Former FCC Chairman Reed Hundt

Comments at IMLS Public Hearing
April 17, 2014

Thank you very much to Susan Hildreth for hosting everyone today, and also to Susan Benton, who is my friend and client as I represent her as a pro bono lawyer at the FCC.  You all know that Susan is the CEO of the Urban Libraries Council.

First on a personal note, my sister is the head librarian in Rockville, MD, my nephew is a librarian, my mother was a public school teacher, my brother is a public school teacher, my sister-in-law is a public school teacher and I once was a public school teacher.  In Washington they would be called takers, but we regard ourselves as a family that has had a long, long commitment to public service.  And I’m very proud, if I can be so bold, to say that I’m part of the library community.  

And now I’d like to express some of the realities of the situation, and not everything I say is going to be good news.  The library community, folks we need to step up our game.  We are in the playoffs.  We need to aim higher; we need to pull together; we need to fight more fiercely; and we need to understand that this game is definitely worth the candle.  It is critical that everyone understand the political realities that face Chairman Wheeler and that face the FCC.  Before I go into any more detail, I want to make sure that you understand that I was not in fact the creator of the E-rate.  Leadership is critical in every walk of life, but particularly in politics, and I want to acknowledge the two principle people who were the leaders that created the E-rate.  

First, Al Gore.  It was in the winter of 1992-93 and Al called me into his office.  He was a Senator who was just elected Vice President of the United States, so the office was right over there.  He said, “If I can persuade President-elect Bill Clinton to make you the Chairman of the FCC, I’ll do it if you can promise to find a way to have the following occur.  I want every school girl in Carthage, TN to be able to go to the Library of Congress without buying a bus ticket, I want all of that information digital, and I want the most remote school child in the poorest community in the United States to have access to it.”  From the beginning the vision was schools and libraries, all information, we’re all in it together.  And then he said, “My father was the principle author of the Interstate Highway Act and this is going to be the digital equivalent.”  A lot of that has happened, but that wouldn’t have happened but for the fact about 3 years later, Senator Olympia Snowe, I note a Republican, said to me “You’re the FCC Chairman, how would you like to pay a visit to Bangor, Maine?”  So I flew up there with Senator Snowe and we went to a school.  She gave a wonderful talk to the students, then she took me to the library in the school and she said, look there aren’t hardly any books.  This was about 20 years ago and she said in the future, there won’t be many more books here it will all be digital, and I want to make sure that all the digital information of the world is available to every single child that goes to this school or any other school in the country.  So it came down to a critical vote in a divided Congress, and all the Democrats wanted Al Gore’s vision to come true, and for a whole bunch of reasons that are characteristic of partisanship and not bi-partisanship, the Republican party didn’t want anything Al Gore advocated to come true and Olympia Snowe stood up in front of everyone else in the Senate Commerce Committee and she said, “I’m voting with the Democrats.”  10 to 8 – that is how it passed into law.  When it got to the FCC, there were 2 Republicans and 1 Independent who wanted to vote against it, so that we would have lost at the FCC and not been able to pass the rule.  I told Linda this story the other day; Olympia Snowe stayed up until 3 in the morning working the phones, calling the Republicans and getting them to vote yes.  Then at 7:30 in the morning she called me and said “I got you your votes.”  She said, “I don’t understand why a mere commissioner at the FCC should not just say yes when a Senator asks.”  

Those are stories about leadership.  They are not meant to be stories about partisanship, they are meant to be stories about leadership, but it is critical that we all understand that this is a country of private wealth and public poverty.  This is a country where to stand for the proposition that there should be public access to anything is to take a stand in a long running battle of ideas.  You can take your stand on either side.  There are a lot of things to be said about a private life and the values of private investment and the values of capitalism.  There are a lot of things to be said about limited government and small government and government waste.  There are a lot of things to be said on that side.  But if you are talking about wanting libraries to be the number one free public Internet access point in the community, then what you are saying is, on this topic I am taking another stand.  I am saying that we need communities to have free public access and that free public access should not be inferior to the broadband available in suburbs in the United States today.  

Thanks to Susan Benton in the last two weeks, the Urban Libraries Council did a survey of 33 major libraries in the United States, more than 100 different buildings, and that survey demonstrated in these libraries that not one single one has 1 gigabit per second connectivity to the buildings, and when you pull out a handheld device and measure the wi-fi at 4:00pm, in every single one of the major libraries (these are the biggest libraries in the United States), the wi-fi connectivity is inferior to what it is in the suburbs of the Unites States in homes.  So how can anyone think that the hundreds of people in this building now are getting anything like adequate access to the Internet?  What is the meaning of adequate access?  It is the things you’ve all heard over the last several hours: being able to download a job application  and fill it out; being able to go online and take a course; being able to enroll at code.org and spend one hour learning how to code.  And these are not the things that Al Gore and Olympia Snowe would be the demand case years later, but they knew that something like them would be the demand case.

30 million Americans every single year go to a public library for free access in order to improve their careers.  That’s one-tenth of the population.  And it is not the same people every year.  Over the course of just 3-4 years, the majority of adult Americans go to libraries to try to get a job or to improve the job they have.  This is the importance of public access.  

You all have studied and shown that there is popular opinion behind this vision.  Now let’s talk about some of the statistics and I want to go right to the core of an issue that has plagued this debate since it started 2 years ago.  First, schools or libraries: which is more important?  I think it is a false choice.  We should talk about an L Rate and the L Rate should be our vision of what libraries need and that should be some amount of money, and schools need some amount of money, and when you add the two together you know the total need.  It doesn’t mean a different tax base, it doesn’t mean you need to think about them differently because they serve overlapping populations, but it is a way to figure out what you really need.  Nevertheless, I do want to compare the two, because we need to talk about needs in statistically useful terms.  Libraries constitute about 20% of the number of buildings of schools.  Libraries on a visits per year basis are about 20% of the visits to schools every single year.  If we talk about potential users, there are 4 times as many potential users of libraries as there are of schools.  If we talk about the number of registered users of libraries, there are two times as many registered users of libraries as there are children and teachers in schools.  If we talk about the actual Internet access, which John was just talking about, there is more than two times the amount of Internet access users in public libraries as in schools. So, whichever way you want to measure, you actually have metrics.  So whether you look at buildings with 20% or whether you look at users in terms of two times or four times, then you have to compare against the following: E-rate money and how much is going to schools.  Well, Larra Clark was talking to us earlier about the shortfalls in data gathering, but as best as anyone has been able to guess, and it is not to the credit of the FCC that they have not made the data transparent, but they are making it transparent because Larra and Susan have been pushing them on this and they are willing to be pushed…this FCC is willing to be pushed.  But we still don’t even know how much money the E-rate has paid out to libraries.  Best guess is that it is about 3%.  3% isn’t that 20% proportion of buildings and it isn’t anything like the relative proportion to the number of users in libraries.  All we can say about 3% is that it hasn’t produced the desired result.  Because when Susan’s group did the measurement in libraries in less than 10 days, because modern measurement tools work just like that, when we did this measurement we discovered what I already told you: a woeful state of connectivity.  And if we had a statistically valid survey, I think I’m remembering right that it was Chris who told me you were guessing out of the 17,000 buildings we would need to survey about 400 to have a statistically valid survey.  It is going to prove that the status quo is really, really deficient.

Let’s now talk about the size of the E-rate.  It is roughly $2.4 billion.  It was set at $2.25 billion in 1997.  One of the things I regret is that we did not put in a CPI inflator at the time that we set the number.  I have some excuses, they don’t stand up to scrutiny and it was a mistake.  Let’s adjust for inflation.  If we adjust for inflation the E-rate would be at about $3.5 billion.  If we adjusted to the relative size of the economy now, as opposed to what it was then, the E-rate should be about $3.75 billion.  If we look back over the last 10 years and do those adjustments, and say what should have been the E-rate spending have been over the last 10 years, we come up with the following conclusion: we have a shortfall of about $10 billion.  That is how much the country owed to itself and didn’t pay.  This is exactly the same infrastructure story that you see with respect to roads, or dams, or any other feature in the public landscape.  And that’s the reason why the connectivity is so woeful in the library buildings and in the classrooms today, because we weren’t spending that money for the last 10 years. And if you say well we forgot, that is not the reality of the story.  The reality of the story is that libraries and schools, as always, are right in the middle of culture wars in our country.  That is the reality of the story.  It is all well and good for me to tell you that we somehow managed to pull off the E-rate.  From the moment the E-rate was passed, there has been political opposition to the E-rate here in Washington, DC – from that very minute.  It was called “The Gore Tax,” there were ads run against it, there were attacks on the people who ran the original administrative structure - the person I originally appointed to run that program was personally attacked and vilified and accused of waste, fraud and abuse, which he didn’t commit and finally they drove him from office.  That is why it ended up at USAC.  There were challenges to the Constitutionality of the spending.  I could go on and on and one.  But I’m saying to you all, there is not a broad based consensus in Washington, DC about what to do.  In this room there might be.  But when I say we need to step up our game, it is because it is not fair to take the greatest visionary and leader at the FCC in this century, Tom Wheeler, and say thanks a lot, here is what we need, and you’re on your own.  We need to be behind him, we need to be supporting him, and our time is short.

What you have heard today, I’m going to translate what Tom said, because it is really, really important.  First of all, the model is the marginal wi-fi user at peak hours.  It is not just broadband to the building, but broadband to the building plus high speed wi-fi in the building.  That is what we have to talk to them about in every one of our buildings.  If somebody is going to write the checks, you don’t go in and say “I don’t really like what you want to buy.”  Besides, he is not even wrong.  You all know that this is the use case you want to build for.  So that is the data we have to give him.

Second, he told you that he is not going to be funding POTS.  As you were saying, we have to have a transition plan, either fast or a little bit less fast.  But it has to happen, because that is what he told you.

Next, it is not just more money.  By not later than June, the FCC intends to insist that libraries figure out how to have consortium bidding.  We have to have longer time periods for these contracts.  We have to have reference pricing so that nobody pays too much and everybody pays the lowest reasonable price.  We have to figure out how to provide IT experts for libraries that don’t have IT experts.  We can’t have it be that the non-experts are either left out, told to fend for themselves, or they pay too much.

We have to have limited pilot projects that run right away, starting with the June order at the FCC, and that actually generate data, so that by not later than the end of the year a more permanent program can be put in place.

The Reply Comments on this topic are due on Monday and we all should remember that if we don’t hang together, we are going to hang separately.  So we need to do a better job, starting with me, meeting and talking and figuring out what to say together.  And then when you all go to the Hill in May and talk to all the members, this has to be at that top of the list.

Of all the institutions in the civic landscape, libraries get the smallest amount of money from the federal government.  Of all of them – smaller than schools, smaller than healthcare, smaller than any other institution that you can think of in the social landscape.  The total amount of money that I saw in your budget that you are empowered to transfer to state libraries is $155 million.  That isn’t even noticeable in the Department of Education budget, and your agency didn’t exist until 1996?

I have a lot of teachers in my family, and am not saying anything against schools.  Those needs have to be met too.  But this group needs to say what are OUR needs and we have to stand up and do the math.  We’ve got the Reply briefs due next Monday.  The first week in May under the leadership of John Chambers at the FCC, who knows more about libraries than anyone who ever was employed by the FCC, we have a working group where we have to actually get to conclusions about the administrative process reforms.  We’ve got to do that so that he can start writing his order in May, so that the Order can come out in June that establishes the new administrative processes and that also talks about how the FCC is going to be spending its money in the next cycle.

In terms of general big picture, for many years the entire community that has benefitted from the E-rate has understandably, because of the constant culture wars, said year after year let’s just hold on to what we’ve got.  That’s what we’ve had to do just because of the constant pressure.  But that’s not what this FCC is telling us.  This FCC is saying, instead of looking at it as X dollars every single year why don’t you come in and tell us a whole bunch of money right up front, it will be a capital expenditure the way John Windhausen and SHLB have been talking about it, more money up front will for once and for all put fiber to these buildings, will provide cashing technology, will have one single model for every single building, and then your maintenance costs in the years later will be less than the up-front costs.  This, by the way, is the way every single network in the United States is built.  It is only in this sector that we haven’t yet embraced that model, and we are being told by the FCC, “Bring us the plan and we’ll pay for it.”  We have to get the plan out and it has to be technical.

Now Susan demonstrated to me that there is plenty of competence, not in every library, but in a bunch of libraries to deliver the IT planning.  Susan Hildreth could do it, you could talk about POTS, this can all be done.  There are a lot of libraries where the IT competence doesn’t exist, isn’t funded by the local and municipal governments and doesn’t need to be funded.  It doesn’t need to be that you have a Cisco trained IT professional in every one of 9000 systems.  It ought to be that 50-100 can serve the entire country, meaning everything has to be transparent.  That is why we want to be online.  All library deals ought to be public for all other library deals.  All library usage measurements ought to be public.  In fact, every library should be goading themselves and others on every quarter by reporting to the FCC now on how it’s going, which is so incredibly easy.  It wasn’t easy back in the old days, those old days don’t exist now.  It is really easy to do these measurements.  We just need to say the data is going to make us free.

Now, to what level are we going to upgrade.  When we are talking about this surge spending, if you forgive the phrase, what level are we going to upgrade to.  There is no doubt whatsoever, because all the comments written on April 7 support this, that the fundamental idea has to be fiber to the building that is capable with today’s electronics of delivering 1 gigabit a second.  But that is not the future, the future is the 1 gigabit will become 10 and 10 will become 100.  But the way fiber works, and this is a lawyer explaining it, once you get the glass in the ground, adding the electronics later to upgrade the bits per wavelength, that is a comparatively lower expenditure.  So we have to be focusing on first getting what John Windhausen and his group call the capital expenditure in place.  Second, as to the wireless local area networks, the comments make it really clear there are several basic categories of funding that are necessary: the maintenance, the cashing, the routers, the internal networks which in some cases have to have wire components, it’s not that complicated.  We should be presenting to the FCC 1 or 2 basic models and saying that these are the models, with variations, that all libraries should be utilizing.  

There are some comments that say the libraries should not do consortium bidding.  All those comments were from the people currently supplying to libraries.  God bless them, they’ve actually done a wonderful job, but they are not looking out for the biggest bang for the buck.  This is a buy-sell transaction.  We’ve got to be doing some haggling.  Now why should libraries be able to opt out of consortiums – only if they can get a better deal by opting out.  Nobody should be saying I want the federal government to give me money so that I can opt out and pay for a worse deal.  We ought to be willing to agree to that and we ought to be willing to say to the FCC we will hang together because we don’t want to get bad deals separately.  We need to allocate by priority – all the comments make it clear there has to be some sense of equity in the prioritization that the FCC does.  There are variations on what equity consists of, but for sure it is an adjustment by income and an adjustment by the number of users.  And so, the ULC presented a formula and there could be other formulas, but we all have to agree on a sensible allocation formula.  If we were on the Titanic it would be women and children first, this is a post gender discrimination era we are in, we need to have a formula that reflects some sense of needs, because the FCC is not going to fund 100% on day one.  

Number two – it is absolutely necessary that we understand the FCC needs to come out with an order in June and that will not be the final order, because it is also going to be the case that pilot projects have to be done and then data needs to come back and we will revise and change our thinking.  But by the end of the year, we should have fulfilled Tom Wheeler’s dream – he wants to reimagine the E-rate.  He told us collectively that he wants us to be the Andrew Carnegie’s of this century, perhaps with a little help from Bill Gates…maybe with a lot of help from Bill Gates.

But, this is an incredible opportunity and we have to take it.  Actually I know that we can take it, because when I look back at that conversation with Olympia Snowe and I look at the results, the reality of Internet access in the Unites States from the year that Olympia took me to that school library in Maine.  The reality is that Internet access in the United States was led by access to schools and libraries in its first 10 years.  The United States led the world in having a generation come on to the Internet.  We have in fact in that generation, the highest percentage of Internet savvy people of any country in the world.  And we did it on a narrow band, not a broadband, platform and what Tom Wheeler came and told you today is that now you are going to reimagine the whole thing on a broadband platform and your vision is going to be realized.  Lift up your head and look a long way out.

Thank you.