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Testimony of Chairman Genachowski, FCC Oversight Hearing

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Released: May 16, 2012

Statement of

Chairman Julius Genachowski

Federal Communications Commission

Hearing on the “Oversight of the Federal Communications


Before the

Committee on Commerce, Science, and Transportation

U.S. Senate

May 16, 2012

Chairman Rockefeller, Ranking Member Hutchison, Members of the
Committee, thank you for this opportunity to appear before you today.

At the FCC, our mission is to maximize the power of communications
technology to grow our economy; create jobs; enhance U.S. competitiveness;
empower consumers; and unleash American innovation, including in areas like
education, health care, and public safety.

Consistent with this mission, over the last three years, we have
focused the agency on broadband communications – wired and wireless. In 2009,
we developed America’s first National Broadband Plan, which identified key
challenges and opportunities throughout the broadband ecosystem, and proposed
solutions to ensure that the U.S. leads the world in broadband access and

Together with my colleagues at the FCC, we have made tremendous
progress in the past three years, taking many steps to unleash investment,
innovation, and job creation. These include modernizing and reforming major
programs like the Universal Service Fund, freeing spectrum for both licensed and
unlicensed use, removing barriers to broadband buildout, and taking strong and
balanced steps to preserve Internet freedom.

And indeed, innovation, investment, and job creation are up across the
broadband economy. These metrics are up both when looking at broadband
applications and services, and when looking at broadband providers and networks.

Our work at the FCC is helping create jobs across the country, from workers
building broadband infrastructure, to agents at new broadband-enabled customer
contact centers, to employees of small businesses using broadband to expand, to
engineers and other innovators inventing the new digital future.

And the U.S. has now regained global leadership in mobile innovation.
American-designed apps and services are being adopted faster than any others.
U.S. mobile innovation is the envy of the world.

We are also ahead of the world in deploying 4G mobile broadband at scale –
with 64% of the world’s 4G LTE subscribers here in the U.S. These next-
generation networks are projected to add $151 billion in GDP growth over the next
four years, creating an estimated 770,000 new American jobs.

In 2011, overall investment in network infrastructure equipment was up 24
percent from 2010, with broadband providers investing tens of billions of dollars in
wired and wireless networks.

Internet start-ups attracted $7 billion in venture capital in 2011, almost
double the 2009 level and the most investment since 2001.

Our efforts to improve the health of our broadband economy have focused
on closing broadband gaps.

First, the spectrum gap. Multiple studies show that demand for mobile
services is on pace to exceed the capacity of our mobile networks.

Last week, at the wireless industry’s annual conference, I presented the
Commission’s Mobile Action Plan, which builds on the mobile portions of the
National Broadband Plan, to achieve our goal of unleashing mobile innovation and
investment. This plan will help ensure that America maintains the position it has
now regained as the global leader in mobile. It includes incentive auctions, while
also recognizing that we must have an “all of the above” strategy that includes
freeing up more spectrum for both licensed and unlicensed use; driving efficiency
in spectrum use, including by increasing the efficiency of devices and networks;

removing barriers to mobile broadband buildout; and pioneering innovative
approaches like small cells and spectrum sharing between government and
commercial users.

On the latter, I was pleased to announce that we are moving ahead in
partnership with NTIA to test spectrum sharing between commercial and
government uses in the 1755-1780 MHz band, a band of particular interest to
commercial carriers.

Thanks to Congress, and the hard work of this Committee last year, we will
unleash significant amounts of prime spectrum through incentive auctions – an
unprecedented market-based solution to reallocate spectrum that was proposed in
the National Broadband Plan. We’ve announced an implementation plan for
incentive auctions that puts us on schedule to launch a rulemaking by the fall of
this year.

We’ve also made progress toward unleashing more than 25 MHz of WCS
spectrum, and converting 40 MHz of prime spectrum in the S-Band from satellite
to terrestrial use.

Last year we became the first country to free up TV white spaces for
unlicensed use. This is the most significant release of spectrum for unlicensed use
in 25 years, and it holds the promise of new value-creating breakthroughs on the
order of magnitude of Wi-Fi.

We are also tackling the broadband deployment gap.

Today, millions of rural Americans live in areas with no broadband
infrastructure. Our plan, adopted unanimously in October, to modernize the
Universal Service Fund will spur wired and wireless broadband buildout to
hundreds of thousands of rural Americans in the near term, and sets us on the path
to universal broadband by the end of the decade – while, for the first time, putting
the Fund on a budget. Together with my colleagues, we crafted a set of reforms
that honor fiscal responsibility, respect business realities, and help bring broadband
to unserved Americans around the country, in every state.

Through our Broadband Acceleration Initiative, the FCC has removed
barriers to broadband deployment and accelerated broadband buildout. For
example, we’ve adopted orders to ease access by broadband providers to utility
poles and established a shot clock to speed cell tower and antenna siting.

In addition to the broadband deployment gap, we are making strides on the
broadband adoption gap.

Nearly one-third of Americans – 100 million people – haven’t adopted
broadband. The Connect to Compete Initiative enlists government, nonprofit, and
private sector leaders to tackle the barriers to adoption – one of several public-
private initiatives driven by the Commission to promote solutions to major

The FCC's successful E-Rate program, created thanks to the leadership of
Senators Rockefeller and Snowe, has already helped connect virtually every library
and classroom in America. In 2010 we adopted several important modernizations
of the program, including recognizing the potentially important role of mobile
broadband, removing barriers to schools opening their computer labs as hot spots
for their communities, and giving schools more choices to strike the best deals for
broadband in their markets..

Public safety is a core mission of the FCC, and the agency is working to
harness the power of communications to make our communities safer.

We are working with multiple stakeholders to advance next-generation 9-1-
1. And we accelerated the launch of Wireless Emergency Alerts that allows local,
state and federal authorities to send targeted alerts to mobile devices of people who
are in the vicinity of an emergency.

As part of our longstanding role in ensuring the security and reliability of
communications networks, the FCC recently led a process culminating in ISPs
serving 90% of all U.S. residential broadband subscribers committing to take
significant steps to strengthen the country’s cybersecurity. This includes
implementing an Anti-Bot Code of Conduct to reduce the threat of botnets,
adopting DNS Best Practices to prevent domain name fraud, and working to
implement an industry framework to prevent Internet route hijacking.

Working with government, private-sector, and nonprofit partners, we also
developed a Small Business Cyber Planner to help small businesses guard against
cyber attacks, which are estimated to cost targeted small businesses an average of
$200,000 in damages.

In today’s hyper-connected, flat world, the success of American companies,
as well as global prosperity and freedom, depends on a dynamic and open global
Internet. And so we are working to preserve the Internet as a free-market globally,
and oppose international proposals that could stifle Internet innovation. Working
with our colleagues in government and stakeholders outside government, we are
seeking to head off barriers to the global expansion of cloud computing, and
encouraging free flows of data worldwide.

And we are working to oppose proposals from some countries that could
seriously undermine the longstanding multi-stakeholder governance model that has
enabled the Internet to flourish as an open platform for communication, innovation,
and economic growth. If adopted, these proposals would be destructive to the
future of the Internet, including the mobile Internet, and across the U.S.
government we have consistently and strongly opposed such proposals.

The FCC also provides value by protecting and empowering consumers.

Smartphone theft is on the rise, and poses a real threat to consumers. In DC,
New York, and other major cities roughly 40 percent of all robberies now involve
cell phones. This past month, together with Senator Schumer, the wireless
industry, and law enforcement from around the country, we announced the launch
of a new database that will allow consumers and carriers to disable stolen
smartphones and tablets dramatically reducing their value on the black market.

This committee has helped lead the fight to crack down on bill shock, a
problem that has cost millions of consumers tens, hundreds, and sometimes
thousands of dollars in unexpected charges. Working with wireless providers, we
found a common-sense solution to bill shock – alerts to consumers when are about
to incur overage charge. A few weeks ago we introduced a new online tool to help
consumers track implementation of the commitments made by wireless carriers to
provide usage alerts.

Last month, the Commission approved an order to put an end to abusive,
third-party charges on phone bills, what’s commonly known as cramming.
Previously, the Commission’s Enforcement Bureau issued $12 million in fines
against four companies that had engaged in widespread cramming, part of a record-
breaking year for our Enforcement Bureau, which logged $67.2 million in
monetary penalties and settlements on behalf of consumers in 2011.

I want to highlight not only what the FCC has accomplished, but how we
conduct our work. The FCC is committed to smart, responsible government, and
we have taken significant steps to modernize our programs and ensure that they are
efficient and fiscally responsible -- saving billions of dollars.

Our work to modernize USF and Intercarrier Compensation will not only
spur broadband buildout, it also eliminates billions of dollars in hidden subsidies
from consumers’ phone bills.

Our work to reform the Lifeline program is expected to save up to $2 billion
over the next three years. Even before this order was adopted, we made changes
that eliminated 270,000 duplicate subscriptions, saving $35 million.

We reformed our Video Relay Service Program, which provides vital
communications for people who are deaf or hard-of-hearing, saving $250 million
per year without reducing availability of service.

In addition to our programmatic changes, we have also reviewed the
agency’s rules and processes – asking tough questions to make sure the agency is
operating efficiently and effectively.

In connection with this review, we’ve already eliminated more than 200
outdated rules and five unnecessary data collections. We have identified two
dozen more data collections for elimination.

We estimate that internal reforms like consolidated IT maintenance and new
financial system have already saved the agency almost $8 million.

And we’ve done everything I’ve listed and more with the lowest number of
full-time employees in 10 years.

In conclusion, the wired and wireless broadband sectors are critically
important to our economy and global competitiveness. I look forward to working
with the Committee on implementing the new incentive auctions law, and
unleashing the opportunities of communications technology for our economy and
the American people.

Thank you.

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