a long-term campaign to transform our children's health. the american academy of pediatrics is proud, proud, to stand today with the administration and working to ensure a healthy future or all our nations children. now it's my distinct pleasure to introduce our next speaker, secretary of the united states department of health and human services, kathleen sebelius. secretary sebelius has been the leader on health care. she's help the families and children for over 20 years. as governor of kansas, she was recognized for her work to improve access to health care, and since taking office in april of 2009, she has been a leader in some of the top issues for children, including the reform of our nation's health and respond to each one. we are very, very proud to be working with you. please join me in welcoming secretary of health and human services, kathleen sebelius.

[applause] >> good afternoon, everyone. thank you, dr. palfrey, are not only that nice introduction, but banks are being here. and thanks for the work at the academy of pediatrics on a host of issues affecting our nations children. and we have an illustrious group here on the floor. and certainly, are pleased to be joined by our partners, congressman moran has a long history on wellness and obesity issues that he has worked on in congress. and we look forward to working with you as this effort moves forward. mayor euille, it's nice to be back in your city. we have done a lot of innovative clinics and other activities. i can't imagine any child not wanting to go into the room next door and hang out. [laughter]

>> fabulous. to the y here and the national white. i want to go hang out. and we're thrilled to have the first lady of virginia here. i have to tell you that my husband still regrets us moving out of assisted-living. [laughter] >> we had the opportunity to live in a governor's residence for seven years, and he was happy to have me take this job. but he did know why he couldn't stay where he was. [laughter] >> we are still trying to sort that out a little bit. and i'm very pleased to be joining in this effort with my friend, and our wonderful first lady, michelle obama. we had some pretty good exercise last by, all that standing up and clapping. but it's thrilling to have her take on the role as the leading advocate in this country for healthy living. dr. benjamin cares a lot about

the lives and health of americans. she used to focus the attention in her clinic in alabama. and now we have a great opportunity to have her become america's doctor and focused the attention around the country. and you know, as she said, we used to have a whole set of rules which were just given out to people, eat so many vegetables day, get your kids from behind the computer, go to the gym. but often that fell on deaf ears, and while those are very important things to do, if we are really serious about turning the corner on this issue, we need everyone to be involved. we need to make this a national crisis, and a nice a untracked national issue because it has a huge national impact that the president pointed out last night so allegorically that health care costs for average families are continuing to skyrocket making it very hard for families to pay the bills, and the ability of small businesses to

keep affordable health care is getting more and more difficult, and that often impacts their ability to keep good employees, and expanded businesses. the unhealthier we are as a nation, the more our health care costs will continue to rise. and the less competitive we will be globally in the world. so we have, not only moral obligation, but i would say an economic imperative to begin to make a change. and let me just give you a couple of pretty alarming statistics. according to the centers to the centers for disease control and prevention, we already spend one out of every 10 health care dollars on obesity and its competitions. overall, we spent almost twice the amount today that we spent on obesity and 1980. that's a bad these trends have gotten. nearly $150 billion a year. to put that in perspective, that's more than treating all

the cancer in america, year in and year out, almost half again as much. a lot of the money that we are talking about goes to treating the chronic diseases which have obesity as an underlying cause. and we know those include heart disease, stroke, type two diabetes. and certain kinds of cancers which are directly related to obesity. medical care for diabetes and its complications alone cost more than $116 billion a year. health care costs related to heart disease, across the country almost $93 billion a year. stroh, another 48 billion. all of which are directly tied to obesity. and that's just what we are spending today. right now, we have more children who are overweight and obese than we've ever had before in this nation. four times higher than it was four years ago. so many children now have type two diabetes and when no longer refer to it as a dolt on set

diabetes. it's just referred to as type two. which is a relatively recent and alarming change. in fact, we have the first generation of american children were if we don't change the trajectory, they will have a shorter lifespan than their parents. here in the united states of america. the fact that some of these consequences don't show up for 10 or 15 or 20 years, should not make this any less of a crisis, although dr. palfrey just did a great job of what really happens in the unseen impacts of childhood obesity. the administration has already supported some major changes in policy to help reverse the growing trend of obesity. one of the most historic steps is the recovery act that the president signed almost a year ago, which is going to have a first time ever 650 million-dollar investment in prevention and wellness aimed at

obesity and smoking cessation. community projects across this country will be experimenting with what really it takes to make some changes. and the surgeon general has already recognized that there are a range of factors influencing obesity. what we've already done with those grants is begin to allocate them to states, but also to ask communities to come up with creative strategies. and some of the ideas are really encouraging. in fact, we are way oversubscribed, we will have three of the best projects underway later this spring. we're also fighting another factor which is advertising. one of the reasons that it is good for your child to move away from the television is not just that it gets him or her up and around, it is they start being bombarded with the ads are particularly aimed at children on kids tv. we know that a recent study indicated that if you're

watching a child's program on tv, every eight minutes you will have a junk food ad. it's not surprising that children can identify most of the brands of the unhealthy food, because companies are spending a billion and a half dollars a year marketing those products to our children. and now those ads have spread video games and websites. so not only on television, but they're coming through in a variety of media. and that's another initiative that we've got to take very socially. so if a child gets diabetes because he turns 18, partly because when he was younger he only ate foods he saw every day on tv and the internet, it's not just his fault. it's our fault. we have to change that dynamic. so if we can change the our children eat and help them be healthier, we also bring down health care costs. last night in his state of union address, president obama

recognize the urgency of this issue. and nominated our next speaker to lead a national movement to address it. the first lady has not only been on the national stage a relatively short period of time, but she has instantly become the most visible and respected advocate for healthier lifestyles in america. she's everyone's favorite vegetable gardener. [laughter] >> she had a healthy kids there last summer on the white house lawn. she has been talking to america about choices they can make. she is launching a national campaign to reverse the epidemic of childhood obesity. and we look forward to being a good partner in that effort. so it's my great pleasure to ask you to give a great, warm welcome to our first lady, michelle obama. [applause]

>> thank you, everybody, thank you. as you know from last night, i get embarrassed when people stand up and clap for me. [laughter] >> i don't really know what to do. do i wave? do i -- it's like, please, just that now, everyone. [laughter] >> good afternoon. i'm thrilled to be here on the floor. [laughter] >> it's a great floor. it's a kind of a war before, but it's a good for. let me begin by thanking the new first lady in the room, maureen mcdonnell. we are going to have a great time working together. she is already very engaged and supportive of these initiatives. and since she's so close i am counting on her to work alongside on some of these issues. we're going to see you in a month at the governor's gala,

whatever they call it, so be ready to dance. [laughter] >> and welcome aboard. >> and practice. >> absolutely. congressman moran, i want to thank you for all your work and is a. i look forward to working with you. our staffs are reworking about some things that you've been working on for a very long time, so we're grateful for your leadership and concern and focus. mayor euille, again you have been a host to me in your great city, and you've done wonderful work in this area. i had a terrific time addressing the national conference of mayors, and i got a very good response from your colleagues. i know that the mayors in this country stand ready to work on this issue. they are seeing the effects of what everyone on this floor has talked about, in terms childhood obesity, and they are ready to make some changes. also, dr. palfrey, it is an

honor for us to have you with us. as i should before, it was through our relationship with our pediatrician that we even began as a family to start thinking about these issues. and it's our pediatricians and our medical community that are going to work side-by-side with families throughout the country. so we are grateful for your support. i know that this is not a new issue for you, and i hope that our attention to it makes your job a little bit easier. i also want to thank all the folks at the y for all you're doing, neil nicoll, for your work as a national leader. but i know that you know as a national leader the real work happens on the groundt these fine facilities all throughout the country. the y has been a leader in ensuring that families and communities all over this country have access to places to

play. your mobile physical unit, your phd unit, i came to the south lawn helped me debut my hoola hoop the skills. [laughter] >> but i think the y is are showing that they are thinking towards the next age, you know. the room that we are were in is a next-generation of what the y's can be. the mobile unit is something that i didn't grow up with, but you're keeping up with the changes and cultures and communities in a way that is going to make a huge impact to the work that we have to do in our nation. and finally i want to thank my buddy in crime, secretary civilians, for her tremendous leadership and her tremendous friendship. we are glad that you moved out of assisted-living. [laughter] >> i know it's hard. i know, i know, i will work on him. [laughter] >> but you can come over for

dinner or something. [laughter] >> from your work with the cdc to the fda, the department of health and human services is clearly at the forefront of addressing some of our greatest health issues, and it's going to take their continued commitment. these grants that are coming out, we've been working with your department in getting them done. your staff has been tremendous and moving very quickly on getting that money out, and i'm anxious to see what all that hard work leads to. so we are grateful not just to you but all of the thousands of people in your agency who make us all look very good. and finally, i want to commend our new surgeon general, dr. benjamin, who i finally got to meet. [laughter] >> three months on the job and were already making crazy, right? [laughter] >> but you're doing a terrific job just jumping right in. the report is not only timely that is right on point.

and your perspective, your new way of looking at this issue is refreshing, and again is right on point. it's presenting both the dangers of inaction, and a vision for health for this country. is an incredible step in a long journey that we will have to take. so we want to thank you for your important work. so as we've seen, the surge in obesity in this country is nothing short of a public health crisis, and it's threatening our children. it's threatening our families, and even more importantly, it's threatening the future of this nation. higher rates of obesity are directly linked, as you've heard, to high rates of chronic illnesses like heart disease and cancer and diabetes that even though type two diabetes is rare among young people, or than three quarters of those who have it are obese. in fact, the health consequences are so severe that as the secretary said, medical experts

have warned that our children are on track to be less healthy than we are. and there's never been a generation of young people who are on track to be healthier than their parents -- or less healthy than their parents. and truly, if we are really honest with ourselves, it's not hard to understand how this happens. i try to track this through i/o. in some cases, it's access. parents have told me, i've seen it myself, that they would love nothing more than to feed their kids more healthy foods, but if you don't live anywhere near a place that sells fresh produce, it's very hard to accomplish that goal. in other cases, the issue is just convenience. at the end of a long day, and more and more families are experiencing these long days

with two parents working and busy schedules, you just get home and you're tired and you pick up the phone and you order a pizza. or you go to that drive-through. it's just easier. our modern-day life makes it very difficult for us to sit down and prepare that meal. and a lot of times it's affordability. in these tough economic times, buying healthy foods unfortunately feels like a luxury for too many families. they just can't afford it. we've seen stories, we've heard stories, of people who know that buying that large gallon of juice is cheaper than buying a gallon of milk. they can't afford to make different choices. and then a schools and in our communities, oftentimes it's budget cuts that make it more difficult. recess and pe are gone for many

kids in communities all across this country. parks and playgrounds and afterschool sports are few and far between in too many neighborhoods. and for most people, the cause is really a combination of all of these things. is no one particular thing. is everything, together. and let's face it, there are just too many pressures on parents today. and i understand those pressures that i talk about this all the time. is easy to live healthy when you lived in the white house and you have staff and people who are cooking for you and making sure that it's balanced and colorful, because i had a hard time doing it before that and the white house, and that wasn't so long ago. barack and i were like any working couple. as a working mom with a husband that was busy, so many times i was the one counting that load and wrestling with many of those challenges. and there were plenty of times, i tell you, that you'd come home

tired, you don't want to get the kids buzz, and popping something in the microwave or picking up a burger was just heaven. it was a godsend. but we were fortunate enough to have a pediatrician, as i've mentioned, that kind of waved the red flag for me, as a mother, and basically cautioned me that i had to take a look at my own children's bmi. now, we went to a pediatrician all the time. i thought my kids were perfect. they are and always will be. [laughter] >> but he warned that he was concerned that something was getting off balance, because fortunately he was a pediatrician that worked predominantly an african-american urban community, and he knew these trends existed, and he was watching very closely in his client population, his patient population. so again, and my eyes, my

children were perfect. i didn't see the changes. and that's also part of the problem, or part of the challenge. it's often hard to see changes in your own kids when you're living with them day in and day out. as parents, we all know and will readily acknowledge broadley that kids in general, we will save we know they don't eat right, right? and we know they don't get as much exercise as they should, generally. but we often simply don't realize that those kids are our kids, and our kids could be in danger of becoming obese. we always think that only happens to someone else's kid, and i was in that position. we all want desperately to make the best choices for our kids, but in this climate it's hard to know what's the right thing to do anymore. so even though i wasn't exactly sure at that time what i was

supposed to do with this information about my children's bmi, i knew that i had to do something, that i had to leave our family to a different way. but the beauty was that for me over the course of a few months, we have started making really minor changes, and i shared the story because the changes were so minor. we did things like, you know, limit the time. my kids were already fairly active, but you know, we got tv timeout during the week, and that helped increase activity, because they were just running up and down the stairs by knowing the more. [laughter] >> we paid more attention to portion size. didn't make a big deal out of it but just sort of said, listen to when you're hungry and when you're full, stop. we reduced our intake of sugary drinks, and instead encourage our kids to trade for what. i just put water bottles in the lunch during the week, and we had low-fat milk.

again, didn't make a big deal out of it. just made a change. we put more fruits and vegetables in our diets, again, trying to make for a colorful palette, but you to slip some grapes and at breakfast time, and throw in an apple at lunch, and pester them about whether they actually ate the apple. [laughter] >> and then you try to balance it out with something at dinnertime. i mean, it was really very minor stuff. but the small changes resulted in some really significant improvements. and i didn't know it would. it was so significant that the next time we visited our pediatrician, he was amazed. he looked over the girls charged and he said, what on earth are you doing? and i said, really, not much, not much. and that's the good news that we want to share with family, particularly for kids. small changes can lead to big results. they are not destined to this date, and they're not really in

control what goes into their mouths, usually. so we know what has led to the obesity epidemic. you know, we know inside. i mean, we're still learning, but we kind of know. and we know what we need to do to solve it. we just have to make the commitment to do it. we really, each and every one of us, needs to make that commitment. we need to provide parents with better nutritional information so they can make better choices. we need to give our kids healthier options at school, where many kids are getting most of their meals. we need to make sure they are spending less time in front of the tv and playing video games, and more time exercising and having fun and doing the work of children, which is play. but we also know that the solution can't come from government alone. that's something that we just have to remind ourselves. and for many, that's a great relief. everyone has to be willing to do

their part to solve this problem, and everyone has to work together to turn this pattern around. and that's exactly what we hope to do through an administration wide initiative on child obesity that i'm going to be launching in the next couple of weeks along with a number of important partners. we're going to be bringing the federal government together, those resources in partnerships with business, nonprofit and the foundation communities, all of whom are thrilled to be a part of this endeavor. it's just been refreshing to see so may people recognizing that this is the time to step up and make some changes. we're going to do a number of things. again, some of them small things. we want to create what we're calling more healthy schools. and these are schools that are offering more nutritious meal options during the day.

they are providing nutritional information to children as part of the curriculum, and they're insuring that children are getting the increased exercise that we know that they need. but we also have to focus on increasing the amount of exercise outside of school. and no place, like the y, knows that we need to make these changes. we need to make healthy food options more affordable and accessible. and that's going to be probably one of the toughest things that we need to do. and we need to do this in all communities, urban, rural, everywhere. people have to have the information. they have to have access in order to make healthy choices. there is nothing more frustrating that will frustrate a parent more than to say that you've got to buy more fruits and vegetables, but to still see the cost out of kilter and see those goals out of reach. so these are just some of the things that we hope to do through this initiative. but what we know is that we have

to be ambitious. that the approach has to be ambitious. it can't just be lockstep. it's got to be something meaningful and powerful. and the other thing that i will say, and say again and again and again, this won't be easy. so let's begin with that. [laughter] >> this will not be easy, and it won't happen overnight. and it won't happen simply because the first lady has made it her priorty. that in and of itself is not going to be enough. it's going to take all of us. thank god it's not going to be solely up to me. [laughter] >> but it's going to take all of us, parents, schools, communities, working together for a very long time, over a sustained period of time. over generations of children will need to keep doing this. but i have every confidence, based on the level of energy

that i've seen, based on the willingness of people to deal with this issue of cross party lines, the willingness of the business community to be a part of the solution. every sign that we've seen over the course of moving to this rollout has been nothing but positive. and of course, parents are ready and willing. we all want to make the best choices for our children. we just need to know how. and if we continue to do that, if we work with our physicians, if we work with our surgeon general, if we've got the government, the federal government working together, businesses ready to make the sacrifices, then we can tackle this problem. and we can do something really important for our kids. we can hand them the future that we know they are going to need to be successful. so i am excited. and i look forward to working with all of you over the next years to make this not just a

dream but to make this movement our reality. so thank you all for the work that you've done so far. and we have a lot more work to do. so thank you so much. [applause] >> [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> right now on c-span president obama attending the house republican retreat in baltimore. he's addressing members on a number of issues and they will have a chance to ask questions as well. that's live on c-span. and this afternoon chairman of the joint chiefs admiral mike mullen talks about the importance of leadership. and military strategy. he's joined on the panel by the chief naval operations and former virginia senator john warner. . .

>> now a conference hosted by the congressional internet caucus advisory committee. we'll hear hear from virginia congressman. risch boucher and comcast ceo, brian roberts. th portion is 90 minutes. >> good morning, everyone.

here we are meeting in, not in virtual space but in real space. my name is jerry berman, and i'm, the chair, perhaps for life, of the congressional internet caucus advisory committee. as you know we work with the congressional internet caucus and all of you to try and educate each other, policymakers, some of you are policymakers, and the world about the internet. not only, and, we started this 13 years ago. and the issue, at that time were two. could we get a congressman to connect to e-mail? that's a. and that was a tough one. we were going door-to-door around saying here's how you do it.

the second thing we were concerned about, and it was fundamental, was that policy makers, from, whether you're republican or democrat or independent, that the internet faced policy issues but it was very important that whatever your solutions you face, that you understand the technology. now we were presumptuous enough to think that we understood the technology. that technology, we would say, at the time, was a network of networks that was scaleable. in other words, it was global, it was different than any other medium. it was not two-way. it was multinetworks connected. it was global and it was a new platform, and we were looking at it at the social level, how was it going to affect our lives. we knew that it was a vast, open platform for innovation

and speech and association, that unlike any other medium, it allowed, a new kind of equality of status, where people could connect, and innovate. they did not need permission. they did not have to ask anyone to get on it. if they have, and we, it was transformative in the sense of the computer at that time was, the great collector of information. and maybe a research tool and privacy, as a privacy advocate it was a danger because it was going to send alize information, -- centralize information and allow for surveillance. what the internet did and connect this to computer network, was turn the computer into a communications tool. it became a communications device. and we can go on from there to say, well, now the internet, is, the computer

but it's also the mobile phone and also your television set. we have this enormous connection of media. we would say, yes, it's a global medium but now it is over a billion people using it and it started out as an appliance and now it is a necessity. everyone has migrated to it. and that means, everyone from citizens to, corporations to governments, to new kinds of firms and education, they are all part of this connected policy or nation which has no boundaries. now, we have seen enormous innovation, and, all of those innovations make communication easier. bring people together. allow for more freedom of association and more connectivity. and the internet has its critics. that is a new form of

bowling alone. people are connected or people are twittering their time away. but if you went to the tech fair last night, which was our 13th tech fair, you would see applications that said, we can, use the internet to deal with alzheimer's disease. we can use the internet to demandside monitoring so you can conserve energy of we can use the internet to create new forms of jobs. we can use the internet to make reading a new kind of experience. you all know this. and, it is the exciting, transformative nature of this global network of networks, in the social space. when i speak to you, and my passion about the internet is, that, we are stewards of the internet. it is, yes, it is a

technology of freedom and it is a technology which is based on code. but, code is law, law makes code, and the policy architecture of the internet, whether it's free and open and protected by the first amendment, or by human rights in china, or whether it's open to everyone to connect, and do things on the internet, whether where you can have an identity all rests on policy debate. that is what this is about. where are we in that debate. how are we driving the internet to keep it open, innovative, free. and that's the whole discussion. and we know, that when everyone comes to the internet, al qaeda is on the internet. cyber pirates are on the internet. we have to deal with content and protection of content for anyone to be a publisher and sustain themselves.

but we also understand that new kinds of creativity are going on. i could go on and on. but the importance as you look at the framework, the debate, the discussion is, as a supreme court said in ruling that the internet was entitled to the greatest protection of speech, even more than newspapers, was, it was a never-ending ongoing conversation and that's what we're trying to promote and the state of the net is a capture of the policy debate that's ongoing. the issues, a lot of issues remain the same. from speech to copyright. and this afternoon we have a platform on global free speech, which is, i want to note is our first judith krug panel in. she was one of the founders of the internet foundation. a great advocate of speech. she would be always sitting there at this conference.

she loved the internet and loved its potential and worked with me in civil rights and civil liberties challenges to keep the internet open. so, i just want to mention that, panel this afternoon in her name. now, what i want to do is introduced, when you talk about the policy architecture of the internet, i want to introduce my good friend and colleague and, representative rick boucher from virginia. he is an original founder of the congressional internet caucus, many years ago. we have been working together from the start. he used this as a platform to drive the jugs and frame the issues. he is now the chairman of the subcommittee on telecommunications in the commerce committee among other judiciary committee. but he is there trying to make the internet open to everyone.

free, secure, protect privacy. protect speech and protect innovation and commerce. and see whether, how it frames as part of our global economy. he was, i always mention it in his very important, that, what started out as a research network, and when people were thinking of it as information highway, rick boucher understood the internet, which was barely mentioned when we rewrote the telecommunications laws in 1996, that this was something new. and we wanted to change it from a research network to a network for everyone. it had to get rid of the acceptable use policies and allow commercial traffic on the internet, which was an enormous stimulation and, said, everyone can connect, and that was, an enormous founding principle. and, among fundamental principles of the internet. and it gives me great

pleasure to introduce rick boucher to you today. [applause] >> appreciate that. >> excuse me. one housekeeping. brian roberts, from comcast will be up here five to 9:00. we're going, there are questionnaire, if you have a question for him, staff is going around, tim lord and others, they will collect your questions, and, present them to him so for the dialogue that begins in about five to 9:00. sorry, rick. thank you very much. >> jerry, thank you so much for organizing once again, through your advisory committee to the internet caucus today's state of the net conference. i want to just take a moment at the outset to commend the tremendous work over the years jerry berman and his associate, tim lorten have done, making the internet

advisory committee a vital and functioning part of our continuing dialogue within the congress to make sure that members of congress and their staffs are constantly aware of the pros and cons of the critical issues of the day. that affect the internet and gentle la communications policy. the internet advisory committee hosts throughout the year, in conjunction with the congressional internet caucus, a series of forums, and these forums are normally held during the lunch hour on business days in congress. they typically meet in one of the congressional meeting rooms. in the capitol. and they are among the best attended forums that any of the various caucuses within the congress sponsors. and during the course of these forums, key presenters, pro and con, on the critical information technology policy issues of the day.

are there to offer their presentations and answer questions that attendees will profound. they are truly informative. and through these forums responses toward by the internet caucus advisory committee, we are carrying forward the basic function of the internet caucus. to make sure members of congress are well-informed about the critical policy challenges that will affect the internet and that when they make their judgements, they do so on a solid, factual foundation. and i can't say enough about the excellent work that jerry berman has done and tim lorten working with him has also done in order to promote those forums, organize them, maybe sure they're well-publicized and well-attended and they truly make a difference in the terms of quality policy making we're able to put forth in the u.s. congress.

i want to take just a few moments of this morning to welcome each of you and thank you for attending our annual state of the net conference. and to review with you briefly the agenda that we have for 2010. for our subcommittee on communications and the internet, one of the subcommittees of the house energy and commerce committee and i have the privilege, as jerry indicated of chairing that subcommittee. we have an active year ahead of us, and i'm briefly going to pre-view that year for you, and then i have the privilege of introducing our featured presentation, the conversation with alan murray, and brian roberts this morning. we have an active legislative agenda. we also have a separate oversight agenda, and i'll talk just for a moment about the key components of both of those agendas. on our legislative agenda, you may note that last week

we reported from our subcommittee legislation that will require a comprehensive inventory of the wireless spectrum. this inventory and analysis will be performed jointly by the ntia and the fcc, and these agencies and our legislation are charged with the responsibility of looking at the entire wireless spectrum, and determining the current uses, and also, identifying possible components of that spectrum. that could be candidates for reallocation for commercial use. or possibly, could be candidates for spectrum-sharing, using some of the new and very efficient spectrum-sharing technologies in order to maximize the efficiency of spectrum use. we provide one year for the agencies to conduct this inventory and when it is presented along with its recommendations, it will provide a highly useful

blueprint to the congress for taking steps to insure that we will be able to have the spectrum available, for the growing demand for wireless applications. i would note that last year, for the first time, the number of homes that do not have a land line service but have cell phones exceeded the number of homes that do not have the cell phones but have land lines service for the first time. and, that, disparity will continue to grow as more and more homes become wireless. more and more people use mobile applications, and the applications that are in current use require ever greater data rates and bandwidths, particularly, mobile video, which now has become a component of so many popular wireless applications. so even though, we will soon be deploying the 4g technologies with lte and similar new technologies,

and that will provide a great benefit to wireless users, the freedom that offers in terms of spectrum availability will be fairly short-lived. the crunch will come soon and we're going to need new spectrum within a matter of just a few years. in order to meet growing demands for wireless services. this inventory will give us the blueprint necessary in order to achieve that goal. our second legislative priority is a comprehensive reform of the federal universal service fund. this month, the contribution factor for long distance revenues, allocated to the universal service fund went from 12% to 14%. so, 14% of long distance revenues now, must support universal services. and the current system is simply unsustainable. the demand for universal service funding increases,

and that demand is being imposed upon ever shrinking revenue base. the universal service fund is supported by interstate and international long distance revenues and because of technological innovation, and business models, such as the packaging of local and long distance minutes by the carriers, that revenue base is shrinking. and so a change has to come. and, it must come soon. a comprehensive reform of the universal service program is called for. and, four years ago, i introduced along with my republican partner, congressman lee terry, the first comprehensive universal service reform. we have, refined that measure, through, comments received from interested parties over the intervening years. and we now have a discussion draft that has been broadly endorsed by the stakeholders. upon which, our committee had a legislative hearing in

the late months of last year. during that hearing, it was revealed that the principle stakeholders, the people who both contribute to universal service support and, receive support from the universal service fund, have endorsed this measure, and on the contribution side of the equation, the net contributors and into universal service funding, we have endorsement for this comprehensive reform from at&t and from verizon, in the center, of companies that are, pretty much, balanced in terms of their contributions into the fund and their receipt from it, we have endorsements of qwest, frontier, other mid-sized companies, and on the beneficiaries side, companies that primarily receive support from the universal service fund, largely the rural carriers, through their trade associations, we also have endorsements. now, this has been a classic

divide historically. never before have the companies aligned on both side of that divide. the net contributors into the fund and net recipients from the fund, come to common terms and endorsed a single legislative reform proposal. they have endorsed this bill. and i think that gives us the critical base of support necessary, to move this measure now through the house of representatives. we controlled expenditures from the fund. we reduced costs, for example, by moving to competitive bidding, for the wireless services, receiving universal service support. we put a cap on the entire high cost universal service fund. we take other steps that, are designed to promote efficiency in the use of these monies and control costs. we also expand the contribution base, from the interstate and international revenues that are the sole

contribution base today to intrastate revenues and to any provider of a network connection. and so, as we're controlling costs, we're also expanding the base for revenues. we make another series of very important improvements in this bill. we effectively transition the universal service fund, to broadband provision. and we do that in two ways. first, we say that, immediately, upon enactment of this legislation, the carriers that receive universal service support may use such part of their universal service funding as they choose. in order to support their broadband services. under current law, they can't use universal service fund to support broadband, they can under the provisions of our bill. that's step number one. step number two is broader. it says that after five years, from the date of enactment, any recipient of

universal service funding, as a condition of continuing to receive universal service support, must provide broadband throughout its service territory. and so at the end of five years, we will in fact have a transition of the use of this fund fully to broadband. it can be used also to support regular telephone service, and to, retire the debt that has been incurred, carriers and purchasing, switching equipment and, other facilities necessary to sustain the basic telephone service. but at the same time, this fund is fully going to be used, in order to accommodate broadband and in fact, broadband provision throughout the service territory will be required. as a condition of continuing to receive universal service support. we had a legislative hearing on our discussion draft in the subcommittee late last year. the next step will be a markup of legislation, which i will be introducing along

with mr. terry and i think other cosponsors, and we hope that will happen soon. ideally, that would happen at a point, in february, at the latest i hope, that will happen in early march. another legislative priority is the renewal of the satellite home viewer act. the license that enables the importation and into local markets of distant network signals. to homes that can not receive a network signal delivered over the air from the local broadcast station. it will expire on february the 28th. and, in order to prevent millions of homes from losing their access to network tv, it's important that this law be renewed. and we are on track to obtain renewal. we now have agreed-upon versions of satellite home viewer act reauthorization house and senate. we've been working with our colleagues in the senate to

obtain approval of a common text. we have that now. we're in the position to obtain the renewal. we've been working with the leadership in both the house and the senate to both identify appropriate vehicle to the which this renewal legislation can be attached. that is proceeding well. we're down to one or two candidates at this point for that vehicle and we do anticipate that well before february 28th. we will have the renewal passed and signed into law. soon i'm going to be circulating in partnership with republican colleagues cliff stearns, george radonovich, joe barton and our democratic colleagues on the committee, a discussion draft of legislation that will provide a set of privacy guaranties for internet users. our goal in doing this is to enhance the confidence that internet users have that their experience on the web is secure.

and in providing that greater level of security, drive more electronic commerce traffic and not in any way, impede electronic commerce, and so what we're seeking to do, is to, replicate, and reflect in the statute the current best business practices with regard to targeted advertising. we do not want to disrupt targeted advertising but we want to give internet users they know what information about them is collected and they understand how that information is used. then through a combination of opt-in and opt-out opportunities, have control over that information, collection and use. and providing that information, and that degree of control, we think we truly will be giving people a greater sense of confidence that their privacy is secure. we've been working with

interested stakeholders. we're very close to having a discussion draft to circulate. when we do, we would welcome your comment and encourage you to make your views nope known and share the good ideas about this measure with us. later this year, it is my hope that we'll be putting forward legislation and we're working now to develop the early concepts for this, that, will provide a national set of consumer protection guaranties, for the users of wireless services. in doing that, we would also preempt the states from having consumer protection standards with regard to the subject matter that would be the subject of these federal consumer protections standards. the wireless industry, needless to say, is inherently mobile. for millions of users i think it is very hard to determine which state has the greatest relevance in

establishing consumer protection rights for that particular user. an individual can live in one state, work in another state, carry out most of his or her cell phone use or, pda use while on the road. and so, which state really is more relevant in terms of providing consumer protections for that kind of user. if there is an industry that argues for a national set of consumer protection standards as opposed to state by state standard-making i think it is probably this industry. it is really the poster-child for an area where national standards are necessary. and, it is my hope that legislation we will soon structure, will put in place a truly meaningful set of national consumer protection standards and then have that be the standard that provides consumer protection for internet users. we're consulting with industry. we're consulting with consumer groups and with,

both the fcc and state enforcement authorities, and we hope to have ledge shun ready for circulation in the not-too-distant future. so that is our legislative agenda. it is pretty ambitious. it will be reasonably short ledge they have year given the fact we are in session fewers days in 2010 than we were in 2009. but, i think this agenda can be accomplished and we're going to be working very hard in our subcommittee in order to achieve it. now we also have an oversight agenda, and i will briefly describe for you the key elements of that. we'll be having a hearing, very soon, potentially in february, on, the standards that have now been developed by ntia and the rural utilities service for round two of the broadband stimulus program. there will be one additional

funding round that will occur during the course of 2010, and, new standards, different from the standards that governed round one, grants and loans have now been involved for round two. and we'll be having a hearing shortly focusing on those round two standards. i was pleased to note that, recommendations, that, were made on a bipartisan basis in our subcommittee when we had the oversight hearing on round one, have been in large part adopted for round two. we made two core recommendations. first, that, what i viewed and i think many on our subcommittee viewed as an overly restrictive requirement in round one for the making of grants by the rural utility service be eliminated. and that standard was that for any community to get the maximum grant amount, it had to be no more than 25 miles from al city of, at least

20,000 people. and when you look at the map of the united states, most of the entire eastern part of the u.s. was excluded from the maximum grant amount because of that particular standard. including many communities in rural districts and economically challenged places, that could be totally ringed by mountains but only be 15 miles from a city of 25,000 people. i happen to represent some of, some of those communities. so i was quite concerned about that. and, on a bipartisan basis, expression of concern about that standard was expressed, at that. that has been eliminated from round two. another major concern we expressed that rural communities in round one, had to apply to and be rejected by the rural utilities services. before they could be considered for grants under the ntia's grant-making program. ntia actually has the larger

share of the $7.2 billion stimulus fund than does rus. and so, that requirement has now also been eliminated for round two, and it is possible at this point for a rural applicant to apply to both agencies and simultaneously be considered by both agencies. an award can only be made by one but consideration can be given by both. and i think that is a positive change. . .

>> on one of the largest media acquisitions proposed in american history. and that is the acquisition by comcast of nbc universal. and that leads me into my next very pleasant task, which is to present to you this morning featured a presentation. for the presentation, we have two very well-known guests, and i want to thank both of them for taking time to join us at our annual state of the net conference. it's my pleasure this morning to introduce to you our murray, the

deputy managing editor and executive editor online for "the wall street journal." and brian roberts, the chairman and chief executive officer of the comcast corporation, who together, will engage more of your benefit and a conversation. as the deputy managing editor and executive editor online of "the wall street journal," alan murray has editorial responsibility for the journals websites, including the wsj.com and marketwatch. and the journals and books, conferences and television operations. he was previously the assistant managing editor of "the wall street journal," and author of the paper's business column. he served as cnbc's washington, d.c., bureau chief, and while working at cnbc, he also wrote the journals weekly political capital call him, and prior to that he spent a decade as the washington bureau chief for "the wall street journal."

brian roberts is the chairman and ceo of the comcast corporation, which is the nation's leading multichannel video distributor. under his leadership, comcast has grown into a fortune 100 company, with 23.8 million customers, and about 100,000 employees. comcast content networks and investments include e!, the golf channel, tv one and 11 sports network. brian is a member of the board of directors of the national cable and telecommunications association, where he served as chairman for two consecutive terms from 2005 until 2007. i would also mention that i recall very well that during our debate in the middle 1990s, on the telecommunications act of

1996, that brian was at that time chairman of the ncga. brian has won numerous business and industry honors for his leadership. in 2009, institutional investor magazine named him as one of america's top ceos for the sixth year in a row. in may 2007, he was presented with the cable industry's highest honor, the ncta's vanguard award for distinguished leadership. in october of 2006, he was inducted into the cable television hall of fame. and brian just happens to be at the forefront of one of the largest telecommunications consolidations in history, the proposed combination of comcast and nbc universal. it's a pleasure to welcome them this morning, and i ask that you join with me in welcoming to our annual state of the net conference, alan murray and brian roberts.

[applause] >> and i hope they're here. >> we are here. >> thank you, mr. chairman. >> thank you very much. >> thank you. thanks for that -- thanks for the introduction. thanks to all of you for getting up early in the morning to be here. brian roberts had a pretty amazing year last year. you turn 50, right? >> write. >> you completed a triathlon, and she became a certified media mogul. completing the deal to acquire nbc universal. you must feel pretty good about all that? >> i'm glad i could complete a triathlon. we haven't completed a triathlon. mr. chairman, as we said, we're waiting approval. but it was a great year in an

otherwise tough year for the economy. >> that was your midlife crisis. to you by a maserati? did you have any wild extramarital affairs? >> this is exactly the place to discuss all that. [laughter] >> actually, just to kick us off here and a lighter note, steve burke who turned 50 to you before, said you've really got to manage that would otherwise you will wake up and have crazy midlife crises, and think of some goal. so i have never thought about a triathlon. i was lying in bed serving that, too, with my bed. and said hey, there's a triathlon in bali. and maybe we should go to that great four seasons and dolly and you end up running on the beach, and would not sound great? she looked at me and said if we are going to go to bali, let's go to bali. we've never been but let's not do it and watch you run a triathlon. that's the exact day of my

birthday, on a sunday, june 28, there was a triathlon also ran in bali in the schuylkill river in philadelphia. that sounds like you. so having to live near photo to all my life, and for any of you who have taken the train or lived in philly, the thought of swimming in the schuylkill is so disgusting. [laughter] smack that's the point of the movie. that's what i chose to do for my midlife crisis that it was a beautiful, beautiful day the. >> we're all glad you survived. that's the good news. the bad news is of course that since you completed the deal with nbc universal, there's been this almost a freefall of controversy over jay leno and conan o'brien. conan o'brien was paid $40 million plus, your money, partly your money, to leave the network. jay leno joke the other night that he felt like it been left on the titanic. you can't be too happy about all that.

>> you know what? i missed all that. i was awake over christmas. you know, obviously, this is a new space, tough business, that has an incredible, incredible implications of decisions to get me. it's a frustrating period of time because we are unable, legally, to be involved. and there's something called gun jumping roles, and i really, you know, we're an observer. the only thing i -- >> you can't talk about? >> can have any discussions about her, and so we, like you, read about it. but i'm looking forward. i think it's a great coming together, the two businesses. i'm sure we'll get into more that as to why we feel that way, but there's many, many good things happening at nbc universal. and it's, cuba, there's nothing more you can really say, except

that there's going to be a thorough regulatory review, and needs to be and should be and will be. but it reminds me that any creative endeavor, that is, a studio and a broadcast network and cable channels, that you don't want 30000 people in limbo for too long. and that however expeditiously that review can occur is very important to the companies. >> how quickly can occur? >> that's out of our hands. traditionally, it's been nine to 12 months. >> just before we leave gay little behind, thereno carrierr0

nothing. they put a zero on that, right? essential he. >> they never did it that way. i think that's been something that some of the stock analysts that follow comcast and maybe some that followed ge have talked a little bit about, which is, if the values that everybody plays on the various assets, you could get to the conclusion that not a lot of i is maybe below zero was placed on that. you have to step back and say, do content and distribution belong together? let's face it, that in and of itself is a controversial question. there are many examples of companies who have come to the conclusion that they don't. so when we went to see our investors, and as i would talk today, we look at sort of to questions. first is that question, do they belong together. the second is, did you make a good or bad deal? and what's the prospect for your investors. so on the first question, steve

burke, myself, all the leadership at comcast believe that this world is changing so fast, this conference, you know, as we get into internet and other issues, it's impossible for people to reject. exactly what's going to happen or we all wouldn't be sitting here right now. we would all be pursuing the great next thing. and so the world is moving at an alarmingly, excitingly fast-paced. and i think condit will be at the center for a big portion of what consumers want to do with the technology as it involves and changes and allow us to do new things that i never dreamed possible. and if it's legal and it's not pirated, and it created and it is well done, now you is going to flow to content. as a distribution company, our world is changing very fast as well. and i don't think that we're going in with unrealistic expectations. so we told our investors, assume

zero synergy, but -- >> do you believe that? >> i do not. synergy to wall street initially on acquisitions means how many people can you lay off. and i think that is a sad reality, a sad commentary of what it's like you have to run a public company and do a deal in today's world. if you can show how many people you're eliminates the first day, then it must be a bad idea. and you know there are plenty of good ideas in the world that didn't start with people getting fired. and so that which wall street hates, hopefully create a little stressed for washington, because there aren't so many obvious overlaps. within our cable programming part of comcast, we own e! and style inverses and golf channel, as the chairman mentioned in the introduction, and a few other cable channels, we are not a top 30 rated cable channel on any of our channels. now, nbc universal has terrific skill. one of the things they've done

extremely well, under jeff's leadership and ge's leadership, is transformed themselves from a one channel company, nbc, to where today, nbc universal, about 80 percent of its profitability is not from either nbc or universal. it's from all these wonderful cable channels. they have many in the top 30. so we're looking forward to getting the benefit to our smaller niche channels, so in b.c. sports, associate itself with the golf channel, is an incredibly exciting possibility. taking a starter john g4, and associating it with sci-fi. so we know there are immediate synergies from our channels. from the distribution and content side, there are 4000 movies on demand. we now have something around 15000 choices on demand. and 20000 choices online on

demand. and when we say to folks, what's your number one complaint with our on demand service, i wish you had more movies. and so rather than find reasons to say no, we're going to go work for a while and find reasons to say yes, so we can get more movies on to demand. so i think there are many opportunities to work together, but the structure i just, i will finish quicker, the structure of the transaction was such that we contributed our cable programming, they contributed all their assets, together we are an investment grade credit. we borrowed $9 billion. ge takes that cash, along with around 6.5 billion in cash we put in. so not a huge bet, they will take that money, pay off their partner, and the rest of that money ge is going to put back into their core infrastructure ge capital businesses and help get things going for ge. and the combined company,

combined company would've had more cable programming -- it will go from 80% higher than that. for cable programming. it will have a focused management team with steve burke and comcast who, all we do, is the media space. and ge is our 49% partner. and said we want you to be so motivated to do a great job. any growth in value to create in addition to your 51% ownership, you get an additional 50 percent of the increase in value. which i've never heard of a public company structure where that occurs. so where you have all the incentive in the world to find those synergies, not do it by a limiting jobs, but by creating and investing and focus. and i don't think we could be more excited as we start a. >> so you talk about the synergies that come from scale. of course, one of the concerns in the city, which you will have to address when you testify next

week, is whether that scale creates that that's where the problem is in combining distribution and content. of your that he will use your content to favor your distribution channels and disfavor other distribution channels. >> let me do that. when i was and what we've said previously, when a vertical integration occurs which is what this really is, we're primarily 95 percent of comcast is a cable tv rob andrews tradition company, and one of percent of nbc your personal condit country. so we're pretty much not in the same business. a few of our smaller cable channels. but the 95% is cable. we don't have a news channel. we don't have a news outlet like nbc news. we don't have any duplication of boys in a local market where the national market. so i don't think there is any of the traditional media consolidation worries. the issue you put your finger on, the competitive issue, you

have, normally in a vertical deal with pepsi buys the pepsi bottlers, if they suddenly determined they're not going to history because anybody else's brands, one would rely on antitrust laws to see if that behavior is appropriate. in our particular case, in addition to the antitrust laws, there's a very specific laws that congress anticipated back in 1992, called program access and program carriage rules. and they said it's okay to be a multi-channel distributors that owns content, but if you do you must make, must make that content available to your competitive satellite carriers and now phone carriers, on nondiscriminatory terms that anyone who is unhappy has a place to go, the fcc, with 15 years of body of case work, and they will educate any disputes. so in addition to the antitrust laws, if we, for instance,

wanted to say cnbc is no longer available to directv to use an example, that's against the law. and if we wanted to monkey around in some way that they were unhappy about, they can go and complain about it and there's a dispute resolution mechanism. there is a very specific law that applies to this particular, when news corporation owns directv, when time warner owned time warner cable, and so i think we're on pretty well trod ground but that concern has been thought about, address, and there is an agency to focus on it. and that should give at least in the beginning after amount of comfort that the question you're raising has been -- is actively policed by the fcc. >> it probably also means the nature of your business going forward, not this is a big change in the past, you will be spending a lot of time here. >> no, as you heard in my background i've been active here for a long time, and i, you know, i have been doing this job

since i got out of college in 1981. so coming up on almost 30 years. and i love it here. i look forward to. >> look forward to each testimony. [laughter] >> all right. does comcast have the expertise going back to the network for a minute, to fix what ails in b.c.? i mean, they are in fourth place now, they need to be in first place. does comcast bring expertise that can help solve a problem? >> let me take twos seconds. when i did get out of college in 1981, my dad, as many of you know, is 89, next few weeks. he turns 90. he's at his desk right now working. and he started comcast into below mississippi out of philadelphia in 1963. he was 40 years old.

in 1981, we had 20 million in revenues. when we complete this transaction, we will have 50 billion in revenues. so i start by stepping back and saying, only in america. it's absolutely a fantastic dream, life that i've been able to have in business. and knock wood, somewhere, that we have not had the kind of reputational attacks that companies have had, or integrity has been at the hallmark of the company. and so as we start to take on a new endeavor, there was a time when we went and bought at&t broadband. people said you are tripling in size. you are taking over for at&t. one of the great names in businesses in the country. how can you presume to do better than they were? and we were in our core business, so it was easier to answer that question with certainty. but i think in fairness, and i think the conclusion that ge

came to, is that this is not a core business for ge. maybe it was 10 years ago, but today it's not. this business is changing and it's a full-time endeavor. that getting more deeply involved with cable and the new forms of electronic distribution of the future of nbc universal, and therefore it's not power plant in india, the ge capital and some of the other things. and they have competing attention for their funds. so i give jef a lot of credit for making -- it starts with the seller before you get to a buyer. they made a hard decision, that maybe, in the, seems easy now but i don't know about that, to change the direction of the company. and for our company, we have felt that businesses have to transform, reinvent themselves all the time. if you start at 20 million in 1981 and you just said we're very happy with what we got. that's one modus operandi. that's not comcast.

we're very fortunate that steve burke, president of our cable comedy, he just relinquished that job to a german named neil smith was a terrific executive, worked for paul allen, work for aol. worked for consumer food industry internationally. great career. neil is going to come into focus our cable company and that will free steve to be the ceo of both congress and to really do the deep dive in finding and promoting and creating a culture at nbc universal, different than a ge culture, much more decentralized, much more stand-alone with a long-term perspective. and you know, with a 50% opportunity to improve it in addition to what we own with a long-term plan to buy it all. we couldn't be more -- >> so the answer is yes? >> i didn't say we can fix it. by the way, the structure of the

deal, again, i know this is an investor meeting, but mike answers don't change from new york to washington. i think you have to be consistent. the deal, the price we by the other 49% is what is in the fair market price. if it goes up it goes out. but if it goes down because there's humongous piracy in the world are we doing lousy job, the price goes down. and that was a very important part of the structure of the transaction. >> i have to correct correct what he said. you said only in america could your father and you humble origins, build up an empire like his. i was told it could happen in australia as well. >> yes. there in a. [laughter] >> although i think they are american citizens. some late-night thing. >> that's true. there was a little british stop along the way. all right. how would you compare this deal to the one that didn't happen, the disney deal? >> you know, we look forward,

not backwards. >> but just look backward for medicare. [laughter] >> just for you, just for you. look, i think there was a moment in time where disney stock was $20 a share. because i ultimately i am a finance major. i start a little bit from the business perspective. obviously you have to love the strategic perspective. espn has been a terrific business. business channel, then done incredible things. family channel was once a really bad deal. now looks like a great channel. disney is firing wonderfully. we were right after 2001 theme park attendance was at a low. there was a shareholder revolt going on. there was the founding family say we want change. there was a vote coming up, and somehow, right or wrong, there was discussion between parties involved with both companies on

a back channel basis that said, maybe now that you've done a at&t, you'd like to come in and put our two companies together. we openly throughout that idea. they said no thank you. and pretty quickly we said, we are not in the business to go in and completely disrupt and over pay and stock today's 30, up from 20. not to me stocks have done as well as does a. i think it's the best performing stock in this space. so i think we did find a good value point. one of the questions on this transaction, moving us off of that back to today, is we are making a bet just as back then. is easy in the rearview mirror to see everything will get better after 2000, you know, 9/11. are we at the bottom of the economy? are bad things going to happen? is going to get better? how long does it take? this is fundamentally a bet on america, you know, and in my

opinion because most of the revenues of nbc universal continued to be domestic, great international opportunity, but all of those primary businesses are a bet on america having a growth recovery internet expansion, television continuing to be an important part of our lives, and you know, that's not for the faint of heart. and so it's not without its risk. is then goes back back and i think, the strategy for us is slightly different here, but the essence of what disney had that we like with cable channels and movie libraries that we could use technology to accelerate for the consumer, access to all that. i think that's still very true today. >> let's turn to the internet. by the way, let me urge everyone, you have question cards on your seat. if you have questions you want to ask, right in a. there are people walking around,

collecting the questions. but let me turn to the internet because you've said on more than one occasion that you see the internet more as a friend than foe. and i imagine every time you say that your fellow media executives rolled eyes and say, what is he talking about? how do you see the internet as friend more than foe, for your very nice business? >> well, if we were just a television company today, i think we would look, you know, very, very different. the last 10 years it's become one of the most competitive businesses out there, the television business, cable television. directv is now the second largest. dish network is now the third largest, verizon has spent more money than any company in recent memory to build something. het nt universe and just to name the principal players. along came the internet. now our industry made a tough

decision to invest in fiber optic before anybody else wanted to. as much to have more channels to keep up with some other competitors as it was, because we were sure of the internet. but way back in the late '90s, bill gates said i think you'll have a bigger business and data than you will in video. and i pretty much said well, gee, if you really believe that would you invest in this industry? and a month later he put $1 billion into our stock. never came on the board. never had to buy any microsoft products. just a pure statement in his own genius way to get broadband going. and today, with broadband, we have a fantastic business that we continue to invest in. we talked a little unsure about that. and it's transform the company. and then off of the broadband platform we been able to launch a phone business. and today we are the third largest residential phone company in the united states. from a standing start about four years ago. so the internet for us has

brought growth businesses like adding connectivity to consumers for the next great thing, maybe even greater than television, or the same as television, which was the pc in the home spirit but change has to come you're talking about the distribution business. now go to the content business. jeff zucker will soon be working for you have talked about digital pennies, or digital times. when you take someone who's watching television, and you move into a computer screen, the advertising value of that user goes down by 90%, or more. and it makes it very tough to make a business out of the. >> so what a lot of people are searching for is, are there ways in different expectations happening, we have some a comcast, time warner has called a tv everywhere, are there ways to give the consumer an

extension of their usage? the same thing happen with on demand. when we went out and launched comcast on demand, for a while content company said wait a minute, we don't get paid. what's good about that? but we knew consumers wanted it. that's what happened with music. they want what they want just what the want and they want it right now. as as we want to now extend that out of the home and onto other devices, the same philosophy is occurring. how can we find, you know, each company will have its own answers, ways to satisfy the consumer need, but in the case of content, if you are making, spending $409 to make a movie for avatar, you're not going to just say here it is for free. and so different businesses are trying to grapple between windows, between pricing, do not just have it be -- go from analog to dollars or digital pennies or whatever that code is. >> so you have your fantastic --

>> fantastic. >> but it's only available if you are paying for the cable service. >> no, there's thousands and thousands of videos available if you're not paying. if you want to watch to blood from hbo, which is the number one new show people are watching right now on their computer in their homes, then they have to be an hbo customer. data relationship we made with hbo, now you get hbo on your tv, whenever the show is broadcast. you can watch it on demand and high def on your tv or eat now you can watch it on demand on your pc. i don't see why we haven't simply made it better for the consumer to consume that content. then there's a show like the office, where you can watch it on comcast lied. you can watch it on comcast on demand. or you can it on fancast, via hulu, on your pc and not have to be a subscriber to nbc.

>> so i can get access to a lot of fancast can't get through who? >> hulu represents, i don't know, 40 percent of the content we offer to fancast. and we're about 3 percent of whose content is coming from comcast through fancast. they are a much bigger supplier then we are a distributor of. >> does hulu make sense to you? cable has work because you have two sources of revenue. you have subscription revenue and get advertising revenue. doesn't make sense to you to be giving away valuable content over the internet? >> honest answer is i don't know. right today, they own about 30% 32%, someone in a that range of hulu, it's not a controlling stake. i've not met the team that runs it yet, have not had the opportunity until their complete

with a process. it's one of those little bit like that very first question, we don't anticipate saying that we have a change of what they are now doing. and i think they are trying to out among all the partners, but what they been doing so far to me just as a user, an observer, is they took primary their broadcast content and said, well, that is being broadcast on the air for free, it's coming over cable, it doesn't have to sources of revenues. so we need to get an additional ratings, or an additional marketing promotion, or an additional relationship with the consumer that likes this brand and we will have to figure out how to monetize it somewhere down the road. i don't think that's a whole lot different than what the newspaper industry has been trying to figure out at some level. >> that's right. it's not easy, but increasingly the conclusion i think over the course of the last year is that the winners are the people who have more than one source of

revenue, who aren't so dependent on advertising. >> so if i might, i will broaden your question and say, what attracted us -- >> by the way, i am totally used to people not answering the questions i ask. [laughter] >> first time i've ever been accused of that. nbc universal, and i've tried to say this a few times, is it right today just about nbc and universal. had they been just those two businesses, it would be a very different help me. but they are u.s.a., sci-fi, bravo, and msnbc and cnbc and oxygen. all of that is the kind of businesses you are talking about with two sources of revenue and very, very, very healthy, no question. that's where you go back to your very first day but of whether there's a zero valuation for all of us who grew up in a different time period, looking around the room, i think that's a fair statement. in b.c., we are at zero?

pics xyz channel. i will pick anybody so i don't think anybody is worth billion dollars, $2 billion. something, so there is -- are going to be changes necessary that have to happen to try to keep it a vibrant part, still most of the television audience is watching, you know, in terms of one show at a time is very popular broadcast television. you know, i think it's an opportunity for us, but i don't want people to lose perspective that this company has transformed himself to be a lot more than just that one. >> is there any good reason not to turn in b.c. into a cable channel? >> we have said since day one we will not do that. i think there is still a broadcast audience. when you look at sunday night football, versus monday night football, and when it went from monday night football on abc to

monday night football on espn, the audience went down. and, you know, to those of us who are connected, you can understand it anymore. but there is people who aren't connected, people who turn on their diet and they want to watch broadcast because that's how they were trained. but to my kids, 16, 19, 22 years old, i think that world will continue to change overtime. what we've said in this transaction, we want to take that fear right off the table. we think there is a vibrant for the local and national broadcast television, and we intend to keep in b.c. free over the television channel. we have local affiliates as a great model. and frankly, the thing we can add because there isn't a lot of companies saying that's the business we want to go into, we are excited about it because we don't think a lot of money is getting spent and shows it in created locally.

and we are at heart a local company. comcast and all of our local systems has made investments to differentiate ourselves with our customers as being in your community and living here and working here and being part of the five of the community. and i think we have very much that opportunity with nbc and i don't think there's any one else trying to do that right now. >> i have some questions different audience which i want to turn to any minute, but before do i want to ask about what is clear he the big story of the day, the apple tablet, a lot of mystery surrounding it, no one quite knows what it is. is it a notebook computer without a keyboard? is it an iphone that doesn't fit in your purse? is it an ev with poor battery life? what exactly is this? [laughter] >> creature that is going to be unveiled at this afternoon that isn't going to change your business? >> we should of had this conversation tomorrow. [laughter] >> i'm with you.

we will all stages and to those great questions. one thing you know, is that apple is on a tear. their design sensibility is second to none. i have incredible respect, and have been to apple many times, trying to find ways to accelerate because it's what consumers love. i think our job is to work with the best. and when you sign up for comcast, whatever that relationship is, it's going to work with whatever it is you want your life. but they never tell anybody anything you're doing until the day they do it. so i'm sitting to one of the same answer. >> from the public's perception, you're talking apple, comcast are like on opposite ends of some spectrum. i mean, apple is like super cool and everybody loves everything they do, it and if they don't

know what it is. cable companies are not traditionally people's favorite companies. you know, you're in philadelphia. old media. how do you feel about that divides? >> it's interesting. that's one view. and that's a realistic assessment at some level of the product is, you know, international, or regional. and many other things. but we went out and hired a san francisco ad agency a couple of years ago. right in the heart of cool. and they said, i'll tell you, we think the things that you've actually innovated, you don't get enough credit for a. you don't know how to tell your story well enough. on demand, is the greatest product in the world. we've had, and correct me if i'm wrong, somebody from comcast in

the audience, but some in the order of magnitude of 14 billion television shows watched on demand out of about 15 million homes in three and a half years. it's more than all itunes downloaded in the united states. overtime. so for all of the noise, the average joe is half an hour, we have something approaching over a couple hundred billion a month of shows being downloaded. we have started with a thousand shows. we went to 5000 choice. we went to 10000 choices, and we've rolled out ces two years ago, my goal project infinity, which is where we are taking our platform, unlimited choice, unlimited devices, and we are going to help enable that to happen. and whether you give us the credit for that as the consumer,

the way you do to apple, that's the mission of the company. when broadband came along, first time i met the ceo of google, he said, 80 percent of all google searches back then are going over broadband. and said if there wasn't a broadband, from comcast in those days, there wouldn't be a google. and today, we are rolling out where 80% rolled out i believe for some high statistic. the next generation of wideband, which when you say well, what to do with wideband, i will give you the same answer that we did when we invent broadband. i'm not sure. but i know we want to give you the fastest and best experience in your home that anybody can offer. if we have to go to 100 megabits, 200 megabits. we've even seen demos of a billion bits a second in and out of your house. we're going to help enable that innovation. so how we tell our story to the consumer, we can do better, we

can improve service at the same ces. one of the key goals of comcast is to listen to the customers, and we have to show up on time and fix it right. we go out, we buy boxes. one of my good friends this weekend, we have our little boxes, his boxborough. immediately comcast isn't that she because we have to test those better. but at the end of it all, i think we're helping enablers change as any company and i think hopeful you will not feel that way about us in a couple of years. >> would a black tee turtleneck help? >> steve jobs is at a level by himself. he deserves everything he has achieved. >> you are in washington so you could have guessed this one was coming. but how you planning to respond to pressure from nbc universal and other copyright holders to restrict illegal peer-to-peer filesharing? >> well, the key word in that sentence is illegal.

and if it's, and whether it is peer-to-peer, let's just make the question what do we do about illegal, and what do you feel about peer-to-peer, break that question into two parts. we did something and we change our practices. it's been well discussed a couple of years ago. around peer-to-peer. our goal is to try to manage the network so -- >> you block. >> we slow down. we did not block. >> was that a mistake? >> huge uproar, and we change. and we changed very quickly, and we work with internet engineers, engineering forum. and we again realize that was not the right solution. and with transparent conversations we've been having with leading groups, we came up with a different scheme that doesn't seem to accomplish the same goal which makes the internet fast for the 13, 14 million customers who use it many, many hours a day, it doesn't have any of the problems

associated with it. that said, the whole question of piracy is really -- we're not going to be on both sides of the question. the content companies and i believe the distribution companies need to focus and realize that the future of being able to enjoy what we have today requires a, you know, a real oldness on ways to not violate people's privacy and somehow not violate copyrights. and if we can play a constructive role in that dialogue, we're going to be more focused than ever to try to help their. >> back to the first part of your answer. do you believe in that neutrality? >> absolutely think we stated principles publicly both as an industry and as a company, we don't block websites. we don't try to do anything to

not have an open and free internet. the question that i think that's implied in your question is, do i think there needs to be governmental laws about that, and how far should that go. that's probably where we might have difference of opinion. >> what is -- >> you know, you get into some definitions of net neutrality. i would say that's regulation, and in this space, we just talked about apple, and i don't think there's anything prohibiting apple from doing anything and everything they wanted to do. i don't think there's any company having a better run. look at google. 50 percent of all the video going over the internet is youtube, if not more. and all of the search -- these are fabulously successful companies, internet is growing at 50, 60% a year.

it's an explosion, and none of us want to get in the way of that innovation. or can't or will get in the way of that innovation. and the question you have to ask yourself, and i think chairman genachowski is doing, you know, the right and i think the fcc is doing an excellent job, as compared to some other ways it's been done in the past, which is to have an open transparent process and that everybody way in, tried to have the rules apply as at least ask the question, how broadly should they go. across all sectors of the space, and you know, hopefully we want to be a constructive participant in that dialogue. and so far, you know, i think, and if there is a problem, what should we fix. but over the history of the internet there have been two complaints, to my understanding, formally filed come on about isps. one of which was the one we talked about and that change before the fcc that took any action. >> part of innovation, of

course, for your business, my business is innovation in business model. is there anything in the current content of net neutrality that you think is preventing you from innovating in business models the way you need to to create a strong business going forward? >> well, heretofore i would say it's always been the fear of what someone might do. so i remember vividly a conversation with microsoft when they were starting with xbox live, and whether we were for some reason not going to want xbox live customers to be able to play xbox live. and again, we said, why would we do that? for my son, that's the main, one of the main benefits of broadband. so i think it goes back to the very first question from one of your very first questions about internet dating friend, not go. where broadband is still the best growing part of our

company, we will invest in the internet, we will invest in broadband, we want to have a superior experience to anybody else you can choose from. right here in d.c. we want to be faster than buyers. we have plenty of competition that were motivated i that competition. but if there is a really bad cloud hanging over, then what happens, wall street dreiser. capital spending because your regular before you have even invented. and i don't think that's the outcome that's been proposed nor do i think that the outcome that anybody would truly hope for. but there are some that would do things that could create that outcome. >> questions from the audience. will comcast indices followed rupert murdoch's new court in seeking that for your content? >> until we really get into i don't even know quite catch what i think he is seeking for his media, you know, "the wall street journal." i don't know that we have a comparability thing for the

print perspective. i will defer that one if you don't mind trick we'll have answers to all these, it's just a matter of when. >> on cybersecurity for your customers computers, should congress be taking additional measures to protect our nation's digital infrastructure? >> well, i think it's a great question to watch, and probably have serious experts way above my knowledge base on terrorism. but when i had the chance to pick the brains of, say, mr. gates when he had invested in our company. and i say things denver, which we be thinking about, cybersecurity is in tomorrow's world important, probably, as physical security has been in the past. and to people who think about these problems. when i hear somebody think about like that, i'm glad the focus by the administration and others

has been to put more attention on the. >> how about, you're a domestic business, how do you feel about what's going on in china with a google and the whole question of cyber freedom? >> again, you know, these are things that we may have to really have strong views on, you know, it was interesting, i met a young man who just applied to the business school program and i was interviewing him. and considering whether to recommend him, and he said that he wrote his essay on that question. and he thought of that. he went to a class at wharton on business ethics. and that question came up two months ago. and all the americans in the audience, this is an easy call, don't you dare censor what you are doing. he said one of the reason i want to apply to wharton was the

diversity of my students. and there were a couple of kids from china who raised their hands and said you just don't get it. our country is at a different place with a different there is, and we need america's help to get better. these are our rules, and you know, we are evolving but you can't just -- >> don't walk away. >> don't walk away from us. and i thought wow, i'm glad people are thinking and talking. i don't actually know the easy answer. and that may well be right, but i think that what that show to me is it's really competent, and i'm sure they are trying to find ways, just as the government is, how do we engage with china and not just walk away. that can't be right completely either. but you have to have some core values, and you know, it's a tough one. >> at the cs confraternity, this is a question from the

conference, -- >> by the way i recommended the kid, just that he would be the focus at this young of an age. i hope he gets in. >> the tranforty spent a lot of time talking about and looking at the whole conference a fair amount time focusing on 3-d tv. how important do you think that is going to be for your business going forward? and will be a bandwidth challenged the? band with the challenges are good opportunities. it means somebody wants something. and if you can give them something, typically that's a good business opportunity. not always but usually. so everybody that saw 3-d this year was more impressed than anytime before. avatar is obviously change the movie expectation, business, the price point. i think the wall street journals

company. and it's real risk. so now there is a rush to develop television. the first time i saw high def tv was $3000 in tokyo. i said i would love to have one, but not for $30000. and today it's $700. the thing that's exciting about 3-d, is it starts at $700. at the most. for the extra money. they are saying 10 or 20% more. so may not even be that much. and that means it will be zero very, very soon. so we're going to have 3-d enabled devices in our homes in the next 10 years. it's just going to happen to cannot even going to know you paid for. it's just going to be enabled. it's like bluetooth. i remember being at ces and seeing this whole section and saying what is blue tooth, what is this any different than

infrared? and now we all want a device with bluetooth that the question is are you going to want to sit there and wear glasses for hours a day as you watch tv. i don't think so. i actually think that for a while it will be a big event. like an avatar. you will pay a premium weta prehuman expect that you will be something unique that will not be something you do all the time. high def was a transition to digital that we all wanted to make, all content, all the time. and is going to take, 10, 20, 30 years to happen but we knew we wanted to get there. i'm not yet convinced that we want to sit there all day long and have a 3-d experience. i think you don't eat chocolate sundays for breakfast, lunch and dinner. maybe someday that will be the case, but i think it's very exciting. it bodes well for the content business. it's part of why we want to be on both sides. that's part of our vision,

project infinity. >> can you talk about about the innovation you are doing any advertising business? i know you have been leaders in trying to figure out the degree to which you can target advertising, you know, go into homes where you know there is a golfer or someone who would be a good target market for a lexus? and all so have some interactivity with people in their homes. >> how is that going? how quickly is that going to happen? on their privacy problems that people in this room need to be concerned about, etc.? >> i think that there's, you do, there's more information that people need to be considered but in this room. i think it's an appropriate focus. >> privacy? >> privacy. not so much in advertising, but searches from all layers of the web, i think have to be cognizant of that. at the same time, there are many ways, and as you pull consumers, they want relevancy in their

life. because advertising is a part of our life. so for me, this phase of life, i don't want to see anymore diaper commercials. thankfully, those days are done. is not the worst part of your midlife crisis. >> and so i would like, i think consumers want to be able to interact and get more information. google's success is about relevancy. and giving you what you want. so on demand success, 14 million orders, out of one company that only services 24 percent of households, to be able to do more than all of itunes downloads, tells me it's what everybody wants, what they want. and they want to go deeper when they push the button and say take me deeper. there has to be a great way to do that in the television space.

technologically, we are doing it now with on demand so it's not a big leap. technically, and we put -- >> you mean communicating? >> we did it two seconds later, one second later, instantaneous is not a 45, second to our download. talking right now. and with a dvr you're able to pause one experience, go in deeper, come back, you are able to have recommendations. and if you look at what's happened on the pc, when you go to amazon, what's so great about, what gives you relevant, if you like this book would you like to try these others? if you go to movies and netflix, part of their popular is how great they know you. and they know your tastes and your queue, and this is not able now, have you thought about this. that technology is crashing into the television. that's cloud computing. that's smarter boxes. that's other providers, smart tvs. that's tablet's. whatever it may be, that's the

consumer expectation. smack you wonder why it's not all ready here. is a technology holding you back? is a privacy concerns that's holding you back what is a combination. >> is the device that's not on your tv is today, a powerful, smart device that the only way i can describe it, when you leave this conference, go back to your home or desk and imagine working on a five year old pc. you would feel like you're going back in time 20 years. the old keyboard, the old crt, the wrong program, the wrong graphics. and so we need to find a way to be modern all the time, but the pace changes so fast that even two years ago, pcs you would never buy if you could buy the newest, or half the price and twice the powerful. that's going to happen to the cable box. that's going to happen to connected tvs. and i think it's going to be a

very exciting, 510 years for the consumer and i think that's going to be when this is happen. but when the last generation for us, did not have that technological capability the way the next generation will. >> and final question, broader question. . .

>> he's never told me it's a bad idea. he'd say that's an interesting idea. but that's not how we'll do it. >> he wouldn't do that. he'd say have you thought about do it the opposite way? he just has if you met him the same man that he was. it's a great lesson for me. there's many different ways to manage and lead. and so for most you'd say one has to go and one has to stay. you can't coexist. we did it this day, don't try to change it, that never happened to me. he was always happy to push. i was always willing to pull. we get to a critical moment, the moment of truth where it's a little different than you wanted it to be. there's a few more problems than may be you'd like there to be. and you're sure and not sure.

nothing is ever black or white. and at that moment of truth there's only one thing that i can trily sit down with and know that the device coming back is unbias, pure, what do i reallyh? and that's sitting with my father. >> brian roberts, thank you very much. fascinating. >> to continue our reference hosted by the congressional internet caucus advisory committee now with a discussion on copyright issues and internet piracy. this panel runs close to two hours. >> hello, i welcome today for the conference. this panel is the first of the day. we will lead from this into

three different break outs. mr. roberts has set the stage a big talking about bettor presence and piracy. this is called copyright strikes, what has have graduated from internet exile. if we can unpack that title, interesting and strange. some people call it response, some people would call it three strikes, signature a baseball term. specially it deals with file sharing on networks is obviously a problem for the content industry. people trading and illegally obtained and used infringing copyrighted material. the content industry is muse ad losing a tremendous amount of money this way. the question is how do you deal with pirates? over the years they have tried to do a variety of things. back in 2008, i believe perry

sherman said they were stop suing pirates in lieu of working with isds to do some type of graduated response. my graduated response, i assume it meets a series of notices and warnings to stop the activity. ultimately, ending in some kind of penalty. there's that process that's been going on. but across the world we've been seeing different laws and regulations in countries like the united kingdom and france and elsewhere. the deal with final technical measure which would be suspension of the service and from the perspective of the advisory committee starting back as gary noted earlier, in 1996, the internet caucus committee is long promoted. it's a powerful communication of tool to promote communication

and democracy. this is obviously to us today. i don't think that was the case back in 1996. where jerry congressman botchier were running around the hill. today the internet is a fabric of our daily lives. the panel discussion this afternoon with free expression taling with china and some of those issuers in secretary collinton's speech highlights that. so when someone talks about sus suspension, it's something we wanted to look at unpack. we assume in the title that they are indeed pirates. we assume in the title of this panel that they are sentenced to exile. i think those are both fictions. but i think what we'd like to do is look at the legislation from across the pond end elsewhere in

the world and kind of start, let's look at this through an american lens. how does this elsewhere reflect back? with us today a we're very, very lucky and fortunate. we have to my left, executive vice president for the global public policy at the federation for forngraphicic industries. whose rights are being managed? next to her, john moores, he's the director of the internet standard for cdt. next to him is the honor john roberts. john roberts is member of the british parliament. interesting he's chair of the party communications group. i guess we might say that you're the chair of the congressional -- your version of the

congressional internet caucus over there. also importantly, your chairman and secretary of the music group. and next to mr. robertson is matt. which we put that list with morrison and associate. let me just right into it. we have legislation across the threnetic and uk and in the house of commons right now. introduced by the executive. that would require after a certain amount of notices and measures. one of which is downgrading of service, one of which is outright suspension terms. in france we have the hadope law. i don't know what it stands for. the sarkozy law was the first

struck by unconstitutional by the courts. there's elements by which a user would be suspended from using internet service. your global public policy for the international federation of photographic industries. can you unpack for us what's going on and perhaps even why in these particular countries registration bit government is necessary. whether it's been in place or current regulatory structure? >> i have to say the whole concept really was born in france when isds and right holders were put into a room and forced into negotiation with a mandate to come one the solution with piracy on the internet. which alaws people to be taken to court for what they were doing. the goal was to come up with a more effective and kinder and gentler approach to dealing with

peer-to-peer infringement. it's really exactly as tim described it, the opportunity to have a system that would have warnings and educational opportunities for people who are using peer-to-peer services that would give them an opportunity to stop without suffering any further consequences, avoid being taken to court, and in fact have their prior si protected because they never need to get the information out to who they were. and all of this of course is based on isd standard's term of service. which say that services are provided on the condition they are not used to break the copyright inting 789 and they serve the right to term gnat service if those conditions were breeched. what's interesting is that the evidence has suggested that the kind of approach is highly effective if people are aware that there is an ultimate

sanction that is possible. and that's what make it is work. most people will stop infinning if they get the notices and are aware that after two or three notices or whatever the number might be something might happen which they would prefer to not have happen. i think in terms of talking about suspension, it's just proven that that so far has been seen as the simplest and most effective approach. it's something they have in their terms of service, it's something they can do already, proximate, if the subscriber isn't paying a bill. it is a relatively straightforward and effective thing to do. i wouldn't call it exile from the internet. certainly we're not asking for all services to be cut. people can still get other accounts and isp, internet cafe. the point is inconvenience, but one that would be easy to just

comply with the law. in terms of the regulatory point, i agree at last an very interesting and important point. i don't deal with the u.s. i deal with countries outside of the u.s. the legal and political business environment is quite simple. i think the reason that we have a legislative approach in various countries outside the u.s., and it's not just the uk, france, south korea, taiwan, new zealand, and other place like australia and japan which are considering it. first of all, they don't have the backdrop of the bmca, which in itself encourages appropriate policy and also the adoption of wisely agreed and industry-accepted measures. they don't have their backdrop. also in a lot of other countries when they were approached were quite concerned about being at a competitive disadvantage and wanted to make sure they would have a level playing field.

having government involvement and regulation is one way to achieve that result. >> mr. robertson, i read in your bio. i read it. it's enormous. you're at the hands of every mayor piece of legislation, everything that's going through that the parliament with your close with the music industry, you're close with your chair, the internet caucus so to speech, can you -- from your perspective, if you can talk about the uk legislation, the digital economy bill that includes these technical measures. can you tell us why? the house of lords for the process and why maybe the parliament thought that was necessary and what may happen for that legislation to go forward? >> well, the bill has come as a naturalization of what's happening with the internet and new technology. but having said that, there are -- i don't think i need to tell americans about lobbyist and people who come to see you. the industry itself, the rate

society in the uk, all a ride the one problems in relation to money that they felt were due, and, forever, the peer-to-peer which was talked about in the previous speaker and it is illegal, because it is. it would seem to be not only infringing into their rights but also in effect tax money to the government. so naturally of course all governments will want to get their phone to flash as it were. having said that, having looked at thing that sweden brought in. and perhaps the one that we're bringing in, illegal downloading went down dramatically. there was an increase in illegal loading of the something like 50 to 100%. by telling people it's illegal it is very, very difficult to explain. especially to children. that what they are doing is illegal. and we're not trying to

criminalize everybody, but there are people who see it as a money-making exercise and these are the kind of people that this will -- it was put in place to try to stop from doing it. it's not big though. but it does shall we say take the communications bill which i saw in a life time. and it takes it back a step further to introduce new technology. we have to remember the government does legislation in hindsight. and we never really think ahead. and some ways it is contagious. it is given the secretary of state, certain so enabling powers which means you can bring in lawyers and happen a to go through the bringing the bill to try and tweak the bill about to

rectify it. having said that -- it's not quite as bad as the model. that's just where we got the same piece. that's basically if you contacted, you go on a list. then you are written to and you kept doing it and you lost your service or were given up you could be in court as a result of that. it's not quite as bad as what we're trying to do is educate people. but it is very important, you do realize those people's livelihoods at risk. we're not talking about the rich who sell millions of copies of record, we're talking about the lower ones that have one or two in their lifetime, but they can make good money out of it.

and tax funds which are very helpful these days. >> well, it's interesting point that legislation is done in hindsight. how does it get enacted? how does it work in practice? who gets affected? what other penalties. if i could ask senate, there's a lot of hand ringing in your camp about what this may mean overseas. what are your concerns about it going forward? >> let me focus on one of the primary differences because the way we've handled what you might call tree strikes in the u.s. which has been largely a market-based voluntary approach

to what we're seeing in the legislative responses overseas. there is some hint of this issue in the digital and copyright act. and the safe harbors which are not optional. and they could decline to comply with the state harbors and the dmca. they forego some protections. but if they want those protections they have to do certain things. they need to terminate repeat infringes, but i think they meant the account of repeat infringers. but that's what in the bill. >> we know of no deaths. >> we're talking about the broadband more than the real death penalty. that's an approach. our approach focuses on repeat infringeers. we with differentiate between

suspects and criminals because we have the presumption of innocence until proven guilty. some of these approaches overseas have lacked then, the constitutional challenges to the original version were in large part motivated by that issue. there was a lack of due process about what -- whether these allegations were mare tour yous. based on the information because the data obtained is not sufficient to make allegations that the wrong people get accused. and, you know, i mean not to beats up on the press, but the tech press has not been good about distinguishing. to beat up on the i.t. bar, we haven't held anybody to that task. that's one the primary considerations here, are we talking about cutting off the accesser alleged or infringers?

and in the u.s. we focus on repeat infringers. so that distinction is very important. and also the voluntary aspect of the u.s. approach that you elect to comply with this. it's is contractual mattered as opposed to topdown government mandate you shall do this based on three accusations. those are very different approaches. i think -- i suggest that the u.s. model has been a little more successful. >> let me ask the same question to john, as you look across the atlantic at some of these pieces of legislation, what are you looking at? >> well, and i think we've already touched on some of the concerns that we have. the lack of due process, lack of really any process in the states at least we've seen -- we've seen notices to isps go out in a fairly automated way with no

review of whether, in fact, this was infringing. and also no evaluation of considerations of fair use and the like. so there's a concern about the lack of process. but see we also, fundamentally, have a concern about the ultimate penalty, the internet exile as the title suggest. you know, at the end of the day, the internet has become such an indispensable part of our society that cutting off the internet access of an entire family for the alleged sins of the 15 year old file sharer frankly goes too far. so i'm really fundamentally, that's our biggest concern. that the the response is disproportion gnat to the alleged. >> let me just take off my ideology hat about suspension being significant.

let me just take populous approach here. you know how many people are we talking about here hundred, five thousand, or tens of thousands of people that we are talking about that fall into the graduated response aspect of this particular piece of legislation. and obviously like, you know, the population of france and uk are different than the u.s. should i care if somebody is infringing copyright material? and if it's not going to hit me, do i really care as an american? >> could you respond to some of the points? >> oh, sure. >> i think people have raised some very good issues about standards of evidence and due process. i think those are absolutely critical things to take into account. one the points that i wanted to make is that first of all when it comes certainly to the industry that i work for, for

the record industry, we are talking about in many of these systems, for example, it's been discussed in new zealand putting in place a reapproval process where they would being able to get preapproved as having a standard of evidence collection and presentation that lived up to a certain requirement. and that would be a requirement that would be sufficient to qualify the evidence to be considered and accepted by a court in my country in the world. so in particular what we do is we find information about ip addresses that are uploading music that is owned by our members. and we don't just send notices based on seeing those titles, we look at the particular music and check to make sure it actually is what it a pretty robusicatn . and we agree that the mere allocation by anyone shouldn't be enough to trigger them. and therefore we've supported an idea that there should be some

kind of requirement at the certain level of evidence. and it should be evidence at the kind the court would accept. so we put together the evidence packets which are checked, verified, and whether it's given information about dates and times and evidence of what's been going on. so that's absolutely critical. the other thing is giving people the challenge if there is a notification and say it wasn't me or you made a mistake or there's something wrong here and have the opportunity to have that checked out. we support that as well. >> let me go to mr. robertson. kind of follow up on that. how do you appeal a suspension at least under the legislation that you see going? >> well, of course it would never get to that stage. we're not talking about hundreds, we're talking about billions of hex on sites that they give music free, file sharing, it's an enormous industry. and the question is if that was

allowed to continue forward, what would happen to your film, music industry? i mean how many lives bands would you have? because kids are losing everything. because people would get involved in the industry. so that inform that respect it's an enormous amount of people involved. you're doing everything in a lifetime. the thing that you get back is most of the children in the classroom you say no. they think things will change. if i give somebody a cd and they download it or copy it. that is also illegal. so the copyright rules are written on it.

nobody realizes that. we have to explain to them. and we have to explain to them why it's illegal and what we're trying to do. what we are saying is what if it never gets to the stage orer somebody can -- if people are -- the ones who are in the business and making a change in thousands on the back of people who do a good job. the appeals process is basically anybody who is notified and the things people are notified about them in private. it's not we're -- we have privacy laws. >> most wanted sign. >> we have privacy laws. it's not the first amendment. we have laws that people won't be knowing. therefore we contact them and tell them. for them it's sometimes that's not me it's someone using my name and we can prove it. then we'll be completely different at that point. we always have the option at the

end of the day to kill against whatever the sentence is or impose upon them. >> so in your view, it wouldn't be a huge number of folks. once we educate them about what copyright infringement is, it'll probably be left a few profiteers. >> yes. in a kind of what we are talking about, nobody is really interested in a daughter passing another cd to another daughter. and listening to it or whatever. how about people that organization themselves, let them see millions and millions of downloads and music. it's happening. the people who rate the music, play the music, own the music, don't get anything. if i was to borrow your car about telling and drive about and then put it back, you might

be a little upset that i've used your property to jr. journey. well, the same thing applies to people who spend a whole life in writing music, playing music. their property is being stolen by somebody else. >> if i could ask matt and john to kind of follow up on the due process question that you're kind of illustrated. >> so it's funny because usually when i hear people advocate, i generally hear it turns out the notice is very effective in getting people to stop. and there's no relationship between those two statements. the canadian industry has adopted in a sort of -- a gentleman's agreement. there's sort of an industry approach. they've been talking about codifying this in their copyright form. and, you know, they beat up on

kann that all the time for not being up to speed. they are handling it up there in a very effective process. you sort of hear the same thing. when isps say from rights we've received information from right holders that indicate that you're infringing copyrights, people tend to stop. that does not necessarily mean then that justifying terminating service. the notice is what's effective, not necessarily the terminate. because most isps have in their service, any smart isp is going to say we reserve the right if you engage in the legal activity. then that penalty always exist. so in that sense i would say that don't justify service terminate with the benefits of notice. you need to justify the benefits of service termination if you really want to engage them. >> i mean let me --

>> let me just pick up on that point. matt kind of stole my point. >> sorry. >> i mean in the end, as you say, noticed are pretty effective. you suggest that they are effective because there's the bad consequence at the end of the day. and i can appreciate that. so why shouldn't the bad consequences at the end of the day be a lawsuit as opposed to having internet cut off? i understand that, you know, seemingly a lawsuit is harsher than just terminating internet access. but the lawsuit actually goes to the precise problem. it has the full of a judicial oversight and section. it affects the infringer and not the entire family of the infringer. and it does cut off a

particularly important medium of communication. i think the digital economy bill has -- the first parts of it have some things that we could all sit down to talk about in terms of graduated notice. in terms of making notices more effective to make sure, for example, that the notices are actually getting read by the account holder as opposed to just getting sent to the account holders e-mail address, that they don't necessarily check. i may have some e-mail address from my isp, but i don't use it. i don't check it. >> yeah, i've been a loyal customer of verizon dsl for 12 years. i haven't checked that e-mail address from 11 years. i don't know how i'll be notify, whether it's popups or letter in the bill or whatever. we can talk about that. but john let me ask you in all fairness, i mean back in the day

when the recording u.s. was in the u.s., i'm using the u.s. example of what suing infringement. so the infringers in court. there are a lot of sensational newspaper reports, human cry about the 13 year old that's being sued. to be sure in a lawsuit is a pretty devastating experience for an average american. more of an average person in the uk. so isn't -- is it -- isn't this better than the human cry about lawsuits? now there's this kind of more escalating approach. what would you say -- how would you weigh? >> i think the lawsuit in the united states did a lot to help begin the process of educating young people, this is illegal. certainly we do things that it's vitally important that our society shift back to a respect

for copyright and -- >> so you're suggesting that the lawsuit is educational tool. >> not an educational tool. but they did a fair bit to raise conscienceness. certainly my 14 year old daughter is very aware that file sharing is illegal. and, you know, i think there's a lot we can do to try to take that educational message. but, you know, at the end of the day, you know, my concern is comparing, you know, millions of automated, even if there are done by a review process of checking in the ip address and validating this song may have been downloaded. millions of automated notices and ultimately, one strike or two strike or three strike notices comparing that to what i think would be a much smaller number of legal actions. >> so, i mean again, i think we can work on notice and get the

notices to be as effective as possible. >> mr. robertson? >> we are all trying to work together. and therefore, we're going to go winston churchill once said there's one thing that's worst than fainting in our lives. that is fainting without them. everything in the economy bill and things like that today go too far or canadians don't go far enough. they all take to work together. we probably wouldn't be sitting in the stage today. the trouble is that's not how it works. that government eventually has to make decisions. and it's the decision of government makes that everybody might say if government doesn't make a decision that this is everybody that has done something wrong. you shouldn't be pleasing everybody. you should please some but not all. i think that's an important

job. our job is to try and stop things from happening. we try to do it in the most humane and easiest way. we do not want to go through the courts. but at the end of the day, the people who really want to get through the courts are the people who are doing the -- the ones that aren't doing it really. them are the ones we want to awrist. they stop us from doing that when we are all actually seeing the same thing. we just see it differently. >> just to be crystal clear, sending notices alone, notice and notice approach does not work. we have numerous studies that show it doesn't work. some percentage will say they

will stop after one notice. as soon as it becomes clear there's no further consequences, believe me that will be all over the internet if that is the system, it simply won't work. there needs to be a consequence. temporary suspend is the only consequence. it's the one in most countries have steamed to be the simple -- seemed to be the simplest. but there could be others that would work as well. i could suggest that suspension of one account is better from everyone that's bringing lawsuits. you get several opportunitieses to reform, you get an opportunity to raise any possibly problem and to figure it out when you get the notices. and frankly, i don't see why if someone has told several time their account is used to upload massive numbers and they are still not willing to stop, why it's not appropriate for there to be some kind of consequence. i think there is a better one than going to court.

because people can choose to change the behavior. they don't have to hire a lawyer, they are not exported to huge fines. it's totally within their control. not to mention that under most systems that we talk about, they can always open another account. it's not exile. >> let me ask about -- you mention there needs to be some kind of ultimate deterrent at the end of the process or whateverred graduated process is. john mentioned in his opening address, or maybe matt, the question of portionalty. i think the reason why we're having this discussion within the context with the internet caucus is a question of suspending the service. adope law, i can't recall the duration. but it's clear it doesn't include your television or your phone. which is comforting. and the uk legislation is vague on whether it's the dsl

connection, fiber connection, wireless connection. i don't think it goes into details on whether your phone or television or other carriers. i think that's an outstanding question. back in the late 90s, i remember the famous case of the hacker, kevin, i think who was a hacker, he was brought to justice. the prosecutors argued that this guy could start a nuclear war with the laptop. we have a war panel later this afternoon. he was -- his internet access was taken away from him, indefinitely. he actually sued, i think he got his rights back -- for to use the internet. but my -- you guys talk about what press sent at least here in the states, how often do we cut the internet access? >> with we are not cutting internet access.

we're suspending one account. i think that's what we're asking for. that's a big distinction. >> okay. okay. matt, john? >> i mean there are lots of courts that have -- that have looked at internet access ban. let me just read you a couple of quotes from court decisions that have struck down individualized bans on internet access. one says second says computers and internet access have become indispensable in the modern world of communications and information gathering. the fact the computer offered the ability for use does not justify a total ban on internet access. that kind of decision, you know, is -- there's another one that says it's hard to imagine how the defendant can function a modern society without the internet access. those court decisions are in the context of convicted child

pornographers who have gone through full trial, been convicted of child pornography, and still we recognize that internet access is such a vital farther that courts need to be very, very careful before they terminate internet access. they need to make sure, as in the context that the prime that is at issue is so vital that we terminate this person's access. and we don't see that kind of searching review as to are there other ways to address particular problem in the adope proposal or the digital bill. >> address my pint. we're not talking talking about a total cut off. i would note that isp do cut off

service for people who refuse to pay their bill and engage in spam without going to court? >> that's nobody is mandating it. what we're talking about here would be the equivalent of mandating that they cut off. >> at the end of the day, we're talking about if the 15 year old file sharer is monitoring the e-mail account, ignoring the notices, then the 13 year old sister is not going to be able to do their homework. my children's homework all needs to be submitted to their teachers online. even cutting off access for 30 days to the household is very problematic. >> i just say child pornographers aren't people who do download of music. i thought we do a lot more than just talk about the internet connection for what they want

for passing on child pornography. that would not happen in our country. they would be in pedophiles, put in prison, and the last thing anybody would be worried about is internet connection. i know nobody, honestly nobody who has one e-mail address. they have a lot of connections. and if you talk about somebody like me, i have about four or five computers i have in different properties that have access to it. so it's not the fact that if we're cutting off one address, and we're seeing to them, don't do it. if they go to another place and do the same thing, then they'll get caught. that's when they will eventually end up in the courts. because they are deliberately and willfully braking the law. they have to take a course on the laws.

that's not what we're trying to do. >> france does seem to be talking about putting people on a list to block access and i think there are lots of families in this country, especially families in the less wealthy, you know, parts of our society that only have one practical way to get on the internet on a day-to-day, evening-to-evening basis. as frustrating as it is to me, my daughter is on the computer all the time submitting homework. >> i'm not saying, when things start, i can only argue about what the uk government is doing. i'm quite comfortable with what we are doing. i think our version of this law is hard in places.

i think at end of the day, you have to make a hard decision. you have well on the way to legality before that jumps in. we're not in the game of criminalizing children. that's not what this is about. it's about criminalizing criminals. that's what we want to do. to try to educate children that our limits really can go in. as limits in everything else they do in our life. that's something else we need to teach. >> and avoiding. a better solution. >> before i go to matt, let me ask you for a prediction. do you think the legislation when it gets the house comments will get through and be passed? >> on a general election of course we have a system of what we call a wash out, come from the house of lords, then we sit down with the opposition parties and name some bills that we can agree on to go through. this bill has practically other than one claws, claws 17 which

has the harder part of the bill. we have to really compromise in that and get it through. but i think with the -- in general feeling that it's susceptible. it will probably go through, probably a lot more weekends than i would like, i have to say. >> so i was just going to say earlier, tim, i think the example of kevin was inappropriate because if i recall, he pled out; right? there was a conviction. there are adjudication of guilty. legal process was followed. and a so he was at least postconviction a criminal. not merely an alleged infringer. and if i recall correctly one one of the 200 or so amendments focused on the issue of are we talking about alleged or infringers. and so that distinction is by

far the most important. are we imposing penalties based merely on allegations or penalties on infringement. that's probably the most important question to answer. once you answered, are we penalizing people that have been adjust dated or not? then the disproportionalty of the penalty is really, you know, far less of an issue. >> unless let's drill down a little bit about who decides? who decides whether this activity is indeed infringing at the various stages of the graduation? >> even more important, it's ironic that everyone is argues that we need court procedures when there was an attempt to be preferable than having to go to court. we could go back to a system where people have to get sued. it will be less effective and it can be seen and have been certainly portrayed in the united states as being more punitive. so the question is can we all

work together to find something that makes sense and works for everyone or not. that's the ultimate. >> the criticism of copyright particularly took place during the campaign by the recording industry was the disproportionalty created by the unique approach to statutory damages where we impose large penalties, as much as $150,000 without any requirements that there be proof of harm. in fact, we have damage because we say you don't need the proof of harm. you have to prove no injury at awful. it's just a statutory awarded. when you get awards that are 1.2, $1.92 million was remitted by a federal court saying it was grossly obsessive. some of the hot tillty is not because it's federal litigation because the penalty have become so disproportionately large that they feel like they've been

indexed for enface in zimbabwe. every year the numbers get larger and larger and larger. they are out of proportion. >> that's been the recent. at the beginning, it was more a general feeling it was not right to bring people into the court. that was the hostility. of course that's a u.s. specific issue rather than international. but seriously, i mean i'm just calling for the more that we can all figure out something that makes sense the better. i think the uk approach has some promise. >> i think about 1500 pounds is $2,000. up to is certainly a realistic and most cases. remember, we're not talking about suing somebody. we're actually talking about convicting them and putting them through a court because they have broken the law. it's not quite the same as litigation in that respect. these people are guilty. or we think they are guilty.

go to a court and be found guilty or innocent. if they are found guilty, they will have a fine which would be probably based on the number of cells and what the background and everything else that goes with that. but we don't want to go down that road. that's what everything everything -- that's why all of the other processes are there. to stop that from happening. to say to the person do you realize you're breaking the law. if you keep doing it, we're going to fix this action to you. do it again, we cut them off. if they have another and doing the same another, then they will end up in court and will be fined. >> it may have been the top of the service by referencing the kevin character who could start a nuclear war with his laptop to john mentioning child pornographers who lose internet access. folks that are copyright infringers. but i think the question of if i can look at the specific

legislation, you mention one to 12 months. that's under the french law where you have your suspension of internet access for one to 12 months possible. in the uk legislation as it stands, there a specified duration? or is that something a regulator has to decide? >> the regulator, and they will make the decision. >> so, tim, -- >> and that makes away from government. >> whatever the penalty is, i think it would be peculiar for the title 17 in the u.s. what is the procedure you follow to apply these? >> mean if it's significant? what courts decide and the

cutting off of the -- >> the laptop. >> right. one is done by the justice department. >> you worth mentioning was the french version was the original version that was instruct down by the constitutional council would have just had nothing but the remedy of suspension. then after the law was revised to meet the objections to the constitutional council, it ended up referring all of these cases after three notices to a criminal court which now has the power to award not just suspension but a full range of the normal criminal sanctions. so the result was again a harsher outcome than the original agreement. so it's a difficult issue. you are trying to come up with something that builds an appropriate safeguards but also avoids -- trying to move people to incentivize them to move towards legal services through

some sort of deterrent that's sort of actually going to court. >> i think we want to take some questions from the audience if there are any. we have a wireless microphone. i think i saw in the back -- tom and then michael in the back. i guess you are first. can you identify yourself? >> sure. my name is andy, law student at washington university here in town. how does merger like comcast play into this? you could have a situation where they are judged during the execution and also accused at the same type. what are the problems of something like that causes? and how do you address those? >> certainly from my perspective, it raises our anxiety. i'm not saying that comcast is going to go start kind of mixing into different businesses and

all. but it raises the concern. so, i mean, i'm not sure how one can respond to your question other than to say, you know, that that's an additional concern. >> and i would add only it's not the first time that kind of thing has happened, having worked at aol/time warner after the merger. how do you deal with business? >> which raises the question about merger? >> that's also -- there's some assumptions about what the state of broadband competition. because if you have an infinite broadband users that one is going to criminate against me because they have this sense, i'll choose another broadband provider. of course in large parters of the united states, there is not broadband competition. the amount of competitive amount you'd have will do a lot to address these kinds of concerns.

so, you know, that's just a pitch for broadband. >> we don't have that problem. because we've unbundled and you can choose who you like. >> which makes the idea in britain of cutting off access from the single provider, you know, perhaps less of a concern. over hear where in fact there really is one broadband provider, you really are talking about internet access for many households. and that could be problematic. and not only nonconstitutional and due process concerns the country would look at it. it would be very propmatic to do that. >> that's one thing here. >> thank you, mr. robertson. we asked about that. the is marketplace different? you're saying because of the

unbundling rules for the telecoms, it's more diversity and opportunity and more choices in your view. we have tom snyder froms foundation and michael mckeen in the back. >> connect me -- connection and a question. correction, matt, you said that the u.s. statutory damages go up. that's dead wrong. the statutory minimums has decreased since 1909. and the statutory has if you adjust for inflation using the government standard figures, they are unchanged since 1976. question were when i talk to parents my kids are about the age where you know file sharing is a real risk. i once did find a file sharing

program on one of my own home computers, one that is never using for any purpose for infringing copyrights and music and movies. this issue of lawsuits is very real to me. personally i find the idea that i would rather experience graduated -- a lawsuit than graduated response just unbelievable. and when i talk to other parents with kids who have kids like mine about these options, i have yet to find one who opted for the idea of being sued. in the countries where this has been debated, has anybody ever produced any data suggesting that consumers in general really would prefer to end up being targeted by lawsuits than graduated response? >> i've certain never seen any data suggesting that. and i would say one of the benefits of graduated response is it allowed parents to find out what their accounts are being used for that purpose, and then there are things we can do.

we have a program called digital file check that if the programs -- unauthorized ones are being used and remove them. it can allow people to find out ways to secure the wireless account to prevent it by being used for other people. it builds in an opportunity for education and education that can allow the account to be used more lawfully and for parents to work with their children. >> again, that's just making the case for notice and notice. that's not making the case for service. >> if nots and notice worked. >> i assume in the hypothetical that tom depicted, the parent doesn't need the service to read the notice. the point is you've been notified there's something going on. that becomes a household issue, not a law enforcement issue. >> if that's the only reason, then that would work for that.

[inaudible question] >> can you identify yourself? >> let's take voice over ip. let's stick with vonnage and magic jack and other companies and the cable operator are using a lot of voice over ip. what happens to the internet when their house catching fire

and they can't call 9-1-1 in the case of the uk? who wins the civil lawsuit of ain't tilley's house burnt down versus isp? >> i don't think there's any questions that telephone services shouldn't be cut off. i assume the same would be true. >> absolutely. by mike is asking as increasingly there are people who only have vonnage. vonnage is selling itself has a replacement service. some people out there in this country -- >> a replacement voice. >> a replacement over voice. there is no plain old telephone service land line. the only pipe to the home is ip pipe and the phone service to connect 9-1-1 is an ip based? >> i'm not technologist, but i

do believe they have a way. >> i believe voice is coming very soon. probably much of the dismay of some telecom providers. they are struggling some. some doing better than others. anticipating that future. when that future arrives, you have a problem. you know, we've seen for example, that at least a couple of states require that 9-1-1 service is voluntary.

>> i understand from talking to them that all these things are quite possible. >> i find hard to believe somebody would go about these days, somebody without some kind of connection. i've got to say, as far as if you break the law and you are using your computer to do that, what you are really saying to me is, no matter if you obey the

law, you should have immunity because you have -- i'm sorry. i don't agree with that. if you're breaking the law, you're breaking the law. you have to withdraw the service from the person who is breaking the law. you have to do that. i would doubt that it's not the people who did these things, that you can have but you're running out of -- ustinov ding, ding, ding. access even if you don't have any money. i've got to think you can still do that. >> i think we have to question. the general and accurate with you shortly sure, and if we could identify ourselves with asking the question, and also limited to a question as opposed to a statement. >> i am with the senator

merkley's office. the question that a slightly different take on this whole thing. what role does the copyright terms play on this, unit, historically copyright was a lot shorter than they are right now. >> i don't think it should play any role in this. i mean, the bottom line is are we talking about whatever, the question is what are the penalties? >> i think that we be up here debating whether was a 10 year term or a 100 your term. i think we would have some of the same questions and concerns that we have discussed speculative 15 euros k. to respect the term, then the fact that every few years the term gets extended more extent, it makes the whole copyright system less respectable in my opinion. >> i actually think that sort of a good connection for what the relation is. it's a broader question about, is filesharing a function of the normative legitimacy of the

copyright system. certainly come a perpetual term extension, or as peter said, perpetuity on the installment land is a problem. but that's just a question of the legitimacy of the system as a whole, not necessarily term extension. >> i think rick back your, rick, could you identify yourself? >> wreck, news corporation that a couple of points on extension. >> if you could get to the question. >> the question is, how do the isps currently deal with the terms of service getting to mike's question, about cutting people off? if i don't pay my cable bill, can that be shut off without worrying about if i'm using comcast phone services or bondage or anything else? what is the term of service is that the cable guy just if i don't pay my bill? if that has some exception, are we able to marry those with a graduate response regime?

>> so i will try -- >> do we have any isp? >> you know, courts have actually looked at cutting off a phone service and they've said you need to be very, very careful about it. i suspect if you get mike out there and he could explain it to us a little bit more. at the end of the day, yes, if you don't pay your cable bill, you can get the service cut off. after a series of extensive notices. that doesn't happen all that often. and there are lots of notices. we're talking about a process that will lead to far more people being cut off, and to cut off, you know, a little unclear what level of notices and process there will be. we're also talking about a system that at least from the u.k., u.k. ministers have been estimating that the costs of the

system would be 500 million pounds over 10 years, and that there would be perhaps as many as 40000 customers who would be able to continue to afford isp service. because the cost would be passed onto consumers. i know that there is a dispute about the amount, but there's a big concern about imposing a very significant cost of process here, that could in fact show the ability of folks to get service. >> two separate points. one is, one is that i think what rick's question is getting to is just the idea that yes, of course there are issues about emergency services. they're the same issues that are raised whenever you're talking about a cable account being cut off for an isp account being cut off for good to pay a bill. in the same kinds of procedures and safeguards will need to be

followed. i don't think there's any question about it. the other issue, the one about cost. it's interesting that john raise there. in the u.k. government a lot of studies done. there have been some i would say almost hysterical over estimates of how much it would cost and other states that's just were talking about a matter of cents per subscriber per year. and the question is, how will those costs develop, they will certainly go down over time because we anticipate that fewer and fewer people will get to that level and more people will start obeying the law and open to legitimate services. but bear in mind, that there is a legitimate question. the right holders are very a lot cost, putting together evidence tax, notifying this whole system until some cause and the question is how they should be handled. and that is a question that the u.k. government is looking at. >> i have time for one quick question from the audience. one more, and then i have one final wrapup question. then we will break for coffee, but let me just say before these last two questions, after this,

we will have a quick coffee break. and go into of three different breakouts, antitrust and internet era, cyberwar, is congress preparing for the common defense, and clouding internet policy and columbia a. so three different breakouts after the session after the coffee break. >> my name is jonathan. i'm with the association for betterment of technology. there are instances in which pairs their liability for crimes committed by the children. i feel like there's a lot of hysteria in this discussion about the ramifications of having internet cut off. but could very well be that this will lead to a situation which pairs are doing a better job educating their children. instead of being passive about what is in fact illegal activity. so i mean, i don't know if it's a question or comment. i apologize, but i think we should be so afraid of something that affects the whole family being the result of illegal activity being committed inside

the home. >> so maybe perhaps the question could be will this help parents be better parents? or parents better online. >> i always like to tell the story, it's too. my sister-in-law is a sci-fi freak. she loves sci-fi. programs. she watches the sci-fi channel. and i'm about fed up with her. so my daughter used to control the television to watch her mother from watching the sci-fi channel. therein lies your problems that it's not the parents who have the control over the equipment. the problem is children who have the control over the equipment. do we need to educate the parents? to understand exactly what kids are doing and the sad thing is, the parents really care. and a lot of cases, i believe that's where we see this. it's a good point that john makes. and he is right, but i worry

more of the children because of the schooling and the peer-to-peer stuff that they give than the adults. >> so if we can create a process where we know for sure that the parent has been -- has actually received very concrete notice, and is aware possibly that if they don't take any action, they may end up getting the subject of a lawsuit. i think it would create a lot of incentive for parents to take action. i think tom, you know, if he had gotten said his computer was filesharing, he would've taken action without the need for either a lawsuit or species and shouldn't do that. >> right. so i think our part is saying the kind of graduated noticed part of the digital a economy that is something we could all sit down and work on. >> let me just ask this final portion for the pair and i will let you go to the coffee break.

i think that's why would ask this question, but i'm going to. so in light of the conversation that with that, looking at the legislation across the atlantic and elsewhere, is this type of legislation something we should import here in the united states in some form? or is it already here? >> well, i mean, earlier on i said sort of the roots of the graduated response our embodied in some degree in fivefold that i think it is says you have to have a reason the plan for terminating service. that's a very market-based voluntary approach. the subscriber an isp agreed to the. certainly, we have seen some sort of voluntary efforts to implement notice and notice. that is, a rights holder notifies the isp, the isp notifies the subscriber. does seem to be very effective.

the notion of importing top down government mandate, you shall terminate subscribers based on ex-accusations i think is something, it's an experiment that i believe will prove unsuccessful and i certainly wouldn't i commend importing it here. >> i am lies on this one. i think you're right. the fact that we're setting up on this stage discussing it means that somebody somewhere is thinking about it. the question is, can we do by persuasion, either voluntary controlled, and what doesn't really work. and somewhere along the line, do we go down that road, or through this litigation problem that you have of people suing people, rather than having a statute that says you must not do this. and therefore, people hopefully won't. >> so as you might predict, my answer would be no, we should

have this legislation. and i don't think it would likely pass constitutional muster, the idea of terminating access, short of in response to a criminal conviction. but i think it is clear that there is a lot of area for perhaps common ground on figuring out how to make notices effective, and on figuring out a way to ensure that parents and account holders take notices seriously. i ultimately, i think i share the goals of the recording interest industry to try to figure out a way that notices really get taken safely. >> i would say the point is to achieve a good result, and that can be done in many different ways. and in the u.s., where i don't work and don't have any responsibility these days, you do have some of the framework in the dmz i and i understand there is some voluntary conversations

going on at different levels and hopefully that will lead to a good result. >> well, i want to thank the panelists for traveling near and far. mr. robertson, has traveled thousands of miles. i know that bad and john traveled 16 blocks, regardless. thank you all for being here today. i really appreciate being here. thank you so much. [applause] >> [inaudible conversations] [inaudible conversations] >> thanks for the great job that you continue to do for the internet caucus, and all of the other related organizations that i want to thank each and every one of you in this room for the

support that you provide to the congressional internet caucus as well. if it's not the largest, it's one of the largest, and it's certainly the most active caucus of any kind in the congress in terms of focusing on an area of issues and making sure that members of congress and their staffs are well educated about these important issues. i also want to regret that, because a vote is expected on the floor of the house any minute now, my interviewing capacities which have improved slightly each year, that we have done this will have to be forgone today. because of the fact that as soon as i said down and ask the first question, my buzzer will go off and i will have to head out of your. so instead, mr. schmidt is a very flexible fellow. which is a trait that will serve him well in his new job. and he's going to speak to you, and i'm going to introduce him first before i go.

so the other new development this year is that all your blackberries are working to i see a number of you fiddling with them, and so on. that's a great technological advance for this room. but we want to tell you to shut them off, and give our special honor to guess his full due. so, as many of you know, how would schmidt is the newly appointed special assistant to the president and senior director for cybersecurity in the office of the president of the united states. he has a distinguished career spanning more than 40 years in defense law enforcement and corporate security. is an expert in the areas of computer security, cybercrime, critical infrastructure protection and business risks related to cybersecurity. he has long been a leader in the creation of public and private partnerships, and information sharing initiatives. he was formerly the president and ceo of the information

security forum, a nonprofit international consortium that conducts research and develops best practices in information security, risk management and critical infrastructure protection. he's also held executive roles in the private sector, including vice president and chief information secured officer at ebay incorporated. and chief security officer for microsoft corporation. he has a distinguished government service career as well, including prior assignments at the white house, the federal bureau of investigation, and the air force office of special investigations. at the white house, he was appointed as the vice chair of the president's critical infrastructure protection board and special adviser for cybersecurity, and his serve as chief security strategist for the united states, served partners program for the national cybersecurity division. he also was a supervisory special agent and director for the af osi.

he would say what that is, computer forensics lab and computer crime and information worker division, prior to that he led the computer forensic team for the fbi. at the national drug intelligence center. he holds a bachelors degree in business administration and a masters degree in organizational management from the university of phoenix, and holden on the right doctor in humane letters. he has received numerous awards and recognition from the government and private industry, including cso magazine compass award, baseline magazine's the 50 most influential people and business i.t., as well as the federal 100 award, just to name a few. now, had i been reprising my role as johnny carson or jay leno, or whatever, i would be asking a number of insightful questions. instead, i'm going to rely on you to ask most of those, but i

want to leave you with a few that i know howard will want to answer. and so let me share those with you, and with him. and then turn the podium over to our honored guest. there are many agencies in the federal government, in many have their own ideas about how to secure our government compute networks. we want to know if howard has been granted the authority that he needs to coordinate the effort among all the federal agencies to secure our government computer networks. in fact, i would say that's the question that i encountered the most in terms of how the federal government will tackle the enormous challenge of managing cybersecurity. president obama's cyberspace policy review states that people cannot value security without first understanding how much is at risk. so we will ask howard to describe to us today the magnitude of that risk and what specific types of threats

businesses and citizens currently face. in addition, how interconnected are the cyber and physical worlds in america in 2010, and what are the possible physical dangers into our citizens to a cyber attack. thirdly, many companies currently have very good security measures in place to protect their networks. does howard believe that we must impose a top down approach that federalize cybersecurity for the private sector? or can we set basic parameters and then allow businesses to continue to use technology to innovate and find the best solutions to secure their networks? and finally, i would ask him is the internet -- the internet integrally related to our nation's digital structure. is because of the internet's open nature that it has served as such an innovative tool for businesses and consumers. however, this openness also poses a significant threat to

our cybersecurity. how can we secure our digital infrastructure without stifling innovation on the internet? and now, the man with all the challenges, and hopefully a lot of the answers, even though he is just starting in this new position, and someone that i am pleased that has agreed to participate in the state of the net conference, please welcome mr. howard schmidt. [applause] >> thank you very much, congressman, and i very much appreciate your leadership in this area for all the years you been doing this and look forward to visiting with you and your office as soon as possible. it's interesting when the congressman was talking about the devices we have. we were sitting in the back room back there. of course, i've got the two devices, the one with the white house which is ultimately much more secure, and my private one, which is presumably somewhat secure and thinking at some point come and i don't know if

any of us will be around, but probably 50 to 100 years from now, or whatever time it takes to go through the physical evolutionary process that human beings go through, we will have phones that look like pointers. we will no longer have round comes in or because they're so used to do everything that way. anyways, it's a great honor for me to be here as part of this event as my first official outside function in the week that i've been at the white house. literally, we could go about this time i was walking out of the administrative offices from filling out paperwork, and got to chris painter has done a wonderful wonderful job. in keeping things moving forward. after the 60 day review was done. walked over to chris and said what do we do know? and it was just nonstop ever since. so the opportunity to have this one break in the action, but also to recognize the importance of the caucus and sort of the theme for the state of the net

-- for the internet is a vitally important that i think it's a good place to come out and talk about some of these things. another point, the questions that the congressmcongressmen lay down, what i will do a little of the fireside chat that we're going to do, is just woodframe sort of the questions into a conversation if i could we do, which i think is the more important thing. and i think i will probably start with a question i get asked most often lee, and that's, you do, do you have the authority? do you have the ear of the president? is this taken seriously in the administration? and when i talk about the administration, i will expand that into the legislative branch that the answer is very simply stated, that's just. the president has been very, very clear and designating as his lead policy official in the area of cyberspace. security for the federal government. we say the federal government, of course, we look at the agencies encompassed there, but i would not for a moment lose sight of the fact that we have

tremendous relationships with the private sector. when we start looking at the overall space we're dealing with, while the federal government is sort of the realm that i got to do with, we have a very, very crucial role in making sure that the government agencies that have direct relationships with private industry are being brought to the table as well. as far as the authorities and stuff, i know there's been discussion about that more clearly, i have the ability and have been able to do so, use all the process and the deputy committed to the interagency processes of both the national security council and homeland security council. so this is once again not a singular type of function we're doing. looking at ways to resolve cybersecurity issues across the government. i'd also add when we start looking across the spectrum, that one of the things i was particularly please him one of the things that made me feel very good as we were discussing this position is i was come

into, that there is a direct linkage to the national security staff as well as the national economic council. i think that's crucial. because one of the things that we look at when you start looking at this component, we say there's the intelligence, defense, law peace, that falls under the umbrella of the national security council. but clearly when you start looking at the economic impact, on the global community, not just the united states, there is a key place for that. so by being dual headed, having a relationship and a sea with the national economic council leadership, as was the national security council which as i reported, gives us a much broader respect on this and helps us to a balance. i think that's crucial. and anybody in this audience, i recognize a lot of faces here, have been around for a while. doing is. you recognize there is no way you can look at absolutes in this space. just like we don't look like an absolute security. when it applies to the economic

challenge versus the intelligence and law-enforcement challenges. so as a consequence it's important we understand that we have a foot in both camps and utilize those two camps. the other thing, and i think this is sort of in the part of how we would like to say i've got a great job because i get to do this. and this room is one of the things working with the federal cto, and the cio for the federal government. once again as we're going through this process, meeting with them come here and there ideas, and being able to figure out where our roles and responsibilities lie, it's important to us. and it's one of the things i was tremendously impressed the first time i met with both of them individually is the discussion was not about security, you guys are just a problem for us, we need to grow our technology at all costs. it was very deliberate, sincere in saying yes, we all love the technology. but the technology needs to move forward a more secure, better

technology and protection of our privacy. and that's how the three of us are going to work. as one might imagine in the past week with all things that have been going on, from an external perspective, those gentlemen both having the time will sit down and start working at our agendas and we have started doing that as well. so when you start looking at the authorities and the things that are necessary, those are the highlights. on a more functional level we look at the cio council, the group from the inspector general's office. there's a wide array of government functions that are taking place that had key responsibility in this space. so the ability to work with them and be a part of their teams i think is very important as well. let me sort of move on to what presumably might have been another question and that's the cyberspace policy review. because there's been a lot of discussion about here we've got another one. we've got security strategies before and sort of what

different is this combo what is different about this. and sort of word all these things come to play. first from a risk management perspective. i think that's one of the things we look at from the cybersecurity review, and how do we do and overall cyber risk reduction? and as i've said before and i think you'll recognize first hand, there's no absolutes that will never have 100% security and still have an open society. you know, we have to protect the privacy. we have to do the things that we need to do from a cybersecurity perspective, but basically the risk out there are the things we need to face. we need to manage those. first we start looking at the space and the risk and we have to recognize there's threats after that we face on a regular basis, we know there's vulnerabilities that we have to deal with. and also the consequences. so i just want to take a moment and address of each one of those specific areas. first, in the area of threats. that's something that we have very, very little control over. and i think we all recognize that the threats come from a wide array of places, from

clever hobbyist or professional hackers, or people to wake up one day and say here, let me try this and see if i can break something. and they are successful at. all the way up to and including people that use the technology to do terrorism acts. and we've seen many cases in the past, not on which airs use the technology, but also using the technology to do funding as well. so as a consequence we have no shortage of threat actors out there. we continue to try to identify them, to neutralize them, and the legal ways that are possible. but clearly we just can't all of a sudden bike say all the threads have to stop. we know that's not practical, and none of the laws in the world will say, you have to stop doing this and people will of a that. so for that aspect alone, we also need to recognize there's tremendous capabilities that they have. what used to be at one time you have to have a nationstate in order to to say, launch a attack

against systems. used to have some pretty healthy resources. and now with the proliferation of bot networks which is what i'm looking to figure out, how could wind up taking those things off-line once and for all, and prevent them from coming up again. to reduce that threat out there. we now see the ability for people to control those systems, that had the same capabilities that 10 years ago was a nationstate capability. how do we neutralize that threat. but one of the things that gives them some level of success across the board is the fact that our builder builds exist. and i said many times the very things that make as great in the internet, the technology that gives us the ability to do all the great things that we can do, also become our biggest vulnerability and our biggest achilles' heel. that's the business applications that we have run from whether it's an entertainment to a financial system, to just things we used to run our day-to-day activity. we have built a system, and it's not because people say i don't

care about security, and from my past experience i never walked into a corporation, i've never talked to an executive or ceo and said, i don't care about security. we're just going to do this. there were always business reasons why security may not be the best thing for them to do at the time. . .

there is a new operating system, and you're the one that gets the call will. that is fine in the sense of configuration, but we should not be looking to the end user, the consumers and our employees to be sort of the policeman of the desktops of you would or the military that will protect our systems. we need to move that battlefield back away in the way we do that is reduce the vulnerability is that currently exist out there and look at the issues. when we look at the software code out there we are doing a better job now and i get asked all the time about our remorse secure than we were last year. absolutely. we've gotten were versions of software, the price our community and many choices out there now that pay a lot of attention to the vulnerabilities and fix them quickly. that's not to suggest for a moment that we are sitting there the most recent browser doesn't have any flaws, we continue to make a stronger, but reality when we identify we have a much

quicker turnaround in the mediating some of those things so every time they use computer systems we know there are vulnerabilities and exist so the second part is how do we wind up doing the risk management to reduce those over abilities. lastly the consequences and it's interesting the past year i was at a dinner in the u.k. and there were some of the people from the european union talking about as we become more dependent on ict systems, as i.t. and technology becomes more of our day-to-day lives, they were talking about that in a futuristic tense and i got up and made my comments and said i sure wish in the u.s. we have the ability to wait until we got to that point. we are tremendously dependent upon it now, even the congressman made talking about our mobile devices. we now have the same power either in our purses, pockets, on our hips or suit jackets that we have a few years ago on a

desktop. we have the same capability in a hand-held mouse or as a consequence we look upon what are the consequences of what we're doing. we no longer say it i will check e-mail tomorrow or the next day. we have a tremendous dependency on it. so as a consequence that's our dependency and the impact it has on our day-to-day lives as affected as well. so when we start looking at the consequences one of the things we are looking for offices while we can't stop the threat players out there, we can do so much to reduce liabilities, we can take some steps to make sure that we have the steps in place to recover quickly with some of the things we may have to face one day. and the other thing as far as our connectivity dose and i talk about things and sort of a personal sense when we start looking at our critical infrastructure and the things that are now being connected to places that never in the past would ever see an ip address now are connected to things we have

access to. so when we start looking as we continue to bring more systems on-line and i jokingly and probably not so jokingly anymore joke about an ip enabled pacemaker. unfortunately i don't need one, at least not yet, give me another six months and see with happens, but in the meantime if i did need one or anybody that has won to have a wireless ip enabled pacemaker that has little pop up on a physician's window that says, by the way something isn't quite right here, and the doctor can say i will give an extra half a both here and refresh the heartbeat. i would love to see the capability exist on the same token i would hate to see someone in a foreign country going let's see how we can make this person really move fast or have him drop on the floor. and while right now it's funny you look at the interconnect to the and the future, those sort

of capability is becoming close to rolled out on a popular basis now so when we start looking at the impact we have to take that place into account as well. now, next thing sort of comes up often times and was one of the discussions with the congressman i had about the weak link in the chain and i think all of us fully recognize that basically we do have a lot of weak links in the chain that while we can be secured and on the first -- on the first to admit we are doing a very good job in making sure the machine runs flawlessly in many avenues. i liken it to the morning traffic reports. we hear about the accidents on 95 and the blockages in the bridge and act, but no one ever talks about 1.7 million people successfully made it to work today. in the same thing takes place in the cybersecurity role. we hear about the date of deaths and tax and all the things we

deal with but we don't see on have wise, we have $375 trillion worth of transactions successfully go to the financial systems in the past year. we don't hear about those things so as a consequence when we start looking at shoring up the systems and what are the risks and the weak links in the chain clearly they exist and we have to look to extract and one of the things specifically looking at is the supply chain component. because at one point the supply chain in the connectivity supply chain partners was relatively small. but that's changed dramatically. not only do we have direct connectivity with our supply chain partners, the use of their systems affect the way we do things and not only that but they aren't just connected to us and one business, it's like a spiderweb and if you draw a picture of the internet you can see the supply chain partners so we need to make sure that small and medium-sized businesses, the backbone of our workforce of america, that they basically

have the resources that they don't have to go out and fight the same battles up the larger enterprise and the government level on a day-to-day basis. when we look at this part of that's component we have to deal with is the education peace. i have met with local business groups over my career and is interesting because seeing some of the on japan nor's out there and struggling just to get the product out the door and be successful and we know how many -- there statistics about how small businesses fail within a certain time frame -- and that is sort of a cycle of an entrepreneurship and businesses, but we should not be in a position where they feel because of cyber security issues. they should not have to spend half of their development budget just trying to secure things, there should be something built in the beginning. they should not have to be worried about it and i've seen it have firsthand as a local office that sells eyeglasses and

those things to get a letter of them saying some of a broken our system and still your credit card, your our prescription, which no one wants out by the way, and all the other things we have to do with from a privacy perspective just because they didn't know how to do it or because the cost of something they could afford to do. so by providing them the tools and the knowledge and awareness that can better protect their systems obviously makes all of us a better all the way to the supply chain as well as us as consumers and users. i don't want to forget management and i think back over my career as a young person and, of course, i think any of us recognizes at some point we might have had something less than very happy to say about management we worked with. it just seems to be the experience i've had, but they have to be fully cognizant of the role of technology and i.t. in the way we do our businesses. so once management starts to understand its senior leadership understands and then we have one

of 360-degree understanding of the things we are dealing with from a risk management and supply chain partners. so what are some of the things when we start talking about all the things, where we are today? well, the president has been clear and if you have not seen it one of the things i was very excited about when we did the announcement of my rollout in the white house, we did it the right way. we did it on the web, we did it on a blog, and on a white house website and i think that was very appropriate because of the use of technology in the recognition of that. as i said in that video if you've not seen it basically the president asked me to focus on specific priority areas -- one, update our strategy to secure america's networks. and sort of my perspective saying updating the strategy also includes making sure that we translate the strategy from a high level points that we see in any strategy to how do we

execute that, how to translate the vision and strategic direction into something we find is actionable. i think as i have met with government agencies that are probably here today or over the past week or so, there is tremendous motivation out there to move from strategic direction and how we execute, have to get these things done and become more secure, become better deterrence, get better and then in the management and what are the steps we need to get there. many have got plans in place that now they're moving toward on. on that point also i want to reiterate a comment i made about chris and the folks in my office but not only that but the people in the agencies. there's been this perspective that while we are appealing this position here back things just aren't being done him and that could be further from the truth. there's been tremendous progress in you'll see reports coming out before too long from some of agencies on the progress they've made on their areas of

responsibilities. i've gone briefings in the past couple days about that. i was not surprised. to see the progress continued as i thought it was an people over the time asked about government, they are doing an awful lot. unfortunately, once again, is like the traffic wreck, it doesn't show up on the front page years of the good stuff taken place, here's the work in the privacy realm, the pierce the work in the technology developed world, here's the stuff and research. as one of my hopes to be able to make them more visible to people through recognition of the work being done from the hill, to the folks out in the government agencies out there. so developing the strategy is one of the things. also looking at an organized unified response to attacks on our systems. and that's not to suggest for a moment there is not a plan out there, the people don't have it and we want to make sure is unified. we want to make sure we're leveraging the skills and capabilities of every u.s. government agency and our

private sector partners. and we've seen in many cases that not just the government side has of his ability in these things. we've seen private-sector entities come in and say we're seeing this activity, we've got hit by this and start marshaling our forces so we can make sure that the private sector is working with the government and vice versa. so the president's desire to have unified response to future cyber security incidents involving the government and private sector is one of the of the things he's asked me to do. when we start looking at the private public partnerships and it's easy for us in this room to discuss that because many have been a part of it but we also want to make sure we include to the highest level our international partners because as a no one packets to stop at the borders, when e-mail or something this is international spectrum and we have a tremendous international support not only for what we're doing but some of the things they're doing that will strengthen the

global security from the internet. we also need to look at the are in the components of this. as i mentioned a few minutes ago when we started looking at the great work done we need to start looking at a number of years in the future. as we're doing more to rollout i.p. b6 and the government agencies were will we be 10 years from now? what other management tools and will need and the identity tools we will be using? and so investing in research and development is key and as one of the things i've been asked to take a look at and, of course, the last thing and probably something if there's anything that we ask your support on an egg -- decorating a national campaign to promote cyber security awareness and education. the key issue for that and also things we can do all the way, once again and chief executive level down to and including the end users. so i wanted to give a quick close, want to maintain some time for a few questions and i

know we're on a tight schedule. that's basically i want to touch on one thing that i think should never be lost and our discussion about privacy. one of the things it is my involvement over the years not only in security side of the privacy side as well, i've said for a long time privacy and security are two sides of the same coin. very clearly without security we have no privacy, data protection is key to the things will do. as i was going through discussing with the leadership coming into this position, the discussion always made sure we had a discussion about privacy per account and them tremendously excited by the fact that everyone knew about privacy, cared about privacy, and not just pain killer service but take it seriously. there was direct desire including in privacy person in office to look at the privacy aspects of cyber security. so i want to sort of leave on

that high note that there's a lot of moving parts on this, none of us have the answers, there's no silver bullet but i think we fully and -- recognized and one of the things i excited about is what stabenow than any other time before. we've gotten tremendous support from the hill, support from the government agencies, the private sector, the citizens and i think we are now at a position finally to make significant long-term changes in our ability to be better security, protect privacy better and be more resilience in the overall. so without thank you once again for this great opportunity to be here today. [applause] i guess tim is going to be throwing the microphone around. >> i just walked out of a great panel on cyber warfare and i said, great, not because it was

a happy discussion and. you know what's been happening in the past two weeks in the news. in your role you probably have to come talk to the president after seeing how something change on-line. how would you define an act of cyber warfare? and how would you recommend moving to address it? what steps would you take? >> i think the first answer is i would not. that's a very complicated subject. we have been debating it for years and years and i know is one of the things the great legal minds have looked at international law and these other pieces of work. i think the key issue is the thing we're looking at is bringing the horses together to get better definition on that and, indeed, is there such a thing as cyber war because there's been a lot of use of that term and i don't know that's always been of corporate applied in many cases so by having clear definitions of not only u.s. interests in u.s. law but also international standard

and law will something will work through. >> you are meeting with members in congress last week i understand. what do you expect congress -- what should they do it in relationship related to cyber security legislation? >> it's interesting, there's a lot of legislation out there and one of my reasons for doing that right out the gate was to understand what their concerns are and how some of the things we currently are discussing as far as policy matters, how can they help in that and without getting into details because i haven't had chance and the weeks to go to the legislation, we've got smart folks looking in rising on it coming to make sure that they understand that we're there to help them and identified the things we need to decide from policy and legislative perspective that they can help on and one key thing is really important. everyone i've met with is extremely extremely excited to help in this any way they can so

as we codified and jal with the things out there, what our needs are, we will continue the dialogue with them. >> thank you serve >> hi, boss. just one question, you mentioned the privacy and security aspects of this job. t you have any principles going in on the impact of cyber security and open government? because i think that's an important piece in the us. >> jerry, you're correct. one of the things when you look at government which we're very much in favor of, you always have to balance that and i use the term regularly between the things that our enemies could use against us, things that i privacy posting things that seem to be innocuous back to lead someone to develop some information on an individual to do what ever with an individual and that's what we have teams of going through that data reviewing and ensure the privacy protections are in place. also making sure that we are as

open as possible and i think it's going to be dynamic. every davis that we look at as a government and that we generate is going to require somebody looking at with a critical eye making some tough quality -- top calls and making with this. we never want to wind up putting us in a bad position through an international tours perspective of what are some bad actor author using the data against the people or the government itself. >> bradley peterson. one of the recommendations in the white house cyber security privacy review was a worker identity management, i wonder if you could talk about what's happening there or or to anticipate happening with respect to identity management. >> as far as what's happening as one of the briefings i have scheduled next week. needless to say when we start looking at identity management the era of user id and password has been sort of law over due to

be retired and i know and the department of defense, doing at the new management isaac -- authentication is crucial so i will know more next week and a lot of things are out there that have been for the published. in some of and the issues of the geren has been looking at not only from the executive branch but legislative branch been out there and the public and i will learn more next week so i'm sorry i don't have a good answer other than i don't -- other than i support. >> there's currently a notice of proposed rulemaking on the neutrality that would give government approval for an average operators to use inspection as part of reasonable network management. inspection looks at all content transmitted including privileged to confidential, legal and business communications and to prevent a confidentiality more users will turn to encryption. how will widespread encryption

impact cyber security and law enforcement? >> i think that is one of the things we look to, many remember the clipper chip days in the debate about that and i think when we start looking at the end puerto rico and and the fcc is doing is not in my office but in the office of science technologies policy is working with them trying to see what impact of any the cyber security peace comes in place with fat. another component we start looking at the whole debate how to make sure that we have a government communications in case of emergency and another's proposals and discussions at the white house with that and i will continue to be involved with that. once i get my feet on the ground next week and start looking into some of the issue specifically. >> good to see you, howard. one of the big challenges i was interested to know what's the relationship between security and economic prosperity. there's a big driver at the moment in the u.s. and also the

uk to move to data into the clouds and that raises a host of issues on security. how do you see your role phasing into that as well as the design and actual flight in which we assess the architecture that sits there to ensure we get both privacy and security that i know we both want to achieve? >> that's a wonderful question, one of the discussions i had in fact, as you know and anybody that's heard me talk about this i'm a big proponent of moving things to the cloud of moving in right. we have tremendous economic benefits of doing so but we have to make sure we do with where we have specific agreements from a legal perspective on what is we're putting, where it will be, the authentication methods and the technical controls as well as international legal controls so as i worked with quebec driving back my role is to make sure as we are looking at the technology components to ask printable questions about the security and that playing so i see a close working relationship as we move more that direction.

i think the second part of that when we look beyond the government's base and we obviously have to do that is we start looking at the private sector and that's where we can really partner up and make sure the things we are developing as far as what are your requirements to put things in the cloud, what do put in there, what things do you put in their generally and put in there in cryptic, or is it residing, that's where we can develop a standard if you would on how we operate in the cloud from a government and private perspective. >> two more questions. >> you don't get to sit down quite yet. linda with the same internet alliance. one of the things that out like to hear a bit about is right now the freedom of information act has compel the the state, county, city records to be thrown on-line. and the impact this has on consumers with the amount of information that's now available whether births certificates,

power of information -- attorney documents and social security -- there's a terrific amount of information about consumers online that really at least from my point of view should not be there and we have a government spending tens of millions telling people to protect their information when in many cases the government is probably the most egregious breach of a people's privacy in that way. how do you see this privacy and freedom of information act, all of these things aligning as we move forward? >> is interesting an expert by y stretch of imagination but my spirits and the states as i travelled has been the opposite, they are doing more not using social security's for driver's license and moving the licensing is with union members others in desire to do that. their specific provisions to put these things out there, are not familiar with but when it comes to my role and start looking at issues of personal information not only the security components

with the privacy as well, obviously i will be on the side of making sure we are doing if there's a requirement to have something out the rest of the open assigned to make sure it doesn't, indeed, jeopardize somebody is well-being and privacy information or identity theft capabilities. >> bruce with a sergeant and arms i.t. security branch. first of all, as a last question i think i speak for all of us in wishing you the best of luck in your new role. >> thank you very much. >> the question i have is the annual threat assessment reported by director of national intelligence player last february had a very scant section on the cyber security and i am wondering if that reflects a lack of understanding or difficulty in assessing the problem or the intelligence community's not viewing it as part of a threat there are reporting on and how to see your

role as playing into this? >> is interesting, i think first and foremost i would never say for a moment there's a lack of understanding of it or a lack of identifying it really what it is. it's a very complex issue and as i mentioned it is really difficult to give attribution and as one of the things whether it's the intelligence community or law enforcement that some of the key tenants there working on some of the folks i've met with in the past week that are assigned to this and senior leadership in those organizations as well to really get it, they're reporting of the command staff and everything else so there is a true understanding and a better desire to get more into outside of the normal intelligence channels to the public as well. the businesses have a better understanding so i would guess and i haven't seen it yet, will probably see more of this year than last year. >> with that, we wish you luck and thank you so much for attending.

thank you. >> thank you very much. [applause] >> speed 27 ..

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[applause] [applause] [applause] [applause] >> mr. speaker, members of the assembly, fellow hoosiers, good evening. this once a year we gather as a family might, to take stock of our state's health and to assess the performance of our public

duties. the sense of privilege one feels on this podium never diminishes, nor the sense of duty to report honestly and accurately on our family's situation and the health of our public institutions. it's our way in this state to speak plainly and to face reality squarely. the plain truth is that life is difficult tonight for far too many hoosiers. an economy booming at full employment a year and a half ago has taken several steps back. one in 11 workers is unemployed, one in six people on medicaid. the average hoosier income fell last year, by almost 1%. we are distressed, disappointed, and dissatisfied at all this. i know we are united in this chamber in seeking to do what government can to work through and out of the national recession in which we are enmeshed.

[applause] >> but hoosiers are also known for resilience, for avoiding self-pity, and for keeping a sense of perspective. we know that we have battled through tougher times before, we know that the possessions, the technology, even the shrunken incomes in our homes today, are still vastly greater than anything hoosiers knew just one generation ago. we know that our jobless rate, though intolerable, is below the national average and well below that of neighboring states. we also know that this is not the only such meeting taking place this month your across america, 49 other addresses are being given, almost all under conditions far more grim than those we confront. the one national study available says that our budget problem is one of the smallest in the nation. our day's most celebrated

business sage says, you don't know who's been swimming naked until the tide goes out. [laughter] >> well, the tide is out, and now we know. compared to its budget, illinois fiscal problem is four times larger than ours. arizona's, five times. california's, six times. out there, the governor recently exclaimed in desperation, how could we let something like that happen? so far at least, no one in this room has to ask that question. a young seaman sought a veteran mariner's advice, asking what do i do when i find myself in a gale force wind with a dangerous reef to leeward? to which the old sea captain replied, what you do is, you don't get yourself in that position. through the discipline of legislators on this floor, and the superb businesslike

management of my colleagues in those balconies, indiana stands in a position very different from virtually all our sister states. a crashed on the reef many months ago. they have seen their credit ratings downgraded and their borrowing costs soar. indiana has a triple-a credit rating for the first time ever, saving millions in interest costs for our cities, schools and universities. we will be using our carefully built reserves to get us through this next year and a half. any reserves most other states had have long since disappeared. they have slashed, sometimes virtually halted, the construction and repair of state roads. in michigan, they are grinding asphalt roads back into gravel, as though to regress by a century. but here, we are building for indiana's future at a rate twice the previous all time record. all over indiana, the dreams of decades are becoming real.

the hoosier heartland corridor, the fort to port highway, u.s. 31 from south bend, i 69, and hundreds of others, all at full speed, under budget,head of schedule, taking shape before our very eyes. [applause] >> after growing education spending five years in a row by a total of 12%, we were recently, reluctantly forced to trim it by some 3 cents on the dollar. but all across the country, education spending has been reduced by vastly more. by twice as much in places like washington, nebraska, and connecticut. by three times as much in virginia, mississippi, and utah. four times as much in minnesota

and south carolina. six times as much in alabama. around our nation, states have closed parks, stiffed vendors, thrown people off medicaid, stopped plowing snow, and released thousands of dangerous criminals from prison early. overnight last night, the citizens of iowa were protected by seven state troopers, total. we have done none of those things and don't intend to. saddest of all, our sister states, at least 40 of them, are doing the worst thing possible in times like these. they are raising taxes, adding to the burden on families already in distress, and making their economic climates even less attractive to new jobs than they were before. michigan, wisconsin, new jersey and at least 11 more have raised income taxes. ohio, oregon, minnesota, and 30 more have raised gas taxes. many states have raised multiple taxes at the same time.

i hope you will join me in saying tonight to the people for whom we all work, we will make the hard choices, we will stretch the available dollars, we will do whatever is necessary but we will not take the easy way out and we will not make this recession worse by adding 1 cent to the tax burden of our fellow citizens. [applause] >> for us, economy in government did not begin with this recession. together we brought this state from bankruptcy to solvency over a five blueprint of careful budgets, stewardship and reform. per capita state government spending in indiana is now sixth

lowest in the nation, an eight place improvement from a few years ago. state government has two-thirds fewer airplanes, thousands fewer vehicles. we have the fewest state employees since 1982. we have heeded the mariner's instruction. what we did was, we didn't get ourselves in the position of other states. and yet the gale of shrunken revenues is still blowing. the reef of huge service cuts or higher taxes is still close alee. solvency, like freedom, requires eternal vigilance. we could be michigan in a minute of meekness, illinois in an instant of irresolution. the budget you passed just six months ago may have seemed reasonably frugal at the time, but almost immediately we could all tell that it spent beyond our declining means. if we had done nothing, its spending levels would have obliterated our entire state reserve by six or seven months from now.

so we have acted, and will act again as necessary. i thank this assembly and our fellow citizens for understanding the very unwelcome decisions we have made to date. we will need your continued understanding, for more hard calls are probably coming. we will make those for which we already have the authority. but there are savings measures for which we need changes only this assembly can make. and so my first request is for legislation to enable the saving of some $70 million through a host of new economies. the largest of these would permit us to manage our two pension funds, perf and trf, under one administration. absolutely nothing would change in the benefits, or the amount of funding, or in the totally separate, independent status of these systems. all that would change is the amount paid out in investment fees, when we bid the job as one large bundle. if someone's wall street bonus is a little smaller next year

while we save indiana taxpayers 40 or $50 million, i think we can all live with that. [applause] >> we need the savings this bill would make possible. they are equivalent, for example, to 1 percent of our k-12 payments, or 5 percent of our higher education spending, or 10 percent of our combined law enforcement budgets. far better to reduce nice to do expenditures in state government than to make even tougher the must do tasks of educating our young people and protecting the public safety. i make a second quest in the name of some of the bravest and most deserving of all those hoosiers struggling this evening. the single parents of our state. there is no one more contemptible to me than a person who brings a child into this world and then fails to live up

to the duties of parenthood. and for those who compound their absence by refusing their court-ordered duty to pay child support, i have even less respect. after five years of hard ever, we have raised the percentage of child support collected from about 50 percent to 58%. this of course is still on conceivably low. the best states are upwards of 70%. we need new tools to make further headway. for instance, allow us to see that a delinquent father who wins money in one of our casinos shares some of the take with his children. every percent of child support improvement sends $7 million directly into the pockets of some of our neediest households. representative linda lawson and senator richard bray have joined to help us. please give your bipartisan support to the bray-lawson bill and let's provide millions of dollars to some of the homes which need them the very most. [applause]

>> all of us tonight are rightly preoccupied with the recession and the problems it presents to our public services. but in time these hardships will pass. what must not pass is an opportunity to continue indiana's steady progress in reforming our public institutions. in 2005, you approved the top to bottom overhaul of the ethics rules for the executive branch. we tightened the gift rules, protected whistleblowers, stopped the revolving door between government and lobbying, and stiffened penalties for any violations. we created an inspector general and a new battalion of fraud fighters to police this new era of higher standards. the dog that doesn't bark rarely gets noticed, but let's notice tonight, that armed with the tools you made possible, indiana has seen five years of scandal free government and we're determined to keep it that way.

[applause] >> and so, all hoosiers should welcome the excellent initiative of your leadership to bring similar reform to this, the senior branch of our government. mr. speaker, mr. president pro tem, i applaud your proposals to raise the standards to which legislators will now be held. it will enhance the quality of your decisions and the confidence of our citizens in those decisions. thank you for stepping forward so boldly. i look forward to signing this important new law. while you're at it, please respond to the plea of mayors of both parties and all parts of our state, and end the egregious

conflicts of interest that occur when public employees sit on city and county councils, voting on their own salaries and overriding the decisions of their own management. how we ever permitted this to occur in indiana is one of those mysteries of history, but now is an ideal time to strike another blow for good government and end this abuse forever. [applause] >> in another area reform has been well begun and is right for a second chapter. from this platform a year ago, i thanked governor joe kernan, chief justice randy shepard, and their commission colleagues for a superb set of proposals to modernize indiana's pioneer days system of local government. a state committed to protecting taxpayers, and limiting government to the role of the people's servant, has no business maintaining more elected politicians than states

twice our size. it's wasteful, it's antiquated, it produces poor decisions, and it scares the public's ability to assign either credit for success or blame for failure. this assembly has taken the first steps toward cleaning up this anachronism. you have dealt with five of the commissions 27 recommendations, most notably the elimination of township assessors. you reduced the number of cooks in the assessment kitchen by about 1000. having as many as 22 different assessors setting property now use in a single county was a formula for unfairness, waste and, all too often, corruption. building assessment to a single, accountable county official was a matter of simple common sense. the exact same principles apply to poor relief and fire protection, still handled as they were in 1848. i hope i have seen for the last time new half-million dollar fire trucks bought in fire stations a couple blocks apart

because two totally separate township boards were involved. just as you already did for libraries, we can maintain local distribution of poor relief, local identity and leadership of our fire departments, while moving resource and taxing decisions to the county level, where they can be made rationally and for the maximum benefit of all citizens. in the process, we can save millions and delete 3000 more political offices for which there is rarely any competition anyway. and we can put an end to the widespread nepotism which, even when good people are involved, simply doesn't pass the test of good government. [applause] >> and as we reduce the number of politicians, let's reduce the number of elections we hold. the commissions suggestion to shift municipal and school board

elections to the fall of even-numbered years would not only boost turnout for these important offices, it would save tens of millions of dollars for our hard-pressed local governments. this may be, as we say, a short session, but we can still take a long stride toward modernization of our top heavy and expensive local government. and no area is reform more urgent, or more critical to indiana's future than in education, and here the news is excellent and the momentum even stronger. 2009 was a breakthrough year in improving the way we prepare our young people for the lives and the work ahead. first, this assembly heeded the call of president obama and others and lifted indiana's backward looking limits on charter schools and on considering student achievement in evaluating teachers. then our professional standards board, led by our superb new

superintendent tony bennett, acted to strengthen standards for new teachers, and to open both classroom and leadership positions to those whose hearts call them to teaching from other walks of life. next, we must address the single greatest cause of student failure, the inability of so many of our children to read proficiently. if a school accomplishes nothing else in a child's decisive first years, it simply must enable him or her to read and comprehend the english language. yet too often failure is masked by the practice known as social promotion. sending an illiterate child on to higher grades is unfair to the next teacher, damaging to our stage future, that cruelest of all, disastrous to the young life being blighted by that failure. if, after four years, the system has failed in this most fundamental duty, then it will simply have to try again until

it gets it right. i ask you to pass our bill to stop social promotion and to say to the world that indiana never gives up on its children, not one sigel kid. [applause] >> two more actions can stamp 2010 as an historic moment for better government in our state. first, let's set the stage for the fairest, most reasonable and nonpartisan redistricting ever seen in indiana. too many times in american history legislative boundaries have been drawn to favor haves over have-nots, in's over outs, incumbents over newcomers. the worst examples of gerrymandering and politician protection can be found in other

states, but a glance at indiana's current lines shows that they are nothing to be proud of. we praise tonight the bipartisan expressions of intention that indiana's next redistricting be its fairest ever. members of both parties have offered constructive ideas for lines that make more geographic, demographic and just plain common sense than today's. let's commit to the kind of principles that assure hoosiers that in our state, voters will pick their officeholders and not vice versa. [applause] >> lastly, some heartfelt congratulations. just eight days into session, this assembly has already made history by completing and safeguarding some excellent work you began two years ago. into thousand eight, you passed the largest tax cut in state

history, and reduced indiana's property taxes to some of the lowest in the nation. at a time when every penny counts, and home foreclosures are a national epidemic, you lowered the cost annually of owning the average hoosier home by more than $500. the american dream of home ownership is more affordable in indiana tonight than in virtually any other place in our country. but you did more. you provided hoosiers unique protection and certainty. through caps that secure these lower tax from ever surging out of control again. as we all know, those caps will always be vulnerable to either legislative or judicial repeal unless protected by our constitution. those who favor more government, more spending, and higher property taxes have every right to present their arguments before the caps become permanent. but they must have the courage to make their case before the final arbiters of our

constitution, all the people of our state, voting in referendum next fall. at 2:31 pm this afternoon, the people's branch of government lived up to its name. you gave the people the chance to decide, as i believe they will, that lower property taxes are here to stay. thank you for this latest bold move to show the world that in indiana, we trust our fellow citizens and we truly put the interests of taxpayers first. [applause] >> that we gather tonight in difficulty but not crisis,

stress but not disaster, is small consolation. no one here will breathe easy or sleep well until we return to the full employment indiana knew just a year and a half ago. but we must recognize that the way we do our duty today is about more than just muddling through the short term better than the next guy. it's about lengthening our competitive edge. every time another state raises a tax, can't pay its bills on time, or sends out ious instead of tax refunds, it slips another notch behind indiana as an attractive place for the next new job, the next new dollar of investment. the better we handle the people's business today, the more business we will have for our people, and the more opportunity for our children tomorrow. even in this hardest year in so long, signs of strength are everywhere. forced by the downturn to a

choice between indiana and some other place, at least 50 companies closed up shop elsewhere and relocated jobs to our state. jobs came from michigan to marion, pennsylvania to decatur, wisconsin to auburn, mexico to elkhart. [applause] >> there's that long german word i always mispronounce, that means enjoyment obtained from the troubles of others. watching the agonies of other states we take no delight at their misfortune. hoosiers never do. our first reaction to a neighbor in trouble is to look for a way to help. but if we take no enjoyment, we will take the job from companies who know a state built for growth, a state with its act together, when they see one.

[applause] >> when the dust settles on this recession, we will have a higher share of america's auto, rv and steel jobs than we did before. in a 2009 when national business investment fell by almost one fourth, the number of new jobs committed to indiana actually grew over the near-record year of 2008. 2009 was the year when several young companies who may lead the electric vehicle industry chose indiana for their plants. many of their suppliers are following them. our goal is to be the capital of this potentially massive industry of tomorrow. over the last two years, indiana has been the fastest growing state in wind power, and now business is seeking to build the equipment for this new industry are coming to muncie, to new albany, and to clinton. within weeks, you'll see us explode onto the solar power landscape. perhaps most telling, 2008

brought the welcome word that more people are moving into indiana than moving out. the numbers weren't huge, but they mark a big reversal from an era in which most years saw a net exodus, sometimes including many of our most promising young people. one recent ranking identified central indiana as the best place in america for new college graduates. a tea bag's strength is revealed in hot water. so far, we have stood up to this recession seat with a strength reflecting the sturdy character of hoosiers. odds are the year ahead won't be much easier. everyone in the publics employ has a chance to help, and a duty to do so, remembering where jobs came from, and who is that pays for our salaries and every penny we dispense. two years ago tonight, i recalled the toughest question i was asked in my first months as

governor, when an east coast ceo asked, what makes your state distinctive? what makes you stand out? no need to ask anymore. look at any map of states still in the black, states preferred for new jobs, states adding to their public infrastructure, states where taxes have gone down and not up. a single bold patch of color below lake michigan, like a peony in a parking lot, is the common feature of all such maps. let's conduct ourselves so that a year from tonight america sees in its fullness what it now sees in part. that there is a special place in our land are hard times are met with resolve, where government is the people servant, not a privileged class, where bucks are not passed, decisions are not ducked, and where scarce dollars are allocated as adults do, to first things first. by then, america will see that

same place leading the nation out of its decline, its traditional industries rebounding and a host of new businesses blossoming. a place applying the highest standards of conduct and accountability in its public arenas. a special place called indiana, to which the bright, the enterprising, the young, the creative are gravitating. it's not enough to stay off the reef. it's our duty, and our golden opportunity, to set our sails and man the helm in a way that separates indiana from a leaking fleet and carries her first and fastest into the sunnier seas ahead. god bless this assembly and this great state. [applause]

[applause] [applause] >> now another state of the state address with ohio governor ted strickland. he is in we the final year of his first term in office and talked about his reelection challenge and ohio's economy. from columbus, this is an our. >> thank you. you're very kind. thank you for the once of your welcome. speaker budish, this is the last

time that senator harris and chief justice tom moyer will be attending a state of the state address. i would like for the two of them to stand so we can express our appreciation for all they have done to the people of our state. [applause] >> leader batchelder and leader cafaro, lieutenant governor fisher, statewide elected officials, and members of my

cabinet, and a special word of thanks to director terry collins, who is retiring -- [applause] >> he is retiring after giving 33 years of his life. to ohio and to the department of rehabilitation and corrections. we thank you, terry. to members of the general assembly, and to the north of the supreme court am a to distinguished guests, the first lady frances strickland, and -- [applause]

>> and to my fellow ohioans, i believe in ohio. i believe -- [applause] >> i believe in ohio because you can't write the history of the world without us. without flight, without light, without rock 'n roll, without professional football, without john glenn in space and john glenn on the earth, without the tomato, without the underground railroad, without roy rogers, without tires and ignition switches, without the humble fly swatter, without the richter scale, without jesse owens running for gold and for all of us in berlin, without street lights, without fire departments, without superman.

i believe in ohio because ohio will power the future. [applause] >> the first major glass coming to open its doors in toledo was libbey glass. it was energy that brought edward libbey here. he brought his company from the east coast to ohio in the 1880s a cuts our natural gas could fuel his operations at a lower cost. from that fateful decision more than a century ago, toledo became an international center for glass production. and while energy once brought us the glass industry, today that glass industry is bringing us new energy companies making solar panels.

that means jobs in solar research and design, production, distribution, and installation. and that means a renewable source of power that will attract new companies in countless industries who will flock to places where there is a better access to better energy. just ask libbey glass, the largest glass maker in the country, still at home in toledo. and once again, in the midst of a great energy center. i believe in ohio because we have made a commitment to advanced energy and we are seeing results. when i took office, ohio had the nation's weakest advanced energy standard for electricity production. today, ohio has the nation's seventh most aggressive standard. [applause]

>> in 2007, not one drop of ethanol was produced in ohio. today, four ethanol facilities in ohio are producing 295 million gallons annually. in renewable and an advanced energy manufacturing products, ohio now ranks first among the 50 states. [applause] >> thank you. the council of state governments scoured the nation to tally the total number of new green jobs created last year. and what did they find? ohio ranks first. [applause] >> ohio ranks first. you know, we've made it -- we've made it this far, this fast on

advanced energy because we pursued smart, responsible policies, and we made smart, responsible investments. two years ago, ohio was one of the first states to respond to the international economic crisis with a bipartisan jobs bill that made key investments in several high growth industries, including a 150 million-dollar commitment to advanced energy. and now, quasar energy group is building an anaerobic digester right here in franklin county. the facility will keep waste product from farms, food companies and elsewhere out of our landfills and transform it into fuel and fertilizer. in shelby county, wayne trail technologies is creating a better battery for hybrid vehicles. aided by our jobs bill, energy projects like these are in the works all across ohio.

our electricity reform bill prevented the kind of skyrocketing rate increases of 50, 60, 70% that crippled so many states that failed to act. instead, ohioans pay 10% less for electricity than the national average. and that reform bill established reliability standards that are essential to ohio companies. dupont officials testified two years ago that they would not expand their circleville plant because their electricity service wasn't dependable. but just last week, just last week, dupont announced a 175 million-dollar investment to retool a facility, a facility that once made components for vcr tapes, and they're turning that facility into something that will make film for solar

panels. [applause] >> the company credits our energy reforms with making ohio a better place for them to do business. now we are rapidly deploying federal stimulus funds to advance $500 million in projects supporting an array of energy jobs from cutting-edge research to home weatherization. we have continued the vital work of the third frontier, the third frontier, a program that is made already $150 million in energy technology investments. we've brought 15 state and private universities together in the university clean energy alliance of ohio -- thank you, chancellor -- and we have done

that -- [applause] >> and we've done that to unite our efforts in pursuit of energy breakthroughs. and, and our first budget we dramatically accelerated our school construction program and made it into one of the largest energy efficient initiatives ever created. i believe in ohio. i believe in ohio because we are not just sitting back and letting other states pass us by. we are taking the vital next steps to advance our energy economy. i am pleased to announce today that ohio is creating the energy gateway fund. we will make a unique and lasting investment in fuel cells, solar, wind, it energy storage and the like with $30 million in federal job

stimulus funds, and $10 million from our state job stimulus program. this 40 million-dollar commitment will offer access to capital for new and expanded advanced energy companies. and we will at least double the impact of our efforts by requiring that those seeking state funds will, at a minimum, match our investment dollar for dollar with new private funds. revenue generated from the fund's investments will keep powering ohio's economy because it will be reinvested in additional energy companies. [applause] >> with the federal tax credit currently in place for renewable energy, companies will be making commitments to new facilities in the coming months. but the fact of the matter is

that ohio's tax structure discourages wind and solar companies from coming to ohio to generate renewable energy. we should give those companies every reason to choose ohio. that's why i am asking the legislature to erase ohio's tangible personal property tax on generation for wind and solar facilities that break ground this year, create ohio jobs, and begin producing energy by 2012. [applause] >> and we will no longer be shy about our place at the forefront of the energy revolution. and that's why we are proclaiming ohio's status as america's energy gateway.

and we will transform turnpike service plazas in williams and owning counties into showcases of ohio's advanced energy capabilities. visitors to ohio will learn and ohioans will be reminded that ohio is producing a new kind of energy to power our future. now there will come a day when ohio will be the undisputed home of advanced energy. a day when will have cast off those two tired little words that have been used to put us down. rust belt. because that's not who we are. [applause]

>> thank you. there will come -- there will come a day when the iconic image of the texas oil rig will be eclipsed by the ohio made wind turbine and solar panel. orville wright once said that everything he accomplished in his life was the result of his upbringing here in ohio. in ohio he was taught to question, to explore, and to seek new answers. i believe in ohio because that spirit is very much alive in our great state today. i believe in ohio because we have laid the foundation for growth and a thriving middle class. i believe in ohio unconditionally. [applause]

>> but let me say to you, we must not lose sight of the fact that many of our people are hurting right now. the wake of the wall street crisis has knocked over banks, and mortgage lenders and pension plans, and companies in every sector of the economy. leaving us in the midst of the worst economic collapse in generations. people who have worked hard all their lives and who may never have bought a stock or bond, and certainly never traded in collateralized debt, they have been hit by a storm of greed they didn't cause. they didn't contribute to, and they would never have benefited from, but for which they must now repair the damage. in stark county just last year,

835 people applied for one job opening as a janitor at a junior high school. 835 people scrambling for one job. one man told the local newspaper that getting the job would be like winning the lottery. now i want to say something to those 834 people who applied for that job and didn't get it. i want to say something to every person and ohio who is unemployed or underemployed. i am fighting for you. [applause] >> i can't say -- i can't say -- i can't say it will be today. i can't say it will be easy. but we are going to fix this

thing. and you have my word on this. i will move heaven and earth to create jobs in ohio, and i will not rest until it's done. because, because the state of our state is unyielding. [applause] >> unyielding -- unyielding in the face of the global economic turmoil. unyielding in the face of budget cuts and job loss. unyielding in the knowledge that we are more than our challenges. [applause] >> and, and unyielding in the belief that ohio will always not

-- always be just our home, but our hope. i believe in ohio -- [applause] >> i believe in ohio because we may have been dealt a tough hand, but we are going to do what ohioans have always done. we are going to play it to win. we've had to make tough decisions. we've had to make sacrifices. but we have worked to reduce the blow of this international economic meltdown, and the decisions that we have made have positioned ohio to not only recover, that to emerge rebuilt and renewed. [applause] >> in our bipartisan jobs plan, we've made major investments in

advanced energy, and also in logistics and distribution, public works, and other areas. we've made the largest commitment in our history to improving ohio's infrastructure while saving resources in every way possible. in fact, we will increase infrastructure spending this year by 30%, while operating with a department of transportation that has its smallest workforce in 30 years. [applause] >> we have revitalized our job training efforts to build the skills our people need for the employment in high growth industries. all told, we've helped more than 140,000 ohioans receive job training since january of 2007. we have made a commitment to building a tax structure that encourages job growth and is

respectful of our citizens. we expanded the homestead property tax exemption, saving the average senior citizen homeowner 400 -- more than $400 each and every year. our business taxes are the lowest in the midwest. in fact, every year that i have been in office we have cut taxes. now, even with the delay in implementing the final year of the personal income tax reduction, our efforts to carry out the tax reform bill of 2005 have already provided the largest tax cut in modern ohio history. [applause] >> we reformed our regulatory process to cut down on red tape and to make it easier for companies to do business in

ohio. in fact, we tossed out 220 state rules and we revised over 1000 more. i believe in ohio because job creators know that ohio is a great place to do business. the small business and entrepreneurship council studies the business climate in 50 states. they consider taxes and regulations and the like, and then they rank the states on whether they are a good place to start and grow a business. and 2006, ohio ranked 38th. in their new report issued just a few weeks ago, ohio now ranks 11th. [applause] >> and -- and we are among the very best in the midwest, and

best among the states that border us. i believe in ohio because we have always been the state that invents things, designs things, makes things, and grows things. and the world knows this. in fact, we are the only state in the america where exports have grown every year since 1998. i believe in ohio because i have never met -- [applause] >> i have never met an ohioan who thinks that we should put in a call to china and ask them if they want more american jobs. because we know there is no product that wouldn't benefit from having made in ohio stamped on it. [applause]

>> but ohio business leaders have told me time and again that lack of access to capital impedes them from competing and expanding. our businesses are operating with one hand tied behind their backs, because when wall street ran amok and damaged the american economy, it created a credit crunch for even the most fiscally sound companies. in particular, we have many small manufacturers in ohio who cannot afford to expand their companies and call back laid off workers, even as orders increase, because they lack capital. if they miss this window to exceed and innovate, it could cost ohioans jobs for a generation. quite frankly, i'm convinced that this is the single greatest factor inhibiting economic recovery. so we're going to do something about it.

today, i am pleased to announce that lieutenant governor fisher and ohio treasurer kevin boyce have been working with a group of ohio lenders to establish the small business growth partnership. the first initiative of this partnership will be the creation of a business lending clearinghouse that points small businesses in the direction of possible sources for to working capital they need to grow their businesses and to create new jobs. we are also meeting with lenders to establish a working capital jobs fund. this public private partnership will become a new, a dedicated source for working business capital. now that may be clear. this is not a bailout and it's not a hand out. these are loans for companies that could make more products, more profits, and more

important, more jobs if they simply had the required capital. my friends, ohioans have all the skills needed to do jobs that are being outsourced overseas. in fact, ohioans have the skills to perform those jobs better. and that's why today i am announcing insource ohio, a collaboration between the ohio department of development, job and family services, and the board of regents. insource ohio will work with any ohio company currently outsourcing or considering outsourcing to demonstrate how ohio's workforce can meet their needs within a business model that remains competitive. [applause]

>> i believe -- i believe in ohio because our workforce is second to none. but when jobs disappear, we owe ohioans every opportunity to prepare themselves for new employment. and that's why today i am announcing the creation of a manufacturing certificate. those who have worked in manufacturing will be able to obtain a credential they can take to future employers that documents their full range of job skills and experience. and certificate holders will be able to earn credit toward additional job training and education. people are coming to our community colleges looking for opportunity. in fact, enrollment is up 23 percent over the last three years. now a lot of folks want to create their own opportunity, and that's why we should help

them channel their passions into a business. today i am announcing the creation of a new program called build your own business. in partnership with our small business development centers, our ohio's community colleges and adult career centers will begin offering ohioans courses and training on starting a new business. participants will have access to business tudors and business mentors, and to small startup loans of up to $5000 to help our new aucklanders take their first steps forward. build your own business represents a statewide expansion of the highly successful program at lorain county community college where they offer education and support to budding small business people. and where 60 of the 62 businesses they have mentors are succeeding. build your own business is just

one of four significant job training programs i think should be the focus of new revenue which ohio will receive in casino licensing fees. i would like the legislature to consider and limiting our co-op internship program to give college students an opportunity to get invaluable experience in their field, and encourage our young people to stay and thrive in ohio. and we should support the highly successful ohio workforce guarantee because it avoids layoffs which spurs business expansion, by providing resources to companies. and i look forward to working with the legislature to create an urban workforce initiative to provide incentives for ohio companies to immediately put unemployed ohioans back to work. i believe in ohio because we favor common sense solutions over ideological extremes.

now with a new regulatory reform that we are calling fast trac, we will be able to accelerate funding and final approval for our most promising job creating transportation projects. and we will dedicate an additional $100 million in cost savings to these fast trac projects, putting more ohioans to work building roads, repairing bridges, and making ohio move. we created the university system of ohio in order to unify our higher education in our state, and to help us pursue the goal of being the best in the nation at turning our university research into new jobs and economic development. and today we are pursuing a groundbreaking agreement that will help our university system turn great ideas into new products and new jobs.

my administration and attorney general rich cordray are overseeing talks toward reaching a standing agreement between the entire university system of ohio and consumer product powerhouse p&g. with the contract in place, we will speed up and strengthen research collaborations between our university faculty and the company. p&g will get the benefit of our innovative thinkers. our universities will get the benefit of unprecedented opportunities to collaborate with p&g on new products. and ohioans will get the benefit of new economic development. and we can use this agreement as a model for other companies and industries that want to work with ohio's innovative institutions. so today, i am calling upon the ohio auto industry support council to build on this historic agreement and to create a network that will link ohio's

manufacturers to great research going on in ohio. [applause] >> thank you. i believe in ohio because we are not passively waiting for a better day. we're pursuing pragmatic solutions and building public, private partnerships that let us focus the energies of government on the needs of the people, and guide the energies of private entities toward work that advances ohio. with the third frontier, ohio made a commitment to securing our place at the forefront of the research economy. and that commitment has paid tremendous dividends. certified independent analysis shows that overall, third frontier effort has