Press Release

I can summarize my testimony in three sentences. First, promoting universal access to modern communication services and the Internet, especially for low-income and disadvantaged Americans, is a noble cause and a pragmatic objective which deserves Federal support. Second, the Federal Communications Commission’s current lifeline program is not an effective or efficient means of achieving these goals, nor are current reform efforts likely to make it so. Third, we cannot give up: the doors of digital opportunity must be opened for low-income and disadvantaged Americans, and it is therefore incumbent on policymakers to develop a new approach that is both effective and a good investment for the American taxpayer.

Federal Communications Commission Chairman Ajit Pai visited Houston and Austin (TX) this week to survey the damage caused by Hurricane Harvey and meet with local, state, and federal officials engaged in recovery efforts. The Chairman was particularly focused on the performance of communication networks during and after the storm, and how the FCC can better enable Americans to communicate and learn critical information in an emergency.

Acting Federal Trade Commission Chairman Maureen K. Ohlhausen announced that she has selected Ian R. Conner, a partner in the Antitrust & Competition group at the law firm of Kirkland & Ellis LLP, to be an Acting Deputy Director of the FTC’s Bureau of Competition, effective Sept. 18, 2017. In private practice, Conner represented clients before the Federal Trade Commission, the U.S. Department of Justice and various state attorneys general. Prior to entering private practice, Conner was a trial attorney in the Transportation, Energy and Agriculture Section of the U.S. Department of Justice, Antitrust Division, which he joined through the Attorney General’s Honors Program. He also served as a Special Assistant U.S. Attorney in the Eastern District of Virginia. Conner received his law degree from William & Mary Law School. He served as an adjunct professor from 2008 to 2010 at William & Mary, teaching a course on antitrust and merger review.

In May 2017, we published a report on Federal Communications Commission's oversight of Lifeline that identified steps FCC has taken in the last few years to enhance the integrity of the program and stated the weaknesses that remained. Specifically, this testimony discusses (1) the extent to which Lifeline demonstrates effective performance towards program goals; (2) steps FCC and Universal Service Administrative Company (USAC) have taken to improve financial controls in place for Lifeline and the USF, and any remaining weaknesses that might exist; (3) steps FCC and USAC have taken to improve subscriber eligibility verification, and any remaining weaknesses that might exist; and (4) steps FCC and USAC have taken to improve oversight of Lifeline providers, and any remaining weaknesses that might exist...

In conclusion, Lifeline’s large and diffuse administrative structure creates a complex internal control environment susceptible to significant risk of fraud, waste, and abuse. FCC’s and USAC’s limited oversight of important aspects of program operations further complicates the control environment—heightening program risk. We are encouraged by FCC’s recent steps to address weaknesses we identified, such as the 2016 order establishing a National Verifier, which, if implemented as planned, could further help to address weaknesses in the eligibility-determination process. We also plan to monitor the implementation status of the recommendations we made in May 2017.

As we begin to assess Harvey’s horrible toll on human life and property, we will need to take stock of what worked, what didn’t, and how we can improve when it comes to our communications infrastructure. As we have done in disasters in the past, the Commission will need to study this hurricane and issue a report. That report must include a full plan for fixing the vulnerabilities that we are finding–from overloading 911 systems to out-of-service cell sites. It should also include a framework for rebuilding so that the communities that have been impacted are not permanently relegated to the wrong side of the digital divide. Above all, we need to get started. We don’t have time to waste–because we know that weather emergencies can occur anywhere at any time–and learning from what happened with Harvey can help strengthen our communications networks and save lives.

Lenovo Inc., one of the world’s largest computer manufacturers, has agreed to settle charges by the Federal Trade Commission and 32 State Attorneys General that the company harmed consumers by pre-loading software on some laptops that compromised security protections in order to deliver ads to consumers. In its complaint, the FTC charged that beginning in August 2014 Lenovo began selling consumer laptops in the United States that came with a preinstalled “man-in-the-middle” software program called VisualDiscovery that interfered with how a user’s browser interacted with websites and created serious security vulnerabilities.

As part of the settlement with the FTC, Lenovo is prohibited from misrepresenting any features of software preloaded on laptops that will inject advertising into consumers’ Internet browsing sessions or transmit sensitive consumer information to third parties. The company must also get consumers’ affirmative consent before pre-installing this type of software. In addition, the company is required for 20 years to implement a comprehensive software security program for most consumer software preloaded on its laptops. The security program will also be subject to third-party audits.

As the Director of the American Technology Council (ATC), I was directed by the President, through Executive Order (EO) 13800, to coordinate a report regarding the modernization of Federal Information Technology (IT). This report was developed by experts selected by the Administrator of General Services Administration (GSA), the Secretary of the Department of Homeland Security (DHS), the Director of the Office of Management and Budget (OMB), and the Secretary of Commerce (Commerce). We set out to accomplish two high-level objectives. First is to create a vision for the future of Federal IT that maximizes secure use of the best commercial technology available, and second is to define a plan to jumpstart the government’s transition to that vision.

The comments submitted in the record so far serve only to illustrate that the Federal Communications Commission was right in 2015 to classify broadband as a Title II service and to adopt Open Internet rules, and that the DC Circuit was right to uphold it. Poll after poll shows that a majority of Americans of both political parties support net neutrality. Just today, a broadband-industry funded study found that 60 percent of comments filed before the FCC support keeping the current rules in place, including 98.5 percent of unique comments.

Net neutrality opponents are wrong on the facts, wrong on the law, and attempt to rewrite history to support their agenda -- and the public is not behind them. If the FCC attempts to rely on the corporate PR, paid-for ‘economic’ analyses, and misstatements of legal precedent that currently support its proposal, it will lose in court -- but not before harming consumers and damaging competition in the meantime. Because the facts continue to show a need for rules, and because opponents have failed to substantiate any claims of alleged harms they cause, the Commission must keep the rules in place.

Federal Communications Commission Chairman Ajit Pai sent letters to Sens Gary Peters (D-MI) and Debbie Stabenow (D-MI) on August 21, 2017, to respond to their letter expressing concern with the Lifeline program and asking for information relating to the Government Accountability Office Lifeline report. Pai provided information on enforcement and compliance mechanisms for oversight of the program, resources for determining program eligibility, the projected timeline for testing and implementing the National Verifier system and resources available for reviews and audits.

Federal Communications Commission Chairman Ajit Pai sent a letter to Rep Colleen Hanabusa (D-HI) on August 21, 2017, in response to her letter regarding communications service to the Hawaiian Home Lands residents and the Commission's investigation of Sandwich Isles Communications. Pai responded to Hanabusa’s questions on whether Universal Service Funds have been paid to SIC since the suspension of payments by USAC in 2015, whether SIC was certified by the Hawaii PUC as an ETC at the time USF funds were suspended, if SIC remains eligible for the receipt of 2015 funds and the total amount of USF funds withheld from SIC in 2015.