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	<title> - ENSURING COMPETITION ON THE INTERNET: NET NEUTRALITY AND ANTITRUST</title>
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	[House Hearing, 112 Congress]
	[From the U.S. Government Publishing Office]



	ENSURING COMPETITION ON THE INTERNET:
	NET NEUTRALITY AND ANTITRUST

	=======================================================================

	HEARING

	BEFORE THE

	SUBCOMMITTEE ON
	INTELLECTUAL PROPERTY,
	COMPETITION, AND THE INTERNET

	OF THE

	COMMITTEE ON THE JUDICIARY
	HOUSE OF REPRESENTATIVES

	ONE HUNDRED TWELFTH CONGRESS

	FIRST SESSION

	__________

	FEBRUARY 15, 2011

	__________

	Serial No. 112-13

	__________

	Printed for the use of the Committee on the Judiciary


	Available via the World Wide Web: http://judiciary.house.gov



	U.S. GOVERNMENT PRINTING OFFICE
	64-583 WASHINGTON : 2011
	-----------------------------------------------------------------------
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	COMMITTEE ON THE JUDICIARY

	LAMAR SMITH, Texas, Chairman
	F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
	Wisconsin HOWARD L. BERMAN, California
	HOWARD COBLE, North Carolina JERROLD NADLER, New York
	ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
	BOB GOODLATTE, Virginia Virginia
	DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
	STEVE CHABOT, Ohio ZOE LOFGREN, California
	DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
	MIKE PENCE, Indiana MAXINE WATERS, California
	J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
	STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
	TRENT FRANKS, Arizona Georgia
	LOUIE GOHMERT, Texas PEDRO PIERLUISI, Puerto Rico
	JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
	TED POE, Texas JUDY CHU, California
	JASON CHAFFETZ, Utah TED DEUTCH, Florida
	TOM REED, New York LINDA T. SANCHEZ, California
	TIM GRIFFIN, Arkansas DEBBIE WASSERMAN SCHULTZ, Florida
	TOM MARINO, Pennsylvania
	TREY GOWDY, South Carolina
	DENNIS ROSS, Florida
	SANDY ADAMS, Florida
	BEN QUAYLE, Arizona

	Sean McLaughlin, Majority Chief of Staff and General Counsel
	Perry Apelbaum, Minority Staff Director and Chief Counsel
	------

	Subcommittee on Intellectual Property, Competition, and the Internet

	BOB GOODLATTE, Virginia, Chairman

	HOWARD COBLE, North Carolina, Vice-Chairman

	F. JAMES SENSENBRENNER, Jr., MELVIN L. WATT, North Carolina
	Wisconsin JOHN CONYERS, Jr., Michigan
	STEVE CHABOT, Ohio HOWARD L. BERMAN, California
	DARRELL E. ISSA, California JUDY CHU, California
	MIKE PENCE, Indiana TED DEUTCH, Florida
	JIM JORDAN, Ohio LINDA T. SANCHEZ, California
	TED POE, Texas DEBBIE WASSERMAN SCHULTZ, Florida
	JASON CHAFFETZ, Utah JERROLD NADLER, New York
	TOM REED, New York ZOE LOFGREN, California
	TIM GRIFFIN, Arkansas SHEILA JACKSON LEE, Texas
	TOM MARINO, Pennsylvania MAXINE WATERS, California
	SANDY ADAMS, Florida
	BEN QUAYLE, Arizona

	Blaine Merritt, Chief Counsel

	Stephanie Moore, Minority Counsel


	C O N T E N T S

	----------

	FEBRUARY 15, 2011

	Page

	OPENING STATEMENTS

	The Honorable Bob Goodlatte, a Representative in Congress from
	the State of Virginia, and Chairman, Subcommittee on
	Intellectual Property, Competition, and the Internet........... 1
	The Honorable John Conyers, Jr., a Representative in Congress
	from the State of Michigan, and Ranking Member, Committee on
	the Judiciary.................................................. 3
	The Honorable F. James Sensenbrenner, Jr., a Representative in
	Congress from the State of Wisconsin, and Member, Subcommittee
	on Intellectual Property, Competition, and the Internet........ 4
	The Honorable Judy Chu, a Representative in Congress from the
	State of California, and Member, Subcommittee on Intellectual
	Property, Competition, and the Internet........................ 4

	WITNESSES

	Larry Downes, Senior Adjunct Fellow, TechFreedom
	Oral Testimony................................................. 7
	Prepared Statement............................................. 9
	Laurence Brett (``Brett'') Glass, Owner and Founder, LARIAT
	Oral Testimony................................................. 54
	Prepared Statement............................................. 57
	Gigi B. Sohn, President and Co-Founder, Public Knowledge
	Oral Testimony................................................. 61
	Prepared Statement............................................. 64

	LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

	Prepared Statement of Parul P. Desai, Policy Counsel, Consumers
	Union, submitted by the Honorable Zoe Lofgren, a Representative
	in Congress from the State of California, and Member,
	Subcommittee on Intellectual Property, Competition, and the
	Internet....................................................... 84
	Statement of the U.S. Department of Justice, submitted by the
	Honorable Maxine Waters, a Representative in Congress from the
	State of California, and Member, Subcommittee on Intellectual
	Property, Competition, and the Internet........................ 95
	Letter to the Federal Communications Commission (FCC), submitted
	by the Honorable Maxine Waters, a Representative in Congress
	from the State of California, and Member, Subcommittee on
	Intellectual Property, Competition, and the Internet........... 143

	APPENDIX
	Material Submitted for the Hearing Record

	Prepared Statement of Randolph J. May, President, The Free State
	Foundation..................................................... 155
	Letter from Lisa R. Youngers, Vice President, External Affairs,
	XO Communications, and Others.................................. 170


	ENSURING COMPETITION ON THE INTERNET: NET NEUTRALITY AND ANTITRUST

	----------


	TUESDAY, FEBRUARY 15, 2011

	House of Representatives,
	Subcommittee on Intellectual Property,
	Competition, and the Internet,
	Committee on the Judiciary,
	Washington, DC.

	The Subcommittee met, pursuant to notice, at 1:30 p.m., in
	room 2141, Rayburn House Office Building, the Honorable Bob
	Goodlatte (Chairman of the Subcommittee) presiding.
	Present: Representatives Goodlatte, Smith, Coble,
	Sensenbrenner, Chabot, Issa, Jordan, Poe, Chaffetz, Reed,
	Griffin, Marino, Adams, Quayle, Watt, Conyers, Berman, Chu,
	Sanchez, Lofgren, Waters, and Jackson Lee.
	Staff Present: (Majority) Holt Lackey, Counsel; Olivia Lee,
	Clerk; and Stephanie Moore, Minority Counsel.
	Mr. Goodlatte. Good afternoon. The Subcommittee will come
	to order. I will now give my opening statement.
	Welcome to this hearing of the Intellectual Property,
	Competition, and the Internet Subcommittee entitled: Ensuring
	Competition on the Internet: Net Neutrality and Antitrust.
	The Judiciary Committee's jurisdiction over the antitrust
	laws in the Telecommunications Act of 1996 and our long history
	overseeing the Department of Justice's decades of litigation
	with the AT&T monopoly, endowed this Committee with a special
	duty to ensure that the communications and information markets
	of the United States operate in a free, fair, and legal
	fashion.
	This Committee has long been concerned on a bipartisan
	basis about allegations and fears that the incumbent telephone
	and cable companies who provide a majority of this country's
	Internet service could abuse their power in the Internet
	service market to discriminate against certain website content
	or platforms to anticompetitive effect.
	Today marks the House Judiciary Committee's third hearing
	in the past 5 years exploring the net neutrality issue. After
	hearings in 2006, the Committee adopted bipartisan legislation
	that would have amended the Clayton Act to enshrine certain net
	neutrality principles. The Judiciary Committee's bipartisan
	commitment to protecting competition and freedom online
	continued under Democratic control, and the Committee visited
	the issue once again in a 2008 hearing entitled: Net Neutrality
	and Free Speech on the Internet.
	This newly formed Subcommittee on Intellectual Property,
	Competition and the Internet will continue this tradition of
	protecting the competition and innovation that has marked the
	Internet era.
	But it is the FCC's recent open Internet order that makes
	today's hearing both necessary and urgent. That widely
	criticized order seeks to entrench a one-size-fits-all
	regulatory approach to net neutrality that circumvents
	Congress' law making authority and that threatens to stifle
	innovation on the Internet in a morass of bureaucratic rules.
	The FCC is pushing this order notwithstanding the D.C.
	Circuit's Comcast decision which squarely held that Congress
	has never given the FCC the broad authority it claims to
	regulate Internet services.
	Today's hearing is a first step in reasserting that under
	our constitutional system, it is the role of Congress, the
	people's elected representatives, to make the laws. Most agree
	that those who provide access to the Internet should not be
	able to discriminate against certain online content or engage
	in other anticompetitive behaviors that restrict access to
	online services.
	The question presented by today's hearing is whether
	potential anticompetitive conduct by Internet service providers
	is better addressed by the FCC's proposed industry-wide
	regulations or by a more flexible, antitrust-based regime that
	targets bad behaviors. I believe that the right approach is a
	light touch that focuses on punishing anticompetitive behavior,
	enforcing antitrust laws, and even potentially tweaking those
	laws to ensure that they still operate as intended in the
	digital age. Antitrust law will better balance the need for
	innovation and competition than an FCC regulatory regime
	possibly can.
	Regulatory approaches often result in regimes where
	innovators must seek permission before rolling out new products
	or services. However, the Internet is simply too dynamic for
	that kind of heavy-handed, top-down regime. An antitrust
	approach would allow the private sector to move forward with
	innovation subject to being held to account if and when it
	became anticompetitive.
	The FCC's regulations would hinge on a vague standard of
	whether or not a particular innovation was reasonableness in
	the eyes of the Commission. Antitrust law would judge that
	reasonableness and legality of actions according to objective
	economic principles and more than a century of case law.
	FCC regulations would be enforced and interpreted according
	to the whims of D.C.-based regulators who too often are subject
	to capture by special interests and repeat players. Antitrust
	law would be enforced by the independent judiciary in
	courtrooms throughout our Nation. Furthermore, as Ronald Reagan
	once said: A government bureau is the nearest thing to eternal
	life we will ever see on this Earth.
	Once the door is opened to FCC regulation of the Internet,
	it will be hard to both turn back those regulations and prevent
	the regulations from expanding to reach other online
	industries, including online content providers.
	Both sides of the aisle on this Committee have long agreed
	that a court-based antitrust approach is preferable to the
	bureaucratic approach proposed by the FCC.
	As Ranking Member Conyers pointed out when the Committee
	reported an antitrust-based net neutrality bill in 2006, the
	FCC is like a moss pit, there is nothing that can happen there.
	The Internet must be allowed to grow and innovate and
	continue to deliver the astounding new products and services
	that have come to characterize it. We must not allow the
	Internet to be mired in a regulatory moss pit. I look forward
	to today's hearing and to the light that our distinguished
	panel of witnesses can shine on this important subject.
	It is now my pleasure to yield to the Ranking Member of the
	full Committee for a further elaboration of the definition of
	``moss pit,'' the gentleman from Michigan, Mr. Conyers.
	Mr. Conyers. Thank you, Mr. Goodlatte, Mr. Chairman. I wish
	you would be more critical in selecting quotes to read back
	that I said. I can't deny that I said that, but I can tell you
	that I have modified my view somewhat and I will not use that
	kind of terminology today.
	And I wanted to thank you and Chairman emeritus
	Sensenbrenner and even Darrell Issa who have all been people
	who have been working on this very important subject of how we
	ensure competition on the Internet. The considerations of the
	FCC, of antitrust law, and using our own legislative
	jurisdiction are all things that I would like to continue to
	work with you and all of the Members of the Committee on.
	You have been working on this issue, and, by the way,
	Howard Berman of California has been on this, too, for quite
	awhile.
	Now, the question that concerns me the most is that the
	Internet is now a function of free speech in this country and
	in the world. As a matter of fact, many of the uprisings in the
	Middle East are all based on--and as a matter of fact they are
	called Twitter riots. It is a new mode of us talking to one
	another, not just in this country but everywhere.
	In some countries, like China, there are very severe limits
	on what is acceptable, and we have had cases even in this
	country where service providers have arbitrarily terminated the
	services of their customers because they didn't like what they
	were doing.
	So we come here today to consider how we can make sure that
	this commonly referred to net neutrality, that it is open, that
	it doesn't turn on what classification you get or how much you
	pay, but that lawful, legal, content should be available to
	everybody in as fair and democratic a manner as possible. So we
	continue these hearings.
	The American job market hinges on a dynamic, open Internet.
	That is how we get innovation and create new ideas that are
	translated into business and commercial and industrial
	activity. So we in this country must and do remain committed to
	technological innovation, including the universal access to
	broadband technology in order to keep American workers
	competitive.
	But as people watch live sporting events from their cell
	phones, and bloggers update the world in real-time events, we
	must remember that most people in the United States can only
	choose between one, and, sometimes if they are lucky, two
	Internet service providers for high-speed Internet access.
	Therein lies the problem. Recent proposed business plans give
	telecommunication companies favored treatment to some Internet
	content and disfavored treatment to other content. So I think
	that is an important part of what we are here for today. This
	is an important hearing.
	It is now my view, since you have quoted me so accurately
	in a previous hearing, for me to say that the FCC rulings on
	net neutrality are weak. They are not overarching or strong.
	They don't meet up to standards. I am looking forward soon to
	have hearings in your Committee to make certain that we can
	deal in a more fulsome way with this subject matter.
	I thank you for this opportunity.
	Mr. Goodlatte. I thank you, Mr. Conyers.
	We will now stand in recess. There are a series of votes
	and we will resume the hearing after we return from the votes.
	[Recess.]
	Mr. Goodlatte. The Subcommittee will reconvene. And it is
	now my pleasure to recognize the Chairman emeritus of the
	Committee, the gentleman from Wisconsin, Mr. Sensenbrenner, who
	has done a lot of work in this area.
	Mr. Sensenbrenner. Thank you very much, Mr. Chairman. And I
	want to commend you for holding this hearing so early in this
	Congress.
	The whole issue of access to the Internet--net neutrality,
	or however it is described--I think is a very important one
	because the Internet and its expansion has been the principle
	driving force behind technological innovation, not just in the
	United States, but worldwide.
	I am concerned that the type of regulation approved by the
	Federal Communications Commission ends up picking winners and
	losers. And frankly, it is not the job of the government to
	pick winners and losers, it is the job of the government to
	protect people against anticompetitive and monopolistic
	practices. That is why I believe that the proper thing for the
	Congress to do would be to set aside the FCC's order and make
	whatever amendments to the antitrust law that are necessary so
	that antitrust provisions can be effectively enforced.
	The other thing is that antitrust laws are supervised by
	judges, and that is the way it has been for 100 years. That
	seems to have worked out fairly well in dealing with these
	issues, rather than either having the Congress do it or the
	commissioners of the FCC to do it. And I am just convinced, and
	have been for a while, that the road the FCC has gone down is
	not good for the Internet, not good for the people, and not
	good for competition. So I would hope that we would continue
	vigorously pursuing this issue, and I yield back the balance of
	my time.
	Mr. Goodlatte. I thank the gentleman.
	And I am now pleased to yield to the gentlewoman from
	California, Ms. Chu.
	Ms. Chu. Thank you, Mr. Chair. And I would like to thank
	Mr. Goodlatte for holding this hearing.
	Mr. Watt, the Ranking Member, could not be here today, but
	he sends his regards. I am just temporarily taking over the
	Ranking Chair position at this point.
	While today it is estimated that more than one-quarter of
	our world's population, or nearly 2 billion people, use the
	Internet, from social working to political campaigns, the
	Internet is now the leading tool for speech and action. We need
	only to look at the role that the Internet has played during
	democratic demonstrations across the globe. Journalists named
	uprisings in Moldova and Iran during 2009 the ``Twitter
	revolutions,'' and the Web has played a critical role in
	disseminating information and rallying crowds as Hosni
	Mubarak's rule has ended in Egypt.
	Furthermore, the future of the American job market hinges
	on a dynamic, open, and lawful Internet. The United States must
	remain committed to technological information and investment,
	including universal access to broadband technology, in order to
	keep American workers competitive.
	But as people watch live sporting events from their cell
	phones, and bloggers update the world in real-time events in
	Tahrir Square, we must remember that more than 90 percent of
	U.S. Consumers can choose only between one or two Internet
	service providers for high-speed Internet access.
	Recent proposed business plans from telecommunication
	companies would give favored treatment to some Internet content
	and disfavored treatment to others. What treatment you get
	could be determined by how much you pay or potentially whether
	the Internet service provider approves of the content or has a
	financial interest in it. The problem is that many of the
	innovations we have enjoyed on the Internet may never have
	occurred if some of the proposed regimes were left unchecked.
	We would never have had a Google search engine or eBay auctions
	or Huffington Post blogs if pay-to-play had been our national
	policy.
	I am concerned that if the U.S. Government stands by and
	does nothing, we will find that only a handful of companies
	dictate where and how people access information on the
	Internet. So as we delve into this issue, we must remember that
	Congress and the executive branch must tread lightly. Nothing
	less than free speech and millions of jobs are at stake.
	I do want to emphasize that an Open Internet can and must
	be a lawful Internet. Digital piracy has ravaged U.S. companies
	and cost America countless jobs. The Internet has also afforded
	anonymity for criminals who steal identities and exploit
	children. Network neutrality does not mean safe havens for
	piracy, child exploitation, or other Internet crimes. Network
	neutrality fosters fairness.
	Our colleague, John Lewis, and esteemed poet, Maya Angelou,
	a native of Mr. Watt's district, along with several others, are
	receiving the Presidential Medal of Freedom at a ceremony at
	the White House at this time, and this is why Ranking Member
	Watt cannot be here today. He regrets that he cannot attend and
	will submit his questions to the witnesses in writing. And he
	looks forward to additional hearings on net neutrality with
	officials from the FCC.
	I look forward to hearing from our witnesses today and to a
	meaningful discussion on today's topic.
	Mr. Goodlatte. I thank the acting Ranking Member. And
	without objection, other Members' opening statements will be
	made a part of the record.
	And before we introduce our witnesses, I would ask that
	they please stand and take an oath.
	[Witnesses sworn.]
	Mr. Goodlatte. Thank you. Please be seated.
	Our first witness is Larry Downes, a senior adjunct fellow
	at the newly formed think tank, TechFreedom. He is the author
	of three books and has held faculty positions at Northwestern
	University Law School, the University of Chicago Graduate
	School of Business, and the University of California at
	Berkeley, where we was associate dean of the School of
	Information and a senior lecturer at the Haas School of
	Business. After graduating magna cum laude from the University
	of Chicago Law School, Mr. Downes served as law clerk to the
	Honorable Richard A. Posner, Chief Judge of the United States
	Court of Appeals for the Seventh Circuit.
	Mr. Downes is an Internet industry analyst and consultant
	who works primarily with technology companies to integrate
	emerging technologies into business strategy, with a special
	emphasis on legal and regulatory constraints. His clients have
	included startups as well as leading global technology
	providers. His expertise in the legal business and regulatory
	environment of the Internet industry strongly qualify him to
	testify at this hearing.
	After him, we will hear from Mr. Brett Glass. All too often
	the conversation in the Beltway, whether in Congress or at
	regulatory agencies like the FCC, becomes dominated by large
	interest groups with permanent D.C.-based lawyers and lobbyists
	to advocate for them. There is a tendency to think about these
	issues in terms of big businesses, but as FCC Commissioner
	Robert McDowell observed in his dissent from the Open Internet
	Order, many broadband providers are not large companies, many
	are small businesses. The same is true of content providers and
	hardware companies. Many of the businesses who will be affected
	by the Open Internet Order are small.
	It is fundamentally important when settling policy to
	always bear in mind the effect of the rules made in Washington
	and what they will have on ordinary Americans and the small
	businesses that are the primary job creators throughout the
	country. That's why I am pleased to introduce our next witness,
	Brett Glass of Laramie, Wyoming, to testify about the effect
	that he believes the FCC's Open Internet Order will have on his
	small business and other small businesses like his.
	Our final witness will be Gigi Sohn, President and Co-
	founder of Public Knowledge, a nonprofit organization that
	seeks to promote openness, access, and the capacity to create
	and compete in all three layers of our communication system:
	the physical infrastructure, the systems, and the content. Ms.
	Sohn is the senior adjunct fellow at the Silicon Flat Iron
	Center for Law, Technology and Entrepreneurship at the
	University of Colorado, and a senior fellow at the University
	of Melbourne Faculty of Law, Graduate Studies Program in
	Australia. She has been a nonresident fellow at the University
	of Southern California Annenberg Center and an adjunct
	professor at Georgetown University and the BenjaminN. Cardozo
	School of Law at Yeshiva University.
	We will begin with Mr. Downes. Welcome.

	TESTIMONY OF LARRY DOWNES, SENIOR ADJUNCT FELLOW, TECHFREEDOM

	Mr. Downes. Mr. Chairman and Subcommittee Members, thank
	you for inviting me here today.
	I commend this Subcommittee for its prompt attention to the
	dangerous and illegal rulemaking of the FCC on December 23,
	2010.
	The agency's Report and Order on Preserving the Open
	Internet, passed by a bare majority of commissioners, just as
	the 2010 lame duck Congress was about to adjourn, created new
	regulations for some broadband Internet access providers. These
	new rules entomb into law one view of what some refer to as the
	``net neutrality principle.''
	Now as an early Internet entrepreneur, I share the
	enthusiasm of all five commissioners--not just the three who
	voted to approve the new rules--for the Open Internet. I just
	don't believe there is any need for regulatory intervention to
	save this robust ecosystem or that Congress ever granted the
	FCC authority to do so.
	As the report itself makes clear, the premise of looming
	threats to the Open Internet that motivated these proceedings
	proved chimerical. The rulemaking process is unduly political
	and disappointingly obtuse. The order rests on a legal
	foundation the agency cannot seriously expect will hold up in
	court or in Congress. The result: regulations that no one,
	other than FEC Chairman Julie Genachowski, publicly supported.
	The Report and Order is deeply flawed. And as with any
	regulation involving disruptive technologies, the risk of
	unintended consequences is high. In its haste to pass something
	before the new Congress convened, the FCC has interfered with
	the continued evolution of this vital technology, preserving
	Open Internet principles in the same way that amber preserves
	prehistoric insects--by killing them.
	I want to highlight just a few of the fatal defects of the
	Report and Order.
	Number one, there was no need for new regulation. Despite
	thousands of pages of comments from parties on all sides of the
	issue, in the end the majority could only identify four
	incidents in the last 10 years of what it believed to be non-
	neutral behavior. All four were quickly resolved outside the
	agency's adjudication processes, yet these four incidents
	provide the majority's sole evidence of the need to regulate
	now.
	With no hint of market failure, the majority instead issued
	what it calls ``prophylactic rules'' it hopes will deter any
	future problems. But it's worth noting that the rules, as
	adopted, would, at most, only apply to one of the four
	incidents which involved a small ISP alleged in 2005 to have
	blocked its customers' access to Voice Over Internet Protocol
	telephone service. If anticompetitive practices do emerge,
	existing antitrust enforcement mechanisms are in place to
	correct them. Indeed, these laws already provide adequate
	deterrence.
	Therefore, to justify their new rules, the majority
	preemptively and recklessly rejects the idea that a violation
	of the new rules requires proof of anticompetitive practices or
	demonstrable consumer harms--hallmarks of modern antitrust
	practice.
	All one can say charitably is that the majority is
	reserving to its future discretion a determination of what
	practices actually violate the spirit of the new rules. It's
	hard to think of a better example of an arbitrary and
	capricious decision.
	Number two, exceptions reveal a profound misunderstanding
	of the Open Internet. The Report and Order detail at least 16
	significant exceptions, caveats, and exemptions for current
	non-neutral network management practices, practices the
	majority acknowledges are ``inconsistent'' with the Open
	Internet first principles.
	In most cases, the inconsistent practices are exempted only
	because they have become entrenched and vital features of the
	online experience for consumers, with no harm to the Open
	Internet. The long list should have made clear to the majority
	that network engineering has evolved beyond simplistic slogans
	of an open and neutral network. The evolution of these network
	practices is far from over, but the majority's ``these and no
	more'' list condemn future innovations to the relatively
	glacial pace of FCC approval. This will unintentionally skew,
	slow, or stunt the next-generation Internet ecosystem in ways
	that threaten U.S. competitiveness in this most global of all
	markets.
	The majority have promised to review the rules no later
	than 2 years from now, but in Silicon Valley, where I come
	from, 2 years might as well be forever.
	Number three, the FCC lacked authority to issue the rules,
	and likely knew it. Despite promises that the agency's very
	smart lawyers had unearthed legal support for their new rules
	beyond arguments rejected by the D.C. Circuit in the Comcast
	decision, the Report and Order largely repeated those
	arguments. This half-hearted effort suggests the agency has
	little expectation the rules will survive court challenges that
	have already begun, and issued them solely to get the messy
	proceedings off its docket.
	I have submitted a report examining these and other
	concerns in detail, and I look forward to your questions. Thank
	you.
	Mr. Goodlatte. Thank you, Mr. Downes.
	[The prepared statement of Mr. Downes follows:]

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	__________

	Mr. Goodlatte. Mr. Glass, welcome.

	TESTIMONY OF LAURENCE BRETT (``BRETT'') GLASS,
	OWNER AND FOUNDER, LARIAT

	Mr. Glass. Thank you, Chairman Goodlatte, Ranking Member
	Chu, Members of the Committee, thank you very much for inviting
	me to testify. It's a great honor for me to be the first of my
	relatively young industry to speak before Congress.
	To stay as close as I can to my allotted time, I would like
	to offer you an abridged version of my prepared testimony,
	which I hope you will enter into the record in full.
	First, some background. I'm an electrical engineer. I
	received my bachelor's of science from the Case Institute of
	Technology in 1981 and my master's at Stanford in 1985. I have
	designed computer chips, written popular computer software, and
	penned more than 2,500 published articles. In the early 1990's,
	I moved from Palo Alto, California, to the beautiful small
	college town of Laramie, Wyoming.
	Laramie is roughly the size of Stanton, Virginia. When I
	arrived, I discovered there was no ready access to the Internet
	outside of the University of Wyoming campus, so I founded
	LARIAT, the world's first fixed Wireless Internet Service
	Provider, or WISP. LARIAT began as a nonprofit cooperative
	whose purpose was to teach, promote, and facilitate the use of
	the Internet.
	Fast forward 11 years to 2003, the Internet was well
	established and the membership decided they no longer wanted to
	be members of a co-op, they simply wanted to buy good Internet
	service from a responsible local provider. So the board
	prevailed upon me and my wife, who had served as caretakers of
	the network, to take it private.
	We did, and we've been running LARIAT as a small,
	independent Internet service provider ever since. We have very
	slim margins. Our net profit is less than $5 per customer per
	month, but we're not doing it to get rich, we're doing it
	because we love to do it and want to help our community.
	We at LARIAT have always been the strongest possible
	advocates for consumer choice, of free speech, and of
	inexpensive, high-quality Internet access. It's our mission and
	it's our passion. And while I now have more help, I still climb
	rooftops and towers to install Internet with my own hands, to
	train my employees, and to check the quality of every job.
	Now, since LARIAT has started, the cable and telephone
	companies have also gotten into the broadband business. We
	compete gamely with them within the city limits, but our
	services, unlike theirs, extend far into the countryside. Other
	WISPs were started and set up shop in our town, forcing us to
	compete harder and innovate more. We estimate that there are
	now between 4,000 and 5,000 WISPs, as shown on the map in the
	written version of my testimony. WISPs now serve more than 2
	million people and reach approximately 70 percent of all U.S.
	homes and businesses, including many with no access to DSL or
	cable. We create local, high-tech jobs and we stimulate the
	development of other businesses. We can cost effectively serve
	areas where there is no business case for any other form of
	terrestrial broadband.
	We also provide vigorous competition where other kinds of
	broadband do exist. For example, a WISP called D.C. Access
	serves homes and businesses here on Capitol Hill. It even
	provides the free Wi-Fi on the Supreme Court steps.
	Unfortunately, I'mhere to tell you today that the network
	neutrality rules enacted by the FCC will put WISPs' efforts to
	provide competitive broadband and to deploy to rural and urban
	areas who do not have access or competition at risk.
	Firstly, the rules address prospective harms rather than
	any actual problem. Contrary to what advocates of regulation
	say, ISPs have never censored legal, third-party Internet
	content. Secondly, even before the rules were issued, the
	Commission's notice of proposed rulemaking created uncertainty
	which drove away investors. The final rules are vague,
	permitting reasonable network management, but not fully
	defining what the word ``reasonable'' means. As Commissioner
	Robert McDowell pointed out in his well-written dissent, this
	lays the groundwork for protracted, expensive, legal wrangling
	that no small business can afford.
	The rules also allow anyone, whether or not he or she has
	service from a particular provider, to file a formal complaint
	alleging violations. Even, now before the rules have taken
	effect, groups here in D.C. have filed complaints against
	MetroPCS for offering a great, affordable Smart phone service
	plan which prohibits a few bandwidth-hogging activities. My own
	company could suffer a similar fate. Our most popular
	residential service plan comes with a minor restriction; it
	does not allow the operation of servers.
	Now, Mr. Chairman, most Internet users would not know what
	a server was if it bit them, and they have no problem uploading
	content to a Web site such as YouTube for distribution. This
	means customers that do need to operate a server could obtain
	that capability by paying a bit more to cover the additional
	cost. But if the FCC decides against MetroPCS, we will almost
	certainly be forced to shift everyone to the more expensive
	plan. We will therefore be less competitive, offer less value
	to consumers, and especially less value to economically
	disadvantaged ones.
	We will also hesitate to roll out innovative services for
	fear that the Commission could find fault with some aspect of
	them. For example, selling priority delivery of data, even for
	a new high-tech service such as Telepresence, is strongly
	disfavored by the rules. This is like telling UPS or FedEx that
	they cannot offer shippers overnight delivery because it's
	somehow unfair to those who use ground service.
	Now in my FCC filings, I urged the Commission to promote
	competition rather than requiring us to ask permission to
	innovate, but the majority rejected this approach in favor of
	onerous regulations which address a problem that does not
	exist.
	I therefore urge Congress--which is the ultimate source of
	the FCC's authority--to set things right. Rather than the
	excessive regulation which would extinguish small competitors
	like WISP and create a duopoly that did require constant
	oversight, we should facilitate competition, crack down on
	anticompetitive tactics, and then allow markets to do the rest.
	Only by adopting this approach can we allow American small
	businesses to create jobs, innovate, and prosper while solving
	a very real problem, providing ubiquitous broadband access to
	our Nation.
	Thank you.
	Mr. Goodlatte. Thank you, Mr. Glass.
	[The prepared statement of Mr. Glass follows:]

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	__________

	Mr. Goodlatte. Ms. Sohn, welcome.

	TESTIMONY OF GIGI B. SOHN, PRESIDENT AND CO-FOUNDER, PUBLIC
	KNOWLEDGE

	Ms. Sohn. Chairman Goodlatte, Members of the Subcommittee,
	thank you for the opportunity to discuss the importance of
	network neutrality to protect consumers and competition on the
	Internet.
	An Open Internet is vitally important to political and
	social discourse, commerce, innovation, and job creation in the
	U.S. Past actions by incumbent broadband Internet access
	providers have threatened the Open Internet, requiring the FCC
	to set enforceable baseline rules.
	Contrary to assertions by incumbents that consumers enjoy
	competition when it comes to broadband Internet access and can
	simply switch providers, the FCC's national broadband plan
	reported that nearly 91 percent of all Americans reside either
	within a monopoly or duopoly broadband market. Given this
	reality, it is important that the Subcommittee work to promote
	net neutrality to ensure competition on the Internet.
	In its Competitive Impact Statement in a Comcast-NBCU
	merger, the Justice Department laid out how the competitive
	harms presented by the merger were matters of antitrust and how
	they warranted clear network neutrality protections. The DOJ
	recognized that online videos distributors, OVDs, represent an
	emerging class of competitors to traditional multichannel video
	service providers, MVPDs, like Comcast. Although new MVPDs have
	endured nationally, incumbent video service providers like
	Comcast remain dominant in their regions.
	Because OVDs are able to provide service in any geographic
	area, they are a source of direct competition to cable in the
	geographic area in which it is dominant. At the same time,
	because the profit margins from subscription video are far
	greater than that of program distribution, Comcast and other
	traditional MVPDs have a strong incentive to interfere with
	nascent OVD competitors. Thus, the DOJ found that Comcast had a
	much greater incentive to prevent the emergence of rival video
	services such as OVDs than it does to cultivate them as
	customers for video service. Comcast simply cannot hope to make
	up lost revenue caused by cable subscribers cutting the cord
	through the sale of programming to OVDs.
	Network neutrality rules, such as the conditions imposed by
	the DOJ and Comcast, work against this anticompetitive danger.
	While the DOJ was specifically addressing Comcast, these
	antitrust concerns apply across the broadband market. A
	customer may wish to cut the cord and drop the video
	subscription, but the monopoly or duopoly broadband Internet
	access provider, also offering a video package, will have the
	incentive and ability to prevent this by interfering with the
	delivery of online video.
	That same harmful incentive exists in the market for
	telephony. Just as the incumbent cable provider has a strong
	incentive to interfere with broadband delivery of competing
	video, the incumbent telephone provider has a strong incentive
	to degrade competing voice traffic. These harms are not
	speculative. There is a documented history of anticompetitive
	actions taken by broadband access providers.
	Aside from the Madison River and Comcast/BitTorrent cases,
	AT&T has blocked several applications, such as SlingBox video
	streaming and VoIP applications like Skype, from its mobile
	network while permitting similar products to use its network.
	Cox and RCN both admitted to slowing or degrading Internet
	traffic, and despite claims that these practices were designed
	to handle congestion, neither provider disclosed their traffic
	management practices to subscribers.
	Despite proclaiming that they have no intention of ever
	actually blocking or degrading content, broadband Internet
	access providers include within their terms of service
	provisions that allow them to engage in precisely these
	practices. And let me emphasize, these are only the cases we
	know about. Organizations like mine don't have the kind of
	money to track everything that ISPs do.
	Now, I want to make clear that while I believe that
	antitrust law has a role to play in ensuring an Open Internet,
	it cannot do the job alone. Broadband providers can
	discriminate against applications of service providers without
	that discrimination rising to the level of an antitrust
	violation. And as the Judiciary Committee recognized when it
	introduced Open Internet-related legislation in 2006, the
	Supreme Court's Trinko decision severely limits the
	applicability of antitrust laws to regulated industries like
	cable and telephone companies. Thus, the recently enacted FCC
	rules are crucial to preserving an Open Internet.
	Public Knowledge is deeply concerned about recent decisions
	in Congress to invoke the Congressional Review Act to repeal
	those rules. Should Congress enact a CRA repeal, the FCC's
	power to protect an Open Internet and not just the recently
	enacted rules, would be virtually eliminated.
	Mr. Chairman, through the years, the Judiciary Committee
	and this Subcommittee have played a vital role in making
	certain that American consumers were protected by the vigilant
	enforcement of antitrust laws. This mission is now more
	critical than ever. As a DOJ analysis shows, anticompetitive
	activities by large carriers have the potential to affect
	millions of consumers in what may be net neutrality issues or
	may not. We urge the Subcommittee to keep a close watch on
	today's communications markets and to be alert to the kind of
	abusive market power that can affect consumers, companies, and
	the economy as a whole.
	I thank you and look forward to your questions.
	Mr. Goodlatte. Thank you, Ms. Sohn.
	[The prepared statement of Ms. Sohn follows:]

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	__________

	Mr. Goodlatte. I will now recognize myself to begin
	questions.
	Let me ask each of you, how do you anticipate the Open
	Internet Order of the FCC affecting the ability of startup
	companies that you advise to raise capital--I guess we are
	directing this to you, Mr. Downes--and have you already seen
	any effect?
	Mr. Downes. I have not seen any effect yet. Of course the
	rules are very new and there is already, as you know, two legal
	challenges as well as discussions in Congress about potentially
	disapproving of the order. But in general I think it's quite
	accurate to say that the ability of my clients, particularly in
	the hardware business, to raise capital will be affected by
	these orders. The problem, of course, is there is a great deal
	of uncertainty. There was a lot of--the rules themselves are
	fairly vague, but of course all the exceptions and exemptions I
	mentioned in my opening statement make it very difficult to
	tell what is and isn't allowed as far as a network management
	practice, techniques for optimizing certain kinds of content or
	certain kinds of media. We don't know if in the future if I
	invent some new network management technique--and of course
	they're being invented all the time--it would be much more
	difficult for me to raise capital, or for my clients to raise
	capital, to pursue those kind of techniques. I think it's safe
	to say particularly early-stage investors will want--the way
	they currently ask for patent stuff, they'll ask for approval
	from the FCC.
	Mr. Goodlatte. Is it fair to say that while there's always
	risk in investing in a business--particularly a new business--
	that with antitrust laws you know the rules of the road and you
	can consult an attorney, you can take into account what you
	think those rules are as you move forward; but with FCC
	regulation, you can look at a set of regulations, begin down
	that path, and while you are substantially invested in this new
	technology, this new idea, suddenly those regulations can be
	changed and you're in a situation where you are no longer a
	profitable investment?
	Mr. Downes. Yes. I think that's absolutely correct, Mr.
	Chairman. And it is also, I think, worth mentioning that the
	way the FCC implemented the enforcement provisions of its
	order, very, very broad. Any party has standing to bring a
	complaint, formal complaint before the FCC about any practice
	that it believes may or may not violate the net neutrality
	rules, even non-customers. And it's very difficult, of course,
	for anyone to know. You know, if the Internet goes slow one
	day, you don't know if that means somebody is doing a net
	neutrality violation or if it's slow because something is
	broken. But under the enforcement provisions of the order, the
	FCC will file essentially a full legal case, with discovery and
	everything that goes with it, for any time a formal complaint
	is filed. And that, of course, is potentially disastrous.
	Mr. Goodlatte. And the ability to raise capital as well as
	the ability to incentivize the development of new technologies
	would be affected the same way by the uncertainty created by
	FCC regulations.
	Mr. Downes. Yes, I believe that is so.
	Mr. Goodlatte. Let me turn to Mr. Glass. Would you say that
	you are able to be more flexible and customer oriented than
	your competitors in your capacity as a small ISP? And if you
	agree with that statement, will the FCC regulations make it
	harder for you to remain as flexible and customer oriented?
	Mr. Glass. Mr. Chairman, let's see; as Mr. Downes said, we
	do not know exactly how the FCC regulations are going to be
	enforced. It may be at the whims of these commissioners or at
	some future sitting commissioners that may have different
	opinions. They are vague enough that we're not exactly sure. So
	I can't tell you exactly how they might affect our ability to
	provide innovative services, but we do provide innovative
	services now that are unique.
	For example, we have doctors on our network, some of whom
	live fairly far out of town; and what we do, when someone goes
	into the emergency room and they get a CAT scan or an MRI, we
	go ahead and we prioritize the traffic so that that doctor can
	immediately--or as least as fast as possible--view the CAT scan
	and determine what's wrong, give an opinion to the hospital,
	dash to the hospital if he needs to do so. That sort of
	priority could arguably be in violation of the FCC's rules. We
	don't know, but they presumptively discriminate against that
	prioritization. So we really don't know where things are going,
	but we are very concerned.
	Mr. Goodlatte. Ms. Sohn, I appreciate your attention to
	antitrust laws, but I have a concern about your suggestion that
	antitrust laws and FCC regulations will work well together in
	this regard. My reading of the Trinko decision is different
	than yours. Quite frankly, my understanding of that decision is
	that if you have an industry that is regulated like the cable
	industry is regulated, like the telephone industry is
	regulated, then the Supreme Court said that in the Trinko case
	that you look less to antitrust laws.
	But here the point, is that the FCC is not regulating the
	Internet now and should not be, and therefore the vitality of
	our antitrust laws would be stronger and more effective if we
	do not have additional FCC regulation of the Internet, which I
	am very concerned is simply kicking the door open for the FCC
	to regulate this incredibly innovative development in our
	society and in our economy that I think has grown tremendously
	and become such a huge part of our economy because it has not
	become heavily regulated.
	Do you want to respond to that?
	Ms. Sohn. Sure. Network neutrality it is not regulation of
	the Internet, it is regulation of the companies that provide
	the on-ramps to the Internet--telephone and cable companies.
	And the FCC does regulate them, and that's why I'm very
	concerned that the Trinko decision really guts antitrust law,
	and that's why former Chairman Sensenbrenner introduced that
	law in 2006.
	Mr. Goodlatte. Sure. But that law was designed to tweak our
	antitrust laws to make them more effective. And I would freely
	acknowledge that we need to look at what we need to do with our
	antitrust laws to make them effective in addressing what's
	going on on the Internet, but not turn this over to a
	regulatory process that is very different than antitrust,
	which, as we just discussed with Mr. Downes, creates a lot more
	certainty in terms of investment, in terms of developing new
	technologies, than having the uncertainty of ever-expanding
	regulatory powers for the FCC, which I think, as I stated at
	the outset, are in violation of Congress' intent to begin with.
	Ms. Sohn. Look, I share your concern. I'm not for big FCC
	regulating everything, regulating the Internet. My
	organization, probably to your dismay, brought the case that
	struck down the FCC's authority to implement the broadcast
	flags, so I share those concerns. But the problem is even if--
	let's set the Trinko case aside--and I would point you to
	testimony that Howard Shelansky of the FTC did about the effect
	of the Trinko case on antitrust enforcement in this area. And
	Howard Shelansky is no fan of network neutrality.
	But setting that aside, there are places that are of
	concern to consumers and concern to edge companies, like
	Facebook and Twitter and Netflix and Google that just won't be
	touched by antitrust law. For example, let's say Verizon or
	Comcast wants Google to pay for faster service or better
	quality of service, that's not something necessarily that is
	going to be covered by antitrust law. It's not as easy as a
	situation where AT&T blocked Skype, where you know that AT&T
	has a competitive interest in disfavoring VoIP. So there can be
	instances of discrimination that the FCC rules cover that
	antitrust law just does not.
	Mr. Goodlatte. Mr. Downes, would you care to respond, or
	Mr. Glass?
	Mr. Downes. Well, Mr. Chairman, it is possible that, of
	course, the broadband provider may ask a company to pay more
	for more service.That's sort of the nature of competitive
	industries. It isn't necessarily a violation of net neutrality
	in principle, and it's certainly not necessarily anything that
	would be considered anticompetitive or demonstrable consumer
	harm. That's the standard for antitrust. I think that's a good
	standard.
	And the problem, as I said, with the FCC is that they
	didn't give us any standard at all. They said we reject that as
	the standard by which we're going to enforce the
	antidiscrimination rule, but we don't know what standard
	they're going to apply instead. They just don't want people to
	be picking winners and losers on the Internet. But I don't want
	to leave that to the discretion of the FCC.
	Mr. Goodlatte. Thank you.
	Mr. Glass.
	Mr. Glass. Yes. I would really like--it would be really
	wonderful for me, because I do experience a lot of
	anticompetitive tactics, especially at the hands of the local
	incumbent--local exchange carrier to have some recourse under
	antitrust law. Right now, I am forced to operate as if I don't.
	And actually, because of that, the best thing that I can ask
	the government to do is enable competition and at least don't
	keeping me from competing. I would like to see the antitrust
	law fixed, however.
	Mr. Goodlatte. Thank you.
	The gentleman from Michigan, Mr. Conyers.
	Mr. Conyers. Thank you, Mr. Chairman.
	I am in the process, lady and gentlemen, of separating out
	three considerations: One, the concept of net neutrality; two,
	the role of the Federal Communications Commission; and three,
	antitrust law. And so I have come to this hearing with the view
	that the FCC has probably not exercised its fullest authority
	in this area before this is all over.
	Contrary to those who think the FCC has exceeded its
	authority and it's not what Congress intended, I think that a
	case could be made for the FCC becoming stronger. So let me
	question you in this respect: We all agree on the validity and
	significance of net neutrality as a telecommunications concept;
	is that true? Yes. Blank. Blank.
	Okay. Do you have reservations about net neutrality? Do you
	think it's dangerous, or are you worried about where it's
	going, or what?
	Mr. Downes. Well, as I said in my statement, Mr. Conyers, I
	am not against net neutrality. I am in favor of the Open
	Internet, I've been a beneficiary of the Open Internet. My
	concern is principally with the idea that the FCC, as a
	regulatory body, is the one to decide what it actually means
	and to enforce it.
	Mr. Conyers. Well, I'm not talking about the FCC. That's
	number two on my list. I'll get to that. But you seem reluctant
	to just come out and say that you are for net neutrality.
	Mr. Downes. No, I've said it. I have written that I am in
	favor of net neutrality in principle.
	Mr. Conyers. Fine. But I've had to kind of tease it out of
	you.
	What about you, can I get a straight, okay, yes, I'm for it
	answer?
	Mr. Glass. Mr. Conyers, I would love to be able to give
	that sort of a response. The problem is even if you look at
	Wikipedia, there are three or four definitions of net
	neutrality under that one heading.
	Mr. Conyers. Well, you take the one that you want. Would
	you like net neutrality as you would define it?
	Mr. Glass. I would like to see net neutrality if it means
	freedom from anticompetitive tactics. I would not like to see
	it if it means onerous regulation or micromanagement of
	innovative companies that are trying to do things.
	Mr. Conyers. Well, I'm talking about the concept itself,
	I'm not talking about who's running it and how it's being
	managed. I don't mean to put words in your mouth, for goodness
	sake, heaven forbid, but from you two witnesses I seem to sense
	that there is some hesitation about just coming out and saying
	net neutrality is a good thing and I'm glad it's here.
	I mean, you start telling me about the FCC and who's
	regulating, I'm just asking you about net--everybody isn't for
	net neutrality. And I suspect that--I'm not a psychiatrist, but
	deep down do you have some reservations about net neutrality?
	You can say yes if you want to.
	Mr. Glass. I think I do have reservations----
	Mr. Conyers. All right. Very good. Now that's what I'm
	trying to get at.
	Now Professor Downes, deep down, don't you have some
	reservations about net neutrality?
	Mr. Downes. No. Look, if net neutrality is a political
	term, yes; if it's an engineering term, no.
	Mr. Conyers. Well, let's see. Okay. Now let me ask the
	gentlelady witness, where do you come out on this net
	neutrality?
	Ms. Sohn. I am a stalwart supporter of net neutrality. My
	organization does not think that the FCC's rules went far
	enough, although we are willing to live with them. They are
	rules of the road. We believe, as the Commission does, that the
	companies that provide the on-ramps to the Internet--they are
	either a monopoly or duopoly in 90 percent of this country--
	should not be able to pick winners and losers.
	Mr. Conyers. Well, now let me raise this, since my time is
	just about gone--you fellows did a good job on making me work
	so hard to get a yes or no answer.
	But the last question, Mr. Chairman, if I might, on the
	question of antitrust, do all of you agree with me that
	antitrust is a very difficult thing to prosecute? There are
	certain standards and levels. And antitrust in the Department
	of Justice has been going down for decades. We don't get much
	of that anymore. Does that statement ring positive with you?
	Mr. Downes. Well, I don't think if you asked companies like
	Microsoft and Intel if they think antitrust has gone down, they
	would say no.
	Mr. Conyers. Yeah, but I'm asking you.
	Mr. Downes. I think, certainly in terms of the technology
	industry, antitrust has been applied more than it had been
	before, and often I think with dangerous consequences.
	Mr. Conyers. Well, there wasn't any industry before.
	What do you say, sir?
	Mr. Glass. From the point of view of a small business
	person, I don't know if I will ever have recourse to antitrust,
	but I would love to be able to avail myself of such remedies.
	Mr. Conyers. Yes, ma'am.
	Ms. Sohn. Well, I agree with you 100 percent. And
	particularly when it comes to regulated industries like
	broadband Internet access providers, the Trinko and Credit
	Suisse cases have completely eviscerated antitrust enforcement.
	Mr. Conyers. Thank you, Mr. Chairman.
	Mr. Goodlatte. I thank the gentleman.
	The Chair recognizes the gentleman from Pennsylvania, Mr.
	Marino.
	Mr. Marino. Mr. Chairman, I have someone that I have to
	meet here shortly. Could I reserve my time and when I get back,
	if I have questions, ask them?
	Mr. Goodlatte. Absolutely. We will do that.
	And now the Chair turns to the gentlewoman from California
	for her questions.
	Ms. Chu. Thank you, Mr. Chairman.
	Well, some would suggest that current antitrust law is
	sufficient to protect consumers with regard to access to
	broadband. Ms. Sohn, you seem to imply that both the Department
	of Justice and the FCC have a role to play in protecting net
	neutrality.
	If the FCC were stripped of its ability to enforce net
	neutrality principles, would the Department of Justice have the
	ability to prevent broadband providers from discriminating
	among Internet content?
	Ms. Sohn. Within the context of a merger like Comcast, yes.
	And I think the Justice Department did an outstanding job in
	doing that. However, if it comes to plain old antitrust
	enforcement, that kind of enforcement has been severely limited
	by Supreme Court decisions in the Trinko case and the Credit
	Suisse case. So I think it would be very difficult without some
	legislation. And I would encourage this Subcommittee to think
	about it.
	And particularly if you're concerned about the competition
	in the application space between search engines or between
	social networks, there is nothing in antitrust law that would
	allow you to move forward on that either. So I would encourage
	this Subcommittee to think about how do we repair the damage
	done by the Supreme Court in the Trinko and Credit Suisse
	cases.
	Ms. Chu. And why is it important to have the FCC involved?
	Ms. Sohn. Because the FCC, first of all, in light of those
	Supreme Court cases, there is very little that an antitrust
	authority can do when it comes to regulated companies like
	broadband Internet access providers. And secondly, there are
	activities that broadband Internet access providers can do that
	discriminate, that hurt an Open Internet, that do not rise to
	an antitrust violation. So there are gaps there that the FCC,
	with its public interest mandate, can fill.
	Ms. Chu. Let me ask about the authority of the FCC. There
	has been significant debate about the Commission's authority to
	regulate broadband, and in particular Verizon has appealed the
	Commission's Open Internet Order, alleging that the FCC has
	acted outside the bonds of its statutory authority. Do you
	believe the FCC does have the authority to develop net
	neutrality rules?
	Ms. Sohn. Well, we would have preferred that the FCC
	reclassified broadband Internet access as a telecommunications
	service, just as Justice Scalia suggested in the Brand X case.
	Unfortunately, they did not do that. The FCC believes that it
	has threaded the needle that the D.C. Circuit gave it, the hole
	that the D.C. Circuit gave it in the Comcast decision, and the
	court will decide that. Again, we would have preferred that
	they had gone to Title 2. They decided to go a different way,
	and the courts will decide.
	Ms. Chu. I have to admit that this all seems academic to me
	because the FCC can clearly regulate this area if they decide
	to reclassify broadband under the Telecommunications Act. In
	your view, why has the Commission held off on reclassifying
	broadband?
	Ms. Sohn. I think it's just fear. It's fear of the
	political blowback that would have happened. Yes, it would have
	been a controversial decision, but it would have been the most
	legally sustainable. It's unfortunate. I think the FCC's
	general counsel was quite correct that not reclassifying not
	only would have affected net neutrality, but would affect
	universal service, would affect privacy, would affect any
	number of important consumer protections that the FCC might
	undertake, but I think it's all about politics.
	Ms. Chu. Thank you. I yield back.
	Mr. Goodlatte. I thank the gentlewoman.
	The gentlewoman from Florida, Ms. Adams, is recognized.
	Mrs. Adams. Thank you, Mr. Chairman.
	Commissioner McDowell's dissent that said that reasonable
	standards set out in the Open Internet Order is one of the most
	subjective and litigated standards in the legal system, do you
	agree with that statement?
	Ms. Sohn. Could you repeat that? I didn't quite understand
	that.
	Mrs. Adams. The observation in Commissioner McDowell's
	dissent that the reasonable standard set out in the Open
	Internet Order is one of the most subjective and litigated
	standards in our legal system?
	Ms. Sohn. That is absolutely correct, because under Title 2
	of the Communications Act--again, the place where I would have
	preferred the FCC to go--what is prohibited is unjust and
	unreasonable discrimination. So the good thing about, had they
	decided to go there, is that you have years and years of
	precedent. Now they have set this new standard, ``reasonable
	network management,'' which I don't think is as onerous as my
	colleagues but, however, is going to have to undergo a whole
	new set of adjudications.
	So yes, I agree with Commissioner McDowell, but perhaps we
	disagree that that would have been the better way to go because
	there is precedent, and because telecommunications providers
	know how to behave under that precedent. And in fact, there are
	over 800 telecommunication providers who choose to be regulated
	under Title 2. And wireless telephone service--not broadband
	service, is also regulated under Title 2. So it's something we
	know.
	Mrs. Adams. So, would you agree that a standard that
	determines a behavior's reasonableness by a majority vote of
	FCC commissioners, is harder to predict than either a bright-
	line rule or a rule of reason constrained by over a century of
	antitrust law?
	Ms. Sohn. Well, I mean, that's an interesting question. But
	as I said before, antitrust law doesn't really apply here
	because of Supreme Court precedent. So it's hard for me to say
	which is better and which is not. But let me say something
	about reasonable----
	Mrs. Adams. Let me ask you something. Let's get a little
	bit clearer. Would you rather have something under an antitrust
	law that has been century tested, or a reasonableness law that
	is subject to the five--I think it was five--commissioners'
	discretion?
	Ms. Sohn. Well, I would say the reasonable standard in
	Telecom was also time tested. It's also 70 years old. So I
	guess to me it's a wash.
	Mrs. Adams. I'm asking you, would you rather have one or
	the another?
	Ms. Sohn. I think you have to have both. It's a false
	choice, you cannot choose. You have to have both.
	Mrs. Adams. So you think that the antitrust law, if not
	amended to quell your concerns, would be a better route than--
	or the reasonableness law would be a better route than the
	antitrust law?
	Ms. Sohn. No. The problem is that even if the antitrust law
	is vigorously enforced, there are still gaps that it doesn't
	reach when it comes to preserving an Open Internet. The gap
	where, for example, an Internet service provider wants to
	charge a Facebook or a Google for speedier service, okay; not
	because it has its own search engine, but just because, because
	it wants the money, that isn't really covered by antitrust law.
	Okay. And that's something that can come under the FCC's public
	interest standard.
	So the problem is the gap, and that's why I can't--it's not
	fair for me to say I like one better than the other because you
	have to have both.
	Mrs. Adams. Mr. Glass, you look like you would like to
	answer that.
	Mr. Glass. Well, I guess what I'm concerned about is there
	are five commissioners on the FCC. The appointments are usually
	political and partisan. The organization is far more
	politically driven than it should be, and this is something
	that we need to fix. I honestly believe that the FCC has
	structural problems that Congress should eventually address.
	But as it stands right now, it really has been capricious.
	And I really do believe the definition of ``reasonable'' is
	going to float, depending on who is sitting on the Commission
	at the moment. It's very difficult to conduct business in an
	industry where you have that sort of uncertainty.
	Mrs. Adams. Mr. Downes, would you like to comment.
	Mr. Downes. Yeah. I mean, I think it's worth noting that
	what they did end up with in the end was not as strict and not
	as onerous as what they started with, which was a
	nondiscrimination rule. And I think what's interesting is in
	the year and couple months' process by which the FCC was taking
	comments and having testimony on the net neutrality proceeding,
	I think one of the things they realized was there are a lot of
	discriminatory practices in the network's design, some of them
	very recent, some of them there to optimize certain kinds of
	content or certain kinds of media or certain kinds of services.
	And that those practices are not harmful to consumers, they
	were not intended to be anticompetitive, and in fact they're
	necessary to have an Internet today that looks like what it
	does, not what it looked like back in 1996.
	So I'm actually pleased that the FCC stepped back from the
	brink in terms of how far it went with the anti-discrimination
	rule. Obviously, I would have preferred them not to have any
	rule at all, but the one they had is not as bad as what they
	started with.
	Mrs. Adams. Thank you. I yield back my time.
	Mr. Goodlatte. I thank the gentlewoman.
	The gentlewoman from California, Ms. Sanchez, is
	recognized.
	Ms. Sanchez. Thank you, Mr. Chairman.
	Mr. Glass, I would like to start with you.
	In your written testimony you state that Internet service
	providers have never censored third-party content. So I want to
	ask you a very simple yes-or-no question. Are you familiar with
	AT&T's 2007 admission that they did censor part of a 2007 Pearl
	Jam concert that was critical of then-President George W. Bush?
	Are you familiar with that?
	Mr. Glass. Yes, I am. However, they were the publishers of
	the content, and therefore they had a First Amendment right to
	edit it.
	Ms. Sanchez. They were also the Internet service provider,
	the ISP; correct or not correct?
	Mr. Glass. As far as I know, you didn't need to use just
	their service in order to access the content. So I'm not sure
	if they qualify as the ISP in the same sense.
	Ms. Sanchez. Well, don't you agree that that type of
	precedent allows for the possibility that an ISP could censor
	content?
	Mr. Glass. There is always that possibility, but as an ISP
	who has worked my whole life to give people access, I
	amfervently in favor of not doing so.
	Ms. Sanchez. I just was asking about whether or not the
	possibility existed there. And I think, if I'm not mistaken,
	you answered yes, that that possibility does exist.
	So without net neutrality, what is to stop a rival ISP from
	blocking access to Web sites, for example, promoting LARIAT
	service, in effect blocking potential customers from knowing
	that there are alternative services?
	Mr. Glass. The market has generally taken care of that. We
	have more than 10 facilities based and even more nonfacilities-
	based providers in our area. Customers are easily outraged by
	such tactics, and they will switch.
	Ms. Sanchez. That is my next question. In your written
	testimony, you argued that consumers will ``move quickly to
	competitors if they dared to try censoring content.'' However,
	as the FCC's national broadband plan notes, 13 percent of
	Americans have only one broadband access provider and 78
	percent of Americans have only two broadband options.
	So what would you say to the citizens of both of those
	groups who have very limited options with regard to who their
	providers are going to be, that hey, if you are outraged at the
	censorship, if that occurs from your Internet service provider,
	and you don't have another provider to go to, what is the
	recourse? And even maybe where there are two providers that are
	present, what if both are engaging in that activity, what is
	the recourse there?
	Mr. Glass. Well, I'm not sure where that figure came from
	because, again, wireless ISPs reach 70 percent of U.S. Homes
	and businesses right now, and they are continuing to expand.
	Ms. Sanchez. That is businesses. That is not necessarily
	individuals.
	Mr. Glass. Homes and businesses. But I am hoping we will
	certainly work to resolve that problem.
	Also, I have here, and we may want to enter it into the
	record, a white paper from the FCC which was published in
	December 2010 where they surveyed customers, and two-thirds of
	them thought it would be easy to switch providers if they
	wanted to.
	Ms. Sanchez. But those two-thirds may be under the mistaken
	impression that they have more than one provider available in
	their area, and what if they don't?
	Mr. Glass. Actually, Ms. Sanchez, I would be inclined to
	think that it is the reverse. What we find is that most people
	don't know that wireless ISPs like myself are an option, and we
	are working to correct that by advertising as hard as we can.
	Many people do not realize that we do offer a real alternative,
	and will offer more of one as time goes by.
	Ms. Sanchez. Ms. Sohn, do you agree with what Mr. Glass has
	to say about censorship and recourse for consumers?
	Ms. Sohn. AT&T engaged in blatant censorship when they
	wouldn't allow Sling Media to be on their platform, even though
	they allowed MLB streaming video. That was censorship as well.
	I am not a First Amendment law expert, but I can tell you I
	don't know of any case, Supreme Court or otherwise, that says
	that a telecommunications provider, like AT&T, has absolute
	First Amendment rights that don't get balanced against the
	First Amendment rights of people like you and I.
	Let me say something about WISPs because I love them. I
	love Brett's company. I think they are terrific. But by nature,
	they are niche players. They are enterprise oriented, and they
	operate mostly where there aren't spectrum congestion problems.
	In many places they serve as hot spots. And if you look at Mr.
	Glass's own Web site, it shows you the guaranteed downstream
	capacity. And for residential areas, it is 256 K, 384 K, 384 K,
	512 K, 768 K. That doesn't even meet the definition of
	broadband that the FCC has put out. So I admire his service. I
	would love to see him compete and compete and compete; but to
	say that they measure up to a Comcast or to an AT&T or even a
	broadband wireless service is just not the case.
	Ms. Sanchez. Thank you for your answer.
	Mr. Chairman, I will submit my additional questions in
	writing in the interest of time.* I yield back.
	---------------------------------------------------------------------------
	*The material referenced was not submitted to the witness.
	---------------------------------------------------------------------------
	Mr. Goodlatte. I thank the gentlewoman.
	I am now pleased to recognize the gentleman from
	California, Mr. Issa.
	Mr. Issa. Mr. Glass, sometimes being around here for awhile
	actually has a benefit besides sitting on the top row. Wasn't
	it roughly 8 years ago that the world gold standard for high
	bandwidth was 256, set by Korea when they came out with
	universal 256 broadband? So how many years are you behind the
	leading edge of broadband typically? When will you be at T1
	speeds in your rollout?
	Mr. Glass. Mr. Issa, we are not behind T1 speeds now. The
	only reason why we offer lower tiers, and by the way, the FCC
	standard for broadband until recently was 200 K, meaning that
	every one of our services met the old standard.
	Mr. Issa. Thank you.
	Mr. Glass. They moved goalposts. In any case, we can do far
	more. However, due to anticompetitive behaviors relative to
	special access, in other words the way we get our bandwidth
	from the Internet, our bandwidth is very, very expensive. The
	reasons you see those rates on our page going down to those
	levels is simply the bandwidth is so expensive that people
	don't want to pay more to get more. We would love to give them
	cheaper broadband, and we are working on it. But unfortunately
	right now, due to those anticompetitive tactics, that is what
	we can offer for that price.
	Mr. Issa. Let me go through a line of questioning.
	Mr. Glass, today with the bandwidth you have available, if
	I have a small- to medium-sized business and no other access
	and I wanted to run VoIP enterprise system at my business, you
	would by definition, I assume, be prepared to just treat me
	like any other bandwidth and interrupt me all the time and have
	me have voice go up and down; or would you give me assured
	service and priority so that my voice traffic was reliable and
	predictable and quality?
	Mr. Glass. Actually, this is one thing, Mr. Issa, that we
	do differently from other ISPs. Other ISPs don't give you a
	guaranteed minimum speed on your connection. Our company does
	that for every customer, whether it is residential or business.
	And we can go to quite high speeds as long as the customer is
	willing to purchase the bandwidth.
	I have right here----
	Mr. Issa. Okay, so you don't have a bandwidth limitation as
	earlier was said off of that sheet. That is some sort of a
	misunderstanding? You can deliver high bandwidth, assured
	service, and you do?
	Mr. Glass. Absolutely.
	Mr. Issa. Ms. Sohn, going back to you, with the FCC
	sticking in the middle of something that has been growing
	virtually exponentially, providing services such as hundreds or
	thousands of simultaneous VoIP connections, something that
	wasn't even thought of outside of a Cisco in your building
	system a few years ago, what is it that the FCC brings
	incrementally to this process in your opinion? What is that
	they are going to do better than what has been happening the
	last decade?
	Ms. Sohn. They are going to provide clear rules of the road
	to ensure that consumers are protected, that they can access
	any Web site, any application, any content they want. They will
	be bring certainty, and not just certainty for consumers.
	Mr. Issa. Okay, I will assume that is exactly what they are
	going to provide. Are they going to guarantee me that I can
	take all of the bandwidth available at the maximum speed, that
	it is given to me by the carriers? In other words, if I have 15
	MIP download, they are going to guarantee that I can take all
	15 at all times; right?
	Ms. Sohn. No, I don't think so.
	Mr. Issa. Okay, so right now--and I don't want to sound
	like O'Reilly, but let me be a little bit here.
	Ms. Sohn. Be my guest. You are doing a great job.
	Mr. Issa. Right now, if everybody wants to take the maximum
	speed, of course, the system crashes or it slows down. So
	assured bandwidth, with some sort of metering or prioritizing,
	in your opinion, wouldn't you say that is in the interest of
	the consumer? In other words, if I need my voice traffic to
	actually keep going, even while somebody else is trying to
	download 10 movies simultaneously, don't I have an interest;
	and how is the FCC going to do a better job than what was
	already in place?
	Ms. Sohn. First of all, what the FCC is doing is keeping
	the status quo in place. And I think that is really, really
	important here when people talk about the FCC is imposing net
	neutrality.
	Mr. Issa. Okay, I will take your answer as the status quo.
	Mr. Downes, since I only have a few moments left, if they
	are keeping the status quo and the growth has been exponential
	and it has been done throughout the FCC, how am I from the dais
	to understand what the benefit is to this grab by the FCC
	during a recess?
	Mr. Downes. Frankly, Mr. Issa, I see no benefit to what the
	FCC is doing. I see only harm, and the harm is the potential
	for them to slow down the process by which these things will
	continue to improve. And new services and new network
	management engineering will be introduced into the network over
	time. The only thing that is going to happen is that will slow
	down or worse.
	Mr. Issa. Thank you.
	Thank you, Mr. Chairman. I yield back.
	Mr. Goodlatte. It is now my pleasure--this is a California-
	centric thing here. This is the third woman from California I
	am pleased to recognize.
	Mr. Issa. We are going to give you a lot more. This is
	important to California.
	Mr. Goodlatte. It sure is. The rest of the country, too. We
	are glad to hear from Californians, including the gentlewoman
	from Silicon Valley, Ms. Lofgren.
	Ms. Lofgren. Thank you. Before I ask my questions, I ask
	unanimous consent to make some testimony from Consumers Union a
	part of the record.
	Mr. Goodlatte. Without objection.
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	__________

	Ms. Lofgren. I am glad we are having this hearing. As we
	have listened to the testimony, I think it is important to
	recall that something like 96 percent of Americans have a
	choice of only two wire-line ISPs. If that were not the case,
	we probably would have a very different set of circumstances
	that face us. And when we talk about true broadband Internet,
	really fast enough to allow Americans to enjoy next-generation
	applications such as high-quality video, the market for true
	broadband is really even smaller for most Americans.
	Most of us have no alternative but our cable company which,
	of course, is facing competition for content on the Internet
	which raises all kinds of other potential concerns.
	Now, Ms. Sohn, thank you so much for being here today. You
	have been a witness many times before the Judiciary Committee.
	You have described in your testimony the concern about the
	monopolies and duopolies. I am wondering, can you give us a
	comparison on what we are facing here with, say, another First
	World area, say Europe; do they have greater competition there?
	Ms. Sohn. Yes. In almost every international comparison
	that you see, the U.S. is 15th, 25th as far as speed and value
	is concerned. That is because we took our regulatory system
	that we had in the 1990's and the early aughts and we got rid
	of it when the FCC reclassified broadband Internet access as an
	information service instead of telecommunication service. And
	so those countries that are beating us--and it is not just
	countries in Europe, it is countries in Asia, it is even
	countries like Iceland and some of the Nordic countries as
	well--they either require dominant telecommunications providers
	to open up their networks so competitors can use them, or they
	heavily subsidize their system. The government does that.
	I am not necessarily a big fan of the second one since I am
	a taxpayer, but I am a huge fan of the first one. If we were to
	go back to Title 2, we could go there. And I think it would be
	a great boon to American consumers because prices would go down
	and choices would go up. I remember the narrow band world,
	dial-up world. I am old enough to remember that.
	Ms. Lofgren. Me too.
	Ms. Sohn. In that era, American consumers had a choice of
	13 Internet providers; 13. And now you are lucky if you have
	two. Even here in D.C., I only have a choice of three.
	Ms. Lofgren. I am still waiting for Verizon FIOS to hit my
	street.
	Ms. Sohn. It is wonderful.
	Ms. Lofgren. Maybe that is an invitation if anyone from
	Verizon is listening. Now, the competition in other countries
	that have true broadband, how did they get it?
	Ms. Sohn. The regulatory scheme is different. We decided
	here that we are going to let the free market flourish, and
	what happened is competition has sunk to where it is right now
	where you have monopolies and duopolies.
	Ms. Lofgren. I think it's even been discussed here today
	that some of the issues are not amenable to antitrust remedies,
	and I think somebody said you might be able to charge Google,
	for example, a special fee for traveling on your network.
	Frankly, Google could afford it. But I'm more worried about not
	the Googles who are sitting financially very happily, but the
	guy in the garage who doesn't have that, and that we would have
	the ability really to stifle innovation without some guarantee
	of access.
	Ms. Sohn. That is absolutely right. Chairman Goodlatte
	talked about what kind of investment would there be under net
	neutrality rules. I think investment, where you are from,
	Congresswoman Lofgren, would be enormous. Investment in the
	next Twitter, the next NetFlix, the next Facebook, that is who
	we really care about here. You are right, Google can take care
	of itself. But imagine if 10 years ago Larry Page and Sergey
	Brin had gone to a venture capitalist and said, I would like
	you to fund this new crazy search engine idea I have; but, you
	know, AT&T/Verizon are asking me to pay for transport. The VC
	would say, See you later, I will invest in something else.
	So it is really the next great innovation, like the ones
	that were used in Egypt to stir democracy. That is what I am
	really concerned about.
	Ms. Lofgren. I would just note that it is necessary,
	especially with the growth of video on the network, there is
	going to be some crunch time here as we catch up. But my
	understanding is that the rule does not forbid reasonable
	network management or nondiscriminatory pro-competitive
	management of the resources. I guess what I am hearing is that
	is not as well defined as it needs to be. It may be correct. We
	may need to have some closer definition so everybody knows what
	that means. If that is the take-away from this hearing, I think
	we will have achieved something.
	Mr. Goodlatte. I thank the gentlewoman.
	Ms. Lofgren. I thank the Chairman for yielding.
	Mr. Goodlatte. The gentleman from New York, Mr. Reed is
	recognized.
	Mr. Reed. Thank you, Mr. Chairman, and to each and every
	one of the witnesses here today.
	Being relatively new to this body and to this Committee, I
	will say that I have a preference for witnesses that come from
	the front line, the people that are out there day in and day
	out--not to mean any disrespect to the think tanks and the
	academic world, we listen to them and enjoy their information--
	but I would like to have a conversation from you, Mr. Glass,
	because you are out there.
	Since I am on the other side of the coast from California
	to New York, but rural New York, western New York, in your
	testimony you provided to us it talks about--I think there's a
	clause here, ``Unfortunately, I am here to tell you today that
	the net neutrality rules enacted by the FCC will put wireless
	ISPs' efforts to provide competitive broadband and to deploy it
	to the rural and urban areas that do not have access or
	competition at risk.''
	I want to clearly understand what brings you to that
	conclusion. Can you summarize that for me?
	Mr. Glass. Well, Mr. Reed, there are several reasons why it
	would cause problems for us. First, it would discourage
	investment. Even when the notice of proposed rulemaking came
	out way before the rules were issued, we had investors who were
	very concerned. One fellow actually, very dramatically, clapped
	me on the back and said: The Feds are here. Small businesses
	like you aren't going to be able to play anymore. Why don't you
	go sell your business instead of asking for capital from me?
	The second problem is the uncertainty of what we were
	allowed to do and what we can't do. We don't have freedom to
	innovate anymore without asking permission.
	The third thing is the potential for censure by the FCC and
	serious penalties, if someone who isn't even our customer comes
	along and complains, and we have to either defend ourselves and
	buy expensive lawyer time or potentially be fined.
	Mr. Reed. Well, as a lawyer, I can understand that bill and
	that concern. And I always go after the frivolous lawyers
	because they give us all a bad name. And the defense cost,
	being a small business developer myself, that is a risk of
	business. So I appreciate that firsthand information.
	Mr. Downes, in your testimony you indicated something about
	the risk of unintended consequences on this report ordered out
	of the FCC are high. What are those unintended consequences?
	Can you articulate those for me?
	Mr. Downes. Well, it is difficult to articulate unintended
	consequences, but we essentially have a lot of history, not
	just with the FCC and not just with the Federal Government,
	State governments as well, who passed laws trying to regulate
	certain problems, sometimes very specific problems--say child
	pornography or indecent speech or other kinds of identify theft
	or spam and so on--where the legislation, because the process
	of legislating is relatively slow to the speed with which
	things change in terms of technology, and especially the
	Internet, by the time the legislation is passed, even with the
	best of intentions, it winds up certainly not solving the
	problem it intended to solve, and in fact opening up the door
	for unintended types of uses where regulatory agencies or local
	prosecutors would use that law to prosecute or try to interfere
	with behavior that they don't like, but which was not actually
	what the law was intending.
	So my concern, particularly with this rule, is again that
	because the FCC has said these are the only exceptions that we
	are going to allow to the neutrality principle, these are the
	only network engineering practices that we think are
	acceptable, even though they're inconsistent, that the
	unintended consequence here will be a slowdown in the
	innovation of new techniques that we desperately need to keep
	the growth that we have.
	Mr. Reed. Thank you very much.
	Ms. Sohn, do you see any unintended consequences on the
	horizon? I understand unintended consequence are hard to
	identify and articulate, but we have been regulating many
	industries for long periods of time. Do you see any similar
	situations where the unintended consequences could flow out of
	these types of actions?
	Ms. Sohn. Well, look, you can always have unintended
	consequences. But I do think my fellow panelists are
	exaggerating, and let me tell you why. First of all, both of
	them say there have been hardly any documented instances of
	discrimination, so what is the problem? If that is the case,
	then you will not have hundreds of complaints.
	My organization was one of the organizations that brought
	the complaint against Comcast for throttling back BitTorrent.
	That took an awful lot of work, okay, and the FCC rules say you
	have to make a prima facie case. So even if you give standing
	to everybody, not everybody has the expertise. And I can say in
	my organization, they don't have the resources to represent
	everybody. So I think that unintended consequence is a little
	overwrought because it is really, really hard to bring a
	legitimate complaint.
	And would you rather have class action suits? Would you
	rather have the States take care of it? I mean, class action
	suits were brought against Comcast in California and in
	Florida. So in some ways this process is even better
	Mr. Reed. I am a States' rights guy, so I would tread
	lightly there because the Federal Government, in my opinion,
	should be a limited Federal Government. So I would defer to the
	States.
	Mr. Chairman, my time has expired so I will yield back.
	Mr. Goodlatte. I thank the gentleman. Now I proceed to
	recognize another Californian, the gentleman from Los Angeles,
	Mr. Berman.
	Mr. Berman. Thank you, Mr. Chairman. It is good to be here.
	On medical malpractice, I am a States' rights guy.
	We need to be on this whole subject, I think we need to be
	careful; at least my view is net neutrality means neutral as in
	anti-discriminatory and not necessarily a totally open net. If
	the FCC is going to regulate, there needs to be allowances for
	reasonable network management to stem the flow of infringing
	works, child pornography, unlawful content not in the American
	sense of unlawful, not in the Mubarak sense of unlawful. And
	why do I say that? Because I really think, ultimately, without
	the incentives for legitimate content, the Internet is never
	going to reach its full potential, which I think is a goal of
	the FCC, and it is therefore critical that policy makes it
	clear that steps can be taken to protect content from being
	stolen and that the existing rules do not prohibit ISPs from
	taking reasonable steps to do so.
	I would like to ask one question. Ms. Sohn, how the heck
	are you?
	Ms. Sohn. I am shocked you are asking me that question.
	Mr. Berman. I thought you were going to say, Why don't you
	go back to Foreign Affairs?
	In your testimony, you cite to the Comcast decision as one
	which illustrates a claim for why a provider may block access,
	and I will quote you here: Both providers deny wrongdoing and
	claim that these practices were designed to handle congestion,
	but in neither case did providers disclose their traffic
	management practices to subscribers. It is ironic that
	providers which publicly proclaim they have no intention of
	ever actually blocking or degrading content routinely include
	statements in their terms of service that would allow them to
	engage in precisely these practices and without prior notice to
	consumers.
	I would like to get a little better handle on what concern
	you are expressing. Do you disagree there may be an appropriate
	situation in which access is denied or blocked and is the issue
	notices to subscribers? From your testimony, there is an
	acknowledgement that subscribers were informed in their terms
	of service, so is it something else that you are seeking here?
	Ms. Sohn. So both former E&C Chairman Waxman and the FCC, I
	think wisely, decided to take matters of network management--
	that is, making the network flow properly--they took copyright
	infringement and pornography enforcement out of that standard,
	and I think that was the right choice. But what the FCC did do,
	and I agreed with this, it said there should be nothing in the
	net neutrality rules that prevents Internet service providers
	from taking reasonable measures to protect against copyright
	infringement. And it also says that nothing in the net
	neutrality rules should prevent the enforcement of intellectual
	property laws.
	So the point there is ISPs, if they engage in reasonable
	measures to enforce copyright, would be well within the net
	neutrality rules. And as I understand it today, content
	providers and ISPs are talking about what those reasonable
	measures should be.
	So it is not network management in my mind, because that is
	about making sure that there is no congestion, but nothing in
	the FCC's rule would prohibit something like that happening. I
	am not a fan of blocking. I am certainly not a fan of ISPs
	throwing customers off the network, although they do have that
	ability to do that under the Digital Millennium Copyright Act
	if they are adjudged to be infringers, but I am not concerned
	that the network neutrality rules would prohibit reasonable
	measures to ensure that copyright.
	Mr. Berman. So you are telling me that if my concern about
	net neutrality rules is that it will be interpreted to
	essentially prohibit ISPs from getting involved in efforts,
	reasonable steps to stop infringing material, I shouldn't be
	concerned because you are not seeking that?
	Ms. Sohn. It is right there in the order. I don't want to
	be boastful, but I helped to negotiate that language. I guess I
	am being boastful. No, you should not worry.
	Mr. Berman. That is the kind of thing that you can boast
	about any time for my purposes. Thank you.
	I yield back.
	Mr. Goodlatte. The gentleman from Pennsylvania, Mr. Marino
	is recognized for 25 minutes.
	Mr. Marino. I guess I am going to pose this question to all
	three of you; but, Ms. Sohn, I will start with you. If the FCC
	gets involved here, would you agree with me that it needs an
	entirely additional level of administration?
	Ms. Sohn. Well, I might agree that it could probably use
	one or two more administrative law judges to the extent there
	may be more adjudication. But the point I want to make, there
	is also this body called the Broadband Internet Technology
	Advisory Group, and I sit on its board along with Verizon,
	AT&T, Comcast, Google and others. That is going to be a place,
	a nongovernmental, multi-stakeholder forum where ISPs and
	others can go to get predeterminations as to whether something
	is reasonable network management.
	I think that is going to take the load off the FCC from
	having to have layers and layers of new bureaucracy. They will
	still have to have some.
	Mr. Marino. If it is going to take the load off, then why
	have the FCC--and we are in a position here in this country
	where spending is out of control. Government is way too big,
	and we are talking about creating another administrative
	branch, even if it is a branch of the FCC, to come in and
	regulate.
	Now, in my research concerning the FCC, it has been having
	a tough time regulating television and other matters. I see
	this as, in addition to an impingement of perhaps
	constitutional rights violations, free speech, we have an
	entirely new, additional branch of government that we have to
	pay and it is something that we can't afford at this point.
	Ms. Sohn. Well, look, the BITAG cannot enforce rules. It is
	not a government entity. It is a multi-stakeholder group that's
	only purpose is to tell ISPs whether, according to good
	engineering technique, or common engineering technique,
	something is reasonable network management or not. You still
	need a government agency to enforce rules of the road.
	So you need both. I don't disagree with you. We don't want
	to bloat government bigger than it is already; however, they
	may need to shift some resources. They only have one or two
	administrative law judges, which is crazy. They have
	adjudications in other places. So they will need to add a few
	people, but I don't see it becoming more bloated.
	Mr. Marino. I have heard that before with the Federal
	Government. Let's start out with 2, and a year later it is 222.
	If we are going to hire more administrative law judges, I would
	be forced to argue there are other areas where we need
	administrative law judges, you and I disagree on that. Mr.
	Glass and then Mr. Downes, would you care to respond?
	Mr. Glass. Mr. Marino, I have actually expressed this in
	writings earlier that I made online. One of my concerns is that
	the push for network neutrality regulations at the FCC has
	diverted it from other pursuits which are more important. The
	FCC, after it published the national broadband plan, laid out a
	calendar that said certain things are going to be done in 2010.
	And because it was spending so much time and energy and money
	on addressing net neutrality, there were goals that it set for
	the third quarter of 2010 that it has not yet gotten to. So I
	am very concerned that it wasted a lot of the Commission's
	resources.
	Mr. Downes. I certainly agree with that, particularly in
	terms of spectrum reform, which is another matter altogether. I
	think it is important to understand that the FCC has been out
	of the business of regulating the Internet in any respect since
	1996. One of the things that is clear from the proceedings of
	the last year is that the FCC, and I don't mean any disrespect
	to the very hardworking staff over there, but they just don't
	understand technologically what happened in that intervening
	period. If they are going to start enforcing reasonable network
	managing practices, the engineering expertise will have to come
	up significantly from where it is.
	I agree with Ms. Sohn that BITAG has great potential to
	assist them if they listen to the recommendations of BITAG. But
	in order for them to actually enforce these provisions, they
	are going to have to do things we don't necessarily like, which
	is look very closely at a lot of Internet traffic to see if in
	fact discrimination is happening, or if the speed is happening
	because the speed is happening.
	Mr. Marino. Just quickly, Mr. Downes, first, I want you to
	address the constitutionality or lack thereof, particularly
	pertaining to free speech, how do you see FCC, if it does have
	control and authority, drawing that line between the two?
	Mr. Downes. The Report and Order sort of hedges its bets
	and contradicts itself in some sense, because the FCC does
	recognize under the Constitution and section 230 of the
	Communications Act, Internet service providers have the ability
	to shape content in many meaningful ways. So they haven't
	outright said they are going to stop that practice. But on the
	other hand, they said we don't see ISPs as typically being
	speakers. And at the same time, they recognize that under the
	Constitution and 230, they do have certain rights.
	Mr. Glass. Mr. Marino, I don't believe it is a First
	Amendment issue. There may be some Fifth Amendment issues, I
	think, possibly here, in that if conforming to these rules
	cripples our network, it may be considered regulatory taking.
	Ms. Sohn. I am not sure what kind of speech a broadband
	Internet access provider actually is engaging in.
	Mr. Marino. That is my point.
	Ms. Sohn. Well, no court that I know of has ever said that
	the owner of the infrastructure has an absolute First Amendment
	right. And to the extent that the courts have addressed it, it
	always has been balanced against the rights of the public to
	receive information. The classic case is the Turner case. It is
	an old case, but it still is the leading precedent in this area
	which said that cable operators had to carry over-the-air
	broadcast stations because the public had the right to see free
	over-the-air broadcast TV.
	Mr. Marino. Don't you see an onslaught of additional
	litigation?
	Ms. Sohn. There already is.
	Mr. Marino. I mean more?
	Ms. Sohn. Look, if Verizon and Metro PCS want to drop their
	lawsuit against the FCC, I would be all for it.
	Mr. Marino. That is an issue not before us, but that is my
	concern of, again, the additional litigation involved here plus
	the fact that the cost, that it is going to be to the American
	taxpayers.
	Mr. Goodlatte. If the gentleman would yield, the issue in
	that lawsuit is the very topic of the discussion here today
	being approached from a different vantage point, and that is,
	is the FCC under the laws passed by Congress entitled to do
	what they are trying to do?
	It is now my pleasure to yield to the fourth woman from
	California, Ms. Waters.
	Ms. Waters. Thank you very much, Mr. Chairman.
	Before I begin my questions, I ask unanimous consent to
	submit for the record the Department of Justice's competitive
	impact statement prepared by the agency's antitrust division in
	connection to the Comcast-NBC merger approval.
	Mr. Goodlatte. Without objection.
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	__________

	Ms. Waters. I have another submission and that is from a
	group of economists sent to the FCC discussing the importance
	of net neutrality rules.
	Mr. Goodlatte. Without objection, so ordered.
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	Ms. Waters. Thank you very much, Mr. Chairman.
	I would like to thank our panelists for being here today. I
	find this discussion very engaging, and I am particularly
	interested, since I spent so much time on the Comcast-NBC
	merger and learned so much about the power of a huge
	organization with a lot of resources.
	And I want to know, and I would like to ask Ms. Sohn, what
	challenges will exist for online content providers in light of
	mergers that will follow the Comcast-NBC merger? How can an ISP
	like LARIAT, for example, compete against an ISP like Comcast-
	NBC?
	Ms. Sohn. First, Congresswoman Waters, I really want to
	thank you for the work you did, really bringing the public's
	attention to that merger, because it was a merger of
	unprecedented proportions. I was disappointed that nobody--few
	people in the government, save you and perhaps Mr. Cole and Mr.
	Frank and the Senate, had the guts to say, How can we even
	consider this? But, unfortunately, you guys were really sole
	practitioners in that regard.
	So, you know, I don't think Larry can compete. There is no
	way. I mean, Comcast now has this vertical merger of one of the
	most popular broadcast networks in the country. And also, it is
	the biggest Internet service provider and the biggest cable
	operator. I think the Justice Department did the best it could
	within the limits that it had. Again, in fear of Trinko, I will
	say they didn't want to push too far because they were
	concerned about these precedents that really limit antitrust
	law.
	So the good news about the competitive impact statement
	that you just submitted for the record is that it says that
	online video distributors, what I call OVDs, are competitors.
	They are part of the market, and that big ISPs like Comcast
	cannot discriminate against them, cannot withhold programming
	from them, and cannot throttle their traffic when they provide
	online service.
	Ms. Waters. Thank you very much.
	Let me just ask in what ways can Internet service providers
	impede access to content, products, services available on the
	Internet, and what options do Internet users have if they find
	they cannot access certain content, products, or services?
	Ms. Sohn. They can either slow an application for a service
	provider's service. They can block it. Or they can slow it so
	much that it is almost like blocking it. That is what we were
	challenging in the Comcast-BitTorrent case.
	So there are many different ways that Internet access
	providers can hurt consumers' access to the things they want to
	access over the Internet.
	What is the recourse? Well, that is what the FCC rules are
	all about. They are about providing rules of the road so that
	consumers, if they do see that they are being unlawfully
	blocked or degraded from the content, services, and
	applications that they want to access, that they can go
	somewhere and have some recourse. And if these rules are
	overturned, either in court or by the Congress, through the
	Congressional Review Act or by any other method, then consumers
	will not have that. They will basically be out in the cold.
	Ms. Waters. You are basically saying there will be no
	options?
	Ms. Sohn. Absolutely. Again, as I mentioned before you were
	here, antitrust law has been so neutered for regulated
	industries like broadband Internet access providers, that right
	now without some kind of law being passed by this Subcommittee
	and the Judiciary Committee, there is no recourse there either
	for consumers.
	Ms. Waters. If I have time left, do you have an opinion
	about what you saw happening in the Congress of the United
	States? I found, in talking with Members, that many Members
	were confused or misled as to what net neutrality is or should
	be, and so many of them didn't even know--of the 74 who signed
	on to that letter, didn't realize. What is the confusion, and
	do you have any ideas how we can help people clear up what net
	neutrality is and what it isn't?
	Ms. Sohn. Net neutrality, quite simply, prohibits telephone
	and cable operators who are the two main, who provide the two
	main on-ramps to the Internet, from picking winners and losers,
	from deciding that Microsoft is going to win over Google. Or
	deciding that LinkedIn is going to win over Facebook. So that's
	what it is about.
	It is really no different than the telecommunications
	regulation we have had in this country for 100 years that said
	that telephone companies cannot decide whether your phone call
	is going to go faster than my phone call, or whether Mr.
	Glass's phone call is going to be a better quality than my
	phone call. It is that simple.
	Ms. Waters. Thank you very much.
	I yield back the balance of my time.
	Mr. Goodlatte. It is now my pleasure to recognize the
	gentleman from Arizona, Mr. Quayle, for 5 minutes.
	Mr. Quayle. Thank you, Mr. Chairman.
	Ms. Sohn, I am going to get back to some of the beginning
	testimony because I am trying to figure out the numbers. The 92
	percent of people who live in areas where broadband is only a
	monopoly or duopoly, does that include wireless providers in
	that number as well?
	Ms. Sohn. To the extent that wireless providers are
	providing what the FCC now says is broadband, so the FCC's
	definition of broadband is 4 megabits down and one megabit up,
	and a lot of wireless providers are not providing those kinds
	of speeds. That may change soon, but it is not the case today.
	Mr. Quayle. So that is only wired?
	Ms. Sohn. To the extent that there are any wireless, I
	don't know of any wireless providers that are providing those
	kinds of speed. So the answer is yes.
	Mr. Quayle. So as wireless continues to evolve and
	innovation continues to evolve on the wireless front with the
	expansion of 4G and then 5G, won't that alleviate any of the
	competition concerns that you have going forward, because there
	will be enough competition via wireless carriers, via phone,
	via cable, via probably other avenues where you can actually
	address this with the market system rather than having the FCC
	regulate this on this basis?
	Ms. Sohn. I am afraid not, particularly because the two
	largest landline providers, AT&T and Verizon, are also the two
	largest wireless providers. Everybody else is struggling for
	air. I mean, T-Mobile, Leap, Sprint, they are struggling to
	compete against AT&T and Verizon. So, no. I wish it was the
	case, but it is not at all the case that as--and again, in so
	many issues that I work on in Public Knowledge, we are always
	told the next great thing is around the corner, so why
	regulate? I am still waiting for broadband over power lines.
	Clearwire just abandoned residential service. That is a
	wireless home service. They just abandoned it to go to
	enterprise.
	Mr. Quayle. Mr. Downes, can you address that question? Do
	you agree with Ms. Sohn's assessment?
	Mr. Downes. Only in part. It is true that the statistics
	that Ms. Sohn and some of the other members have cited from the
	national broadband plan, that was a reference to wire-line
	broadband. There is a separate set of statistics that are in
	the plan to talk about wireless competition. And, of course as
	we know, wireless competition is much more robust. There are
	many more providers.
	I think it is absolutely the case that as 4G networks and
	later networks get rolled out, assuming that we can solve our
	spectrum issues, and we know this as consumers, we are moving
	away from the sort of fixed computer experience of the Internet
	and moving to a mobile Internet. It is app-based. It is an app-
	based economy. As that happens and as we get the 4G speeds and
	the kinds of capacity, yes, it will provide more options and
	more competition.
	It is true that one of the most promising technologies,
	particularly for the rural areas that may today have no
	options, is broadband over powerline. And I would reference my
	written testimony where I point out that the FCC has been
	delaying and interfering with the ability of VPL providers to
	do experiments. So if what the FCC wants is more competition,
	they really ought to be more supportive of new technologies
	rather than holding them up.
	Mr. Quayle. Mr. Glass, Ms. Sohn was talking earlier about
	innovation within Internet companies, Facebook, Twitter. Now,
	how would the Open Internet Order deter other companies like
	yours from expanding and upgrading their services, because it
	seems like there would be a lot of capital-intensive
	improvements that you do that could fall by the wayside to
	somebody else?
	Mr. Glass. Mr. Quayle, actually we are involved right now
	in some very capital-intensive upgrades. This radio I have here
	in my hand, we are deploying these. These allow access to the
	Internet at 54 million bits per second. We can attach these to
	an antennae, put it on your house, and you can get up to that
	speed. There is a question of cost still, but we are working on
	that very heavily.
	The big problem we see is being able to raise capital, as I
	mentioned before. If people believe that we are a little guy
	and we are unduly impacted by regulation, that is what is going
	to hurt.
	When we recently expanded our network, and as a matter of
	fact, we are in the process of completing the expansion now. We
	went to our customers and we asked them if they would invest in
	us by paying ahead for a year of service. Now, that is a
	Faustian bargain because it kills your cash flow. You get a lot
	of money up front, a lot of capital up front, but you also have
	a huge liability at that point. We had to do that because we
	could not get conventional investors to invest in our company.
	Mr. Quayle. Mr. Downes, there has been a lot of talk about
	antitrust laws and how some people believe they are not
	effective for this area. Do you believe the antitrust laws can
	adequately account for any misbehavior by Internet service
	providers and monopolistic opportunities they may have?
	Mr. Downes. Yes. It is theoretical because we have not
	tested them, and we have not tested them because there haven't
	been any serious cases that require testing them. I don't
	necessarily read the Trinko opinion the same way as Ms. Sohn
	does. I have every reason to believe that between the FTC and
	the Justice Department, if there were serious anticompetitive
	problems that had demonstrable consumer harms, the effect of
	which was to reduce the Open Internet, I am quite confident
	that our existing antitrust laws and enforcement mechanisms
	would take care of the problem.
	Mr. Quayle. Thank you very much. I yield back.
	Mr. Goodlatte. I thank you. I am now pleased to recognize
	the gentlewoman from Texas, Ms. Jackson Lee.
	Ms. Jackson Lee. Mr. Chairman, my interest in this
	Committee is about creating jobs and competitiveness. I am
	going to kick the football in your direction, Ms. Sohn. Do you
	think that the Justice Department--and in this instance I think
	you said the FTC--the FTC are sufficient and have taken note
	enough to determine whether or not they need to file action and
	whether or not there is an anticompetitive impact on some of
	the entities that you are suggesting are negatively impacted,
	and is there a reason why they haven't acted?
	Ms. Sohn. I believe that the Supreme Court has effectively
	gutted antitrust enforcement when it comes to regulated
	companies like the telephone and cable companies that provide
	broadband Internet access service. The Trinko case and the
	Credit Suisse case--and it is not just me saying this--Howard
	Shelanski, I mentioned him before, he testified in front of the
	Subcommittee on Courts in June, and he basically said that the
	Trinko and Credit Suisse cases have made it virtually
	impossible to apply antitrust.
	Ms. Jackson Lee. What would you offer as a remedy?
	Ms. Sohn. I think Congress has to reverse those decisions
	and revivify antitrust law. I think it will be helpful in a lot
	of different ways.
	Ms. Jackson Lee. And that would be overall, because I think
	the antitrust laws are weak, period.
	Ms. Sohn. Absolutely.
	Ms. Jackson Lee. We just recently saw a merger dealing with
	Continental and United, and it is almost as if the Justice
	Department said we have no teeth, we have no ability to
	respond. So you are suggesting a legislative fix?
	Ms. Sohn. Absolutely. That is the only way you are going to
	be able to overturn a Supreme Court precedent like that.
	Ms. Jackson Lee. Mr. Downes, if you have large
	telecommunications companies who also operate as Internet
	service providers, and they might be perceived as unfairly
	thwarting competition by slowing down the Internet speed of
	access for customers who access the Web sites, do you see a
	solution for them? What solution would you offer?
	Mr. Downes. So you are talking about telecommunication
	companies who also are service providers?
	Ms. Jackson Lee. And someone is trying to access, and
	because you have another provider, you might be slow in having
	access. Do you see a remedy for that?
	Mr. Downes. Obviously, one remedy is to switch. You don't
	have to buy the whole bundle of services from the same
	provider. If you have more than one choice, you can have cable
	from Comcast and telephone from AT&T and Internet from Verizon
	if it is mobile. So you have your choice of providers in many
	areas.
	In the areas you don't, I think one of the things to
	recognize is that--and we see it quite dramatically in what
	happened in Egypt over the last month. The very tools that have
	made the Internet so powerful in the last few years in
	particular allow consumers really to exercise their
	dissatisfaction and unhappiness with governments or with
	companies much more easily and effectively and quickly than
	ever before.
	Ms. Jackson Lee. What I am trying to say, they try to
	access these giants from their Web site, from a competitor
	Internet service. That is the question. And they feel that they
	are not getting the access as quickly as possible. It can't be
	that they can go to Verizon. They are talking about those
	particular entities.
	Mr. Downes. I'm not clear what you are asking. You're a
	Comcast customer and you want to go to Verizon?
	Ms. Jackson Lee. No. You are a small consumer and you are
	trying to go to AT&T or Verizon, and you are not able to access
	as quickly as you would like; it is a slow process. Do you
	think there would be any slowing down of the utilization of
	those services?
	Mr. Downes. Well, it depends on what is causing the
	slowdown. A lot of times you experience slowdowns because of
	technical----
	Ms. Jackson Lee. You don't think it would be purposeful and
	you don't think that small companies should have some
	protection?
	Mr. Downes. It could be purposeful.
	Ms. Jackson Lee. What would you perceive to be a remedy for
	that?
	Mr. Downes. The antitrust enforcement mechanisms that
	already exist for anticompetitive behaviors that have
	demonstrable consumer harms.
	Ms. Jackson Lee. You feel comfortable that they are
	sufficient?
	Mr. Downes. Yes. As I say, since we haven't tested them, we
	don't know. And we haven't tested them because we haven't
	needed to.
	Ms. Jackson Lee. Let me go to Mr. Glass. Let me ask you the
	same question. Do you believe that the current laws which
	protect against monopolies or duopolies in Internet service
	providers and broadband providers are sufficient? Do you
	believe antitrust laws can protect small companies?
	Mr. Glass. Ms. Jackson Lee, I think the law needs fixing. I
	am especially concerned about what will happen if the FCC rules
	stand, because as Ms. Sohn sort of alluded, when we become a
	regulated entity, then suddenly Trinko kicks in and we lose
	remedies under the laws.
	Ms. Jackson Lee. What do you want to see strengthened under
	the antitrust laws?
	Mr. Glass. I would like to have the ability to take action
	under antitrust to deal with the problem I am having right
	now--anticompetitive pricing of the inputs to my business by
	the telephone company.
	Let me explain. I rent leased lines from the telephone
	company to connect me to the Internet. They charge me more per
	megabit per second for wholesale connections to the Internet
	than they do to retail consumers who are buying DSL from them.
	As a result, they are trying to make it impossible for me to be
	competitive and also be profitable. I would like to be able to
	take action about that.
	Ms. Jackson Lee. Do they argue that you are in an area that
	is difficult to serve? Do you make that kind of argument?
	Mr. Glass. Actually, there is no rational justification.
	The physical plant, the wires, have been fully depreciated for
	decades. There is no reason why they could sell me that access
	at a very low cost, except they want to prevent me from being a
	better competitor.
	Ms. Jackson Lee. Mr. Chairman, to conclude, we have had the
	privilege of serving on this Committee in past Congresses and,
	frankly, have had these hearings. I would make the argument
	that we want to see competitiveness. We like large companies
	and small companies. But I wonder whether or not we in the
	Judiciary Committee are going to be the only ones who will
	raise this concern and whether our collaborators on Energy and
	Commerce will not, and whether or not we will be able to move
	forward in trying to answer some of the concerns and still
	balancing the commitment to competitiveness and providing jobs
	that our large companies do provide.
	I yield back.
	Mr. Goodlatte. I thank the gentlewoman for her comments,
	and look forward to working with her on that very objective.
	It is now my pleasure to yield to the Ranking Member of the
	Subcommittee, the gentleman from North Carolina, Mr. Watt.
	Mr. Watt. Thank you, Mr. Chairman.
	I apologize to the Chairman and the witnesses for not being
	here earlier, and I thank Mr. Conyers and Ms. Chu for
	substituting for me. I had to go over to the White House to the
	Presidential Medal of Freedom presentation. One of my
	constituents, or somebody who lives just outside my
	congressional district was being honored, so I needed to be
	there, along with John Lewis and Stan Musial and Yo-Yo Ma and
	Warren Buffett and some other people. I didn't need to be there
	for those reasons, but I needed to be there for my constituent.
	I thought I would not ask questions, but just sitting here
	listening to the questions that got asked, I got provoked to
	ask a couple of questions. Somebody was talking about somebody
	providing broadband over power lines. Who in the world is doing
	that, and who would have the incentive to do that in today's
	market? Is anybody actually doing that?
	Mr. Downes. Yes. It's a technology that has been in
	development for quite some time.
	Mr. Watt. Is anybody doing it?
	Mr. Downes. There are a number of companies that are doing
	trials with it. It is very attractive for rural customers
	because the infrastructure is already in place. They already
	have electricity, where they may not have high-speed Internet
	connections, or they can't get mobile for obvious reasons. So
	it is, in fact, a very appealing technology, but so far it has
	not been commercially successful.
	Mr. Watt. And would the FCC's order have some impact on
	that one way or another? I mean, would it disincentivize it or
	would it have any impact on it at all.
	Mr. Downes. Well, the BPL providers would be subject to the
	same rules as any other Internet provider, assuming they're
	offering broadband speeds, which is what they are doing. My
	point was just that up until now, the FCC has not been
	particularly helpful in encouraging this new technology, and in
	fact has been criticized by the courts for rulings that have
	slowed down the deployment of that technology. There is a
	concern that it interferes with hand radio operators.
	Mr. Watt. I thought you all wanted the FCC to get out of
	the way.
	Mr. Downes. Get out of the way of the broadband power line,
	yes.
	Mr. Watt. You want them in in some things and out of other
	things. Okay. All right, I got you. That's what most people
	want. They want what they want, and then they want them out of
	the way when they don't want what they want.
	Let me just ask a general question to all three of you. I
	don't know how you promote competition in a capital-intensive,
	cost-prohibitive industry. I mean, you know, you're ending up
	with two major carriers here, Verizon and AT&T. I mean, a lot
	of our private enterprise is becoming more and more
	concentrated just because, I mean, there's just--these in many
	ways are utilities, and the capital costs are so heavy. I'm
	just trying to figure out how do we promote competition in
	these areas?
	Ms. Sohn, and then we will just go down the line, and then
	I will yield back, Mr. Chairman.
	Ms. Sohn. Ranking Member Watt, I mean, you are absolutely
	correct; there are very high barriers to entry. Not everybody
	can get spectrum. And T-Mobile and Sprint are begging the
	Federal Government to perhaps put limits on what AT&T and
	Verizon has, so they can get some more. Not everybody can lay
	lines, coaxial cable. You have to get permission from the State
	government, so the barriers to entry are huge.
	So what do you do? I think the answer is to do what the
	countries in Europe, Scandinavian countries, and in Asia are
	doing and beating us at broadband value and speed. You have to
	go back to the way we regulated these entities in the nineties
	and the early aughts. You have to require the dominant
	telecommunications and cable providers to open up their
	networks so competitors can use them as well, what we call line
	sharing--some call line sharing, unbundling, there are
	different ways. But the notion is the countries that have
	dozens of Internet service providers are those that have
	required the big guys--the British telecoms, the French
	telecoms, to open up their networks to competitor----
	Mr. Watt. So how do you responded to their argument that
	they paid for that and therefore shouldn't give it away, or
	give it away at reduced cost after they've developed it?
	Ms. Sohn. Well, without public rights of way, there would
	be no cable industry, there would be no telephone industry. I
	mean, they are----
	Mr. Watt. And basically you're using this as a public
	utility argument.
	Ms. Sohn. Exactly.
	Mr. Watt. Okay. Mr. Glass and Mr. Downs, and then I'll
	yield back.
	Mr. Glass. Yes, Ranking Member Watt. The best way to
	promote competition, I think, is to do several things. The
	capital cost of the kind of wireless that I provide is actually
	within reach. It's not insurmountable. It's never easy to raise
	capital, but it certainly is possible. What we need to do is
	encourage investors to bring that capital to the table, and in
	order to do that we need to be very careful about deterring
	them using regulation.
	We need to reduce barriers to entry--and again, regulation
	is potentially a barrier to entry in this arena. We need to
	come down hard on anticompetitive tactics. We've already talked
	a little bit about special access as being one of the barriers
	to rural broadband deployment.That is an anticompetitive
	tactic. It's not asking to use something for free, it's asking
	to get something at a reasonable price.
	We also need to deal with spectrum. The preemptive bids by
	the large incumbents so as to lock out competition are
	something which the FCC hasn't addressed and really does need
	to address.
	But mainly I guess I need to come back to the point that
	I've been making throughout the hearing. As Henry David Thoreau
	once said, ``Government never furthered any enterprise but the
	alacrity with which it got out of the way.'' What we need is
	simply to remove the barriers, and then the market will
	encourage investment and will encourage deployment.
	Mr. Downes. I think for many reasons the most attractive
	option for more competition, particularly with broadband
	Internet access, is in the mobile space. With more wireless
	providers, that's where the technology is going, and also
	that's where the consumers are going as well. The most
	effective thing we can do then to promote more competition
	would be to do a better job of managing the existing spectrum.
	That was a goal the FCC had last year. They didn't really work
	on it because of the net neutrality proceeding. We'd like to
	see them go back to that and actually start with an inventory
	just of who has what spectrum in the first place, and then see
	if we can find ways to manage it more effectively so we can
	speed up the competition offered by broadband mobile providers.
	Mr. Watt. My time is up, but it just seems ironic that
	you're saying on one side get the FCC out of the way, and then
	saying on the other side put the FCC back in and let them do
	this. I mean, I don't know how you can have it both ways. I
	mean, I understand what you're saying, it just seems--but now
	is not the place to pursue it.
	I appreciate the Chairman's indulgence.
	Mr. Goodlatte. I appreciate the gentleman's comments as
	well. And I will just close by saying that it was over 10 years
	ago that I introduced legislation--probably the first net
	neutrality legislation introduced in the Congress--along with
	Congressman Rick Boucher in 1999, I think. We didn't call it
	``net neutrality,'' we called it ``open access.'' It was
	designed to make sure that there was open competition on the
	Internet, but it was antitrust-based. And it never got to the
	finish line because the various interested parties in this kept
	shifting sides, and the sands underneath our legislation kept
	shifting. Some of the companies that were supporting our
	legislation back then are now looking in a different direction.
	Some that were opposing our legislation back then would very
	much support the idea today.
	I very much agree with Mr. Downes' comment; the principle
	purpose of the FCC is to allocate spectrum and to try to find
	the most efficient way to do that; that spectrum is public
	property, if you will, and therefore it is the reason for the
	existence of the FCC.
	I think the FCC has been on mission creep for decades now.
	And we need to be very, very careful that we don't put
	ourselves in a situation where we think that it is a great idea
	to have the FCC regulate the Internet the same way they have
	regulated the telecommunications industry and others. This is a
	rapidly changing, dynamic environment, and all kinds of
	decisions are made by all kinds of companies based upon what's
	going to be available in terms of capital, what's going to be
	available in terms of new technology and new ideas.
	And I don't think it's going to happen if we empower the
	FCC in a way that they have clearly not been empowered in the
	past. They've been rebuffed by the courts in this area. They
	have chosen to take a different route that I think is very
	spurious in what they are attempting to do, and I hope the
	courts will rebuff them again. But failing that, I think that
	Congress should act, and I agree that it shouldn't just be a
	negative act to stop the FCC; it should be a positive act to
	look at our antitrust laws and see if they give appropriate
	access to small actors like Mr. Glass, and to look to see
	whether laws written 100 years ago are responsive to this
	dynamic environment.
	But if they are clear rules of the road that exist before a
	decision is made to develop a product or to come up with the
	finances for it, we will be better served than to go down a
	path where we set about trying to find the capital, find the
	people to take the risks, and then have the rules changed in
	the middle of the game, which is where I fear the FCC will lead
	us.
	So I thank everyone for their participation. It has been a
	very, very good discussion.
	And without objection, all Members will have 5 legislative
	days to submit to the Chair additional written questions for
	witnesses, which we will forward and ask the witnesses to
	respond as promptly as they can so that their answers may be
	made a part of the record.
	And without objection, all Members will have 5 legislative
	days to submit any additional materials for inclusion in the
	record.
	And with that, I again thank our great witnesses, and this
	hearing is adjourned.
	[Whereupon, at 4:20 p.m., the Subcommittee was adjourned.]


	A P P E N D I X

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	Material Submitted for the Hearing Record


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	Letter from Lisa R. Youngers, Vice President, External Affairs,
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