, many of whom I was fortunate to work with earlier in my career at the agency. I hope the committee will give me the opportunity to work with them again.
Before closing, I would like to solute the work of acting chairman, Michael Copps, and Commissioner Jonathan Adelstein and Robert McDowell. I'd like to congratulate Commissioner McDowell on his re-nomination. I'd like to solute the Commission for the hard work they've done in connection with the digital television transition. Our country has benefited greatly from their service.
Thank you again, Mr. Chairman, for the opportunity to appear before you. I look forward to answering your questions.
SEN. ROCKEFELLER: Thank you very much, Mr. Genachowski. (Laughter.)
I was governor, if you remember, back in 1981, and I appointed the first person to head the Consumer Advocate Division of the West Virginia Public Service Commission. I did not know what that was going to turn out to be. The person is still at force, and he has literally changed the face of West Virginia, a single person on a sometimes weak, sometimes strong commission.
In comparison, critics have argued that the FCC has become captured by industry. Not everybody says that, but the critics do say that. And more of a referee of corporate disputes than of what can help the consumer, caretaker to the public.
By statute, however, the purpose of the Commission is to make available as much as possible to all the people of the United States of America efficient communication services with adequate facilities at reasonable prices. So question, I believe that the FCC should work to make sure consumers are offered the best quality service at reasonable prices, and I assume you agree.
MR. GENACHOWSKI: Yes.
SEN. ROCKEFELLER: Do you believe that he FCC has adequately fulfilled its mission in making sure the consumers have access to the latest technology at reasonable rates' If not, is the agency structurally capable of so doing?
MR. GENACHOWSKI: Senator, let me speak briefly about consumers and about broadband. In this time of great change in our communications area, it's never been more important for the FCC to wake up every day and understand that at the core of its mission is working on behalf of American consumers.
The communications sector, as Senator Kerry mentioned, it's a fifth of our economy. It's a contributor to the greater percentage to our economic growth. There are enormous opportunities for all Americans, but there's also confusion among consumers, which the FCC can help tackle. The FCC should be looking at maximizing choice for consumers for dealing with complaints, for waking up every day and asking -- and looking at the world from the prospective of American consumers.
With respect to your other point, Chairman Rockefeller, the growing consensus that we need a national broadband strategy in this country -- in fact, the requirement that the FCC develop and issue a national broadband plan is a recognition that we, as a country, are not where we need to be with respect to our communications infrastructure. We should have, I believe, a communications infrastructure that is world leading, a 21st Century infrastructure that generates economic growth, opportunity, prosperity.
And critically, we should have in this country a 21st Century communications infrastructure that extends to all Americans, and that does so to your point meaningfully, in a way that they can afford to sign up and use and take advantage of the opportunities that communications technology offers.
SEN. ROCKEFELLER: Thank you.
The FCC has been criticized for a lack of transparency by the GAO. I won't go into the language, but the language is quite startling. Consumer groups join them. Even industry joins them -- some industry. It is nearly impossible to find information on the FCC's website. That point has been brought up this morning. And much of the data filed with the Commission is not even accessible online.
Worse, in the past, the FCC has been accused of disclosing information too soon, and you know that to be the truth, while leaving the general public in the dark. Consumers should not have to hire $500-per-hour lawyers to find out what the FCC is doing and participate in the decision-making process.
Question, do you agree that the FCC should be more open to the public?
MR. GENACHOWSKI: Yes.
SEN. ROCKEFELLER: And how?
MR. GENACHOWSKI: Well, Senator, the first thing is it requires a commitment throughout the agency to principles of openness, transparency, fairness, fact-based decision-making. And if confirmed, I would want to lead the FCC in that direction.
I don't see how it could be otherwise. The issues are just too complex. We need an FCC that's smart about technology, smart about the law, smart about economics, smart about businesses, and smart about what consumers go through every day in navigating a complex communications world. So I think this is quite important.
I had the same experience that you did in trying to navigate the FCC website. The FCC should be a model for transparency, openness and fairness. There's a lot of work to do, but I'd like to see the FCC be a model with respect to using communications technologies to communicate openly with the American people, and of all the constituencies that are interested in what the Commission does.
SEN. ROCKEFELLER: I'm over my time, but I'll just end by saying this. You have plans to make it more transparent. Some of the things that the GAO has said are quite staggering. And they're talking about "The FCC Should Take to Ensure Equal Access to Rulemaking Information. That's the title of a booklet, which criticized the agency for providing more information to certain stakeholders to the detriment of others.
According to the GAO, in some instance the FCC staff would go so far as to call individuals to inform them of the upcoming items scheduled for a vote and contrast stakeholders representing consumers and public interest groups do not hear from them. I hope you're not satisfied with that.
MR. GENACHOWSKI: No.
SEN. ROCKEFELLER: I call on the ranking member.
SEN. HUTCHISON (R-TX): Thank you, Mr. Chairman.
On the broadband issue, how do you view the issue of no service versus underserved areas as priorities?
MR. GENACHOWSKI: Senator, the first thing I'd say is that I -- in working on the national broadband plan that Congress entrusted the FCC, I would start where Congress started. Congress, in the statute, asked the FCC to look at deployment, affordability, national purposes, and the FCC, I expect would do that.
With respect to un-served and underserved areas, I think the first principle the agency should follow with respect to its own work, and also to the extent that it consults with the NTIA and other agencies on grants, is the taxpayers should get the biggest bang for its buck for taxpayer dollars. And the first priority, I think, is to do what can be done to extend broadband to un-served areas.
Rural areas around the country, there's a divide between parts of the country that have broadband, in some cases have fast broadband, people who don't have broadband at all. And I think Congress was clear that working on providing broadband to un-served areas is critical.
There are other concerns and goals as well. I think the term "underserved" can mean a series of different things. In some cases, it can mean un-served in a particular area. So there may be a market that is served, but a pocket of it that doesn't receive any service, and there may be ways to help operators extend their service to parts of the market that don't receive it.
There may be markets where -- that are underserved because the speed is too slow, and there may be ways to help providers in the market to increase their speed. There may be markets that are underserved because the adoption is very low, and there may be ways to -- Senator Warner's point, to think about strategies to increase adoption in that area to make it a sustainable economic possibility of ongoing broadband service in that area.
SEN. HUTCHISON: Well, that's correct. I just hope that the priority is to help people who have nothing with our stimulus money, is really what we're discussing here. But people who have nothing, it seems to me, should take priority over people who have slower service. I would hope that that would be a common sense rule.
The indecency policies going forward, how do you see that involving, and is that a priority in timetable that indecency policies would -- and enforcement policies would be looked at?
MR. GENACHOWSKI: Senator, I heard you mention your children, and, and I have children, as well. I'm a parent who shares the concerns of many parents about what their kids see on TV. I worked on children's educational programming when I was at the FCC. And I chose after I left the FCC to get involved with a nonprofit called Common Sense Media that focuses on helping improve media lives for family and children.
I share the concerns of parents on indecency, number one. Number two, the FCC's job in this area it to enforce the law. And Congress has been clear on the indecency law. The Supreme Court recently rejected a challenge to the indecency law. The FCC's job is to enforce the law, and it will enforce the law around indecency.
SEN. HUTCHISON: Let me ask you, on media ownership. When I first came to the Senate, I was a person who believed that a newspaper should not have too much television presence in a market, because I think more media outlets are a good thing. Since I came to the Senate, the technology world has exploded, and I no longer think that we need to police that.
And now we have the most incredible situation, which I don't think any of us ever anticipated in our lifetimes that major newspapers would be on the brink of literally going out of business. And not having that avenue for news coverage for the citizens of big communities is now a viable possibility.
So my question is: The FCC does still have rules against dual ownership. And I think it is important that you look at that and determine if really we ought to be doing everything we can to keep newspapers alive in order to have the most outlets for people who like to get their news in different ways?
MR. GENACHOWSKI: Senator, very, very early in my career, I worked on a newspaper in college and then I reestablished the oldest newspaper at the college that I went to. My heart is filled with respect for the role that newspapers play in our society and our democracy.
And a little bit later in my career, I spent time in the broadcasting industry where I learned, both that it's a, it's a special business. It played a special role in our country, and also that it's a hard business, especially in these times.
It's a unique business. It's still our -- broadcasting our, our only universal medium and source for news and information. And so excessive consolidation is something I think that still needs to be paid attention to. But at the same time, it, it wouldn't be right for the FCC to ignore the changes in the marketplace that are apparent, and the struggles in the various parts of the traditional media business.
Congress has required the FCC on a, I believe it's a quadrangular basis, to look at its ownership rules. And I think when Congress asked the FCC to look at its ownership rules, it expects it to run an open process, looking at facts, looking at data, understanding the marketplace, understanding the principles that, that underlie concerns on all sides in this to understand the importance of having broadcast outlets, and of course the importance of having newspapers understanding concerns about excessive consolidation.
And run an open, fair process to make smart policy judgments about the right thing to do.
SEN. HUTCHISON: Do you know when that quadrangular review is up?
MR. GENACHOWSKI: I believe the next review is scheduled for 2010. And I apologize if that's the right date.
SEN. HUTCHISON: Well, I didn't know, either. But I would hope you would set it as a higher priority than just waiting for a review period to come up. I think it -- we've got to do something to help newspapers, in my opinion.
MR. GENACHOWSKI: Yes. I -- and, Senator, I agree with that. And the other thing that I would point out is the, the FCC has had rules in place for sometime, with respect to failing stations, distress stations. And certainly any stations in that situation that comes to the Commission should be taken seriously and looked at seriously. Because it would be wrong for the agency to ignore the real problems at exist in the marketplace.
SEN. ROCKEFELLER, IV: Thank you, Senator Hutchison.
And Senator Pryor.
SEN. PRYOR: Thank you, Mr. Chairman.
If I may, Mr. Genachowski, I'd like just to pick up where Senator Hutchison left off. She was talking about newspaper ownership of broadcast media. I'd like to ask you about the minority ownership of broadcast media. And that is -- you know, you can look back, we've made some progress in that area. But I'd like to ask you is, do you think it's a good public policy that we should encourage more minority ownership of broadcast media?
MR. GENACHOWSKI: My understanding, Senator, is that that's the policy of the communication deck to ensure the widest possible dissemination of licenses and to pursue diversity and ownership. It's been a value that's been widely shared for a long time. And the data that I've seen has -- did not leave one with a, with a good taste about where we stand now as a country on that.
SEN. PRYOR: And do you have any ideas on what we can do, meaning the FCC or the Congress or whoever can do, to try to make ownership of broadcast outlets more possible for minority interests?
MR. GENACHOWSKI: I think the first thing possibly is to make sure that we understand what's actually going on out there. I've been told that there are -- that the data, with respect to ownership now, is, is not satisfactory, and there's work that can be done to understand that.
Second, I think this is an area that lends itself to the FCC running a process that's opened and that's creative, and that looks for ways that are constitutionally permissible, and that would actually work, but that lead to a wide dissemination of licenses and diversity in ownership.
SEN. PRYOR: Yeah, I just think that that public policy goal of a more diverse ownership spectrum is a good national goal that we should continue to try to do. And I'd be glad to work with you on how to, how to get there.
The second question is about broadband going out to rural areas. This morning this committee had a hearing on Inez Tenenbaum over the Consumer Product Safety Commission in her confirmation process. And she had some really good ideas about how the CPSC can better communicate dangers and recalls and safety and all this stuff to the general public.
But one thing that struck me as most of her ideas -- not all, most of them dealt with people having broadband capability, so they could receive this type of information from the CPSC. I would like to ask you about the BTOP or the Broadband Technology Opportunity Program in the stimulus package. Do you know much about that, and do you have a sense of how that's going to be administered'
MR. GENACHOWSKI: My understanding is that it's the Commerce Department and the Agriculture Department that have the grant-making authority. The FCC, as I understand it, has responsibilities to consult with those agencies as they put together the plans for distributing the grant.
SEN. PRYOR: And I know you're not there yet, but is it your understanding that the FCC is involved in that process?
MR. GENACHOWSKI: My understanding is that there's been consultation, yes.
SEN. PRYOR: And is it -- are you happy with what you hear on that or do you think the FCC should be more involved, and do you think that program is going to actually get to un-served areas, as Senator Hutchison was referring to?
MR. GENACHOWSKI: Senator, I, I don't have any access to nonpublic information. From what I've heard publicly, I believe that active, healthy consultation processes are going forward. I think these kinds of activities are ways to demonstrate how government can work together, collaboratively, to pursue a common end.
The FCC is the expert agency around communications and our communication's infrastructure. It's more than appropriate that the FCC play a consultative role. And it's certainly something that I would want to jump into, if confirmed, and work with you and understand ideas that you might have on the grant program.
SEN. PRYOR: And lastly, I would like to ask you about something that's important to you as a parent and me as a parent and others in this room, as parents and grandparents. We passed the Child Safe Viewing Act. I don't know if you know the history of that. Are you familiar with that?
MR. GENACHOWSKI: I have some familiarity, but please --
SEN. PRYOR: And, you know, basically when the V-Chip Bill passed, where that went -- and I think '96, if I'm not mistaken. It is a requirement the FCC would continue to look at technology, and see if this idea could be improved upon. And this Act that we passed recently, in the last year or two, you know, basically mandated that the, that the FCC do some -- you know, open a case on it, basically.
And I want to thank Acting Chair Cox because he's done that. I understand you're in a comment period right now, maybe even the second round of a comment period.
The question -- my question for you is: Given your background and all the things that you've done, do you think it's time that we revisit V-Chip, and not just the technology, but the V-Chip's system that's in place?
MR. GENACHOWSKI: Senator, first of all, I admire your leadership in this area. It's very important, and it's something that, that I've been concerned about for some time now. You mentioned grandparents, and they don't -- imagining my grandparents and my kids watching TV together, sometimes is a -- it's a challenging thing to think about.
I believe in the power of technology to help drive solutions here. I think this is a set of issues that aren't -- shouldn't be audiological. This is about making sure that parents are empowered to make decisions about what their children see. And I have great hope for what technology can do to help parents here.
Exactly what the ideas are, I think should come out of a healthy process at the FCC. I know that process has begun. I hope it's generating great creative ideas. I'd like to see an innovation in this area, and think about what kinds of incentives can we provide, so that we get as much innovation here, with respect to technologies, to help parents as we do in other areas.
SEN. PRYOR: Mr. Chairman, thank you.
SEN. ROCKEFELLER, IV: Thank you very much.
SEN. BEGICH: Thank you very much, Mr. Chairman.
And as Senator Pryor just talked about, I, also, will be very interested in how you proceed, and for the same reasons as someone who has a young child. Someone asked me what shows have I watched recently, and he's a little under seven. And they sort of describe a sit-com, and I said -- I, I have no clue what they're -- they were talking about. If it wasn't on -- I won't publicize one channel, but I'll say PBS was the other channel. If it's not on those two, I have no clue what's on the regular shows, unless it's a newscast. So I'm very interested in as you precede as the Chair of the FCC.
Let me, if I can -- and you and I talked briefly about this, in the Universal Service Funds and how important that is, at least for our state, a very rural state. And I'd like to describe here in this committee, extreme rural. As other people talk about rural states, the distance and the travel and the complexity of transportation of these locations, but also just the climate conditions really creates some unique situations.
Under the -- and I know there's talk about reform. And as that moves forward, they'll be issues of concern for us as Alaska has identified, if I'm not mistaken, it's a 100 percent travel, which gives it some special considerations. And I'm curious on how -- and what -- how you feel about that policy, and how lands travel -- issues of travel land is recognized and how Alaska fits into that' And you may give a general. You don't have to be specific, but specifically about that and the reform, itself, of the USF.
MR. GENACHOWSKI: Sure. Senator, the principle of the universal service is a core principle of Communications Policy, as you know, that, that goes back to the beginnings of the Communications Act, that had been reinforced many times by Congress. And that is a priority of mine. I would like to see us have as much success in universal service and communications over the next 75 years that we've had over the last 75 years, extending communication's infrastructure and the benefits of communications to all Americans.
And I, I defer to your knowledge of Alaska, of course, but I think historically there have been -- there's been success in universal service in Alaska. And I'd like to see that continue in the future, with respect to, you know, the vast -- all of the vast country that we have.
SEN. BEGICH: Fantastic. Let me -- and I appreciate that, because you're right, it's been very successful, very useful. And also in Alaska, because our lands are different with the Alaskan native people. Their travel lands incorporate travel lands. It's different than reservation lands, so sometimes we have to continue to point that out, because our land claims settlement was much different than the traditional reservation settlement.
So as you have an opportunity -- and I know I said it in my statement. I didn't give you a chance. You kind of nodded yes. I know you've said yes in my meeting, but I am looking forward to you to come to Alaska. And I just want to echo that, because this will give you a chance to see the value of that program.
MR. GENACHOWSKI: Good. I'd like that.
SEN. BEGICH: Let me also point out, in Alaska, the issue of how we provide broadband. We have some concerns by satellite providers. And currently their concerns -- or they're concerned that they'll be excluded from the national broadband plan in Alaska, because the cost and the utilization satellite is part of the equation. How do you see that' And will you, in the broadband plan, keep that all in consideration, that in Alaska satellites are utilized in a lot of ways to get that more costly connection that may not be able to be done by land.
MR. GENACHOWSKI: Senator, that's not an issue that I'm, that I'm very familiar with. I'm glad you've raised it. And I'd like to make sure that I have a chance to work with you on it, and make sure that it gets the attention that it deserves in the FCC's workings on the national broadband plan.
SEN. BEGICH: Excellent. Because that -- I can tell you they're very concerned, just because the -- again, the vast distances, the uniqueness of the lack of access to infrastructure, satellites become part of the equation of how we deliver broadband.
The good news is in Alaska, at 70-plus percent, we're the highest connected state in the country, which is kind of unusual in its own way. And it's because of this kind of relationship we have with satellite, as well as on the ground.
Let me, if I can -- and I know you're a big, big supporter of E- Rate. And, again, for us it's more of a statement, just for the record, as our discussion occurred privately. And that is the importance of E-Rate and how we deliver. When we have the No Child Left Behind Act that says you must have a certain type of teacher with a certain credentials, teaching kids at certain levels. In some schools we may only have 10, 15 people, and to have all that specialty is impossible.
So E-Rate and our education capacity of telecommunications is powerful. We can go from one hub and teach in 30 different villages at the same time. I just want to reemphasize the importance of that, but also hear your support again on the record of how important E-Rate is, as well as the impact it may have, especially in rural communities.
MR. GENACHOWSKI: Yes. I, I was privileged to see the early days of E-Rate. Chairman Rockefeller and Senator Snowe and others on this committee worked very hard for it. It's a great accomplished. And it's -- thinking about broadband going forward and the opportunities that it creates for all Americans, education is a great example. A way to give children everywhere access to the best information, the best teachers. To allow children in rural areas to have the same opportunities as children who live close to universities.
I'm very excited about the opportunities for education and broadband, and for the next generation of E-Rate.
SEN. BEGICH: Very good. My time has expired, but let me, again, thank you. I think you're going to be an incredible Chair.
And to Mr. McDowell, I apologize. I won't be here, also. But, again, Mr. McDowell, your reappointment is going to be a plus. I know you've been a big proponent, in a lot of ways of Alaska issues, because you've seen it, you've been there. So we'll work on the Chairman together, and give him that great experience of Alaska -- not the fish, the telecommunications. (Laughter.)
But, again, thank you both, and I look forward to working with you on Alaska, specific. Thank you.
MR. GENACHOWSKI: Thank you.
SEN. ROCKEFELLER, IV: Thank you, Senator Begich.
Before I call on Senator Cantwell and Senator Klobuchar, I have to make a committee announcement. I am not please by the way that -- and this was my fault, so I take full responsibility for it, that people made their statements, then left. Some happily came back, and for that, I applaud them.
But it is wrong -- I mean, this, this is a eminently important hearing. Eminently important hearing for nomination and a vote to follow. We cannot have it that people come in and make their opening statements, get into their opening statements the questions that they're going to ask anyway, and then having done so, leave. This is an embarrassment to you. It's an embarrassment to me. It's an embarrassment to the United States Senate, and to this Committee.
So from now on, it may be very rare occasions, that we will not have opening statements, except from the Chairman and the Ranking Member, and then we will go directly to the witness. And that will be the order.
I now call on Senator Cantwell.
SEN. CANTWELL: Mr. Chairman, will that be the Genachowski Rule' (Laughter.)
I thank the Chairman. And I agree, I'm here to ask questions in person, and I think it is an important hearing. So thank you for your statement.
Mr. Genachowski, the diversity of media -- I don't know if any of my colleagues have asked about that so far. But I've supported technical changes required to expand the number of low-power FM stations. And these are important because they develop local content, and they are important to the vary community interests. I certainly have opposed media consolidation, particular that with the cross ownership, and I don't think it's really the way that we're going to save newspapers. I don't think that's the issue.
I think that there is an important role, though, for police education and government, the PEG channels, and their service. And PEG channels provide an outlet for people in the community to create and distribute their own television programming. But I'm concerned if the -- I know you're working on a rule-making, but if the translators get priority and fill all available frequencies, even if Congress were to allow low-power FM stations operate in the third adjacent channel, if wouldn't be meaningful.
So I'd like to understand what you think we can do to make sure that we are keeping that diversity of voices, and having low-power stations.
MR. GENACHOWSKI: Senator, yes, we -- but we spoke about this a little bit before, the wide dissemination of spectrum licenses. Diversity of ownership is, I think in the Communications Act. It's an important principle and priority, and it's something that I look forward to working on.
The issues that you mentioned, I think are examples of -- there are creative ways to tackle these issues that constantly need to be looked for. I think your leadership on the LPFM issue is an example of that. I'm not an expert in that. I look forward to learning more about that. But making sure that in connection overall with understanding uses of our spectrum, looking for ways to put more spectrum to work, to think about a wide dissemination of licenses in connection with that, all seem to me to be high priorities, and something that I'd look forward to working with you and the Committee on.
SEN. CANTELL: Okay. Another area is white spaces -- opening up broadcast white spaces to fix wireless and personal portable devices. I know the Commission took a very conservative start in opening up the white space, but it was a start.
Will the Office of Engineering Technology make sure that this is a priority issue, so that we can have sufficient resources in working with the industry to test and make sure that we are answering any of the technical issues that might come up'
MR. GENACHOWSKI: Senator, I think the answer is yes. And, in fact, I'm glad that you're mentioning another example of creative use of spectrum to advance the overall goals of the Communications Act. I'm energized by what's been happening in the country around mobile.
We're seeing incredible innovation. The number of Americans who have mobile phones has increased dramatically. I think the current number is about 270 million Americans. But even more important, the number of Americans who have Smart Phones, who have mobile phones with advanced applications on them is increasing.
I believe that we have an opportunity for the U.S. to lead the world in mobile. Some of that will require the ongoing creativity and the ideas of the source that you mentioned to take full advantage in this country of the opportunity that spectrum use allows.
SEN. CANTWELL: Okay. And a question about, obviously, competitive markets for broadband service. Is there -- if there is a competitive market for broadband services where consumers could purchase broadband from multiple independent providers, would the discussion over net neutrality change'
MR. GENACHOWSKI: Well, I think that the -- in a market of unlimited competition, it might change. The, the goal as I see it of the net neutrality debate, is to preserve the Internet as the greatest platform for innovation and small business creation that we've ever had.
More competition, more consumer choice would of course help achieve that, and that would be an excellent thing.
SEN. CANTWELL: But obviously not -- I mean, the concern, obviously, is not to artificially segment off parts of the population in given them a higher cost.
So you see, you see more competition in broadband services'
MR. GENACHOWSKI: Competition is clearly a goal for the FCC and of the Communications Act, and something that I'd hoped to pursue and promote at the FCC.
SEN. CANTWELL: Thank you, Mr. Chairman.
SEN. ROCKEFELLER, IV: Thank you.
Are there any other questions, Senator Hutchison'
SEN. HUTCHISON: I do. I wanted to ask one last question. We talked in my office about the so-called Fairness Doctrine. And as I understood it, you said that you did not support reviving it or polices like it directly or indirectly through localism and that sort of thing. And I just wanted to have, for the record, that are incorrect in stating your position or if you would like to restate it'
MR. GENACHOWSKI: No, Senator, I, I don't support reinstatement of the Fairness Doctrine. I believe strongly in the First Amendment. I don't think the FCC should be involved in censorship of content based on political speech or opinion.
SEN. HUTCHISON: Thank you very much.
Thank you, Mr. Chairman.
SEN. ROCKEFELLER, IV: Senator Klobuchar.
SEN. KLOBUCHAR: Thank you very much, Mr. Chairman.
Mr. Genachowski, I mentioned this Dig Once Bill that Senator Warner and I have introduced. And I just -- I don't want to spend much time on that, because I have some other questions. But I just wanted to get your commitment that you're willing to work with us on this. Just estimates, again, 90 percent of broadband installation is digging up the roads. And if we can do it at the same time we have an open road because of federal highway projects, we could save a lot of money.
MR. GENACHOWSKI: Yes, Senator, I'd, I'd love for the FCC to be a resource for you and Senator Warner in this idea, and others where we're thinking about the communication's infrastructure for the country for -- you know, for the next several decades.
And some of it is a real infrastructure issue. And if we can be -- deliver the best bang for the bucks for taxpayers by laying broadband lines at the same time that we're building highways, I don't see why we wouldn't want to explore that.
SEN. KLOBUCHAR: Thank you. Another quick area is just the E911 area. I'm the co-chair of the E911 caucus. I'm a former prosecutor. I did that for eight years, and saw firsthand some of these interoperability issues. The good -- when we had our bridge collapse in our area right in the metropolitan area, had done a very good job of interoperability because of our Sheriff and others.
And then I've seen difficulties in the past and in some of our rural areas with that. And it seems to me that's just one of the areas of our nation's information infrastructure that may continue to elude us, absence from federal action and federal involvement in terms of making our emergency services more interoperable.
MR. GENACHOWSKI: Senator, this is a --
SEN. KLOBUCHAR: Is it interoperable, Mr. Genachowski, because that's a big question.
MR. GENACHOWSKI: It's a --
SEN. KLOBUCHAR: Do you think that is something you would be willing to work on?
MR. GENACHOWSKI: Very much so. My wife and I were not very far from the World Trade Center on 911. Most of my family was in, either New York or Washington. None of us should be satisfied with where we are on public safety.
Chairman Rockefeller, he stepped out. Others on this committee have been leaders on this. As one of your colleagues mentioned earlier, 911 Commission urged the country to do something about public safety interoperability, and we have to do it. It's just not acceptable that firefighters and police officers arrive at the scene of an emergency, and can't communicate with each other.
And they have a new opportunity now that we need to cease, I think as quickly as possible around mobile broadband. Now, that we're through the digital television, there's spectrum available for advanced mobile public safety applications for our first responders.
I don't think we can move too quickly in tackling that. And it's something that I look forward to working with you on it.
SEN. KLOBUCHAR: Thank you. Now, we had a horrible shooting of a police officer once before we got better communications in our metropolitan area. And literally the emergency person had seven different phone services and walkie talkies in trying to talk to each other while they were perusing a suspect who had killed this cop. And it was a, it was a nightmare. So that's something I will never forget.
I just came from a judiciary hearing on our competition in the wireless market and text messaging and things like that. And Senator Rockefeller and I and others have a bill that we will most likely introduce in some form this year about cell phone competition. And my view is this has come along way from the days when the movie Wall Street, and Gordon Gekko had a cell phone the size of a briefcase. And we now have 270 million Americans. Eighteen percent of Americans don't even have a landline.
And yet, while there have been some vast improvements with early termination fees, and others are still, having driven around my state this weekend, huge problems with dropped calls and consumer knowledge about what they're buying and if it really works in the areas that they want to drive to or work in.
So could you comment about the FCC's role as a watchdog of this area'
MR. GENACHOWSKI: Senator, I look forward to working with you on this. I'm an optimist, a believer in the potential of mobile for our country, for the U.S. to have world leadership in mobile. At the same time, we need to make sure, one, and the FCC can work with you and the committee on doing this, that we minimize confusion. That we maximize competition and choice. And that we do everything we can to deal with complaints that consumers have and respond to them effectively.
SEN. HUTCHISON: Thank you. And, you know, the complaint right now, and this is why we had this hearing, is just concerns about some of the prices right now. FCC website. You and I talked about this and how it used to be this model of development and innovation. And now it's lagging behind. Do you want to talk briefly about what you'd like to do with that?
MR. GENACHOWSKI: Senator, if confirmed, my goal would be to have the FCC website and its media operation be a model for the rest of the government. The FCC should have that. It should be a 21st century agency for the information age. I've been around this area enough to know that I won't be able to snap my fingers on day one if I'm confirmed and make it happen. It will take some time.
But the opportunities are great to have all of the various constituencies and stakeholders interested in the FCC. Ordinary consumers, businesses, academics around the country, others be able to get online to get information easily. To have it be searchable and accessible. This is all achievable. I'd like to see the FCC achieve it. And I'd like to see the FCC be able to use the media to communicate clearly and in plain English with the public about what it's doing.
SEN. HUTCHISON: Thank you. Of course, the question I really wanted to ask when Senator Schumer was here and we could pretend, you know, you're under oath, we could do this whole thing, was when he said that the credit card box that he really, it should have been the Genakowski box instead of the Schumer box. And I had really wanted to ask if he had ever offered you that. (Laughter)
But I chose not to do that. And because we had such a nice and positive hearing, we won't end that way. Thank you very much, Mr. Genakowski.
SEN. PRYOR: Thank you. Anybody else have any questions' Any other questions' Mr. Genakowski, thank you very, very much for your time here today and for making yourself available. And I know you've visited with many of us, if not all of us privately in our offices. And we appreciate that. And I also think something that others have alluded to is very true. And that is this agency is extremely important and will really benefit from your leadership and your management style there. And I just think it's going to be a great era for the FCC. So, thank you for your public service. And if there are no more questions, we'll excuse you and your family. If you guys would like to stay, you can. But if you'd like to leave, that's completely up to you.
I will say one last thing before you leave, is that we're asking all the senators who have follow-up questions to get those to you or get those to us by 6 p.m. today. And that's a sign for you, because that means we're going to try to expedite your confirmation as much as possible. But that means we would ask you to turn those around rather quickly. So, thank you very much for your time. And I'm going to call up the second panel if the Committee doesn't have anything else. Thank you very much.
MR. GENAKOWSKI: Thank you.
SEN. PRYOR: As he is departing the table there, and as Mr. McDowell is coming forward with his family, there's going to be a little bit of a change here. So, we'll give everybody just a minute.
Okay, thank you. And I want to thank everybody for trying to do such a quick change there, because we had a lot of people that had to come and go. Commissioner McDowell, once again welcome to the committee. I want to thank you for your past and current public service. And I must say that I hear very, very positive reviews on the things that you've done there at the FCC. And I think you've been a very positive force there.
And I know that you have your family here. It looks like we have the members of the fillies organization here. (Laughter) And if you want to introduce your family and make your opening statement, that would be great.
MR. ROBERT M. McDOWELL: I'd love to. Thank you, Senator Pryor and Senator Hutchison so much for having me here today. It's such a great honor to be here today and a great honor to accept the President's nomination. And, yes, with your permission, I would like to sort of introduce members of my family.
First of all, you know, without their love and support, I couldn't do this job. It is they who really bear the brunt of supporting an FCC commissioner. So, the love of my life, my bride, the rock of our family, the wind in my sails is my bride Jennifer. And then also my son Griffin who is suited up to play in the beginning of the Vienna Little League town championship, their tournament. So, he's been hitting in the 700s all season. Applause is welcome, thank you. He pitched a no-hitter. And as you can imagine, his coach is very eager to have him there on time tonight for the start of the town championship. So, he came all suited up, ready to go. They will leave his entourage, and he, of course, will leave shortly after my opening statement.
My beautiful daughter Mary Shea. Our youngest son Cormack, who calls himself Coco. And my sister Tina. And my nephew Calistan as well is here. And our good friend Bonnie Motes is going to do the honors of escorting them out as soon as we're done with the opening statement.
And, of course, I owe everything to my parents. My father Bart McDowell, a native Texan, passed away just this past January.
And my mother Martha Shea McDowell passed away not quite four years ago. And our thoughts and prayers are with them always. But especially today.
I would also like to extend my public congratulations to Julius Genakowski and his beautiful family on his nomination. And if we are both confirmed, I look forward to working with him in the same bipartisan manner I've pursued for the past three years.
Furthermore, I want to acknowledge the warm friendship and support I've received from my two fellow commissioners, Acting Chairman Mike Copps and Commissioner Jonathan Adelstein. I have enjoyed working with them over the past three years. And especially in the past six months. Although we don't always agree, our disagreements are almost always pleasant. In fact, while the three of us have enjoyed this collegial time at the Commission this year, folks have started calling us the 'three amigos.' And if confirmed, I look forward to continuing to work with Mike at the Commission. And Jonathan just down the street at the Rural Utilities Service, should he be confirmed for that post.
And while I'm on the topic of us working together, I would be remiss if I did not discuss with this committee the digital television transition. As of midnight last Friday, 100 percent of our nation's full power television stations are broadcasting only in digital except for a few analog nightlight stations, which are providing DTV educational information for those who are still not ready. And we have heard of three or four that are having a little bit of trouble making the transition.
But for the vast majority of consumers, the benefits are wonderful and include better picture quality, better sound quality and more channels all for free over the air. Nonetheless, up to three million households remained unprepared as of June 12th. The FCC, working with other government agencies, the private sector and community organizations is acting rapidly to locate and help these consumers in our own version of a search and rescue operation.
I appreciate the continued support we have received from Congress as we implement the switch to digital. And I look forward to our agency staying focused on this issue as our number one priority until all over the air consumers become digital ready.
In preparation for this hearing over the past few days, I've been reflecting on my three years at the FCC. The fact that I was appointed to the Commission the first time underscores the maxim that sometimes it is life's surprises that offer the best experiences. This position came as a surprise to me. I never pursued this office, but the opportunity to serve the American people in this way has been the highest honor of my life.
What we do at the Commission literally affects the lives and liberty of all Americans everyday. The evolution of the communications marketplace has been nothing short of amazing, especially in the past three years. For instance, in 2006, the discussion regarding a wireless only America was just getting started. Today nearly one in five American households is wireless only.
In the meantime, 23 percent of all businesses are expected to be wireless only by the year 2012. In 2006, 57 million Americans subscribed to broadband services. Today the number is closer to 80 million, a 40 percent increase in three years. The fastest growing segment of the broadband market is wireless broadband, which has grown by nearly 400 percent since 2006.
In fact, American consumers account for nearly 30 percent of all mobile web surfing worldwide, making the U.S. first -- (audio break) -- Facebook, MySpace and Twitter were in their infancy while traditional media, such as newspapers and broadcasters enjoyed healthy bottom lines. When I first started at the FCC, the market for online videos was just starting to germinate. Today, Americans watch nearly 17 billion online videos each month. And that figure is growing at 16 percent per month.
Furthermore, nearly 15 million Americans are watching video on their mobile devices. And that figure is growing by more than 50 percent per year. At the same time, traditional media have witnessed a dramatic decline in the face of the competitive pressures coming from new media.
So much has changed so fast. Increasingly, America's economy rides on the rails of the communications sector. As the government contemplates policies to help promote sustainable economic growth, the role of the FCC is more important now than ever. In the coming months, the Commission's primary focus should be to foster economic expansion by helping shape an environment that is attractive to capital investment so that the creative brilliance of America's entrepreneurs can continue to bear fruit for the benefit of all consumers.
During my time at the Commission, I've tried to promote economic prosperity, competition and innovation by supporting initiatives to make it easier for new entrants to compete in the video marketplace. Spurring the rollout of broadband by, among other things, taking steps to open up the use of the television white spaces. And fighting to ensure that inventors of new wireless medical devices are not restrained by government red tape.
America's technological future could be brilliant if we, as policy makers, make the right choices. The wireless sector is one of the most promising under the FCC's purview. Yet sometimes we look at the wireless market through the lens of its wire-line ancestor. For instance, we all the know the name of the inventor of the wire-line phone. Alexander Graham Bell, of course. But few can name the inventor of the wireless phone, a device used by more than half of the world's population.
His name is Martin Cooper. Mr. Cooper estimates that the technological innovation has enabled us to double the amount of information transmitted over the radio spectrum every two-and-a-half years. As a result, we are 2 trillion times more spectrally efficient today than when the radio was first invented in 1897. This concept is known as Cooper's Law. This powerful trend should continue indefinitely unless the government adapts policies that frustrate rather than foster innovation.
If I'm confirmed, you have my commitment to support policies that will promote and not stifle freedom, competition, innovation and more choices. If we adopt such policies, we will create boundless opportunities for American consumers and entrepreneurs alike.
Additionally if confirmed, I will commit myself to continuing to conduct the affairs of my office in a bipartisan and ethical manner. And I will continue to make decisions as an independent commissioner and an independent administrative agency. Furthermore, I will work to support policies that will promote vigorous growth in the broadband markets to ensure that all Americans have access to the promise of high speed Internet services and to ensure that the Internet remains robust, open and safe.
The FCC's broadband plan due to Congress in February will play a crucial role in America's broadband future. If confirmed, I will also continue to advocate for reform of FCC processes to make the Commission more open, transparent and user-friendly. For instance, it would be helpful if notice of proposed rule-making actually contained proposed rules. We could also serve the public interest by following Congress's mandate to get to work adjudicating the backlog of over 1.2 million broadcast indecency complaints, some of which are older than my children.
Also if confirmed, I will continue to work to reform the universal service and intercarrier compensation regimes to contain skyrocketing costs while ensuring that all Americans have access to affordable quality services as directed by Congress.
Finally, if confirmed, I will continue to work to clear away unnecessary regulatory underbrush and barriers to entry that inhibit the creation of a dynamic and free communications marketplace. These are just a few ideas. We have much, much more to do.
In conclusion, I have cherished every day I have served as a commissioner. I have been honored to work with not only some of the finest people ever to serve on the Commission, but the hundreds of talented career professionals who work at the FCC as well. And if confirmed, I would be humbled to serve with them again.
Senator Pryor and Senator Hutchison, other members of the Committee, thank you again for the opportunity to appear before you today. And this concludes my statement. And I look forward to answering your questions.
SEN. PRYOR: Thank you, Commissioner McDowell. What I'll do now is turn it over to Senator Hutchison who has an appointment that she needs to get to. So, Senator Hutchison.
SEN. HUTCHISON: Well, yes, and I want to especially say good luck to Griffin. I am very impressed.
And I'm going to make this statement publicly. Tonight I'm going to be watching the University of Texas Longhorns in the College World Series. And I am asking you right now to consider going to the University of Texas and playing baseball because I know you have a future. So, consider it a recruitment. Good luck tonight.
Mr. McDowell, I want to ask you a couple of the questions. First of all, on the fairness doctrine, that is something that is very important to many people. And reinstating it is something that everyone I know thinks would be a bad idea. And I wanted to ask you if you see any signs of the Commission moving in that direction to the localism effort. And what is your view about what is going on'
COMM. McDOWELL: First of all, Senator, I've spoken out for quite awhile about my concerns about any reinposition of the doctrine. Some call it the censorship doctrine. Others call it the forced speech doctrine. I just simply call it the doctrine in order to be fair. But I believe it probably is unconstitutional. I don't have any concerns at the moment that the Commission will pursue it. I take Mr. Genakowski at his word that he will not pursue it. But there are some other concerns that I have regarding keeping more obligations on broadcasters, especially at this time, but throughout as well.
The broadcast industry is really taking it on the chin right now. Due in part, certainly to the recession. About a third of their revenue, their advertising revenue, comes from car dealerships alone. And, of course, we all know the fate of car dealerships. There are more and more broadcast stations in distress these days. And then there's the whole aspect of all the new media competition I sort of outlined in my opening statement. The eyeballs and ears and ad- ballers are going to new media, and I think we need to be mindful of that before we impose any new regulations.
SEN. HUTCHISON: Thank you. I'd like to ask you the same question that I also posed to Mr. Genakowski regarding the media ownership rule, the newspaper ' broadcast television station FCC parameters. And ask if you think that it is time to look at those restrictions in a new light. I said earlier that I have never like having too much ownership in too few media outlets. I don't' think it's healthy. But so much has changed in the last five years, as you stated in your opening statement. And I think perhaps now with newspapers in such dire straits that lifting some of those restrictions and letting broadcast and newspaper owners have the capability to bring their revenue up so that they can both stay in business. And I'd like to know how you feel about that.
COMM. McDOWELL: Thank you, Senator. In December of 2007, I voted for a relaxation of the newspaper broadcast cross ownership ban. Especially looking at the top 20 markets, but also looking at the below 20 markets, markets 21 and below with different standards. Both standards would help preserve the diversity of voices, and I think that's really what our rules are all about to make sure there's competition of voices and a diversity of voices in a particular marketplace, so that no one company or small group of companies could dominate the news and information or entertainment in a particular market.
But I think that our communications marketplace is awash with a plethora of choices for consumers. In fact, we are awash with so much information, the texting acronym is TMI, or too much information sometimes. So, I think we need to take that into account. Of course, that order that we voted out in December of '07 is being litigated at the 3rd Circuit right now. It looks as though that court will sort of freeze review of that until a new FCC is constituted and that we move on with our quadrennial review, which is scheduled to commence next year.
So, primarily speaking, I'm not sure if anything will be done before the next review. But, of course, the Chairman controls the agenda at the FCC, and that would be he prerogative to schedule that or not.
SEN. HUTCHISON: Last question would be the net neutrality. How are you going to approach net neutrality?
COMM. McDOWELL: I think it's very healthy to have this debate, first of all. The concern is that there's primarily been a duopoly in the last mile for years in broadband cable company versus the telephone company. And the fear there has been maybe one of those companies could somehow control, both of them could control the content that flows over the pipes, as they call them in the vernacular.
I think the best way to resolve that is ensure there's more competition in the last mile. And since I've been at the FCC, I've worked to do just that, to help create opportunities for the construction of new delivery platforms, be that through our video franchising order in December of 2006 to make it easier for new entrants to get local franchising authority and lay new fiber and create new last mile facilities that way. And that's not just incumbent phone companies, but it's also overbuilders and new entrepreneurs as well.
Or whether it's through our 700 megahertz order where hopefully we'll have up to six new entrants per market, or six players per market to help mix things up. And then top that off with what we did to help open up the television light spaces to unlicensed use and our further work that we have ahead of us there. That, I think, really helps provide competitive safeguards.
So, I think coming over the horizon or the AWS-1 option we had in 2006, the list goes on. But coming over the horizon, I think we have a multitude of opportunities for competition in the last mile. And I think that will help be a check and a balance against anti-competitive conduct. And, lastly, I would hope that we can choose the dialogue from merely discrimination. The word 'discrimination' certainly has many negative contexts or meanings. But talk about anti-competitive conduct as well and the intent there.
So, as we go forward, I look forward to working with this committee and my fellow commissioners on that issue. But I think what's best for consumers is competition.
SEN. HUTCHISON: Thank you very much, and thank you, Mr. Chairman, for your deference. I appreciate it.
SEN. PRYOR: You bet. Thank you. Senator Thune.
SEN. JOHN THUNE (R-SD): Thank you, Mr. Chairman. And I wish I could have been here for Mr. Genakowski when he was here. We had an Armed Services Sub-Committee hearing in which I am the ranking member. But I'm glad to be able to welcome and congratulate Mr. McDowell on your reappointment. I look forward to continuing to work with you upon your confirmation on a lot of issues, obviously that many of which have been touched on. National broadband policy, applying indecency regulations. Net neutrality has been mentioned. Spectrum allocation are just a few of the issues that confront the Commission today.
And I think that the range of issues that you deal with, the importance of those issues can't be overstated. So, it's a very important position. And I hope that we can continue to make some progress on some of these things. And I would say I understand you've had a lot of, probably, I'm sure, very lively discussion about the fairness doctrine. But I hope the Commission can put the stake to the heart of that thing once and for all. It will certainly reduce the number of amendments that we consider up here if we don't have to deal with fairness doctrine amendments on appropriations bills.
But I do want to ask you about some of the national broadband policies. Because, as you know, the FCC is required by the stimulus bill to develop a national broadband plan. And I know that there are grants and loan guarantees in the stimulus bill, but I'm just curious to what your thoughts are about deploying broadband to rural areas of the country.
COMM. McDOWELL: Well, I would hope that the focus would be on unserved areas, certainly, first. Now, the FCC has an informal advisory role with the Department of Commerce and the Department of Agriculture who actually have the spending authority for that $7 billion. And it's not a written role, it's very informal. Primarily the Chairman and the career staff of the FCC working with the staff at Agriculture and Commerce on that.
But I would hope our focus would first be on unserved America. Certainly in South Dakota, I know there are a lot of areas that are still unserved. We also have what would be now nearly $8 billion universal service fund at the FCC. And that fund is growing despite a cap that we voted last year on competitive eligible telecommunication carrier portion of that fund. That's a mouthful.
It's the ETC portion, as we call it. And the contribution factor or the tax sorts has grown to an all time high, almost 13 percent.
So, that is something that we administer, and I think we need a full audit of that fund and how it's used as well as all FCC operations, by the way. But that would be part and parcel to any part of any broadband reform.
SEN. THUNE: Well, and I know that universal service fund tends to generate a considerable amount of controversy. And the only thing I guess I would ask of you as you take these issues on that you take into consideration the impact on rural areas and making sure that rural areas in the frontier, so to speak, isn't left behind. I think there are just some wonderful applications of technology that are leading to incredible increases in productivity and job creation and everything else in our economy. But it's obviously going to be very important in my view as we move forward that we do it in a way that takes into consideration some of the unique and particular needs that rural areas of the country have as well.
So, I don't have any questions beyond that, Mr. Chairman. I want to congratulate Mr. McDowell, and as I said before, look forward to working with you. And as you know, I will be focusing in on some of those rural issues. So, thank you and good luck.
COMM. McDOWELL: Thank you, Senator Thune.
SEN. PRYOR: Thank you, Senator Thune. Let me dive in, if I may, with just a few brief questions. First, about E-Rate. This is a provision in the 96 Act that Senator Rockefeller and Senator Snowe worked on. It's one of the things the Chairman is very proud of because of the effectiveness in closing the digital divide. When the telecom act of '96 was passed, only 14 percent of the classrooms in the country and five percent of the classrooms in low income communities had access to the Internet. Thanks to the E-Rate program, it's more than 90 percent of all classrooms have access to the Internet. The question would be, do you support the E-Rate program as it's currently laid out in the statute?
COMM. McDOWELL: Yes, sir.
SEN. PRYOR: And do you think that there should be any modifications, either changes or enhancements to it' Or do you think it ought to just stay as is?
COMM. McDOWELL: Well, I've called for early this year a complete audit, like I said before, of all FCC operations. Financial operations, everything. And that would include E-Rate and the whole ETAC administration of funds. But not for any particular reason, but I think it should be done periodically. You know, in the private sector when you have a merger acquisition of a company, there's a due diligence. And, obviously, now we have a new party in charge of Washington, so I think there should be due diligence on the entities that are getting new leadership. And that should be part of it.
SEN. PRYOR: Speaking of mergers and acquisitions, I know that that's one of the things that the FCC does that's very important. And, you know, when you look at a merger or acquisition in a given industry, there could literally be billions of dollars at stake. And there's a lot of capital investment. And you need to consider that aspect of it. You also need to obviously look at the consumer and whether the consumer will benefit.
But you also, I think at least, should look at the economic impact it will have on given communities. Because oftentimes when there is a merger acquisition, one community is a big loser in that prospect. So, my question is just a general question. And that is how do you balance all of those interests when you're looking at a merger acquisition?
COMM. McDOWELL: In order to statute, the FCC looks at merger through what they call the public interest standard. And that's really our only hook. And, again, that's a merger, whether it's a transfer of licenses. If there's no transfer of license, it doesn't come before us. So, we have a different standard from, let's say, the Department of Justice or the Federal Trade Commission might. So, the public interest standard is broad, but it's also within our core mission, obviously, that Congress set up in 1934.
So, going forward, I'd like to look at mergers and any conditions that are placed on them. And I ask the question whether or not those conditions are merger specific. Is there something that's coming out of there regarding maybe a competitive harm that's merger specific. And we place conditions on that that are sort of narrowly tailored to those interests.
So, that is historically how I've done things. Sometimes a majority of the Commission might see it a different way, and they work out a different deal with the merging entities. Then the merging parties will come to me and say, please vote for this as is. So, that's something to take into consideration as well.