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114th Congress   }                                  {    Rept. 114-444
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                  {           Part 2




 March 10, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


         Mr. Upton, from the Committee on Energy and Commerce, 
                        submitted the following

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 4596]

                             MINORITY VIEWS

    Democratic members provide these supplemental and minority 
views to the Committee Report on H.R. 4596, the Small Business 
Broadband Deployment Act, for additional background and context 
surrounding those issues and matters being presented in and 
purportedly addressed by the legislation. While Democratic 
members do not oppose the end result of the reported version of 
H.R. 4596, the record is not sufficient at present to determine 
what the size of a small business is in this context, whether 
the underlying Federal Communications Commission (FCC) enhanced 
transparency rules are unduly burdensome on small Internet 
Service Providers (ISPs), or the effect of an exemption on 
consumers. Moreover, the FCC is currently evaluating whether 
such rules are needed.
    The question underlying H.R. 4596 is narrow: is there a way 
to relieve truly small service providers from some burdens of 
the FCC's enhanced transparency rules while minimizing the 
impact on consumers? To answer this question, Congress and the 
FCC must collect adequate data to analyze the benefits of the 
enhanced transparency rules to consumers and the real burdens 
on ISPs. The FCC's data analysis is on-going and this bill 
provides certainty to smaller ISPs in the interim.
    H.R. 4596, as reported, ensures that consumers will 
continue to receive essential disclosures under the 2010 FCC 
transparency rules, while temporarily exempting smaller ISPs 
from the 2015 enhanced transparency rules. The bill also 
directs the FCC to report to Congress so that future decisions 
about this rule are data-driven.

                             I. BACKGROUND

    As part of the FCC's Protecting and Promoting the Open 
Internet Order, the FCC enhanced its preexisting broadband 
transparency rule. In doing so, the Commission noted that 
``consumers continue to express concern that the speed of their 
service falls short of advertised speeds, that billed amounts 
are greater than advertised rates, and that consumers are 
unable to determine the source of slow or congested 
    \1\Federal Communications Commission, Protecting and Promoting the 
Open Internet, GN Docket No. 14-28, Report and Order on Remand, 
Declaratory Ruling, and Order, 30 FCC Rcd. 5601, at para.164 (2015).
    At that time, the FCC chose to exempt temporarily smaller 
ISPs from the transparency rule enhancements, citing an 
abundance of caution regarding concerns that the requirements 
might be burdensome for small providers.\2\ For the purposes of 
the temporary exemption, the FCC adopted the proposal from the 
American Cable Association (ACA) that smaller ISPs be defined 
as those with 100,000 or fewer subscribers.\3\
    \2\Id. at para.172-175.
    \3\Id. at para.174 (``One metric to which ACA points is the 
approach that the Commission used in its 2013 Rural Call Completion 
Order, which excepted providers with 100,000 or fewer subscriber lines, 
aggregated across all affiliates, from certain recordkeeping, 
retention, and reporting rules. We adopt this definition for purposes 
of the temporary exemption that we adopt today.'').
    The FCC further directed its Consumer and Governmental 
Affairs Bureau to adopt an order by December 15, 2015, on 
whether to make the exemption permanent and whether to modify 
the Commission's definition of a smaller broadband provider. 
The Bureau issued an order on December 15, 2015, extending the 
smaller broadband provider exemption for another year so it 
could complete the process of estimating the burden the 
enhancements will place on providers of all sizes, and to 
obtain approval from the Office of Management and Budget, as is 
required under the Paperwork Reduction Act of 1995 (PRA).\4\
    \4\Protection and Promoting the Open Internet, Report and Order, GN 
Docket No. 14-28 (Feb. 26, 2015) (online at


A. The effects of H.R. 4596

    The original text of H.R. 4596 would have increased the 
definition of a smaller provider five-fold and made the 
exemption from the enhanced transparency rule permanent. 
Specifically, the draft would have applied to any ISP with 
500,000 or fewer subscribers or with fewer than 1,500 
employees. At the legislative hearing on January 12, 2016, 
where the discussion draft of H.R. 4596 was considered, 
Democrats raised concerns that these thresholds for small 
business were too high and that the permanent exemption may not 
be warranted without additional data to reveal burdens imposed 
on small ISPs and their magnitude. Democrats argued that to 
make this type of determination, Congress must have robust data 
about the impact on consumers as well as the true costs to 
service providers.
    If the bill were enacted as introduced, tens of millions of 
consumers would permanently lose the benefit of the FCC's 
enhanced transparency rules. This would be an undesirable 
outcome as the record that the FCC has compiled on these 
matters clearly show tangible and calculable consumer-related 
benefits associated with these rules. Testimony provided at the 
Subcommittee on Communications and Technology's legislative 
hearing on January 12, 2016, estimated that 21 million 
consumers are currently served by smaller ISPs.\5\ The FCC has 
collected data on FCC Form 477 that shows 1,913 companies 
currently serve 500,000 or fewer subscribers. These providers 
have a total of approximately 11.4 million connections that 
would qualify for the exemption outlined in the discussion 
draft (and later incorporated into the introduced version of 
H.R. 4596).\6\ At a minimum, the introduced version of H.R. 
4596 represents a nearly 45 percent increase over those 
approximately 6.6 million connections that are now subject to 
the FCC's exemption.
    \5\See Written Statement of L. Elizabeth Bowles, Legislative 
Committee Chair, Wireless Internet Service Providers Association 
President, Aristotle, Inc. (January 12, 2016) (online at
    \6\The FCC does not collect data on employees, so it is impossible 
to estimate the impact on consumers of the proposed language that would 
exempt companies with 1,500 or fewer employees.
    Further, the proposed thresholds have no basis in the 
legislative record. One witness at the January 12 hearing 
indicated that for her association, the largest member was a 
wireless ISP with approximately 200,000 subscribers, with the 
average member providing service to 1,500 subscribers.\7\ No 
record evidence in Congress or at the FCC supports extending 
the exemption to cover entities with 500,000 subscribers or 
with 1,500 employees.
    \7\See archived webcast of A Legislative Hearing on Four 
Communications Bills, U.S. House of Representatives, Subcommittee on 
Communications and Technology, Committee on Energy and Commerce 
(January 12, 2016) (online at

B. Modifications made during markup to H.R. 4596, as introduced

    At the subcommittee markup, Republican members offered to 
work with Democrats to improve the bill. Ultimately, 
Congressman Loebsack (D-IA) and Chairman Walden (R-OR) offered 
an amendment at the full Committee markup to address many of 
the concerns raised by Democrats. The amendment would 
significantly modify the bill to create a five-year sunset for 
the exemption and lowers the exemption threshold to companies 
with 250,000 or fewer subscribers. Additionally, the amendment 
would direct the FCC to report to Congress to provide data to 
help determine an appropriate threshold going forward. The 
amendment was adopted by voice vote, and H.R. 4596 was reported 
favorably by voice vote from the full Committee on February 25, 
    The changes made by the Loebsack-Walden amendment could 
significantly mitigate potentially negative impacts on 
consumers while still providing certainty for smaller ISPs. 
Because Congress will rely on data reported by the expert 
agency, the FCC should include in its report: data specific to 
how the exemption affects consumers; information on how many 
consumers would be exempted at different thresholds; and a 
recommendation on whether any definitions should be modified 
based on the data collected. Additionally, although the 
language requires the FCC to send its report within 180-days 
after enactment, the FCC should consider updating the report to 
Congress in the interim before the sunset expires.
    Again, the compromise struck in this specific instance 
helps to keep a fair balance between providing certainty for 
smaller ISPs while ensuring that consumers are not forgotten, 
as the FCC continues its process to collect the relevant data 
for Congress. We appreciate the opportunity to supplement the 
Committee Report to ensure our views are noted on this 
important discussion.

                                   Frank Pallone, Jr.,
                                           Ranking Member, Committee on 
                                               Energy and Commerce.
                                   Anna G. Eshoo,
                                           Ranking Member, Subcommittee 
                                               on Communications and 
                                   Dave Loebsack,
                                           Member, Subcommittee on 
                                               Communications and