Wheeler Defends ‘Serious Money’ Requested for 2015 FCC Budget

Subcommittee Chairman Ander Crenshaw, R-Fla., cited an “inappropriate study” the FCC had embarked on, delving into newsroom operations, referring to the Critical Information Needs (CIN) study, which the agency suspended after criticism from congressional Republicans and Pai earlier this year. The money spent on this study suggested the FCC perhaps “has more money than it really needs,” Crenshaw said. Wheeler defended past critical information needs studies as what the FCC has always done, whether controlled by a Democrat or Republican. “I raised questions” about the latest CIN study draft that seemed to touch on newsroom editorial judgment, Wheeler said. He said that prompted him to nix those questions. He said he ended it entirely when concerns continued: “It became the dog that didn’t bark.”

"It’s not my first time presenting a budget,” Wheeler told lawmakers, emphasizing a need to hit the key points. “This is a 10 percent increase, this is serious money.” The increase “demands explanation,” he said. One third of the money will go to technology upgrades, another third is for “expanded enforcement and new rules” in USF, and some will go for basic inflation and the shift of the National Broadband Map from NTIA to FCC hands, he said.

Wheeler presented great detail on why the changes are necessary: “Forty percent of our IT systems are more than 10 years old -- that means for many of them there is no vendor support.” The agency has “incompatible” systems that “can’t talk to each other,” are “insecure” and of a level that no business in the U.S. would accept, Wheeler said.

"The Lifeline program has been abused,” Wheeler said, stressing the “challenges” of USF. “My line from day one is, ‘I want heads on pikes.'” Other challenges involve the transition from voice to broadband and changes to the E-rate program, afflicted with “18-year-old priorities” and in need of “redirection” and “cost efficiency,” said Wheeler. He said he created a strike force focused on attacking “waste, fraud and abuse” and the need for “more muscular enforcement,” with investigators and auditors rather than simply lawyers. “We need to spread them throughout the agency,” said Wheeler.

Subcommittee ranking member José Serrano, D-N.Y., raised concerns of smartphone theft and his interest in mandating the installation of a kill switch, posing questions on that issue. The kill switch idea is “right in concept” but has problems in implementation, Wheeler said. When the kill switch is used, it would “fry the innards” of a phone, but there’s a risk of people suddenly finding a misplaced phone after using the kill switch, he said, only to find the innards fried and the phone useless. Serrano said his legislation allows the owner to bring the smartphone back to life, but Wheeler pointed out risks of hacking.

"I can assure you that priorities are constantly shifting,” Wheeler said, pointing to the changing technologies. Pai backed passage of the FCC Consolidated Reporting Act, which would simplify the reporting requirements the agency would have. It passed the House last fall but has seen no movement in the Senate.

"I've not been asked to participate in the development of our agency’s budget request,” Pai said. His opening statement focused on the profit the FCC can bring the government through spectrum auctions. He framed the agency’s broadcast-TV incentive auction as the best opportunity to raise billions of dollars that Congress has already allocated, and disputed the wisdom of setting a spectrum cap. “Under the law, we only have one option, which is success,” Pai said. He criticized “millions of dollars wasted” in the E-rate program and a lack of transparency or a sense of impact about the program, touting his proposal for what he called a “student-centered E-rate program.” The agency shouldn’t increase the E-rate budget and certainly not without any offsets from other parts of its budget, Pai said.

Rep. Mike Quigley, D-Ill., expressed concern about the FCC’s speed in facilitating the positive train control pole approval processes. Pai said he expects the process to get speedier over time. Wheeler convened meetings with tribal entities and the railroads to help move things along and there’s “a batch processing structure in place” to help expedite the pole approval process, he said. “It is crucial that we have the rapid deployment of PTC, period.” Wheeler and Pai aired contrary views on proposals the agency is considering on joint sales agreement by broadcast station owners. Pai defended the use of JSAs as a useful tool in helping minority and women-owned businesses. Wheeler defended rules limiting JSAs as promoting transparency and accountability.

Serrano criticized the lack of unification in answers from the two commissioners. Wheeler countered that Pai and he agree in 90 percent of votes at the FCC. “At some point, we have to sit down and decide,” Wheeler said, saying his job is to “push decisions.” Businesses hate regulatory uncertainty, Wheeler said. House Communications Subcommittee Chairman Greg Walden, R-Ore., also briefly attended the hearing as an observer, coming in after the first hour of the hearing. Both Wheeler and Pai will again testify on the budget Thursday at 10 a.m. in 138 Dirksen before the Senate Appropriations Financial Services Subcommittee.