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Testimony of Commissioner Pai, FCC Oversight Hearing

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Released: May 16, 2012






MAY 16, 2012

Chairman Rockefeller, Ranking Member Hutchison, and members of the
Committee, it is a privilege to appear before you today. Several months ago, you
extended to me and to my colleague, Commissioner Rosenworcel, the opportunity
to appear before you in connection with our nominations to the Federal
Communications Commission. I am honored that this Committee, and ultimately
the full Senate, approved our nominations. And I am grateful to you for your
support during the confirmation process and for giving us the chance to serve the
public in our new capacity. As I stated during our previous hearing, I look forward
to building a collaborative relationship with Congress, including the members and
staff of this Committee.
That relationship begins, appropriately, with this oversight hearing.
Congressional oversight of the executive branch and independent agencies is a
critical feature of government. As the Supreme Court opined decades ago,
Congress’ “power of inquiry . . . is an essential and appropriate auxiliary to the
legislative function.”1 It is important for agencies to be accountable not only by
virtue of statutes that reflect accumulated Congressional will, but also through
contemporary examination. I seek no exemption from this exercise. Accordingly,
I welcome your exacting scrutiny regarding my office’s performance and priorities
during the fifty-two hours since I was sworn in as a Commissioner.
1 McGrain v. Daugherty, 273 U.S. 135, 174 (1927). 

On a more serious note, the agency in the near term will be addressing
several high-profile matters. I am eager to begin working with my new colleagues
at the Commission, with Congress, with interested parties, and with the American
people in doing so with care and dispatch.
First and foremost among these matters is the implementation of the
spectrum auction authority granted by Congress earlier this year. With the
proliferation of smartphones and functionally similar devices, the increasing use of
high-bandwidth mobile applications is straining network capacity. Indeed,
according to one recent estimate, data traffic on mobile service providers’
networks is projected to increase 16 times from 2011 to 2016. The FCC therefore
must do what it can to free up additional spectrum for broadband, and Congress’
recent action has given the Commission important authority to accomplish this
objective. The Commission needs to implement the incentive auction legislation
swiftly in order to address the nation’s growing demand for wireless broadband.
At the same time, however, it must do so in a balanced manner that takes into
account the concerns of all stakeholders. It is my intention to work with my
colleagues thoughtfully to sort through the technical, policy, and legal thickets
ahead. We need to get this right. But implementation of this authority is not the
only answer. Currently, the federal government has control over too much
spectrum, limiting the amount of spectrum available to handle the growing
demands of American consumers. The government therefore needs to accelerate
its efforts to identify and to free up as much additional spectrum as is feasible for
commercial use.
Reform of the universal service system is another area in which the
Commission will be focusing much attention. This past fall, as you know, the
Commission adopted many changes to the distribution side of the universal service
ledger. On April 27, 2012, the Commission issued a Further Notice of Proposed
Rulemaking that seeks comment on a broad range of questions relating to the
contribution side. I agree with the Commission’s recent characterization of the
status quo in this area: “The current contribution system has given rise to
uncertainty, inefficiency, and market distortions. Outdated rules and loopholes
mean that services that compete directly against each other may face different
treatment. Universal service charges billed to consumers and businesses vary by
company despite virtually identical service offerings, creating confusion and

distorting markets. And compliance costs have increased as companies struggle to
apply old rules to new products.”2 In this context, reform is a necessity, not a
luxury. Chairman Genachowski, Commissioner McDowell, and Commissioner
Clyburn deserve much credit for taking on this challenge, and I stand ready to
assist them in future efforts. I look forward to reviewing the record compiled in
response to the Further Notice and taking appropriate action in a timely manner.
Media ownership is another area in which the FCC soon will be poised to
take action. At the end of last year, the Commission released a Notice of Proposed
Rulemaking kicking off the quadrennial review process mandated by Congress.
The NPRM sought comment on several of the Commission’s media ownership
rules as well as certain aspects of an FCC order on diversity of ownership that were
vacated and remanded by the United States Court of Appeals for the Third Circuit.
My understanding is that the comment and reply comment deadlines have passed.
I will carefully review the record and will support the Chairman and my fellow
Commissioners in seeking to resolve the difficult questions presented in this
proceeding. Our efforts must reflect the changing nature of our nation’s media
landscape while at the same time preserving the Commission’s commitment to the
core values of competition, diversity, and localism.
The areas I have outlined – spectrum policy, universal service, and media
ownership – occupy distinct niches in communications regulation. But the
common thread uniting them is that prompt and well-considered FCC action can
improve the communications marketplace for the benefit of all consumers. Freeing
up more spectrum for wireless broadband will give companies the incentive to
invest in next-generation services and allow consumers to take advantage of
advanced mobile applications. Wise reform of the contribution mechanism will
ensure that the Universal Service Fund is sustainable and will enable more
Americans to enjoy access to voice and broadband services. A more vibrant media
sector will help more Americans gain access to a wider array of broadcast
television, radio, print, and other sources of news.
2 News Release, “FCC Reforms Seek Efficient, Fair USF Contribution System,” available at

Indeed, whenever the FCC exercises its jurisdiction, it should seek to create
a regulatory environment in which competition and innovation will thrive, because
consumers ultimately will reap the rewards. My approach will be to promote
policies that will give private firms strong incentives to raise and invest capital; to
develop new products and services; and to compete in established and new
markets. We should do what we can to remove uncertainty that can deter
businesses and investors from taking risks; to revisit outdated regulations; and to
set clear, modernized rules for the road. Moreover, the FCC should act with
dispatch to reflect the pace of change in today’s marketplace. Faced with an
industry as vibrant and dynamic as today’s communications sector, the
Commission must guard against clinging to twentieth century methods of
addressing the technological landscape of the twenty-first century.
I believe that this approach will result in more American consumers
enjoying better products at lower prices. And it will help the communications
industry – which by some measures constitutes one-sixth of our economy –
contribute more meaningfully to economic growth and job creation.
Chairman Rockefeller, Ranking Member Hutchison, and members of the
Committee, thank you once again for giving me an opportunity to serve, and for
affording me and my new colleagues at the Commission the chance to testify
today. I look forward to your questions.

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