[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
ISSUES IN TELECOMMUNICATIONS COMPETITION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
JULY 22, 2008
__________
Serial No. 110-138
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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COMMITTEE ON ENERGY AND COMMERCE
JOHN D. DINGELL, Michigan,
Chairman
HENRY A. WAXMAN, California
EDWARD J. MARKEY, Massachusetts
RICK BOUCHER, Virginia
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
BART GORDON, Tennessee
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
BART STUPAK, Michigan
ELIOT L. ENGEL, New York
GENE GREEN, Texas
DIANA DeGETTE, Colorado
Vice Chairman
LOIS CAPPS, California
MIKE DOYLE, Pennsylvania
JANE HARMAN, California
TOM ALLEN, Maine
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
CHARLES A. GONZALEZ, Texas
JAY INSLEE, Washington
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
DARLENE HOOLEY, Oregon
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
DORIS O. MATSUI, California JOE BARTON, Texas
Ranking Member
RALPH M. HALL, Texas
FRED UPTON, Michigan
CLIFF STEARNS, Florida
NATHAN DEAL, Georgia
ED WHITFIELD, Kentucky
BARBARA CUBIN, Wyoming
JOHN SHIMKUS, Illinois
HEATHER WILSON, New Mexico
JOHN SHADEGG, Arizona
CHARLES W. ``CHIP'' PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
STEVE BUYER, Indiana
GEORGE RADANOVICH, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO MACK, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
SUE WILKINS MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
_________________________________________________________________
Professional Staff
Dennis B. Fitzgibbons, Chief of
Staff
Gregg A. Rothschild, Chief Counsel
Sharon E. Davis, Chief Clerk
David L. Cavicke, Minority Staff
Director
(ii)
Subcommittee on Telecommunications and the Internet
EDWARD J. MARKEY, Massachusetts, Chairman
MIKE DOYLE, Pennsylvania CLIFF STEARNS, Florida
Vice Chairman Ranking Member
JANE HARMAN, California FRED UPTON, Michigan
CHARLES A. GONZALEZ, Texas NATHAN DEAL, Georgia
JAY INSLEE, Washington BARBARA CUBIN, Wyoming
BARON P. HILL, Indiana JOHN SHIMKUS, Illinois
RICK BOUCHER, Virginia HEATHER WILSON, New Mexico
EDOLPHUS TOWNS, New York CHARLES W. ``CHIP'' PICKERING,
FRANK PALLONE, Jr., New Jersey Mississippi
BART GORDON, Tennessee VITO FOSELLA, New York
BOBBY L. RUSH, Illinois STEVE BUYER, Indiana
ANNA G. ESHOO, California GEORGE RADANOVICH, California
BART STUPAK, Michigan MARY BONO MACK, California
ELIOT L. ENGEL, New York GREG WALDEN, Oregon
GENE GREEN, Texas LEE TERRY, Nebraska
LOIS CAPPS, California MIKE FERGUSON, New Jersey
HILDA L. SOLIS, California JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
----------
Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 3
Hon. Charles W. ``Chip'' Pickering, a Representative in Congress
from the State of Mississippi, opening statement............... 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 101
Witnesses
Matthew Salmon, President, CompTel............................... 6
Prepared statement........................................... 9
Larissa Herda, Chairman, President and Chief Executive Officer,
tw telecom, Inc................................................ 16
Prepared statement........................................... 18
Carl J. Grivner, Chief Executive Officer, XO Communications...... 47
Prepared statement........................................... 49
Catherine Avgiris, Senior Vice President and General Manager,
Voice Services, Comcast Cable.................................. 66
Prepared statement........................................... 68
Jonathan Banks, Senior Vice President, Law and Policy, United
States Telecom Association..................................... 75
Prepared statement........................................... 77
Submitted Material
Edison Electric Institute, statement............................. 102
ISSUES IN TELECOMMUNICATIONS COMPETITION
----------
TUESDAY, JULY 22, 2008
House of Representatives,
Subcommittee on Telecommunications
and the Internet,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:10 p.m., in
room 2123 of the Rayburn House Office Building, Hon. Edward J.
Markey (chairman) presiding.
Members present: Representatives Markey, Gonzalez, Stearns,
Upton, Pickering, and Terry.
Staff present: Amy Levine, Tim Powderly, Colin Crowell,
David Vogel, Philip Murphy, Neil Fried, Ian Dillner, and
Garrett Golding.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. I am going to now convene to order this
Subcommittee on Telecommunications and the Internet hearing,
and today's hearing is about several issues affecting
telecommunications competition. This hearing comes several
hearings after other hearings dealing with these issues
including two last year that examined telecommunications
competition in the United States as well as broadband lessons
from abroad.
Looking back, observers increasingly recognize that the
United States started out on the right path by implementing
provisions in the 1996 Telecommunications Act that were
specifically intended to jump-start competition between and
among technology platforms. When the Telecommunications Act was
enacted in 1996, residential consumers did not have any
broadband offerings in the marketplace. Nineteen ninety-six, no
broadband offerings for any consumers. Yet soon after
enactment, deployment by cable and competitive new entrants
prompted the incumbent phone companies to finally deploy such
services to residential consumers. By 2000, the United States
was ranked first in the world, but subsequently regulators
began the ill-considered action of taking the market opening
rules off the books and the United States started to slide down
in international broadband rankings. People may quibble with
the methodology used in such rankings, but regardless of how
you slice it--price, speed, percentage of subscribers--the
United States is clearly no longer on top. Ironically, our
foreign competitors are now enjoying broadband success stories
by adopting and implementing many of the policies that were
embodied in the Telecommunications Act but that the FCC has
subsequently abandoned.
Several pressing competition issues including pole
attachment rates, interconnection issues, number of reporting
time frames, copper wire retirement, and forbearance
legislation are before the subcommittee today, and each of
these issues, if resolved correctly, can help promote greater
broadband deployment, speeds, and consumer choice. These issues
also highlight the repercussions caused by the FCC's regulatory
reclassification of services such as broadband access to the
Internet. This semantic confusion and the ensuing regulatory
uncertainty leave countless carriers and industry participants
without clear direction as to their legal rights and
obligations under the law. The fact that one incumbent
provider, Vermont Telephone, felt that it was empowered to deny
interconnection to another provider shows how far some in the
industry as well as at the FCC have strayed from the intent of
Congress in the Telecommunications Act of 1996.
The continued invocation of intuited ancillary authority
under Title I of the Telecommunications Act to alternatively
modify, waive or plug statutory holes in our Nation's
communications laws and regulations is untenable in the long
term, in view. Congress should address these issues and others
including broadband consumer protection issues comprehensively
in the next Congress as part of overarching broadband policy
legislation.
Today's hearing is also a formal legislative hearing on
H.R. 3914, a bill offered by Chairman John Dingell and myself
addressing forbearance issues. This legislation fixes a glaring
problem in the Telecommunications Act by removing the so-called
``deem granted'' provision contained in section 10 of the
Telecommunications Act. This provision currently permits
automatic deregulation of duly enacted statutes if the
Commission fails to act within the statutory time period. This
can occur even if a tie vote demonstrates no clear majority
supports such deregulation. With the Commission having
permitted forbearance on a two-two tie previously and possibly
having just four commissioners serving early next year, this
concern is not purely theoretical. If there is a clear majority
to support forbearance on specific obligations, then let us
have the FCC act in timely fashion with written justification
to approve such forbearance. But an agency's inability to act
should not result in the removal of statutory duties that may
have taken Congress years and a clear Congressional majority to
enact.
In addition, I continue to be concerned about the process
by which the Commission considers forbearance petitions. In the
past, industry petitioners have gained the proceeding by filing
amendments to their petitions so late in the time period for
consideration that effective parties and the public have no
meaningful opportunity to consider and respond to the proposed
amendments. The Commission has an open proceeding to reform
this obvious abuse to the process, and I urge the Commission to
act to protect the integrity of the proceedings and the public
interest.
I want to thank all of our distinguished witnesses for
their willingness to participate here today.
I now turn to recognize the ranking member of the
Subcommittee on Telecommunications and the Internet, the
distinguished gentleman from Florida, Mr. Stearns.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Good afternoon and thank you, Mr. Chairman,
and I welcome all our witnesses this afternoon. The main focus
of this hearing frankly is on Chairman Dingell's bill, which is
H.R. 3914, to eliminate the deemed granted language from the
Communications Act forbearance provision. And with this panel,
I am sure we will get a balanced treatment on both sides, and
Mr. Chairman, you brought out several points. I hear you
continually mention how the United States is lagging in
broadband. I am reminded that Dr. Ford, who testified at one of
our hearings, who used to work for the FCC and now is with a
think tank, he showed that the OECD ranking misrepresents the
degree of broadband deployment in the United States. We have
more broadband subscribers than any other nation. I don't know
that I can let that go because I think there is some question
about the United States lagging so much but I know we can
certainly do better.
We have more competition and better technology than ever
before, my colleagues, and the market is evolving faster than
either the FCC or Congress themselves can keep up with.
Consumers clearly benefit from the accelerating convergence of
technologies that allow for vibrant, cross-platform competition
in voice, video and broadband. As Congress and the FCC evolve
the regulatory environment, they should do so on a
technologically neutral basis that creates parity among the
different types of providers regardless of the platform.
The deemed granted language was designed to ensure that the
FCC would not let petitions for deregulation languish and so
that Congress would not need to go through the time-consuming
legislative process every time the market outpaced the law,
which as we have seen over the last two decades is quite a
common occurrence.
Our posture prior to 1996 was regulating unless it could be
proven that regulation was not necessary. This led to
overregulation and stifled growth and innovation. With the 1996
Act, as the chairman pointed out, flipped it and instead of
regulating by default, the burden was switched to the FCC to
defend regulation of telecommunications carriers. This change
led to the elimination of many arcane and unnecessary
regulations and is partly responsible for the tremendous growth
and innovation we have seen in the past 12 years. In this
market environment, the FCC should have the burden to
demonstrate that its regulations are still necessary.
The deemed granted provision is having the intended effect.
Various segments of the industry including both incumbent and
alternative providers have filed 91 petitions. Under the threat
of petitions being deemed granted, the FCC has ruled on 96
percent of them. Moreover, the FCC has not been granting
petitions indiscriminately. Of the 87 petitions the FCC acted
on, it denied a percent in whole or part and approved 23
percent. So without the deemed granted language, the FCC is
unlikely to have ruled in as timely a manner as they did, if at
all. The result: we would still be stuck with many outdated and
overly burdensome regulations that do not apply to the new 21st
century technology. Perhaps much of the innovation we have seen
would not have occurred.
The deemed granted language should be retained because it
is critical to ensuring the FCC acts in a timely way. My
colleagues, nevertheless, some in industry have raised
questions about the FCC's procedure for evaluating these
petitions. We need to work to reform the process, not gut the
language that makes the provision work. That is why last
October I and a number of my colleagues authored a letter
asking the FCC to improve and reform the process so that all
parties and the FCC can evaluate all the factual evidence in
support or opposition of a particular forbearance request. The
letter expressed concern with the current forbearance
proceedings and whether or not adequate procedures are in place
to ensure that a rigorous analysis is conducted. Sometimes
petitions are incomplete when they are filed and only at the
last minute is all the information submitted. We should be
focusing our attention on that kind of FCC process reform, not
striking the deemed granted.
Another issue that needs further examination is pole
attachments. I do not know what the right answer is but the
rules that govern attaching communications equipment to poles
are a mess. The FCC needs to start to clear this up while
keeping in mind that any rate increase could damage broadband
penetration. I hope our witnesses today can help us better
understand the issues here today and help us to move forward.
So Mr. Chairman, I think this is a very timely hearing.
While I do not necessarily support eliminating the statutory
deemed granted provision, the FCC's forbearance process is in
need of reform and I look forward to working with you and other
committee members to get it conducted fairly and greater
transparency in the forbearance process. Thank you, Mr.
Chairman.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Texas, Mr. Gonzalez.
Mr. Gonzalez. I waive opening.
Mr. Markey. The gentleman's time will be reserved. The
chair recognizes the gentleman from Mississippi, Mr. Pickering.
OPENING STATEMENT OF HON. CHARLES W. ``CHIP'' PICKERING, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSISSIPPI
Mr. Pickering. Mr. Chairman, I thank you for this hearing
and want to commend you for the effort.
Forbearance is a good and necessary thing as part of the
1996 Act so that we can update and modify as markets change and
evolve but there are possible problems with the deemed granted
that if we could have a Commission with only four instead of
having the full five and that could be a very real possibility
coming the first of this year. We would not want to see a
loophole created where a rash of petitions are filed and then
the inability to really thoughtfully act on the forbearance
petitions as has been done in large part so far to date.
So I commend the chairman of the subcommittee for this
effort. I think it closes a loophole. It gives certainty. It
maintains deadlines and the forcing requirement that the FCC
truly act on these petitions. I think it is a good balanced way
with this bill that we can have a workable forbearance policy,
certainty in the market and that the FCC is still required to
act in a timely way, and so I commend you for this hearing and
look forward to hearing the witnesses today on the panel, not
only on forbearance but other issues that are affecting
competition in the marketplace, and with that, I yield back,
Mr. Chairman.
Mr. Markey. Great. The gentleman's time has expired. The
chair recognizes the gentleman from Michigan, Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, good afternoon, and it is nice to be back.
I appreciate that we are having this hearing today and seeing
our former colleague, Mr. Salmon, among us. So nice to have you
here, Matt.
I am interested in hearing from our witnesses regarding
this legislation. The trend in the telecommunications sector is
toward development of advanced technologies and increased
competition. Deregulation has successfully promoted investment,
innovation and more competition, benefiting consumers across
the board. In my view, the addition of section 10, the deemed
granted forbearance provision to the Communications Act, was
indeed a very positive development. It is clear to me that as
the level of competition in the market increases, the amount of
government regulation should decrease, and I hope that we would
all agree that markets do a better job of protecting consumers
than regulators do, and in a competitive market we should
permit market forces to work and not interpose government
regulators between providers and consumers. All that does is
impede the competition that we all want to see.
The number of consumer choices and services available has
significantly grown as we trend away from regulation. When
competition is present, we must continue the course away from
regulation, and as new services and technologies become
available, we must avoid the lure of government red tape.
Yet it seems that the FCC is sometimes reluctant to pull
back and allow those market forces to work. It sometimes
inserts itself between consumers and providers, frustrating the
operation of market forces. I believe that it is important that
FCC decisions should be made deliberately and that a written
explanation of the Commission's rationale should be made
available to the public. But the deregulatory process of
section 10 helps to correct the regulatory bias of the
Commission, and in my view, the deemed granted language should
be retained. It is a pro-consumer provision that helps to keep
the agency from interfering with the relationship between
buyers and sellers and allows the consumers to benefit from the
operation of market forces including both incumbent and
alternative providers to make sure that they have run through
the full process, and as my colleague from Florida, Mr.
Stearns, indicated, the FCC has issued orders for 96 percent of
the petitions. Without the deemed granted language, the FCC is
unlikely to have ruled on the petitions in as timely a manner,
if not at all. Only four petitions have been deemed granted.
Only one was controversial of those, and of the other three,
one was unopposed and two facilitated telephone relay services
for people with disabilities.
Some in the industry have questioned the FCC's procedures
for evaluating petitions. The answer, I think, is to reform the
FCC process and not gut the language that makes the statutory
provision work, and I yield back the balance of my time.
Mr. Markey. The gentleman's time has expired.
All time for opening statements from members has expired.
We are now going to turn to our very distinguished panel,
and our first witness is the Hon. Matt Salmon, who is the
President of Comptel, a trade association representing
competition broadband providers. Mr. Salmon served in the U.S.
House of Representatives from 1995 to 2001, and at the time was
the only member of Congress in history to speak Mandarin
Chinese, which is pretty close to the skill level you need to
understand telecommunications regulations. So we welcome you,
sir. Whenever you are ready, please begin.
STATEMENT OF MATTHEW SALMON, PRESIDENT, COMPTEL
Mr. Salmon. Thank you. I might as well give my speech in
Mandarin, then nobody can argue with anything I say.
Chairman Markey, Ranking Member Stearns, other members of
the subcommittee, it is an honor to be here today. As Chairman
Markey said, my name is Matt Salmon. I am the President of
CompTel. As many of you know, Comptel is the face of the
competitive telecommunications industry. Our members are
telecommunications service providers and their supply partners
and they offer a wide range of wireline, wireless, and VoIP
services. Our industry expanded exponentially when passage of
the 1996 Telecommunications Act made competitive entry into the
local telecommunications market possible. I am proud to say
that our members have competed and continue to compete
vigorously and with innovative technology. Although DSL
technology was sitting on the shelf collecting dust in the Bell
world, the new entrants were the first to deploy that
technology. Only after competitors took action to respond to
what consumers wanted and needed, the Bell companies finally
responded to deploy DSL. This is the hallmark of the
competitive telecommunications industry. Our companies push for
and deploy innovative technologies before the big phone
companies deem those consumers worthy of such services. Other
examples are triple play, Ethernet over copper, fixed wireless,
nationwide high-speed services over advanced fiber networks,
and the list can go on and on.
I cannot overemphasize that the competitive industry has
spent billions investing in broadband technologies and
infrastructure. It is not just the phone and cable companies,
as some would like Congress to believe, and the investment is
not solely in just deploying new infrastructure. Our companies
also maximize existing infrastructure including the legacy
copper facilities that we lease from the Bells. For the
telecommunications future of the United States, it is all about
broadband, and without the competitive industry, this Nation
will continue to drop in the broadband ratings. The policy and
goal of giving all American consumers and businesses access to
broadband options and services depends on numerous platforms
competing, not just two.
Mr. Chairman, I believe I have a unique perspective because
before running for Congress I spent 13 years as a
telecommunications executive for one of the Bells. I began my
career with Mountain Bell, which after the breakup of the Bell
system became U.S. West. As many of you know, they are the
predecessor to Qwest Communications. And during the creation
and passage of this Act that we are talking about today, they
and the other Bell companies were all about competition. They
wanted to compete in the very lucrative long-distance markets.
As such, the deal for Qwest and other Bells to open their
networks to competitive companies like ours seeking to enter
into the local markets was struck.
I am familiar with this deal as I was a member of Congress
from the First Congressional District in Arizona, when we were
lobbied intensely by Qwest and other Bells during the passage
of that act. During my 6-year tenure in Congress, I remember
few issues that were lobbied more intensely or where more
promises were made by the Bell companies. In fact, it reminded
me of an old poem my father used to recite to me: ``Just Before
Christmas, I'm As Good As I Can Be.'' The ink was not even dry
on the President's signature before the Bells challenged the
constitutionality of the Act. Furthermore, a full decade of
costly litigation ensued at the FCC on the rules the Commission
crafted to implement the Act. These rules are the reason
competition exists in a market where the majority of the lines
to consumers and businesses are owned by a handful of large
companies.
While many aspects of the Act enabled and propelled
competition, section 10 has been really troubling. This small
section actually has the ability to undo all the good the rest
of the Act seeks to accomplish. I commend Chairman Dingell for
his introduction of H.R. 3914, which addresses one of the most
troubling parts, and you have talked about that. I would just
ask you on the whole deemed granted issue, imagine a committee
or a subcommittee here in these hallowed halls in Congress
where a tie vote is enough to pass the bill or where three
bills are scheduled, only two are heard, and because of that,
all three pass. We would all say that was ludicrous, and it
would be, but essentially that is the type of process that we
have to deal with at the FCC, and passage of 3914 would go a
long way toward fixing this deemed granted provision, and we
would all hope that action could also be taken to stop the
revolving door of multiple filings of forbearance petitions on
exactly the same issues. For example, less than 100 days after
Verizon's forbearance requests were soundly defeated at the
FCC, they filed again in two of those markets. Nothing really
changed. Not only do these frivolous petitions diminish the
Commission's time and capacity to focus on critical issues like
USF reform, media ownership, digital transition, and other
issues of high importance to Congress and the American people,
they forced the competitive industry to use valuable capital
fighting these frivolous petitions. We would rather use the
millions upon millions of dollars that we spend advancing our
issues and research and development in growing our companies
and helping our customers.
One final note on section 10 of the Act. I don't believe we
ever envisioned when we passed the Telecom Act that we would
have a provision that could unilaterally undo the very act
itself. Essentially that is what is happening. What we need to
do is focus on this fact: there is virtually only one wholesale
provider that gives us access to the last mile, the Bell
Company. Once reasonable access to the last mile is taken away,
the marketplace is left with a full monopoly on access to
business customers' services and a duopoly between cable and
the Bells on residential services. How does that protect
consumers and how is that in the public good, as Section 10
purports to do?
Mr. Chairman, our membership is diverse but our needs are
very uniform. Whether it is dealing with special access,
unbundled network elements, interconnection or pole
attachments, all we are asking for is to continue to have
access to the monopoly infrastructure at the cost-based rates,
the very rights provided for our companies under the Act. Our
members did not build out networks in a monopoly world, and
under the old telecommunications welfare program where state
commissions provided a guaranteed rate of return. Every penny
invested in infrastructure by the Bells before the Act was met
with a guaranteed rate of return. Unlike the Bell companies, we
did not inherit a government-sponsored network. Our investors
bore all the risk with starting our companies and building our
networks. We are not asking for any handouts or giveaways, and
heaven forbid, we are not asking for any earmarks. We do not
come before Congress and ask for the rules to change before we
invest in broadband. We come before Congress to say we are
investing in broadband and we will continue to invest. Please
don't change the competitive provisions and rules of the Act.
The regulatory environment after years and decades of the Bell
Company sponsored litigation is now relatively stable and we
want it to remain that way so the competition can continue to
thrive, technological innovations can continue and grow, and
more and more Americans can have access to advanced
technologies. As I said before, it is all about broadband, and
whether all customers and businesses have the access and the
range of choices that meets their needs, that will happen with
the competitive industry.
Thank you, Mr. Chairman. I appreciate this opportunity.
[The prepared statement of Mr. Salmon follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Salmon, very much.
And our next witness is Ms. Larissa Herda, who is the
Chairman, President, and Chief Executive Officer of tw telecom,
a $2 billion competitive broadband provider. She also serves on
the Economic Advisory Council of the Federal Reserve Board of
Kansas City. We welcome you, Ms. Herda. Whenever you are ready,
please begin.
STATEMENT OF LARISSA HERDA, CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, TW TELECOM, INC.
Ms. Herda. Good afternoon, Chairman Markey, Ranking Member
Stearns and distinguished members of the subcommittee. My name
is Larissa Herda and I am Chairman, CEO, and President of tw
telecom, formerly known as Time Warner Telecom. Thank you for
the invitation to appear before you today.
Encouraging broadband deployment is an important national
policy objective. Deploying fiber networks in the communities
where we do business if the heart of tw telecom's business
plan. Although we have spent billions of dollars deploying
broadband infrastructure, we still have no choice but to rely
on services provided by third parties in certain situations.
For example, we have no choice but to purchase special access
and interconnection from the ILECs. As many of you know, the
forbearance provision of the Telecommunications Act and the
FCC's implementation threaten to eliminate our ability to
obtain these vital services.
I strongly support the legislation filed by Chairman
Dingell and Chairman Markey and cosponsored by a bipartisan
group of this committee. I appreciate the subcommittee's
interest in reviewing the forbearance process, which is in
drastic need of reform. In addition to passing legislation that
removes the deemed granted language, please do what you can to
convince the FCC that it is critical that they adopt procedural
rules to govern the forbearance process.
Today, however, I would like to focus my opening comments
on our need to attach our fiber facilities to utility-owned
poles. In order to deploy fiber and deliver broadband services
to our customers, tw telecom must be able to obtain access to
poles at non-discriminatory rates. Unfortunately, the current
rules governing pole attachments are seriously flawed. Under
the existing rules, pole owners charge two different regulated
rates for pole attachments. One applies to telecom carriers and
the other applies to cable companies. All of these entities
provide broadband service to end-user customers and this is a
very important point to emphasize. Both telecom carriers and
cable operators provide these services. But pole attachment
rates are determined based on which of the legacy regulatory
classifications applies to the service provider, and the rates
applied to a telecom carrier of broadband are two to three
times higher than the rates applied to cable providers of
broadband.
These rate differences exist even though pole attachments
providing telecom service do not cause the pole owner to incur
higher costs or use more space than is the case with the cable
attachment. This produces particularly egregious results and
instances where a cable company leases a fiber facility to us.
Even though we are using the exact same attachment, our use of
the cable company's facility to provide telecom services causes
the rate for pole attachments supporting that fiber to increase
two to three times, even though no additional space on the pole
is required.
To the extent that tw telecom provides services like
broadband Internet access in competition with cable operators,
the different rates yielded by the pole attachment rules skew
competition. They cause competitors to pay dramatically
different rates for an identical input that they have no choice
but to buy. In summary, I urge you to press the FCC to adopt a
single rate that applies to all competitors that use pole
attachments to provide service.
In January the FCC adopted an NPRM in which it tentatively
concluded that it should adopt a single rate. Since that time,
all industries including many pole owners have commented on the
FCC's proposed rulemaking and all agree that a single rate is
appropriate. We would appreciate the subcommittee using its
oversight role to ensure that the Commission adopts a single
pole attachment rate for all providers of broadband services.
This will encourage deployment of broadband networks critical
to a vibrant economy.
Thank you for your time and attention today.
[The prepared statement of Ms. Herda follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Great. We thank you so much.
And now our next witness, Mr. Carl Grivner, is the Chief
Executive Officer of XO Communications, a competitive broadband
provider with over 1 million miles of fiber deployed. Mr.
Grivner has served in various positions with Ameritech Cable
and Wireless and IBM.
STATEMENT OF CARL J. GRIVNER, CHIEF EXECUTIVE OFFICER, XO
COMMUNICATIONS
Mr. Grivner. Good afternoon, Chairman Markey, Ranking
Member Stearns and members of the subcommittee, and thank you
for the opportunity to appear this afternoon. I also want to
thank Chairman Dingell, who is not here, and Chairman Markey
for introducing the bill, H.R. 3914. I think it addresses the
problems of deemed granted forbearance petitions.
Forbearance is part of the broader issue of competition and
broadband availability. Broadband availability is one of the
most important challenges in telecom. The United States does
lag behind many nations and is falling further behind. Other
countries use all of their resources to make broadband widely
available, but in the United States, the ILECs constrain
broadband by fighting competitive access to the legacy network,
and as we all know, competition is one of the key drivers of
broadband.
XO is one of the key competitors in helping to accelerate
broadband development in the United States established in 1996
as part of the Telecom Act. We have invested over $7 billion in
building advanced networks. We have over 140,000 business
customers across the United States and we provide a variety of
IP services to our customer.
But one significant barrier to broadband deployment remains
and that is the last mile access to those customers, and it is
critical for competition. With the Act, Congress mandated
access to the last mile because ratepayers financed legacy ILEC
networks already in the ground. By putting capital into their
networks, they were guaranteed a rate of return for basically
100 years, and still today in over 90 percent of the business
market, the ILEC loop facilities are the only route into the
building, and XO pays for that route. We pay hundreds of
millions of dollars each year for that last mile of
connectivity. Now, we prefer not to rely on the ILECs to fill
out networks but it would cost over $50 billion to build to the
2.3 million buildings within reach of our network, and the FCC
agrees that it is not cost-effective to duplicate existing
facilities.
Copper networks aren't dead. They are alive and doing very
well. Copper services most businesses and 100 million
households. Seventy-five percent of all telephone access lines
are home run copper. Copper facilities are a broadband
resource. Copper has evolved over the years beyond analog,
voice, and dial-up. It is now a leading broadband
infrastructure. Us, XO, others at this table offer Ethernet
over copper at speeds up to 10 megabits per second and soon you
will have 100 megabits per second over those little copper
wires that have been existing in the network for almost 100
years. Yet the Bells are leveraging their copper cartel to
restrict access to that last mile. The ILECs control access to
nearly all last mile facilities. They want to control the
supply through copper removal. They want to control access and
pricing through the use of the forbearance petition and they
want to squeeze out broadband competition.
So let us start with what is wrong with copper retirement.
As ILECs deploy fiber, they disable the copper loop. It harms
the public interest in at least three ways: it destroys an
alternative broadband source, it threatens public safety--
copper supplies its own power--and it poses a danger to
national security. It removes redundancy in the event of an
emergency. The FCC should adopt a formal process for approval
of copper retirement. ILECs must prove that copper retirement
is in the public interest. Current rules give the ILECs free
reign. ILECs simply file notice to retire the copper and that
is the end of it. Consumers, which we are concerned about, have
no recourse.
If copper destruction is dire, forbearance is even more
horrific. The 1996 Act included forbearance as a tool to
eliminate obsolete policies. It worked until the ILECs hijacked
forbearance to raise rates on the last mile and to take out
competition. The most dangerous aspect is deemed granted. It is
a decision through inaction: don't do anything and you will get
what you want. It is a lack of an appealable order. The
Committee has taken the right steps with H.R. 3914, which would
eliminate forbearance deemed granted. But even with this
legislation, there are still some problems with forbearance.
Private parties can dictate the FCC's agenda and resources.
Frivolous petitions are filed as placeholders to start the
deemed granted clock. Supporting data is incomplete or filed
months or even a year later, and just let us see what sticks.
Petitions are filed at will. A rejected petition can be re-
filed the next day: that didn't work; let us try this. Every
frivolous ILEC petition places a heavy burden on the resources
of the FCC and the industry. The lack of rules encourages
forbearance petitions.
Last fall, XO and other competitors petitioned the FCC to
create long-needed rules governing forbearance, and I want to
thank the members for stressing the importance of having a
deregulatory process based on rules and procedures. At a
minimum, the rules should require a forbearance petition to be
complete as filed, require the FCC to seek public comment on
petitions, set guidelines for the treatment of confidential
data, and forbid late filed data by petitioners.
I want to conclude my remarks and look forward to your
questions. Thank you.
[The prepared statement of Mr. Grivner follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Grivner, very much.
Our next witness is Ms. Cathy Avgiris, who is Senior Vice
President and General Manager for voice services for Comcast.
In addition to being the Nation's largest broadband provider,
Comcast is also the Nation's fourth largest residential phone
provider. We welcome you. Whenever you are comfortable, please
begin.
STATEMENT OF CATHERINE AVGIRIS, SENIOR VICE PRESIDENT AND
GENERAL MANAGER, VOICE SERVICES, COMCAST CABLE
Ms. Avgiris. Good afternoon, Mr. Chairman and members of
the subcommittee. Thank you for the opportunity to testify
today. My name is Catherine Avgiris and I am the Senior Vice
President and General Manager of Voice Services for Comcast
Corporation. I am currently responsible for overseeing all
aspects of Comcast voice business. I last testified before the
subcommittee on the E911 bill last year and I would like to
congratulate this subcommittee and Congress for passing this
important piece of legislation. It is good to be back with you
today.
I am pleased to report that since I last testified,
Comcast's voice service continues its rapid growth, as the
cable industry continues to provide consumers with their first
real competitive choice to the incumbent telephone companies
since Congress passed the Telecommunications Act of 1996.
Today, Comcast's voice service alone reaches more than 44
million homes nationwide. In just the last 3 years, more than 5
million customers have chosen the great savings, reliability,
and convenience that our competitive service provides, and as a
result of this phenomenal consumer demand, we are now the
largest facilities-based competitive provider of residential
voice service in the United States.
Facilities-based competition from all cable providers is
delivering real savings for consumers and competition that has
been delayed for nearly a decade by litigation and regulatory
gamesmanship. Economic experts estimate that households will
save $95 billion over the last 5 years and small businesses
will save $16 billion as a result of this expanded competition
in the voice business. That is a total of more than $111
billion in savings. Our actions and our investments prove that
we believe in competition and we would rather compete with the
incumbent local telephone companies in the marketplace than
engage in regulatory battles with the FCC or in the halls of
Congress. But the incumbents are still dominant with an 88
percent share of the market, and this gives them the ability
and the incentive to frustrate innovation, choice, and
competition, especially in those remaining areas where
effective competition is dependent on mutual cooperation with
competing providers.
Let me give you three examples. First, cable providers such
as Comcast have to rely on incumbent telephone companies to
interconnect with our network in order to provide true
competitive choice. Interconnection on terms that are not just,
reasonable, and non-discriminatory is tantamount to stopping
competition dead in its tracks. Unfortunately, the incumbents
continue to use interconnection as a weapon for impeding
competition. For example, we are currently in a dispute with an
incumbent that is refusing to interconnect with us. Put simply,
denial of interconnection means denial of competition and
denial of consumer choice. Other local telephone companies use
their own tactics to delay or frustrate our entry, and as more
consumers choose Comcast, the incumbents become more creative
in developing roadblocks to competition.
Second, consumers find it critically important to keep
their phone numbers when they switch providers. Incumbent
telephone companies cannot be allowed to drag their feet to
impede the number porting process. They must cooperate with
their competitors to ensure that porting works smoothly. While
wireless carriers have voluntarily agreed to allow their
customers to switch their phone numbers to a new wireless
provider in a few hours, the current industry standards for
wireline providers allow the incumbents to take up to 4
business days to switch a number. But the reality is that
customers typically have to wait a week to port their wireline
number to Comcast, even though this transaction requires no
more than a few hours, at most, to complete. Customers expect
and should be given wireline porting that is as convenient and
hassle-free as wireless porting. To that end, the FCC has
proposed cutting the standard interval in half and Comcast
strongly supports that proposal. Unfortunately, most of the
incumbents have opposed that initiative. We hope that Congress
or the FCC will implement this pro-consumer proposal, and I
remind the Committee that number porting is a mutual obligation
on both incumbents and competitors. We are ready, willing and
able to port numbers more quickly as well.
Third, we know that one incumbent telephone company has
attempted to undermine the number porting process through a
practice known as retention marketing. Confidential information
exchanged between carriers for the sole purpose of affecting
the port is being used to keep existing customers from
switching their voice service to a competitor. In response to a
complaint, the FCC recently concluded that this practice is
improper, and just last week the D.C. Circuit Court rejected
Verizon's attempt to stay that important ruling. As these
examples show, Congress and the FCC cannot assume that just
because facility-based voice competition has emerged, all is
well. The incumbents will continue to look for ways to stifle
competition, even as they call for less regulation of their own
voice business.
In closing, we note our support of H.R. 3914 and believe
that there should be no regulatory forbearance by default.
Thank you again for the opportunity to testify today and I look
forward to answering any questions.
[The prepared statement of Ms. Avgiris follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you very much.
And our final witness is Mr. Jonathan Banks, who is Senior
Vice President for Law and Policy at U.S. Telecom, a trade
association consisting of the Nation's largest phone companies.
Prior to joining U.S. Telecom, Mr. Banks held positions with
Bell South and with the Federal Trade Commission. We welcome
you, sir. Whenever you are ready, please begin.
STATEMENT OF JONATHAN BANKS, SENIOR VICE PRESIDENT, LAW AND
POLICY, UNITED STATES TELECOM ASSOCIATION
Mr. Banks. Thank you, Chairman Markey, Ranking Member
Stearns and members of the subcommittee, and thank you for the
opportunity to testify before you.
Consumers today are clearly benefiting from an accelerating
convergence of technologies that have created the sort of
competition that we were all looking for in 1996. Today,
Comcast has over 5 million voice customers, Verizon has over 1
million video customers, and 16 percent of the households in
this country have cut their wired connection to the telephone
world. Telecoms are in the video business, cable is in the
voice business, and telecom, cable and wireless are all in the
broadband business. Our companies' investment in network
upgrades and competitive video platforms is one example of how
consumers are benefiting from lower prices and higher quality
service today that we all would have envied in 1996. And let me
say, there is nothing that is more important to our companies
than winning new broadband subscriptions in the market and they
are doing everything they can to sign up customers, as is
Comcast, other cable companies, and wireless companies.
This progress has created the urgent need for regulatory
parity more broadly than just within the telephone industry but
across all these platforms. The United States Telecom
Association represents broadband service providers from the
very largest to the very small companies, from urban providers
to purely rural providers, and our members provide broadband on
both a fixed basis and on a mobile basis. We have companies
that are very small that are providing IP-based video services
in competition with cable. We have companies that are small and
large operating wireless broadband networks.
So let me step back for a second and give you an overall
perspective of how we see all of our industries contributing to
the economy. The last several years have brought telecom, media
and technology together into one ecosystem where each of our
sectors depends on the other for innovation and for developing
products to attract consumers. Telecom, media, and technology,
or TMT, is now the fourth largest gross domestic product, and
it is the leading contributor for growth and productivity
across our entire economy. About half of our Nation's
productivity growth comes from the TMT sector. The TMT sector
also generates over 10 million jobs, many of which are high
paying and in high-growth sectors of the economy. In fact, if
you take the annual investment made by the U.S. government to
put a man on the moon, add to it the annual investment to
create the interstate highway system, you will find that that
comes in today's dollars to less than half of what our private
companies are investing in broadband networks, in software, and
in technology, and it is that investment that is driving the
economic growth in jobs that come from our sector. So when we
look at policy issues, we look to see that this healthy
investment trend will not be harmed by regulatory decisions,
and a key ingredient to the continued success of the investment
and the pro-consumer benefits are regulatory parity across the
sectors so that the possibilities for innovation are as wide as
possible.
Our members support the goal of H.R. 3914 to improve the
forbearance process. Congress created the process in 1996 in
recognition of the fact that the communications industry was
changing rapidly and that many FCC regulations were either
obsolete in 1996 or would soon be obsolete. In fact, Congress
viewed the importance of regular review of FCC rules to be so
important that not only did they pass section 10 but they added
section 11 to the Act, which required the FCC biannually to
review its rules and regulations and get rid of the rules and
regulations that were no longer necessary to the public
interest. The FCC has effectively read section 11 out of the
Act, leaving only section 10as a vehicle for updating
telecommunications regulations.
I think we have discussed some of the statistics here.
Since 1996, there have been 87 petitions that the FCC has
issued orders on, and the orders have roughly put a third of
the petitions in the denied status, a third in granted, and
roughly a third in partial grants or denials. So the FCC has
acted judiciously on these petitions. We are certainly aware of
the Verizon petition and the controversy that that has
engendered, which I do think is in large part due to the
absence of any accompanying written order making review
difficult for Congress or the courts and difficult for anyone
to ascertain the exact scope of the order. However, the FCC has
taken some steps to improve this process. They have issued a
notice of proposed rulemaking to improve the procedures for
forbearance and this Congress is considering H.R. 3914, which
to us does establish a read deadline for FCC action, and
without a real deadline, FCC action can be delayed easily for
years, putting the industry that labors under a lot of
regulations at a distinct disadvantage.
My written testimony discusses a number of the important
issues that you have set out here for comment and that the
other panelists have commented on, and I would be happy to
discuss those with you. Thank you.
[The prepared statement of Mr. Banks follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Banks, very much. Now we will
turn to questions from the subcommittee members.
Ms. Avgiris, your testimony states that H.R. 3914, the
legislation that Mr. Dingell and I have introduced, would
prevent forbearance by default and force the Commission to
expressly rule on a petition so that it is not automatically
granted. Does Comcast support passage of H.R. 3914?
Ms. Avgiris. Yes.
Mr. Markey. Mr. Salmon, could you give us a yes or no on
that?
Mr. Salmon. Unequivocally yes.
Mr. Markey. Ms. Herda?
Ms. Herda. We agree as well.
Mr. Markey. Mr. Grivner?
Mr. Grivner. Yes.
Mr. Markey. Mr. Banks?
Mr. Banks. We would like to work with the Committee to
ensure that there is some way that the FCC has a real deadline
to act.
Mr. Markey. Mr. Banks, your testimony indicates that you
support the goal of H.R. 3914 to improve the forbearance
process at the FCC, and I agree that the forbearance process
does need reform. But H.R. 3914 does not address the FCC
process but rather the deemed granted loophole. Do you support
elimination of the deemed granted loophole or not?
Mr. Banks. We are concerned that simply eliminating the
deemed granted status without some other inducement to force
the FCC to act would leave us with outdated regulations for
years and years and years and no way to get out of them.
Mr. Markey. So even with good congressional oversight, you
don't think that we can keep the FCC accountable to our intent?
Mr. Banks. I think congressional oversight helps but the
FCC's past record suggests that things do sit for years after
court remands, for example, without action.
Mr. Markey. Mr. Banks, under section 10, do you agree that
automatic forbearance from interconnection, for instance, could
occur on a two-to-two tie?
Mr. Banks. Yes.
Mr. Markey. Don't you agree that such sweeping action is
unfair on a tie vote or through agency inaction?
Mr. Banks. There is clearly legitimate concern over agency
inaction and tie votes, yes.
Mr. Markey. If for 221 years the Supreme Court on a four-
to-four tie had to agree with the person who had brought the
case and whoever brings a case can get it to four-to-four wins
rather than forcing a five-to-three vote to change the laws of
the United States, that that would be quite a different America
that we would live in if you did not have to have a majority of
the Supreme Court to change a law. Four-to-four would change
it. And so that is kind of at the heart of what we are doing.
On our committee here, if it is 27 to 27, you lose. If it is
eight to eight, you lose. If it is four to four, you lose. You
have to get a majority to change the status quo. So this
standard I don't think should be any different for the FCC, do
you think, Mr. Banks?
Mr. Banks. I think you have a very fair point about the
difference between the Supreme Court rules, for example, and
the FCC rule on forbearance here.
Mr. Markey. Now, Ms. Herda, you have heard proposals from
others that pole attachment rates should be made uniform by
making cable operators pay more and telecom companies a little
less. What, in your view, are the implications for broadband
deployment of such a plan?
Ms. Herda. Well, I think that with regard to the pole
attachment rates, I am not an expert in that area, but I
understand that the FCC has gone through quite a process to
establish the cable rate, and that various PUCs have also
agreed that the cable rate is the appropriate rate and it has
been held up in the federal courts, so we advocate the cable
rate there. But I think at the end of the day there needs to be
a process to determine if that rate is the correct rate and
that a fair cost recovery is appropriate.
Mr. Markey. Should we insist on a rate that is uniform and
also promotes broadband deployment?
Ms. Herda. Yes.
Mr. Markey. You think we should?
Ms. Herda. Yes.
Mr. Markey. Mr. Grivner, what are the implications for your
business and others if Verizon and others disable the copper
loop facilities to the home or business?
Mr. Grivner. Well, for our business, it removes our ability
to provide broadband access to our customers, and the copper
loop, as I said in my opening remarks, is alive and doing very
well. There have been technologies developed in this country
that have expanded the capabilities of copper loops from, as I
said earlier, 10 megabit, now up to 100 megabits of capability
out of simple copper that exists in the ground today. So I
think it would be devastating certainly for our businesses but
I think it is devastating--when we talk about broadband
availability, I think it is. The availability is there, it is
just a matter of using the technology that exists.
Mr. Markey. But they don't allow the copper to be dug up in
Japan or in Great Britain, but here in the United States where
we are supposed to be the leader----
Mr. Grivner. We got a notice in the mail that the copper
has been removed and good luck.
Mr. Markey. How much have you invested in your network
already, Mr. Grivner?
Mr. Grivner. We have invested over $7 billion and actually
have increased our spending over the last 2 years. We have
invested another $400 to $500 million over the last 2 years in
IP technologies to bring broadband to our customers.
Mr. Markey. Thank you. My time has expired. The chair
recognizes the gentleman from Florida, Mr. Stearns.
Mr. Stearns. Thank you, Mr. Chairman.
You know, listening to both sides, and I think Ms. Avgiris
makes some good points. I can empathize with both sides, but
what we have here is, the question is, do we need to regulate?
Affirmative action is needed to prove that we need to regulate
here. Now, there is a possibility that we could have a
compromise, so I think that is what myself and my staff are
looking at here. Knowing the strong opinions of both sides
here, but Mr. Banks, wasn't the whole point of the deemed
granted language to make sure the FCC acts on forbearance
petitions?
Mr. Banks. Yes, sir.
Mr. Stearns. So let me just go to each of you, a question
for each person on the panel, and just give me your honest
answer. I think it is critical that we need the deemed granted
language but I agree that the FCC process needs to be reformed.
I think, Mr. Chairman, there is a possibility we can get
bipartisan legislation here, and here is what I would suggest.
Short of eliminating the deemed granted language, the question
would be for the panel, what kind of reforms would you suggest
to make sure that the forbearance process with the FCC is more
transparent and runs smoothly? That is, for example, when the
process is nearing the end, no one can come back at the last
minute and submit a whole new affirmative plan in which you
don't know anything about it and then you have to answer, which
goes on. So wouldn't things like deadlines for the filing of
amendments and additional evidence address most of the concerns
that have been expressed here and wouldn't that be the crux of
what we could do as reform so that you folks, and I am talking
to Ms. Avgiris, your folks would not be surprised. So I am
offering here what I think might be a compromise language which
is reform at the FCC.
So why don't I start with Mr. Salmon and then I work on
down, just what do you think of the suggestion I had?
Mr. Salmon. Thank you, Mr. Chairman, Ranking Member
Stearns. You pose some very, very provocative thoughts. We
would love to see widespread reform of section 10 but we
believe very, very strongly that Chairman Dingell's bill is a
very, very good start. I think Chairman Markey probably put it
as good as I can put it. It is a very undemocratic process to
allow a two-two vote to constitute a victory or a majority.
There is no other body ever in a democratic society that I know
of where that kind of thought process goes on. It certainly
never went on here. It doesn't go on in the Supreme Court. But
additionally, Mr. Banks said that their goal is to get rid of
antiquated rules and regulations. If all the forbearance
process was used for was cleanup language we would probably be
a little bit more comfortable with the process, but the whole
forbearance process is used to completely undo the entire Act.
It is used to completely obfuscate all the other rules and get
rid of the----
Mr. Stearns. You know I don't have much time, so I need for
everybody else to have a chance, but I ask each of now, Ms.
Herda, the compromise I suggest, do you think that would be
something you could accept?
Ms. Herda. I think obviously process improvements would
certainly help but the problem that we have is that when the
FCC fails to act, it is the competitors that get hurt in the
process with the deemed granted, and we get punished for that.
I am not sure that any process improvement is going to improve
that situation.
Mr. Stearns. So things like deadlines for the filing of
amendments, real deadlines, and additional evidence, you think
that would be an improvement?
Ms. Herda. I think they should have deadlines. I think that
is--
Mr. Stearns. I mean real deadlines.
Ms. Herda. But if they don't meet the deadlines, then to
grant it after things aren't met is the problem.
Mr. Stearns. Let me go to Mr. Banks because I think you are
alone here. Mr. Banks, go ahead. I will give you an opportunity
to speak.
Mr. Banks. I think the FCC is an open docket in which they
have gotten lots of suggestions for process improvements and we
have to keep in mind that the people who use forbearance are
some of the big telephone companies but many of the small- and
medium-size companies who use it, right now there are 12
forbearance petitions pending at the FCC.
Mr. Stearns. No, take my suggestion. What about deadlines
for the filing of amendments, real deadlines so that the CLECs
could see this early on, know what is at stake and there is no
further going on.
Mr. Banks. So there are definitely some process
improvements that I think----
Mr. Stearns. Do you think the process improvements I talked
about you could accept?
Mr. Banks. Yes.
Mr. Stearns. Do you think that is a compromise?
Mr. Banks. Yes.
Mr. Stearns. I hear from you that you are willing to work
on the Dingell bill but you are not necessarily a supporter of
it as are these folks, so I am offering you sort of compromise
that you are saying you could accept?
Mr. Banks. Yes.
Mr. Stearns. OK. Mr. Grivner?
Mr. Grivner. I think we need to fix this. I think we need
to fix it all the way. What you are suggesting are certainly
good suggestions relative to the process but deemed granted as
has been mentioned, if it is still hanging out there, so you
meet the rules but you are still going to get what you want, in
the end is a flawed process.
Mr. Stearns. OK. And----
Ms. Avgiris. I also believe that having strict deadlines
and providing evidence for the record on a sooner basis helps
improve the process, but when you get down to it, if a default
provision is granted of forbearance when you have a two-two
tie, only the competitors are hurt that way.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Texas, Mr. Gonzalez.
Mr. Gonzalez. Thank you very much, Mr. Chairman, and I
commend the ranking member, Mr. Stearns, for coming up with a
good idea. I don't believe it goes far enough. That should be
in place regardless. To be honest with you, I don't know of a
process where you can amend at any time and it especially lends
itself to a great deal of mischief if someone wanted to play it
that way and to game the system. Everybody knows how to
complicate matters and almost assure because of the
complication it extends time, consideration, and then if you
have a deemed granted result, you can see where all this is
going to lead us.
Mr. Salmon, Mr. Banks, let me ask you, on the deemed
granted, now, the FCC hears other petitions and disputes and
requests, not just forbearance petitions, right? In those other
settings, in those other conditions, do we have anything like a
deemed granted provision?
Mr. Salmon. I know of no other process where there is a
deemed granted provision, and additionally, when a forbearance
petition is filed, because of the deemed granted language, the
Commission, if it is working on another project, whether it is
USF or digital, any other number of things, they have to pool
all their resources and put it out to the issue that has a gun
to their head. That is why--it is just policy.
Ms. Herda. What we have also found is that we have no
recourse in the courts, as we have seen, that we have no right
to appeal. In the case of the Verizon issue, it was determined
that we couldn't even appeal it.
Mr. Gonzalez. Mr. Banks, back to that question, do you know
any other hearing, dispute, petition consideration, anything
that also has a mechanism such as a deemed granted if it is not
acted on timely?
Mr. Banks. I think there are a number of procedures at the
Commission involving enforcement actions and maybe some other
things where the Bureau makes a decision, and unless the
Commission rejects it, the decision becomes effectively a
Commission order.
Mr. Gonzalez. Somewhat a cousin to this, so I wouldn't say
you have something is almost direct procedurally. I am just
curious. But there are many aspects of this but it just seems
that you could really do something with a system that
automatically grants the relief just because the decisionmaker
in this case doesn't act, and I don't think we have to go to
the Supreme Court or the United States Congress. We can just
look within the confines of the FCC and find that this may be
very unique. But something of this importance, even if it is
not, and we find something that may be similar, as Mr. Banks
may have pointed out, we are talking about something that
really, and I agree with Mr. Markey, I think could truly impact
competition.
Let me ask Mr. Grivner, I was surprised, and this is my own
ignorance, I just look at the copper wire line as a thing of
the past, but you are talking about speeds that basically would
come under premium category classification by the FCC. Is that
true?
Mr. Grivner. Yes, absolutely. This copper technology,
actually Mr. Banks worked at a company, Bell South, that also
deployed it many years ago, and it has developed here in the
good old United States by several companies. They have taken
existing cop repairs. We are selling it to our customers. We
sell--you would have to sell six or seven T1s at extraordinary
pricing to be the equivalent of what we are able to get out of
simple twisted cop repairs. It is just great technology and
customers love it as well.
Mr. Gonzalez. It is surprising when you indicated what was
being offered and what was being explored, and I don't know if
other members were surprised about the speed or the capacity
and the ability of copper wire.
Ms. Herda, in today's environment, who owns most of the
utility poles? I mean, my assumption is in the old days you had
the incumbents more----
Ms. Herda. You have a combination of incumbent and utility
providers.
Mr. Gonzalez. And today is it utilities have more ownership
of more poles or----
Ms. Herda. I think that is what I understand. That is what
I have heard. I think the incumbents have gotten rid of some of
theirs, a bunch of theirs.
Mr. Gonzalez. I come from San Antonio. Our utility company
is actually by the municipality so I am thinking of other
settings, which is difficult for me sometimes. But I am just
thinking of the relationships that municipalities may have with
utility companies and such, right away easement and so on, but
in other aspects too, I am thinking in terms of, I know of
partnerships with municipalities to build out, let us say, Wi-
Fi and maybe even WiMAX and such. I am just thinking in terms
of giving an unfair edge to any particular provider, any
particular technology, all using that same pole because of the
relationships. Do you fear anything of that nature?
Ms. Herda. Actually, as a matter of fact, we have services
that sometimes compete with the providers who own the pole and
so when we are asking them to actually do the work, they are in
no rush because certainly it is to their advantage to delay our
construction of our fiber networks. So there is, in addition to
the rates associate with it, which we think everybody should be
paying the same rates, we think that there should be terms and
conditions that mandate behavioral conditions.
Mr. Gonzalez. Thank you very much.
And I want to pronounce the name right and I apologize
because I met you right before the hearing. Is it Avgiris? Ms.
Avgiris, regarding, you all called it the portability. I just
call it transferring your phone number. And what you are
telling me is that wireline or wireless can do it in a number
of hours but not so in other circumstances, and that right now
we are looking at 4 days.
Ms. Avgiris. That is correct, 4 business days.
Mr. Gonzalez. What do you suspect might be the reason for
that? Because I am going to ask Mr. Banks obviously. And I have
a minute and 40 seconds, but----
Ms. Avgiris. So I will take a minute and 40 of that.
Consumers want faster porting. They want it because they want
to be able to purchase services at retail, self-install. Our
service provides new feature functionality that is not what is
available with basic telephone. And they have gotten accustomed
to being able to make decisions on their own timeline, and the
whole wireless industry and their porting within voluntary
means to port within a number of hours means that that
capability is there. Comcast as a provider is ready, willing,
and able to port a customer's number away from Comcast if they
want within the next day. I see no reason why everyone can't.
Mr. Gonzalez. Mr. Banks, do you disagree?
Mr. Banks. I think faster porting is good for consumers.
Right now when our companies get ports from other customers, we
don't get them in 4 days. When other companies ask us to port
numbers to them, they don't ask us to port them in 4 days. So I
think there is some reason to think we ought to get to the 4
days first and then be careful how we put this requirement on
smaller telephone and smaller cable companies that would have
to mechanize their back offices and spend a lot of money to do
things that aren't really how they do business in small
companies.
Ms. Avgiris. If I could just clarify?
Mr. Gonzalez. You have 24 seconds in your response.
Ms. Avgiris. The three largest providers, telecom
companies, are all electronically bonded. Those are the
companies that we believe should have a faster porting interval
of 1 day. The smaller companies we can work with.
Mr. Gonzalez. Thank you very much.
Yield back, Mr. Chairman. Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Mississippi, Mr. Pickering.
Mr. Pickering. Thank you, Mr. Chairman.
Mr. Banks, let us try to get to the compromise again but
from a different direction. Earlier in your testimony, you had
said that you could do away possibly with the deemed granted if
you had strict timelines of certainty that the FCC had to act
on a date certain. Is that something that you could accept?
Mr. Banks. Yes. I mean, our whole--the whole function of
the deemed granted is to force the Commission to act in a world
that has changed.
Mr. Pickering. So if you had appropriate forcing timetable
shot clocks as part of reform, then you could support removing
the language deemed granted?
Mr. Banks. If it would serve to give that incentive, a real
incentive to the FCC to act, yes.
Mr. Pickering. Mr. Chairman, maybe that is the compromise,
the right balance. I think everyone is concerned that in the
first 3 months of next year while we have a new Administration,
it is very likely that we could have four Commissioners for an
indefinite period of time. You could actually have
congressional inaction combined with FCC inaction that would
create a deadlocked Commission, and I think during that period
of time, you could have a lot of unintended consequences of
gaming of the current process that is not what anyone who is
involved in the 1996 Act intended. I do think that we want
regulatory certainty, and to the degree that we can force the
FCC to act within a certain time period, I think that that is
in everyone's best interest, competitors and incumbents alike.
Mr. Grivner, I was going to ask one other question, Mr.
Banks. I saw you shaking your head when Ms. Avgiris said that
the three largest can do electronic porting within 1 day. Is
that something that you could support?
Mr. Banks. I am not sure about the 1 day but it is true
that the largest carriers are electronically bonded in a way
that lets them do lots more things than the carriers that are
smaller than that.
Mr. Pickering. Right now, is it a 4-day?
Mr. Banks. Right now, it is a 4-day for, right, ports
involving wireline companies.
Mr. Pickering. But for the largest and best for the
consumers in competition, we could probably change that to 1 or
2 days?
Mr. Banks. I think the easiest thing to move down is the
people that have the bonding rather than the mid-sized and
smaller carriers--well, carriers and cable companies both have
more troubles.
Mr. Pickering. Thank you, Mr. Banks.
Talking about regulatory certainty and timely action, I am
going to come back to you, Mr. Grivner.
Ms. Herda, pole attachments, one of my favorite subjects of
all time.
Ms. Herda. I am sure.
Mr. Pickering. That is currently now pending before the
FCC?
Ms. Herda. I am sorry?
Mr. Pickering. That proceeding on pole attachments is now
in front of the FCC?
Ms. Herda. Yes.
Mr. Pickering. And how long has that been there?
Ms. Herda. Since January.
Mr. Pickering. Since January. Is there any announced time
of action that they will take action?
Ms. Herda. No.
Mr. Pickering. But you want uniformity?
Ms. Herda. Yes.
Mr. Pickering. One rate?
Ms. Herda. Everybody to have the same rate.
Mr. Pickering. And then the certainty of FCC action?
Ms. Herda. Right.
Mr. Pickering. And what that rate is, you are somewhat
flexible?
Ms. Herda. Just the rate, to reimburse them for costs
obviously. It shouldn't be a profit center for the pole owners
but it should be fair and equitable.
Mr. Pickering. And right now you have the utility rate, the
telecom rate and the cable rate. Is that correct?
Ms. Herda. Yes.
Mr. Pickering. So somewhere in between?
Ms. Herda. That is for the FCC to decide.
Mr. Pickering. But they need to decide soon.
Ms. Herda. Yes.
Mr. Pickering. Mr. Grivner, talking about regulatory
certainty, you have invested $7 billion, and this goes back to
the forbearance and why this is so important. If we had a
change in regulatory policy that basically wiped out $7 billion
of investment--for example, you have to have loops in transport
to do your business. The $7 billion that you have invested in
facilities, one regulatory decision could wipe out billions of
dollars of investment and wipe out competitive choices.
Mr. Grivner. Well put. The $7 billion that we have invested
leads you right up to that customer promise and it is all
behind that so that last piece of connectivity is critical to
that $7 billion of investment.
Mr. Pickering. So decisions should be made correctly,
thoughtfully, majority vote, and a certain process of
transparency. I think that we can get there.
Mr. Chairman, this panel has been very helpful. I look
forward to working with you to get the right balance.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Michigan, Mr. Upton.
Mr. Upton. Well, thank you, Mr. Chairman, and again, I
appreciate the testimony from all of our witnesses and some of
the questions here.
I can remember when the 1996 Act was written and this
provision was included, and I have to say as I listen to the
testimony today--as Mr. Banks said to one of the responders,
one of the questions, we all want a deadline. We are fed up
when the deadlines pass us by. And I have to say, at least from
my vantage point, I think it is worse today than it ever was in
the 1990s. I can't tell you how many times I have seen some of
the Commissioners or we have made a call or written a letter,
talked to them about some deadline, you are assured that it is
going to come by and it doesn't happen, and consequently, as
you look at the different petitions that have been deemed
granted, 91 petitions have been filed. Only four have been
deemed granted, and as the staff has looked into those four,
three of them were not controversial at all and the one that
was, was this one that was on a two-two vote and that was
before Commissioner McDowell had been on, so someone didn't
recuse themselves so it was a two-to-two tie, and as I
understand it, Mr. Copps and Adelstein had wanted to prevent
the entire petition from being deemed granted. They probably, I
am guessing, could have reached for a compromise at least in
some part as it related to the denial in that part and I guess
you could see a parallel between what happened when we had a
two-two split over the AT&T/Bell South deal when of course
McDowell did take himself out, recusal, which I remember that
deadline went on forever as well. So when you know something
like that is going to happen, but the question I have, if it
ain't broke, why fix it if it is only really one. Is there only
really one so far of this 91? Is the staff correct that it is
only really one of 91 that are in rough water?
Mr. Banks. Yes, your numbers are correct. There is only the
Verizon petition that has caused any controversy, but the
controversy has been among the FCC people. I don't know that
there has been any controversy in the marketplace about the
effect of that order. Verizon, as I understand it, has gone out
and used the freedom to sign contracts with customers.
Mr. Upton. But what this provision did was, it really put
the gun to the FCC's head that they really had to live by the
shot clock that they wanted, right?
Mr. Banks. Yes, and to be fair, I think it is difficult to
identify anything else that will really make the FCC act but
that is the crux of the problem.
Mr. Upton. We have tried. We have sent them brownies. We
have done a bunch of different things. We have gone down to
visit. Let me ask one other question, Mr. Banks, and this I
think came up in a related question I think to Mr. Salmon.
Isn't the deemed granted provision similar to the statutory
sunset provision like program access except that it gives the
added protection of giving the FCC the opportunity to prevent
the sunset if they so desire?
Mr. Banks. That is a very interesting point, and Congress
put a number of sunset provisions in the 1996 Act including on
some of the special extra long-distance safeguards and those
expired after 3 years, the ones I can think of. So you are
absolutely correct that is like the sunset provisions.
Mr. Upton. That is a good note for me to end on. I yield
back my time. Thank you.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Nebraska, Mr. Terry.
Mr. Terry. Thank you, Mr. Chairman, and I would agree with
several of the comments made. I have empathy for everyone here.
Mr. Grivner, I especially appreciate the level of investment. I
came right after the passage of the 1996 Telecom Act but I
engaged in the discussions that undoubtedly occurred during
passage of what to do if the FCC doesn't act. I think that, as
Mr. Upton pointed out, a very real concern as we develop
policies and one of the policies in the 1996 Act was opening up
the incumbents' networks, their infrastructure for competition
because we wanted competition, and I still think we want
competition today, especially as there is a convergence or
merging within the incumbent industries. So working through
this, though if there is some unnecessary or unfair regulation
that is hindering the ability of the incumbent to compete, and
I come from an area where there is good competition between
capable and the incumbent. In fact, the incumbent is the
minority carrier now. So I come from a different world or
perspective. But I am just wondering as we work through some
options here if a deadline really works. What are the
consequences to the FCC if we say you have to do this by 90
days of the filing of the petition, and then there is
consequence. Then they still go to a year or 6 months or
whatever, and I am sure that the deemed granted was to put in a
consequence. So I am not sure we gain anything here if we just
put in a date or shot clock without any consequence.
So, Mr. Banks, I want you to get to that next question of
what should be the consequence if the FCC misses the deadline
that is set? What would be the world without the deemed granted
if there are no consequences?
Mr. Banks. I think without the deemed granted, we are
likely to be in a world where the FCC would not have changed
any of the rules for Omaha, even though the market had
basically flipped head over heels. So without consequences, I
think the fact that we have consequences here is why the FCC
has ruled on essentially every forbearance petition that has
come before it or along the lines of the numbers Mr. Stearns
gave. So it has been effective and it has left us with the one
Verizon issue out of the 89 petitions.
Mr. Terry. I appreciate that.
Mr. Grivner, during one of your answers to the questions to
Mr. Stearns, when you were working through the possibilities of
compromise, you mentioned that it is a flawed process, and what
went through my mind when you said that is whether or not the
incumbent should ever receive forbearance.
Mr. Grivner. Should ever receive forbearance?
Mr. Terry. Should receive forbearance. I guess what I am
trying to ask you is, do they deserve it in any situation?
Mr. Grivner. Well, I actually referred to it as forgiveness
because really what forbearance has been is a peeling back of
the 1996 Act piece by piece. So if we go back and look at the
complete history--by the way, everybody you ask that was here
in 1996 and you ask about forbearance, no one raises their hand
as being the author of that, which I find interesting. But if
you peel it back, there were certain conditions that had to be
met on both sides to create a competitive landscape, and as the
years have gone by, those kind of even-steven things have been
pulled back from the competitive industry, and forbearance is
just a very, very strange process where a two-two vote, whether
it be the Supreme Court, and God forbid----
Mr. Terry. But eliminating the two-two vote discussion
here, because I think we all pretty much agree that needs
remedied in some way but----
Mr. Grivner. I think there has to be a reasonable and
complete submission of data that has to be analyzed by the FCC
staff. Let us make it a fight. Let us make it a game. Let us
not make it a basketball game where two teams show up and only
two referees show up and the other team says I win because only
two showed up. Let us make it a real game and let us make it a
fight, put your stuff on the floor.
Mr. Terry. Thank you.
Mr. Markey. Mr. Grivner, were you a basketball player at
some point?
Mr. Grivner. As I understand it, Mr. Chairman, you used to
be one but a series of injuries have hobbled you.
Mr. Markey. I am feeling your pain, Mr. Grivner.
So we will go another round here, if we can, for maybe 3
minutes a piece from the members if they have any additional
questions, and I will just say, Mr. Terry, we have been trying
actually for years to find out which Senator actually stuck in
these words over in the Senate during this conference
committee, but again, they had a code of omerta over there
which protects each other on a bipartisan basis, but there is
kind of a Rosemary's Baby quality to this one provision that
everyone accepts the fact that it is an incredibly important
storyline but no wants to take credit for the law of unintended
consequences taken to the pluperfect form that it has resulted
in. But that is the way the Senate operates.
Let me turn to you, Ms. Avgiris. Recently Vermont
Telecommunications Company denied interconnection on the basis
that it only had to do so for telecom carriers. So here is
Comcast, the fourth largest telephone provider in America,
being told you are not a telecommunications company, and as a
result, they can deny you interconnection. Can you talk about
the implications of the Federal Communications Commission
determining that Comcast is not a telecommunications company
for the purposes of interconnection in terms of what that
represents for competition in Vermont and in other States?
Ms. Avgiris. Well, regardless of regulatory classification,
interconnection is the fundamental ability of our company to
serve our customers and exchange traffic with other people so
everyone can call everyone else. Specifically in the Vermont
telephone company case, it is not the affiliate, and every
company has affiliates. We have a retail affiliate that
provides an information service which is called Comcast Digital
Voice that provides features and functionality that is much
different than what basic telephone is. They are not the ones
that asked for interconnection. There is another affiliate of
Comcast that is a certificated telecommunications carrier in
each of the 38 States that it provides telecommunications
services to its clients. That is the entity that asked for it.
It meets all the obligations of being a telecommunications
carrier, supports the State 911 universal service fund,
interconnection, local number porting, and that is where the
rub comes because it is--they are a certificated CLEC and have
the rights and responsibilities to interconnect with everyone.
Mr. Markey. I think it is a perfect example of how
something has gone terribly awry when the people of Vermont are
denied this competitive opportunity that would give them
alternative service and potentially lower prices and higher
quality of service. It just is perverse to me that a very
narrow interpretation of what is a qualifying company should be
able to affect consumers so negatively.
Let me turn to you, Mr. Banks. When we get to this question
of whether or not your telephone number is portable, if
somebody wants to switch from one cell phone company to another
cell phone company, it takes 2 hours to switch the number, and
the cell phone companies, that is the large telephone companies
that you are here representing, although you are not here
representing them in that form, but they are able to do it in 2
hours. So the question I have for you Mr. Banks is why do the
same companies take 4 days if the same consumer wants to move
their wireline service over to another company? Why should it
take so long? What is the technological problem at these
companies?
Mr. Banks. I think it revolves around companies' operating
systems. The wireless carriers are essentially the envy of
everyone in terms of the newness of their networks and the
newness of their----
Mr. Markey. But they are the same companies in terms of
their CEO, their executive vice president, their chief
technology officers. They are all the same people. Why can't
they figure out how to cut it down from 4 days down to 2 hours
the way their cell phone wing does in ensuring that consumers
keep their same cell phone number as they switch companies?
Mr. Banks. Well, you are right that they are owned by the
same people but they grew up in different worlds and built
themselves different systems and are in different places in
terms of their capital and who can invest in upgrading systems
and which part of the company is a growth part. So there are
systems issues. But it is true that the largest carriers have
better systems and the medium-sized and smaller carriers----
Mr. Markey. But how hard can it be just to e-mail to
someone else inside of the telephone company and say this
customer wants to switch companies? How long does that take
inside of Verizon or AT&T? Is that a 4-day process to e-mail?
Mr. Banks. No. Verizon and AT&T do this process generally
in under 4 days and report the data on that to every State as
part of their 271 filing.
Mr. Markey. Do they ever have meetings, I am wondering, at
Verizon or AT&T where they bring the cell phone executives over
to talk to the wireline executives about how they do it? Do
they ever have meetings like that?
Mr. Banks. Well, the North American Numbering Council has
meetings all the time.
Mr. Markey. I am talking about inside the company. Do any
of these executives ever meet and talk and they can explain the
new modern system that the cell phone wing uses in order to do
number portability?
Mr. Banks. Yes, and I think at those meetings the wireless
people say that 16 percent of your customers have dropped you
and come to us, so ha ha.
Mr. Markey. But it takes 4 days. Aha, they say back. That
is our revenge. We don't allow it to happen overnight. But I
bet you it doesn't take 4 days inside a company.
Mr. Grivner?
Mr. Grivner. Same question?
Mr. Markey. No, I am fine. I thought you had your hand up.
Mr. Grivner. No, no.
Mr. Markey. My time has expired. Let me turn and recognize
the gentleman from Florida.
Mr. Stearns. Thank you, Mr. Chairman.
This is a question for the entire panel again and it is
dealing with pole attachment rates. I think a lot of us agree
there is no rhyme or reason towards the pole attachment rates
that are currently being applied, and I guess the question for
each of you is, shouldn't the FCC create a uniform pole
attachment regime and perhaps what would that regime look like?
Mr. Banks, I will start with you and then I will go down.
Mr. Banks. So I am in complete agreement with Time Warner
Telecom that that the system needs to be rationalized, that
people that are attaching to a pole to provide a broadband
service with the same attachment ought to pay the same price,
and that is just a matter of rationalizing the prices and
applying them uniformly to everyone. I think that would
certainly help our companies that pay an awful lot more than
others with our broadband deployment.
Mr. Stearns. Ms. Avgiris?
Ms. Avgiris. It is well established both at the FCC and in
the Supreme Court that the cable rates that have been
established for pole attachments are more than compensatory, so
while we absolutely support a uniform rate and it has to be
fair and cost-based for the same attachment, we believe it
should be the cable rate. Otherwise all you are doing is
adversely impacting cable broadband customers.
Mr. Stearns. You just raised another question with me.
Would you support amending the forbearance provision so it
grants cable companies deregulatory relief as well?
Ms. Avgiris. As it relates to forbearance, the video space
is much more competitive. In the voice space, which is what I
am here to talk about, there are a lot of complex provisions,
and we believe that the safeguards that are there to protect
certain rules need careful analysis and so I think the same
rules apply.
Mr. Stearns. Mr. Grivner, going back to the original
question dealing with the pole attachment rates.
Mr. Grivner. Uniform pricing and also uniform service level
agreements as well.
Mr. Stearns. Ms. Herda?
Ms. Herda. Same thing, uniform pricing, uniform service
agreements, and we agree with Ms. Avgiris with regard to the
cable rates.
Mr. Stearns. Matt?
Mr. Salmon. Same thing, and on the whole idea of the shot
clock, we would like a shot clock for that. We would also like
a shot clock for special access where we are paying exorbitant
rates and they haven't fixed that problem, a shot clock for USF
reform. I could go on and on and on, but what is fit for the
goose is fit for the gander.
Mr. Stearns. Do you think that should be deemed granted?
Mr. Salmon. I am sorry?
Mr. Stearns. Do you think it should be deemed granted?
Mr. Salmon. No, I just don't think that is good policy, and
on the whole deemed granted, let me just take a second because
Congressman Upton pointed out that there are very few instances
where deemed granted has actually kicked in. That is only part
of the problem. The bigger part of the problem with the whole
deemed granted language is that it encourages companies to file
incomplete petitions because it is one of the only things that
has a shot clock and a deemed granted provision. So they filed
these frivolous petitions that are incomplete and then at the
very last minute they throw a bunch of stuff, and like Chairman
Markey pointed out, pray that something sticks. That is the
bigger part of the problem that it just runs the whole process
askew.
Mr. Stearns. Thank you, Mr. Chairman. As Mr. Salmon just
pointed out, I think what I talked about earlier about a
legitimate compromise here, just making the deadlines for
filing amendments and additional evidence just stark and these
deadlines are real deadlines and they cannot be amended or
changed, and by then you would know everything and you wouldn't
be concerned about what the final outlook was because during
the comment period everybody knows, so I hope, Mr. Chairman,
that perhaps the suggestion I make would be part of the process
here. Thank you.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Texas, Mr. Gonzalez.
Mr. Gonzalez. Thank you very much, Mr. Chairman.
Ms. Herda, I am going to ask a basic question and everybody
in the audience probably knows the answer but I am trying to
figure it out. I want to switch service, I come to you, and so
there has to be an effective termination date communicated to
my old carrier and an effective start date with you, right?
Ms. Herda. Right.
Mr. Gonzalez. How then does this portability timeframe play
into that equation?
Ms. Herda. It is different for our services since we sell
business services and they are complex telephone services, so I
think it is a bit different from what Comcast is looking for.
It is more likely that we would need more time to be able to
port those services.
Mr. Gonzalez. I guess the curiosity is just one starts at a
certain time, and the calculation. I guess maybe I am missing
the whole concept about the portability of numbers, the way you
identified it, in other words, so that people will continue the
same business and so on. I mean, that is the whole convenience
part of it. I am just saying that it has to end at a certain
time with the old carrier and then the new service has to then
assume that that new number is fully operable. Is there some
caveat out there to the customer, hey, listen before all that
can be accomplished, it is going to take X amount of time?
Ms. Herda. Yes. When we communicate with our customers----
Mr. Gonzalez. So that would mean then I would be carried
with my old service for a longer period of time because there
is this 4-day interval?
Ms. Herda. Generally with our services, since we focus on
selling to just business customers, we also have a facility
that is going into that customer that takes some time to
construct, so we set timeframes for intervals for service which
are generally longer than few hours. It is very different from
the wireless business or maybe the very small business
customers that Comcast services.
Mr. Gonzalez. Does anybody else wish to comment just on the
observation that time plays to the advantage of someone in that
particular scenario and maybe even a bottom line?
Ms. Avgiris. The local number interval does present a
beginning and an end date and the beginning date is when the
competing carrier requests the number to be exchanged from the
incumbent carrier, and they set a firm order commitment for a
particular date and it is a question of what is the process
internally to complete that transaction, share that information
between the carriers and expedite the port request of the
consumer to change service because the whole point behind local
number portability is to enable competition and to enable
choice.
Mr. Gonzalez. The longer it takes to complete the
transaction to get the number ported or whatever it is,
obviously then I am being carried by my old service----
Ms. Avgiris. And I may not get the savings that I could
otherwise get.
Mr. Gonzalez. Thank you very much. Yield back.
Mr. Markey. The chair recognizes the gentleman from
Mississippi, Mr. Pickering.
Mr. Pickering. Mr. Chairman, thank you, and just for
historical context, I believe it was Senator Dole and Senator
Pressler who came up with the forbearance provision, and I
happen to think that the forbearance process is actually a
healthy way to keep the Act alive, dynamic, organic, as things
change, it can evolve, but it needs to be done right and your
bill addresses how to do it right.
And to Mr. Banks and Congressman Gonzalez, I think the
bottom line on the portability----
Mr. Markey. By the way, if I may, if the gentleman would
yield, the gentleman from Mississippi was on Senator Lott's
staff at the time and he would have access to meetings that I
as a Democrat would not have had access to. So we thank him for
clarifying the historical reference.
Mr. Pickering. Just for history.
Mr. Banks and to Congressman Gonzalez, I think the real
issue here is--you said something interesting--you said the
difference between wireless and wireline, they grew up
differently, different cultures, but wireless is the growth
part of their business, and the more they port, the more they
grow. The faster they port, the faster they grow, and what
Verizon and AT&T have found out, once they get down to number
portability on wireless is that they benefited from that. They
are growing because more people are switching to them. Now, on
the other hand, on their wireline side, as cable enters, they
are losing customers so that is the losing side of their
business, and this gets to their bottom line. They want to slow
down what they lose and they want to speed up what they gain,
and I think the fair thing to do is to have some uniformity of
wireline and wireless porting. If this was not technologically
feasible to do one issue but this is fairness, level playing
field, pro-competitive, pro-consumer, pro-choice for everybody
and I think that we ought to get a portability policy that is
same whether it is wireless or wireline or something comparable
that is reasonable with some differences between small
companies and large companies. That was more of a comment than
a question.
Let me go back to pole attachments. Ms. Herda, Mr. Grivner,
Ms. Avgiris, I think you are all on record of supporting the
current cable rate. Is that correct?
Ms. Herda. Yes.
Mr. Pickering. And that does have something to do with
competition. The more you pay in pole attachments, the less you
can build out, deploy and compete in other areas, and I think
that that would be the same for you, Mr. Salmon. So you all
would support the current cable. Mr. Banks, you would support
some uniform compromise. Is that correct?
Mr. Banks. Yes. I do think that it is important that we
also remember that this money goes to support facilities,
utility poles that we need and it is important to ensure that
pole owners, which are principally utilities, get enough money
that we do have poles when we need them.
Mr. Pickering. I see that my time is running out. The last
thing that I would encourage, I do hope that we can get an
interconnection policy, Mr. Chairman, if not this Congress,
then the next Congress. It is a basic fundamental. It makes the
market function. Without interconnection policy, we really
ought to go home and pack it up. It is just a simple, fair way
to make all consumers be able to complete a call on one network
to another and it ensures a functioning marketplace. With that,
I yield back, Mr. Chairman.
Mr. Markey. I thank the gentleman, and I know the gentleman
is going home and packing it up, but it all depends on what
kind of going home and packing it up you are talking about. If
the Federal Communications Commission is going home and packing
it up without actually providing interconnection, that is not a
good thing.
So we are going to finish up by asking each one of you to
give us a 1-minute summation of what it is that you want us to
remember out of this hearing. We will start with you, Mr.
Salmon, if you could give us your 1-minute summation.
Mr. Salmon. We have been asked what our druthers are, and I
think our druthers are, we would like to see section 10
scrapped altogether, but this is a good first step and one that
we support. I think that all of us understand that the most
important thing that we want in public policy is to make sure
that America continues to prosper and continues to grow with
technological advancements in the telecommunications realm. We
would like to be first in the world. That is only going to
happen with a very, very competitive, robust telecommunications
sector, and we are proud to be part of that and we would like
to move forward in tandem with the ILECs as friends singing
Kumbaya. Unfortunately, that doesn't happen all the time.
Mr. Markey. Thank you, Mr. Salmon.
Ms. Herda.
Ms. Herda. Yes, I would agree with Mr. Salmon in that I
believe that forbearance basically gives the FCC authority to
rewrite the Act and I think that is Congress's job. I am
uncomfortable delegating that rewriting the Act to the FCC.
With regard to pole attachments, we are just looking for a
unitary rate for everybody to be on a level playing field so
that when we all compete, we are coming from the same set of
cost base, and that is it.
Mr. Markey. Thank you.
Mr. Grivner.
Mr. Grivner. Move 3914 forward. Copper is not dead and
electronic bonding is possible for all companies whether they
are wireless or wireline. Thank you.
Mr. Markey. That is a Kumbaya moment, electronic bonding.
Ms. Avgiris.
Ms. Avgiris. Comcast is all about pro-competition, pro-
consumer choice. All of our positions on local number porting
are about more choice for consumers. Interconnection provides
us the ability to complete, and without that we really would be
waving away the $111 billion that consumers can save.
Mr. Markey. And Mr. Banks, you have the final word.
Mr. Banks. The presumption in 1996 was that regulation
shouldn't stay through inertia and that is why we have section
10 and that is why we have section 11. The world has changed
now when Comcast is the number 4 phone company. So there is no
reason to keep regulations through inertia. Of the 91
forbearance petitions filed, most are narrow. They deal with
discreet sub-issues of telecom regulation, and the Commission
has successfully come out with orders in all but one of those
and that is the Verizon thing. I think the process is working
and it is getting orders out of the FCC. I point you to the
court remand that took three years of the FCC reporting every
month to the district court before a court hearing and an order
so we do something to make the FCC work.
Mr. Markey. Thank you, Mr. Banks, very much. We thank all
of you. We do have a looming problem because we could have a
two-to-two vote at the FCC by the end of this year. In fact, it
is very likely that that is going to be the case and that would
be absolutely historically unacceptable, and it is important
for us to get this policy right because, as you said, Mr.
Banks, in your testimony, 50 percent of the growth in the
American economy comes in this telecommunications and
technology sector. It is not widely understood that 50 percent
of the growth comes there but it does and it makes all of these
decisions central to whether or not we are going to continue to
see the job growth here and the lowering of the cost of
communications to all industries.
With that, we thank this panel and this hearing is
adjourned.
[Whereupon, at 3:52 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. John D. Dingell
Today we examine the state of competition in the
telecommunications marketplace. Sound telecommunications policy
should spur competition between providers, bringing lower
prices, more innovative services, and better service quality to
consumers. But ill-conceived or poorly executed policy
represents a lost opportunity for such consumer gains.
Section 10 of the Communications Act, which we will discuss
today, was added by Congress to ensure that the statute kept
pace with changes in technology and in the marketplace. It
permits providers to request that the Federal Communications
Commission (FCC) forbear from enforcing certain laws or
regulations, when such laws or regulations are no longer
necessary to protect the consumer. It further provides that if
the FCC does not act on a forbearance petition by a date
certain, then the provider's request that the FCC not enforce a
particular law or regulation is automatically granted.
This provision is dangerous and bad policy because it
allows agency action to take effect without any formal vote or
supporting record. Consumers and companies then have no right
or recourse when the lack of enforcement harms consumers.
We are familiar with the episode in 2006 when a four-member
Commission was evenly divided on the merits of a forbearance
petition and was therefore unable to act. Because the deadline
passed with no Commission action, the petition was deemed
granted and a host of regulations were tossed aside. Making
matters worse, the Commission failed to issue an Order
explaining the scope of relief granted, which prevented
Congress from conducting appropriate oversight and precluded
meaningful judicial review.
This must not happen again. At any time we could find
ourselves with just four commissioners having to address
forbearance petitions under the ``deemed granted'' regime.
In an effort to remedy this problem, Chairman Markey and I
introduced H.R. 3914, the ``Protecting Consumers through Proper
Forbearance Procedures Act.'' Our bill simply removes the
``deemed granted'' language from the statute to ensure that
agency decisions are fully transparent and that affected
parties--including consumers--have full legal recourse.
I am also concerned with the Commission's process for
reviewing forbearance petitions. The Commission must ensure
that the forbearance process is fair, open, and transparent.
Too often, industry petitioners have rigged the process, by
filing amended petitions late so that opposing parties have no
meaningful opportunity to respond. I applaud the Commission for
opening a proceeding to reform the process, and I urge that it
be concluded in a manner that serves the public interest and
protects consumers.
We will also consider several other issues today, and I am
disappointed that some of the companies most interested in
these issues declined our invitations to testify. For example,
Verizon has spent considerable time discussing the issue of
retention marketing, and Verizon and AT&T have lobbied the
Commission about pole attachments. I am disappointed that we
will not benefit from their expertise as we consider these
important issues.
Furthermore, this is a legislative hearing on H.R. 3914,
which I understand these two companies do not support. I am
saddened they are not here to more fully explain their views
and to answer polite questions I intended to ask them.
I thank the Chairman once again for considering these
important matters. I hope that the panel will assist us in
building a sound record so that we may thoughtfully move
forward with carefully crafted legislation.
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