>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. athen cory johnson. -- i'm cory johnson. president obama sent to the annual budget for congress, the $4 trillion budget would raise taxes and spend more on education, housing, and infrastructure. >> we would be making a critical error if we avoided making these investments. we can't afford not to. when the economy is going well we are making investments, when we are growing, that's part of

what keeps the deficit low. the economy is doing well. >> the budget has been delivered to the congressional office. more on this coming up including information on how the president has earmarked millions for data-driven health care research. some weak economic numbers and december are raising eyebrows in the u.s. economy. consumer spending posted its biggest drop in five years, 3/10 of a percent. that drops after holiday shoppers apparently pregame to doing shopping in october and november. meanwhile, manufacturing in the u.s. fell in december, the slump in oil prices and a stronger u.s. dollar impacting orders. hewlett-packard's ceo is getting more money after three years of sales the kleins. the board of directors raised her total compensation by 11%. ahead of their split of two companies. she will receive $19.6 million in 2013.

she was sent to raise -- annual enterprise ratings ever in super bowl history 49 game so far. the game was offered and 49% of the homes. ratings totals will be released later. the patriots won. now to the lead -- the largest spectrum auction and the u.s. history, over $40 billion in bids. one of the big book -- big winners was dish network. they secured $13.3 billion in winning bids. they won more spectrum than verizon. dish had $14 billion in revenue

and a market cap of 33 billion this is amazing. they use a loophole to get a discount as a small business. yes, dish network is a small business. now they are asking for $3 billion in discounts because they have this partnership with a couple of companies that makes them, according to them, small business. it's supposed to be for firms with less than $15 million in revenue. joining us is the sec exchange. also with this title boil. -- todd o'boyle. this is just an amazing thing. >> the result of the auction or certainly amazing. they showed once again the consumers want and need better wireless connectivity. i think it's too early to say exactly what to make of the winning bidders. since what really matters is whether and how they put to use the spectrum licenses they have one. -- won.

>> dishes a lot of spectrum they have gotten before and didn't use. when you look at this loophole that qualifies a small business, partnering with its amenities but only 85% of those companies, could you have seen this coming? >> i didn't see it coming to this extent. i don't think anybody else did either. i think that's part of what's generating such outrage. it's an affront to the fcc's integrity. his affront to all these wireless entrepreneurs for whom these the business discounts were intended to go. dish claiming $3 billion worth of those discounts makes a mockery of the entire program. >> what was the purpose of that program? what was it intended to do? >> congress directed the fcc to set up a program to help a small entrepreneurs get a foothold in the wireless industry. and engage in what's called facilities-based competition. using spectrum they get it

auctions, building out a network, and actually providing end-user service. what's happened now is the sec -- the fcc has loosened these rules so much where we get a situation where the big sophisticated corporate interest can game the system and use the shell corporations in order to get multibillion dollar discounts. i think that's wrong, both as a commissioner and the taxpayer. >> i think the notion was to help small businesses, to help competition, to help women and minorities. dishes none of that. -- dish is none of that. >> the policy should be facilitating market entry. we're glad to see new diverse forms entering the market. we should be facilitating competition. i'm glad to hear more about facilities-based competition. there's all sorts of steps the fcc could take to improve that including by relaxing or preempting bad legislation in a

state that preempts communities ability to build their own broadband networks. the fcc could put a stop to the time warner cable merger. there's lots more for the commission to do to ensure that we have a market place full of options with lots of entrepreneurs. >> those issues aside, what is common causes take on dish using a small business loophole to win these auctions. >> we support allowing designated entries -- entities to receive discounts. what really matters is from our perspective, is on the backend. what's a clear timeline for them using these licenses and then hitting the market? >> i want to read from the letter he wrote to the fcc. you wrote we must change course and soon by closing loopholes that allow big businesses to rip off the american people to the tune of billions of dollars. the amerco people should be outraged about this. i certainly am.

-- the american people should be outraged about this. what he do now that the horse is out of the barn door? >> is a common on the fcc to do a thorough investigation into these applications. i think the integrity of the designated entity program is at stake. if it turns out the scandal is what's legal under our rules, i think it's incumbent upon the agency to reform the rules to close these loopholes. i would note that i descended last year -- i dissented last year, and i predicted almost exactly this results. that corporate interest would find ways to arbitrage the system and game it at the american taxpayer. my only regret is that i turned out to be this right. >> why do you think the fcc commissioners went for this? to support some of the same goals. is it about maximizing revenue and letting the biggest spenders when -- biggest bidders win?

competitive effort to be damped? >> by and large we share the same goals of wanted to have a small business program that actually works. the question is -- are you willing to take the efforts to reform the program to ensure it's actually small businesses that benefits. that's where we have seen a bit of division. i hope that nothing else, this current episode with respect to this auction will inspire the fcc to take action to ensure that those who claim the bidding credits are the small entrepreneurs, are the women and minorities who historically have not had a chance to break into this marketplace. those are the people we should be looking out for common of the fortune 500 corporations that can go to wall street to raise capital for these auctions on their own. >> if there's one rule change that has to be made before the next auction, what do you think it should be? >> i think the best steps the fcc could take for the next auction are insuring a reserve spectrum for the smaller

competitors to ensure that we don't have yet another situation where all of the scarce public resources and up concentrated in the hands of the big two. let's make sure they are going to smaller players, entrance and upstarts. >> todd o'boyle, from common cause and the fcc commissioner. we appreciate your time. thank you. speaking of amazing, super bowl xlix. are the brands spending millions for commercials during the game? they also spent vast fortunes on the social media site of those campaigns. which adds have the greatest reach online? we look into the social media feedback for the super bowl however titers are able to focus their measures -- their efforts in ways like never before. that's next. ♪

>> this is "bloomberg west," i'm cory johnson. angela merkel is unlikely to agree to a bilateral meeting with the greek prime minister. the german governor official says she does not want a general confrontation. she wants to show him he is isolated with his plans to increase spending in greece. one of the leaders of pro-russian separatists in ukraine is calling for a massive mobilization of troops, trying to get 100,000 people the pickups arm -- people to pick up arms against the ukrainian government. talks broke down over the weekend, fighting has intensified since the collapse of those talks. spotify cancels plans to launch in russian. this comes as russia remains at an economic slump. the government is tightening rules on internet access. the cancellation columns as

spotify put $.5 billion into funding for international expansion. the super bowl got record ratings, not just with television viewers. 65 million facebook users to part in conversations about the big game. twitter reported 28 million tweets, and adds were a big part of that. which adds get the most social media buzz? joining me is ben. it was a hell of a game it. the ads brought their a game as well. talking about reaction, before get into individual ads, just writ large, what was happening in social media as they were reacting? >> there is new ways to show the ads. the days of a tv ad and buzz in the paper in the next day is long gone. you have advertisers launching the video before the game

extending and after the game trying to generate shares and likes an engagement for much longer perio the time it. dit's not just tv, there's a whole load of ways to spend your money. >> as we look through some of those ads, what reaction do you have about what happened online? >> a lot of ads were put up on youtube, for example, a long time in advance of the game. others were put up shortly before the game. no supplies -- no surprise, a lot of the ads when they were shown during tv suddenly the youtube views a started taking off like crazy. we saw that with the coca-cola had, very few views before the game, and it did well after. you others like budweiser launch their ads if you days in advance. they already had 10 million views before the game started. i got another great surge during

the game. you have different strategies around using the super bowl to launch something and sustain it online or actually build up excitement and knowledge of the advance, and then the super bowl is just one milestone amongst many. >> the touchy-feely ads, the budweiser ads, the horses and dogs and puppies even -- what could possibly be wrong with that? i wonder that mass audience, how clever played? t-mobile with their kim kardashian add -- it was funny, i thought it was funny. i wonder if that's the kind of ad that is designed with a social media sponsorship find it to get that message out after the ad runs? >> maybe. there's a lot of ways to judge if something is really benefiting. one of the quick polls was the consumer vote, what did well.

that ad came about half way, where is budweiser was at the top. we monitor things like the completion rates. if people want something online, the today finish it -- do they finish it? do they share it? there's a close correlation between what consumers are saying and who is getting the best engagement on shares. i think t-mobile may be intended to be a great sharing type of video, it doesn't seem to be resonating at. i think the bud one and the bmw ad is doing well. the coca-cola one is doing well. we monitor over a few days. what you see is in the early days after the super bowl advertiser spend a lot of money to get shares. some facebook campaigns and there will be things that carry on being viewed after the budget ends. that's a really good ad that

will resonate people will share because they love it. >> interesting to see who was going for cheeky, who was going for sexy. the jury's secrets -- victoria's secret, wives watch this with their husbands. there's more of a mixed audience than your typical football game. i wonder how that plays different online? >> obviously come on line even have a much more targeted message. online you can target men or women, rich people or poor people, people with kids, people without kids. when you have something designed for digital, you tend to define your target audience much more narrowly the new designs of the for tv. that's why the super apple -- super bowl ads in general are designed for a mass audience. they are relevant for a lot of consumers, like coca-cola tend to do well. in many ways i'm surprised that

they still spend so much money on suitable -- on the super bowl, when online you can target people who have an affinity with your plan. >> to that point, we had the carl's jr. ceo on last week, and he talked about he was buying regional space as opposed to national ads, not just because he has two different brands hardys versus carl's jr., that he felt he could target the markets where he would have the most impact and still benefit from being on the super bowl and generate the social media buzz. is that a model we will see more of? clicks yes. what we are seeing across the spectrum of tv is more narrow targeting, to the point where we are seeing advertisers will make 10 or 20 as a year, different ads for different demographics or ads for loyal customers versus others. you can get precise.

regional ads and things like that are a step in that direction. >> ben legg. thank you. we appreciate it. "bloomberg west," will be right back. ♪

>> i'm cory johnson. this is "bloomberg west." president obama presented his budget to congress today. $250 million dedicated to use data for personalized medical research. this is believed to have huge potential, but could be a problem when it terms to logistic. caroline chen joins us from new york. welcome to the bay area. glad to have you. what an interesting thing this is combining the specialized

medicine and big data. >> exactly. the president proposed what he calls personalized medicine. the ideas togetheron people together data on them, but also scientific data. your characteristics, whether it's hair color, eye color, or your habits. do smoke, exercise? the idea is to draw links between underlying features like your genes to the way you are experiencing disease. why do some people get obese? why are some people prone to certain disease rather than others? >> is not creepy data the government have all that information? the privacy issues, would this become a serious issue? >> i think the government is well aware this is going to be a question. they specifically set aside some money to figure out that question. how do we ensure that the data is kept private?

that person's personal data is in leagues. the they're doing differently is that they are hoping that all the volunteers will be able to have access to their own personal data. >> it won't be anonymize the minute you put it in, you're supposed to believed its going to be anonymize on the backend? our biotech up is excited to have this? -- biotech companies excited to have this? >> they are looking for specific targets. if they can find great connections, this target goes with the disease am of this biomarker indicates you will experience disease in a certain way, that information goes to drug makers. they are excited for that. >> i'm adjusted and why technology will -- technological advances happen now. are the electronic records and the government able to handle this kind of depth of data in a standardized way? >> not at this time it.

i think i have been told there more than 600 different possible electronic records. in some hospitals, the emergency room records is not the same as the one used on the fourth floor. they don't talk to each other. this was start to standardize the way the data is collected across different hospitals. if i said to you, do you smoke? that's a different question than how many times do smuggle week versus when did you quit smoking? >> the government is trying to get it together, caroline chen, thank you. trafficking drugs promote reaching the white house grounds, spying on professional athletes. incidents like these make people say drones are no good. we look at the future of drone regulation. that story coming up next on "bloomberg west." ♪

>> breaking news now on that one time retail tech titan radioshack. would go to scarlet fu with more on the breaking news desk area . >> the chain would still -- sell half its stores to sprint that would operate under the sprint name and close the rest is part of a bigger bankruptcy deal. radioshack did not have an immediate comment on this. standard general, a hedge fund that provided a financing package to radioshack last october, also declined to comment. these are still the go see asians, is not a done deal. -- still negotiations this is

not a done deal. this would keep radioshack from selling off the stores. the latest is that they would sell half the stores to sprint and close the rest is part of a bigger bankruptcy deal. we keep you posted on any developments, but radioshack stayers -- review shack shares have been -- radioshack shares have been a penny stock for a while. >> they had 4300 stores all over the place, but you wonder if those stores are in the right locations that sprint without -- would want that many? >> i don't recall them being a lot of malls, but they are in strip malls and wide ranged in locations. there would be a battle with bankers and lenders over the real estate and control of the company. is a lot that needs to be figured out, which is why these negotiations are ongoing. >> there is some irony, because they tried to revive they are

struggling business a few years ago by focusing on feature phones, not smartphones. selling phones from people like sprint. they face planted on that one. >> we saw how that went. >> scarlet fu, thank you. alibaba chairman jack ma speaks out after the chinese government released a scathing report. the industry and commerce says the comedy was widespread, and the comedy wasn't doing enough to fight it. ma spoke about the issue in hong kong. >> we have a problem almost every week. the problem we had last week we already have the first stage solved. this thing i think is going to be very transparent. this thing is going to be pretty meaningful for e-commerce groups

developing in china. it's not supported by certain government officials. it is how we can do things in a good way in good legal procedures. and so far, we're pretty happy and we are moving things ahead. >> he didn't look happy. he says he is eager to correct any misconceptions. >> we were misunderstood by the world. but we are not transparent, we don't want misunderstood by the world that is a platform of selling fake products. and we want this company -- as always, i said, not represent

china internet. it represent the spirit of internet. of the whole world. >> ma was in hong kong to launch a funded for entrepreneurs in that city. as drones wins their way into hobbyist, they are also going into the sky and taking off a few people. an employee crash of drone into the white house lawn, calling the president to call for more rules on the recreational use of drones. tijuana police found a mess laden -- meth-laden drone crashed on the border. the nfl is taking steps to ban drones around stadiums. why is the faa so slow to move on regulations? and can they control these things even if they want to?

joining me is patrick. the drug drone was amazing. just a guy forgetting he may have crashed his drone near the white house? >> the guy was part of the intelligence community, which to me is too large to fly drones by the white house. that's just me. >> the brings to mind the old catch-22 military intelligence is an oxymoron. are these signs of a lack of regulation? maybe to a certain degree? >> their hundreds of thousands of these being sold. i was there telling the faa back in 2007 and eight that these systems were going to get cheaper into the hands of people they were going to be top consumer electronic products.

the proliferation, we can see it, and anyone can buy one can fly one. nefarious activity like that in mexico, there's a steep learning curve or. the cheaper ones can't carry that much weight. i don't know that there's that much to worry about. i'm not saying can totally take it off the table. but there are easier ways. wonder if we might look at these drones like frisbees, they will just end up like on someone's roof. but there's a class of drone the needs other regulation. what's the dividing line when they go from deutsche tool? -- from toy to tool? >> they can be used by a lot of different people. there is a lot of good uses. and then there's a lot of talk

about good, commonsense regulation. most people want to ally -- rely on the law. we want it to make it to be easier for people to use these for business. the people using them for business are going to be responsible. the people who are using them hobby wise are going to be safer. the traditional hobbyists, others are just members of the hobby -- of the public who want to consume electronics. they don't recognize the faa as regulating toys. >> we get a conference near san francisco where we had a drone battle, where drones would crash into themselves. one of the drones got a little high, caught some wind off the golden gate bridge, and never to be seen again. as far as i know, that's the one that landed at the white house. does this happen a lot, where drones just go missing? >> you have to obey the laws of physics.

there's no getting around that. i have seen a lot of these systems flying and people saying it malfunctioned or crashed. but they do get away from you. they are not foolproof. you do have to have some skill to fly them. some of them are preprogrammed, and you can program waypoints or whatever else in the return to home up. sometimes i just get away from people. -- they just get away from people. you may find a drone in your yard one day. >> the game of drones continues. patrick egan thank you very much. can africa be a world leader in solar power? and can it help solve long-standing infrastructure problems? a ceo that has big african plans, next on "bloomberg west."

>> this is "bloomberg west." off grid has a mission -- empowering african homes and businesses with solar power. babylon more power to do it with the world bank announcing a $7 million investment in the tanzania-based company. off grid's ceo and cofounder joins me now. xavier, it's an interesting business. describe the conditions of your typical customer. >> they live on one dollar to four dollars a day. they are burning kerosene, which is gentle -- jet fuel for light. they may have to want three miles and have to pay for the privilege. >> went to the end up paying for that -- what to the end up paying for that? >> it varies wildly.

i've seen up to a dollar a day. up to $30 a month to burn jet fuel in their living room. >> these are not people with capital to buy solar panels a cost. how much do yours cost? >> we don't sell it as a product. we sell it as a long-term lease. a typical system would cost 91,000 dollars or more coming up to get a battery and electronics and the lighting. we have been able to radically reduce the cost on our side by buying in bulk. >> the basic idea is you are following a solar city model. you own the product, they rented, and it reverts back to you? >> they honored at the end of 10 years. >> they pay at the end of the month? >> every day. it behaves like a utility. we have down to seven dollars a month. >> with the uptake like?

-- what is the uptake like? >> it's the easiest sales pitch of ever seen. do you want electric light in your home? of course you do. but typically they couldn't afford it. now it's can you take the money you are spending now on kerosene and how are your house. -- how are your house. >> the payment of a structure exists in these places -- infrastructure exists in these places? >> tanzania is ahead of us in terms of mobile minutes. everyone has a cell phone. they send us money over their mobile phone. we sent him a text message that unlocks the system and they go on. this is a for-profit enterprise.

we are incredibly motivated by the social effect of what we're doing, but we think it's usually -- a huge commercial opportunity. there are more people off the grid than when edison turned on the first libel. one in five people. >> there are more people off the grid now? >> william gibson said it was the future is here, just unevenly distributed. i think the electricity is the ultimate example. it's not even a second thought for us in the studio. but for people -- most people in africa, and a lot of people in in commu change? how you pick the places you want to do business? >> where we work, it's 90% off the grid. 10% of people are on, 90% are off.

anywhere we go, there's huge demand. we rollout geographically. we have seen as high as 30% to 40% adoption.>> it's not so stinky. xavier helgesen, thank you. is objective world news. tony abbott could face a leadership challenge after allies lost badly in state elections. australians are upset with spending cuts, abbott says he has restored order. >> we were elected in 2013 because the australian people rejected chaos. that's why we were elected, because the australian people rejected chaos. and we are not going to take them back to that chaos. we really are not going to take them back to that chaos. >> australia's economy has lost momentum under abbott with growth hitting its weakest levels in 18 months. apple is planning to sell $6.5

billion of bonds. proceeds will be used for buybacks dividends, and more. apple's latest offer raised $3.2 billion, allowing the company to raise funds without having to repatriate foreign cash. is the tech industry's diversity problem getting any better? and why does it matter? one organization says it is in an accident is when it comes to profits. that's next on "bloomberg west." ♪